“All my career has been about rapid change,” says Mike Sturrock, Group CIO of logistics specialists DX Group, the company he joined in 2011 with the express mission to put technology in the driving seat of a high-end delivery services company.
DX Group may not have the brightly coloured vans of other logistics firms or a royal warrant, but its heritage is connected to the Royal Mail and the company holds a significant place in the history of the UK logistics industry.
“We are the largest single independent provider of logistics, transport, mail and courier services in the UK,” Sturrock explains of DX. What makes DX unique in the increasingly competitive logistics sector is its heritage and customer base in high-value deliveries.
“The majority of the company is vetted to a high level, in consideration of the valuable items they’re carrying,” he says. The reason being, the DX Secure division delivers all UK passports.
DX has three divisions: business-to-business arm DX Network Services which delivers everything from mail to medium-size items; DX Secure, serving the business-to-consumer marketplace; and DX Freight, delivering medium-to-large and irregular sized items to the business and consumer markets.
Because the Secure division carries high-value items such as jewellery, visas, medical samples, spectacles and bank cards, the likelihood of you spotting a DX-branded vehicle on UK roads is slim.
“You don’t see our name on the roads. On the secure side of the business our vehicles are plain. When we are delivering passports it is two people in the vehicle, it is locked and we never use curtain-sided vehicles,” Sturrock explains.
DX Group was set up in the 1970s, at a time when the UK was in the grip of constant strikes and law firms were struggling to get legal documents to one another as part of the normal legal process. The company was formed to offer an alternative to the Royal Mail and to this day DX operates blue post boxes inside law offices and offers a service that guarantees to deliver any legal document, posted before 5pm, by 9am the next morning.
“We manage a closed network of physical mail. We can also separate out mainstream mail, so that law firms get a full service,” Sturrock explains.
But with more and more documents being sent digitally, DX Group looked for a niche that would counteract the downturn in regular mail usage, and in March 2012 it acquired Nightfreight, a logistics firm that specialises in ‘ugly deliveries’ – parcels of irregular dimension and weight such as bicycles and canoes.
“We were looking for an acquisition to grow the business and to offset the erosion of mail usage,” Sturrock says of the increasing use of digital documents, even in the more traditional legal circles.
“The next step for DX Group was to branch out into bigger freight.” Sturrock explains that this was not a simple case of buying a rival and subsuming it into your operations to gain market share: the demands from the customer base are very different.
“You can’t put a laptop on the same vehicle as a tractor tyre. There are plenty of examples in this sector of where integrations have gone wrong,” he warns.
“But we have distribution centres around the country and we can optimise the hubs we bring goods to and then the spokes that go out from there. It’s a constant flow of data.”
There are 12 DX distribution centres, 18 main DX centres and 15 Nightfreight centres.
“So there are opportunities to consolidate. That has technology and routing implications, but driving efficiency is one of my career themes,” he says.
Nightfrieght has contracts with retailers B&Q and Debenhams, with the B&Q contract including management of the DIY chain’s stock levels.
“We pride ourselves on quality of service. This is not a race to the bottom and we are not after the £2 delivery. ‘Great service every time’ and ‘See it, own it, act on it now’ are the messages from the board to the organisation; they stick to it and this appeals to me as that is how I am,” Sturrock explains.
But Sturrock and his team aren’t just using technology to consolidate and drive efficiency across the business: for them technology is very much seen as a way in which DX Group can remain the quality end player in logistics.
“We are already working with a number of e-commerce companies and there is growth in that area. This is especially so for retailers that want high?quality service and assurance around the identification of the recipient such as a signature or other proofs of correct delivery such as GPS coordinates, timestamps or digital pictures of the front door the item was delivered to.”
So where is Sturrock in the transformation journey of DX Group? As an organisation approaching its 40th birthday it unsurprisingly has its fair share of legacy, so Sturrock is focusing on the technology strategy by using Webmethods from Software AG as an integration platform for all of the core systems at DX Group.
“We can put business process management (BPM) on to that later. Eighteen months ago we put in JD Edwards ERP, and combined with our implementation of the Webmethods suite of integration products it now forms the backbone of our unified architecture.
“By connecting all our systems to this architecture we’ve been able to continually improve our efficiency and service to customers while simplifying our systems estate. The ERP is cutting out a lot of spaghetti and allowing us to retire old systems.”
Integrating Webmethods into DX Group is Quinnox, a systems integrator that was already working with DX when Sturrock joined, but an organisation the CIO is pleased with.
“They are great with the legacy and they have the skills. We need these platforms for the organisation and we need them to operate with Windows 8,” says Sturrock.
“You must get the culture right with systems integrators. It can be a deferential culture where they say yes but mean no, but now we have the culture right they are proper partners and they challenge us.” Sturrock adds that Quinnox are a good size fit to DX Group and so his organisation gets the attention it needs.
In line with his earlier comment about the poor technology integrations that can follow logistics business mergers, the CIO is not putting the acquired Nightfreight on to the same core platforms as the rest of the DX Group’s divisions, but has placed Nightfreight’s data into a central data warehouse along with all DX Group information so that all the company’s data is in one place.
“BI is my pet thing,” he says and business intelligence certainly plays a significant part in Sturrock’s future strategy and reasons by the implementations so far.
“BI is a work in progress and we can provide good reports, but we want to move on to prediction.”
Before joining DX Group, Sturrock was head of operations systems at easyJet and his three years there were instrumental in easyJet becoming a smart user of business information.
“I’m getting further into BI to drive intelligence to give us some insight and some predictive analytics of what might happen. At easyJet we modelled hypothetical scenarios of fog in Madrid and a handling strike in Athens. You can then work out whether it is better to cancel a flight and take the crew off duty and start afresh.
