Sie sind auf Seite 1von 5

9/5/2010 IT Integration Project Case Study | DH…


Business Comms & Data Centre & IT Information IT Services Security & Development Management & Storage
Applications Netw orking Infrastructure Management Continuity & Integration Skills

New s IT Case studies Perspectives & Trends Features Com pany Analysis White Papers Suppliers' Directory


Newsletter Sign up
Weekly email updates
on key IT issues
Sign up / Login

DHL Logistics
10 APRIL 2008 Kenny MacIver

CIO Nigel Underwood explains how DHL completed the largest IT integration project ever undertaken in its sector
The large-scale consolidation that has reshaped the express delivery and contract logistics sector in recent years has presented some major integration

The largest and most complex to date was triggered by Deutsche Post World Net’s acquisition of the UK’s Exel Supply Chain in December 2005 and the
unit’s merger with a previous acquisition, the US group DHL Solutions, to form DHL Logistics.

As a measure of the size of the integration task, the takeover brought together 110,000 staff from Exel with around 30,000 from DHL. And with the ramping up
of staff levels post-acquisition, the user community grew to 164,000, spread across 3,000 locations in over 100 countries. More than 900 IT projects were
initiated as part of the integration programme, as DHL unified its core forwarding systems, contract logistics services, the companies’ mail systems and
networks, and began the standardisation of 75,000 PCs and countless field devices.

Setting itself a three-year timescale and E70 million investment for the integration, DHL managed to draw a line under the IT integration at the beginning of
2008, having come in under budget and ahead of target on the projected savings from the merger.

For those past two years, that strategic IT transformation has been the main preoccupation of DHL Logistics CIO Nigel Underwood. Information Age asked him
about the challenges that lay behind such a positive outcome.

As a coda to the completion of the integration programme, Deutsche Post announced in January that it is planning to transfer responsibility for parts of its
global IT operations to Hewlett-Packard.

If the deal goes through, HP will inherit the 2,500 employees who currently provide the services for Deutsche Post World Net’s global data centre operations in
Arizona, Malaysia and the Czech Republic, as well as IT operations in a number of other European countries, covering information and data management,
infrastructure and network management, and application management.

However, Deutsche Post World Net has stressed that all applications used by its customers will continue to be designed, developed and governed internally. It
will also retain the professional services and customer integration supply management components of its IT services unit, including project management,
project consulting, application development and deployment services, as well as electronic data integration for its messaging and supply chain programmes.

Information Age: When Deutsche Post acquired Exel and merged it with the previously acquired DHL Solutions group, to what extent was the senior
management of all three companies aware of the IT challenge that would result from a merger of that scale?

Nigel Underwood: On the Deutsche Post side, the company has a long track record of executing acquisitions. And the CEO of Deutsche Post’s logistics
business prior to the acquisition of Exel was responsible for both the logistics division as well as the IT function in the Deutsche Post organisation and so was
very IT literate. On that side of the house, there was very much an understanding that IT was critical to a successful integration.

And the same was true at Exel, which is the side I came from. I sat on the acquisition review board for the previous five years and had been involved in Exel’s
acquisitions of Tibbett & Britten, Fujitsu Logistics and similar companies.

So I think the business awareness was high. As we went through the planning cycle, it was evident that a lot of the investment was going to be on the IT side.
But that was where a lot of the value was to be created. The synergy was dependent on the capability of IT and its integration.

IA: So what were the critical success factors in this case?

NU: A lot of the challenges were not about the technology but about the people. The biggest challenge at the business level was cultural integration: when you
are operating in so many countries, how you bring people together from each of the different heritage organisations – because each acquired business has a
background of acquisitions in its own right.

Despite the acquisition’s size, we wanted it to have the characteristics of a merger, taking the best from both organisations. Exel was around e10-11 billion in
revenues and DHL was e9-10 billion. But the IT numbers were very different: if you looked at the DHL side coming from Deutsche Post, there were probably
only 50 dedicated people focused on DHL’s IT. Mostly it was being provided by the shared services function or by the Express organisation [an earlier
Deutsche Post acquisition].

