The perennial debate over whether CIOs can rise to MD or CEO makes the hearts of many IT leaders sink: after all, each case is different according to the sector and company concerned.
If an organisation rates sales performance then the sales bosses will emerge as the ultimate leaders and product quality experts will lead product-oriented companies.
Likewise if an organisation has carved its niche through a powerful technology offering then it is very likely a tech leader will rise to become its MD.
Neil Cotty and Global Freight Solutions (GFS) epitomise the latter. A techy at heart, Cotty has sound business knowledge and is now MD of the company he helped found.
He told us how he and his partner founded the business, the critical role technology now plays in freight distribution and how he progressed from the IT man to the MD.
GFS is a parcel-and-carrier management company which resells courier services.
“We are a value-added reseller, adding enhanced IT and customer services for carrier users,” Cotty explains.
The IT is the key component for GFS: a customer receives a labelling package, the full parcel track-and-trace application and a GFS team also monitors parcels as they pass through couriers’ systems.
GFS has partnerships with major logistics companies including DHL, FedEx, Tuffnells, Home Delivery Network and the Royal Mail.
“Our customers include [maternity retailers] Mamas & Papas, a major car exhaust manufacturer in Derby, and Raleigh bicycles,” Cotty says.
Using GFS to handle their courier needs ensures that each organisation can use the best possible distributor for the item being shipped.
Cotty explains that as well as the exhausts, the parts manufacturer also sends out tiny electronic components and catalogues. A courier firm may have a limit stipulating all parcels must be five kilos, so using GFS avoids these constraints.
“We manage parcels from dispatch to delivery, we also manage the carriers’ performance on behalf of our customers. GFS sends four million parcels per annum. We get preferential rates from that volume, which means we get the best price for our customers and the couriers get good quality invoice resolution in return."
Cotty was working at IBM when he met Martin Day, his business partner in GFS.
“Martin had the idea of a business which provided visibility to parcel distribution. Back in 2000 there was nothing like this and it is only in the last five years that the distributors themselves have begun to offer it. We were setting the trend.
“It is difficult for organisations too, for every carrier you’d need to know the identity number of the parcel, which is difficult to recall if you are sending 500 a day,” he says.
The duo split from IBM to go it alone, Cotty as software developer and Day as business manager.
“Martin was a one-man sales force, but we did it with no loan or funding and the only marketing was through networking. Now the company has turned 10 and made £15m in 2010.”
As with all start-ups, the initial weeks and months were hard. Cotty was working 14-hour days writing the code.
“The complexity was the integration of the carriers’ systems, especially all the costing like surcharges, weight or if a parcel is going to the Highlands and Islands. There are first prices and subsequent price structures; some offer a single price for the first box and then 23p per kilo for every box thereafter. There are a huge variety of charging structures. So our billing system is our greatest achievement,” he says.
GFS struck its first major deal with Securicor Omega, a major player in the carrier market of the 1990s.
But the subsequent rise of e-commerce has meant the sector has had to raise its game.
“Traditionally the carrier market has been poor at customer service as there has been very little margin for them. They are good at focusing on the vehicles and operations, but as well as our IT offering we provide a consultative approach so that we understand the customer’s requirements and visit them to view their products,” Cotty explains.
“GFS is strongly IT-led, it really is a technology business. Today we have two main products: GFS Selector, a Windows-based dispatch system, and Seeker, a track and trace management system. Customers can interface these to their ERP platform using an IaaS server,” he adds.
The importance of technology to the logistics sector – global giant UPS invests $1bn a year in technology alone – meant that Cotty was well placed to step up to the managing director role.
“It was a natural progression. I took over the billing process, then marketing on top of IT and then accounting. I turned around our EBIT by focusing on the billing. There was a lot of billing going astray or not being resolved in time, so we were not operating best practice. I hired a developer to focus on billing as our back-end systems had to catch up with the front end systems we had developed,” Cotty says.
Day now carries the job title CEO and continues to manage relationships with the carriers.
Cotty’s journey began as a traditional computer operator in his native New Zealand. Back in 1982 he was writing code on PDP systems for British global financial services giant Royal Sun Alliance.
When his family relocated to Australia Cotty went with them, securing a role at Philips-Siemens as a programmer on its medical IT products before moving to Bayer, where, Cotty says: “the commercial side of me kicked in”.
He left the German chemical giant to start up his own business writing MRP systems for the manufacturing sector in the days before behemoth ERP systems.
This led to a stint back in full-time employment as a consultant with Borland, putting their Pascal and Turbo Pascal systems into Australian banks as well as into local branches of global consultants KPMG and Ernst & Young.
As with many of his antipodean peers the appeal of travel beckoned and Cotty set off for the UK, found his way to IBM, met Day and the rest is history.