“Fuel is the biggest cost at easyJet. At DX Group we do place a fuel surcharge to the customer, but we are optimising our routing and the number of deliveries. Can we deliver 20 items rather than 15? It is all about the efficiency of the route. At Nightfreight all the vehicles have telemetry that monitors fuel use, but also logs throttle use, braking and idling time for fuel and safety reasons.
“A fully-used 18-wheeler costs the business £65,000 a year. Can we make £8,000 to £10,000 improvements from a vehicle?,” asks Sturrock.
Challenged as to whether getting drivers to make 20 instead of 15 deliveries will make the roads more dangerous as they race to meet targets, Sturrock is clear that BI does not come at the cost of safety.
“We don’t want to give the driver pressure, we want to give them the right number of items that they can deliver. So we will use the analytics to look at the deliveries of that day and how they are going. We want to know if a driver is not going to deliver all their items so that we can make a change, because the more times we have to handle an item, the greater the cost impact on the business,” he says of items being returned to depots.
“I bring my attitude to safety to DX from easyJet. Founder Stelios Haji-Ioannou used to say: ‘If you think safety is expensive, try having an accident’. So there were never any corners cut at easyJet and we developed roster systems for the aircraft maintenance. Safety is a culture, not a set of processes,” he says.
Sturrock’s budget is currently 2.5% of revenues and he has a strong ability to invest at present.
“I met the chief executive and the chair of the venture capitalists and talked about the benefits of technology investment when I was considering the role, and they have backed their words with cash,” he says.
“Savings are being made by degrees as we retire old systems and we have become better at supplier management. There are plenty more savings to come.”
The position of the CIO and the IT team has changed within the organisation.
“We were a bit on the back foot and had been seen as a cost. Now we are providing benefits and reducing costs. So next year the investment levels will remain up. There will be another acquisition or exit at some time, so there is no flat earth plan, we just build for the future and the long term,” he says of the possible exit of DX Group’s backers.
“People do now come to us first as we are good trusted partners,” he says, adding that his department is the ‘custodian of the technology strategy’, while controlling all technology spend across the organisation.
As an organisation that handles sensitive documents and items, Sturrock has worked to inform the organisation of how to use social media.
“It is an outbreak of common sense. We took the Tesco strategy model of stating: ‘If you wouldn’t say it to someone’s face, don’t say it on Twitter’.” Wi-Fi access is also strictly controlled.
Sturrock’s IT team is split across the key DX Group sites of Iver in Middlesex and Northampton, and he has a Nightfreight team in Bootle, Merseyside. With an improved data network and video conferencing, this 90-strong team – 70 in DX Group and 20 at Nightfreight – can work effectively together with a minimum of travelling.
“I don’t want people hacking up and down the motorway,” he says.
Sturrock has had to increase salaries to get the quality people he wanted for his technology teams, but more than money, he puts a lot of effort into team culture.
“When people don’t know me or the company, you create the environment so then the issue is not the money, it is about doing good things; in the process, we retain people,” he explains.
Former yacht skipper Sturrock has personally sponsored charities to encourage team members to quit smoking, has held team meetings on his boat and organised challenges such as a round the Isle of Wight race where half of the team cycled and the other half sailed.
Despite his seafaring experience, it is his time at airline easyJet that has had the most influence on Sturrocks career.
“EasyJet had the most profound impact on thinking and I had the most success in my career in terms of results so far,” he says.
Although the two businesses may seem a world apart, Sturrock points out the healthy amount of overlap between DX and easyJet in strategy and personnel, with the chairman of DX Group having once recruited Andy Harrison, then CEO of the airline and now CEO of Whitbread. Sturrock’s easyJet career overlapped with that of current CIO Trevor Didcock, hired by incoming CEO Carolyn McCall.
Sturrock has no need to hide the fact he wanted the CIO job at the airline but missed out to Didcock.
“I spoke openly to Trevor about it and we worked really well together and did a lot together,” he says of the handover.
“For the nine-month handover I did a plan of three months to make sure he was a success, three months for my career and three months for my exit. We are still mates and still work well together.”
Sturrock’s ability to work well with people in difficult situations and for being a clear and concise communicator go back to the origins of his career.
“At 18 I was skippering yachts and I’ve learnt a lot from that. I build crews, but not to command and control. Each member is a watch leader, they get freedom to do what they do and the get support from me through collaboration and conversation, not politics.”
Sturrock has competed in the Race to the Azores yacht race and is currently planning to sail to Svalbard in the Arctic Circle. When not relaxing on a boat, he’s a keen cyclist who rides mostly off-road, and the outdoors team-oriented nature of Sturrock is one that permeates throughout the organisation, he says.
As digital business becomes the norm, physical objects will need an organisation that understands and utilises digital opportunities. DX Group and Mike Sturrock look to have the package secure and ready to deliver.
Mike Sturrock CV
September 2011-present: Chief Information Officer, DX Group
2007-2011: Head of Operations Systems, easyJet
2005-2007: Head of Broadcast Systems, BSkyB
2004-2005: Head of New Media, BSkyB/SkyBet
2002-2004: Head of Content & Media, Hutchison 3G
2002-2003: Content & Media Services, 3 Telecoms/Hutchinson 3G
2000-2001: Interim CTO, Vivendi Universal Group
1999-2000: IT Director, Sportal
1996-1999: Technical architect, BT
1993-1995: Network Specialist, KPMG
1990-1993: Developer, Thames TV
1986-1989: Professional Yacht Captain