So in reality, it was not the coming together of two IT functions, it was the coming together of six or seven IT functions into one new organisation. From the top
of the organisation to the bottom, we appointed 2,200 people.

And the aim was to remove uncertainty as quickly as possible; integration was really a people agenda, [dependent] on some very critical people, very critical
knowledge and skills, and commitment to work some very long hours.…/dhl-logistics.tht… 1/5
9/5/2010 IT Integration Project Case Study | DH…
We were also trying to crew up with additional resources because one of the other principles we had was that the integration was our problem, not our
customers’. The nature of the business means that a lot of the IT folk spend time with the external customers – the retail companies we are providing logistics
solutions to. So, alongside delivering an integration agenda, it was absolutely critical that we had teams focused on customers’ projects.

IA: The sheer scale and geographical distribution of the businesses must have made this particularly difficult.

NU: This was the biggest integration in our industry’s history, and probably across many other industries if you look at the size of the network, the number of
countries involved and the number of locations in each of those (3,000 in over 100 countries).

If you look at the volumes of shipments, we were already the leader in contract logistics, and the coming together of the airfreight and seafreight services put
us at number one in terms of scale in those two [areas] as well. We were handling over 10 million shipments a year through our combined forwarding

The integration has been a little like rewiring a house with the electricity turned on; you could not afford to drop any transactions while bringing the systems
together. At the same time, we were trying to save money. Deutsche Post had set a e220 million synergy target and we knew that IT was on the critical path
for enabling a lot of that.

To give you an idea of the scale, across the business in IT we kicked off 900 projects specifically for integration. So establishing good project governance and
global project management was essential.

IA: Was setting a relatively conservative three-year timeline for the integration an important factor?

NU: We [managed to] achieve almost everything within 24 months. We are ahead in terms of quality, cost and time, and the benefits at the other end. We are
spending less than we originally anticipated.

The critical systems are pretty much complete – forwarding systems, email, networks and so on – and we have policies fixed for contract logistics. Really the
question now is: how do we embed our operating model, and how do we complete the standard deployment of things like desktop [Exel had a Dell-based
standard, DHL an HP one]?

IA: What were the biggest lessons learned from the integration exercise?

NU: The fact that the business community and the IT community were lined up is the biggest single lesson for me here. I didn’t candidly believe we could go
at the pace we set, without that.

We had an agreed approach with the business: you can either go the long way round on an aeroplane journey and avoid the thunderstorm or you can go
through it. And we decided to fly through a series of thunderstorms. As it happened, they were not as turbulent as we thought they would be.

We set some fairly bold targets, saying that by the end of 2007 we would have primarily completed the integration of our two forwarding systems. In fact, we
had completed 95% by the end of the first quarter of 2007, putting us ahead of schedule.

Of course, inevitably, there were issues to deal with – a group of people resigned [in Asia following the acquisition] and we had to put in interim management;
we had a troublesome implementation in one particular country, which involved two-hour calls for seven days until we turned that one around.

IA: So what were the costs and benefits associated with the integration?

NU: The prize here [for Deutsche Post] is e220 million in synergy savings on the business side, and of that the IT number was tens of millions of euros. We
have certainly exceeded the IT synergy target.

From an IT perspective, we initially set an integration investment amount of e70 million. Again, during the first year we spent less than we had factored in. That
meant that in late 2007 we closed down the majority of those integration investments and there will be no integration investment in 2008.

So we expected to close [the integration] in 36 months; instead it [was] more like 24 months.


There are currently no comments on this article

Register to leave comments

Please click here to register to leave comments
If you are already registered, please click here to login

People who read this also read...

DHL IT Services
DHL exploits service-oriented architecture (SOA) in integrating acquired companies. James Harvey, head of the support services at the express shipper, tells Information Age of SOA’s
w onders and w eaknesses.

Deutsche Post turns back on giant IT outsourcing deal with HP

Reassessment of IT department’s efficiency leads German logistics giant to opt out of previously agreed seven-year deal.

