With its market now open to competition, the last year was a bit strange for the Royal Mail Group business but in IT terms it was pretty good, according to its group technology director David Burden. “We still managed to cut 10 per cent from our costs, while at the same time absorbing a range of new technologies
and systems,” he says.

Burden says that using technology to help the business operate more effectively remains the key focus for him. The growth of Royal Mail’s internet capabilities – particularly Smart Stamp, its online postage service – has been impressive, according to Burden, who likens the technology to the early days of airlines’ e-ticketing systems. “You can’t imagine the industry without them now,” he comments.

Royal Mail has done a lot of work on its central asset, the Pegasus delivery point system, over the past 12 months. It delivers to 27 million different places in the UK, and Pegasus keeps data on everything there is to know about them. It is different from the postcode address file and drives the business by holding the details behind the letterboxes, like any difficult access to an address, or whether there is a friendly or hostile dog there. “As a 27 million item database it is enormously critical to us, and helps drive the business using address interpretation,” he says.

The organisation handles 80 million items of mail a night (120 million during the Christmas period) and as much of that as possible is done through automation. “It is a very sophisticated system, taking an image of the letter and using character recognition to find an address, it then interprets the address and links it up with the 27 million database to validate it,” says Burden. “The read rates are in the high 90s and the systems can handle 40,000 items an hour, so the sort rate is very quick and reliable. This year we have worked to improve its efficiency and accuracy and therefore the quality of the service – 94 per cent of first class mail now arrives the next day.”

There have been big structural changes in the market, where internet online fulfilment has had a big impact. “There has been a shift from traditional social letters to big business competition interacting with the customer, for example with online utility bills. Even very small businesses are growing in their use in the package market. It changes the business internally,” says Burden.The organisation is continuing its implementation of SAP financials and procurements and Siebel customer management systems. “What has been hard this year is looking at customer facing systems,” says Burden. “We have several 100,000 business accounts and we want them to work directly out of the system. Until recently many of them used a paper docket system, which was not that reliable. Now we are replacing that with a completely online service, which goes from defining the mailing on the internet to the billing and payment systems.”

Plans for the year ahead include working hard on the HR arena, which handles 200,000 employees as well as keeping track of Royal Mail pensioners. This will be a big project for the organisation and is still at the planning stage. Burden says he will also be looking to revitalise relationships with service suppliers. “The nature of relationships with suppliers changes as technology moves along,” he says. “The contracts and the relationships have to change as well and after a few years it is a good idea to have a look at ways to revitalise them.”

Royal Mail will also be increasing the work it does with mobile devices. Parcel Force already uses PDAs so its delivery people can communicate in real time with depots, but the organisation is now giving PDAs to postmen so that signatures can be captured more easily and the details can be put online.

“The nature of relationships with suppliers changes as technology moves along. The contracts and the relationships have to change as well”
– David Burden, group technology director, Royal Mail