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Smart Enterprise: Greater Expectations

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the department has put policies into place that make it easier to get approvals. Any costs associated with services — the staff hours and software that might go into building a new application, for example — are billed directly back to the business units. This applies to customer-facing applications and services as well as services that support DHL's internal processes. IT bills the busi- ness departments directly; the business units, in turn, commercialize that as part of their broader Supply Chain service offering. "Costs, ROI and broader IT service per- formance therefore need to be tracked tightly,'" says Coran Thompson, DHL's VP of IT Service Management (U.K., Ireland, France, Eastern Europe, the Middle East and Africa). "We do this in a variety of ways, and balanced scorecards are one important tool. The company has created a set of IT best practices, and it measures everything it does against these. DHL Supply Chain also calculates how much IT elements truly cost, based on a total cost of ownership model and compares this to the benefits it will deliver, either through cost savings or revenue generation. In addition, because Cox and his team, like the rest of DHL Supply Chain IT staff- ers, focus only on projects with a clear and approved business case, IT ends up creating value, delivering cost savings and revenue for the company, he says. This, says EMA's Drogseth, is exactly what IT will have to deliver to avoid becom- ing completely commoditized. "It seems way out there compared to where most [IT shops] are, but on the other hand you could stand back and say, 'Why didn't that happen 10 years ago?'" he says. "If you look at the future of IT, it makes IT more of a services provider, generating support for the business processes." Case in point: A recent project that deploys telematic tracking on DHL Supply Chain's U.K. fleet of delivery trucks has helped the company achieve improved driver performance. Going into the project, Cox had a good idea of how much the hardware, software and manpower would cost, and what the benefit would be to the Supply Chain Divi- sion — he knew they would be able to save money on equipment as well as help the company meet environmental targets that were set at the group level. The program itself would require a lot of staff. At the end of shifts, managers would need to sit down with their drivers to discuss driving performance — everything from how hard the drivers braked, how long they waited in traffic with the engine running and how hard they accelerated. If a driver had been idling too long, he or she, after the review, could be reminded to turn the engine off when waiting in heavy traffic. "We can show them how their driving performance was across the route that they took," Cox explains. "We then benchmark this against best in class performance for that route. DHL Supply Chain is now assessing the value of adding gyroscopic equipment in order to measure how fast vehicles are turning, to further optimize performance." Data from the telematics and subsequent driver training have reduced wear and tear on company vehicles, reduced fuel consump- tion and carbon emissions, and increased safety. "We've optimized driving performance and delivery routes, resulting in a 4 percent reduction in carbon dioxide across a fleet of around 800 vehicles," adds Cox. This has also supported DHL's Go Green agenda, a program to improve the company's 2007 carbon-efficiency levels by 10 percent two years from now and 30 percent by 2020. Back to Basics For its part, the run side of DHL's IT Services has created an IT infrastructure that's lean while still directly affecting the bottom line. Virtualization is an important component, Thompson says, as is standardization wher- ever and whenever possible. That's because most of DHL's IT systems are transactional, meaning they depend on real-time pro- cessing, where minutes and seconds are important to its customers' productivity and revenue generation. Recently, DHL used virtualization in a warehouse management solution that serves some of DHL Supply Chain's key customers in the U.K. and Eastern Europe. The project ultimately reduced the number of physical servers from 44 to 12, accord- ing to Thompson, and it is expected to deliver savings in DHL's annual costs and to improve the quality of service. It was created and executed using ITIL ® , which helped the process go more smoothly. The company tapped ITIL as its frame- work for service management processes to ensure that it is deploying "practical and repeatable common standards," according to Thompson. It is especially important to DHL, she says, because of its size: With so many different regions and maturity levels, it would be nearly impossible for DHL to bring new services to its users and custom- ers without some level of standardization. "The ITIL processes help us in ensuring a level of consistency of service provision and provide us with a common language with which our customers and business are also becoming increasingly familiar," she says. "The new [warehouse] environment will provide a scalable environment that will allow us to manage the business peaks and troughs across the customers." It also supports the Go Green agenda by reducing the power consumption, she says. With fewer barriers to entry, the com- pany can continue to grow with IT's help. That's exactly what any CIO could wish for, says Cox. "During the economic downturn in 2009, DHL Supply Chain, like many organizations, paid particular attention to optimizing its efficiency," he says. "This has paid dividends, meaning now we're far leaner and better equipped to tackle growth opportunities." ■ KAREN J. BANNAN is the Executive Editor of Smart Enterprise magazine. ITIL ® is a Registered Trade Mark, and a Reg- istered Community Trade Mark of the Office of Government Commerce, and is registered in the U.S. Patent and Trademark Office. Deutsche Post DHL at a Glance ■ HEADQUARTERS: Bonn, Germany ■ FOUNDED: 1969 ■ REVENUE (FISCAL 2009): 46 billion euros ■ NO. OF EMPLOYEES: 500,000 in more than 220 countries and territories worldwide ■ NO. OF IT EMPLOYEES: 5,000+ ■ BUSINESSES: Express (parcels); Global Forwarding and Freight (air, ocean and road); Global Mail (customized mail and parcels); and Supply Chain (contract logistics) ■ NO. OF COUNTRIES AND TERRITORIES IN ITS NETWORK: 220+ DATA: DHL )'('SMART ENTERPRISE 29

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