Platform Computing - Category winner

A service economy
Demand for IT service management softw are is rising fast, as vendors continue to innovate

The integration imperative

The current economic pressures have put renew ed focus on the critical role of data integration in business and technology consolidation…/dhl-logistics.tht… 2/5
9/5/2010 IT Integration Project Case Study | DH…

White Papers
1Z0-040 Oracle Database 10G New Features for Administrators Practice Exam
Oracle 9i administrators can certify on Oracle 10G by passing this exam. The ExamForce 1Z0-040 Oracle Database 10G New Features for Administrators practice exam provides
their unique triple testing mode to instantly set a baseline of your know ledge and focus your study w here you need it most.

70-680 Windows 7 Configuring Exam Prep Special Edition

ExamForce's Window s 7, Configuring CramMaster w ill prepare you to pass the Microsoft 70-680 exam. CramMaster 70-680 practice exam provides their unique triple testing mode
to instantly set a baseline of your know ledge and focus your study w here you need it most.

A Complete Beginner's Manual for Ubuntu 10.04 (Lucid Lynx)

Getting Started w ith Ubuntu 10.04 (Lucid Lynx) is a comprehensive beginners guide for the Ubuntu operating system; it features comprehensive guides, How Tos and information
on anything you need to know after first installing Ubuntu.


More Features Read latest issue

In the frame
Softw are development framew orks play a pivotal role in the
move to cloud computing

Software is not enough

Oracle’s move into hardw are rew rites the rulebook for
enterprise systems vendors

The rise of Ruby

Beloved of the softw are developer community, the Ruby on
Rails development framew ork is now infiltrating the
mainstream. But is it suitable for the enterprise?

The integration imperative

The current economic pressures have put renew ed focus on
the critical role of data integration in business and technology

More Features »

Related articles
Attention to detail
Organisations are at last getting to grips w ith data
management and vendors in the space are anticipating a
bumper year. But can their tools really resolve the chronic
mistrust of corporate data?

Advancing partners
At the Hosting, Outsourcing & Managed Services 2009
event, part of Information Age’s Spring Forum, delegates
heard how the global outsourcing industry is evolving – in
their favour

Effective IT Survey 2009: key findings

The Effective IT Survey 2009 finds the preferred strategies of
IT leaders largely unchanged, but cost-cutting is clearly on the

M aster data management shows dramatic

The prospect of a single, real-time view of the truth has led to
a spiraling number of master data management projects

Advertisement…/dhl-logistics.tht… 3/5
9/5/2010 IT Integration Project Case Study | DH…

Info Age blog

Reassessing Russia
10 AUGUS T 2010

Suppliers directory
More…/dhl-logistics.tht… 4/5
9/5/2010 IT Integration Project Case Study | DH…

About us / Contact us / Advertise with us / Useful links / Comment guidelines / Terms and conditions / Copyright / Disclaimer / Privacy policy


« Click to expand/hide

Business Applications Comms & Netw orking IT Infrastructure Information Management IT Services
News News News News News
Features Features Features Features Features
Company Analysis Company Analysis Company Analysis Company Analysis Company Analysis
Perspectives & Trends Perspectives & Trends Perspectives & Trends Perspectives & Trends Perspectives & Trends
IT Case Studies IT Case Studies IT Case Studies IT Case Studies IT Case Studies
White Papers White Papers White Papers White Papers White Papers
Suppliers' Directory Supplier's Directory Supplier's Directory Supplier's Directory Supplier's Directory

Security & Continuity Development & Integration Management & Skills Storage Info Age highlights
News News News News News
Features Features Features Features Suppliers' Directory
Company Analysis Company Analysis Company Analysis Company Analysis Blog
Perspectives & Trends Perspectives & Trends Perspectives & Trends Perspectives & Trends Research
IT Case Studies IT Case Studies IT Case Studies IT Case Studies Information Age Magazine Latest Issue
White Papers White Papers White Papers White Papers Video
Supplier's Directory Supplier's Directory Supplier's Directory Supplier's Directory Poll
Article archive
Newsletter Sign up
Magazine Subscription…/dhl-logistics.tht… 5/5