Linking Online with Offline

July 17, 2008 by SAP News

Across the world, 97 billion e-mails are exchanged every 24 hours; Bill Gates alone receives four million every day. Communication is getting faster and faster and taking place mostly online. Can the traditional letter survive in a world of e-mail, Web portals, and chatrooms – or are letter carriers about to go the way of the dodo?

According to Correos’ chief information officer, Rubén Muñoz, demand for traditional postal services is still increasing. However, Muñoz sees today’s customers – among them many large companies – expecting better service, with classic elements like letters set to become less important in the years ahead.

In addition, much is in a state of flux: More and more competitors are entering Spain’s market for postal services, which is to be completely liberalized by 2011. This will open the Iberian market to providers from all over the world.

In this process, the market’s former monopolists are fighting an uphill battle. While upstart service providers cherry-pick from Spain’s lucrative urban centers, the established providers are required by law to maintain a country-wide postal network and continue to deliver mail on every business day. Every Spaniard – including those living in remote, mountainous regions and on tiny islands – is entitled to this service.

To survive under these conditions, Spain’s national postal service needs to reduce costs while retaining customers and gaining new ones with additional services. According to CIO Muñoz, the best way to achieve this is with innovations that link the physical and digital worlds, facilitating further development of traditional products.

Virtual office is number one

Correos’ expansion of its online business demonstrates how this works. Growing at an annual rate of 130 percent, the Web site www.correos.es has become Spain’s most popular post office. Customers can use the virtual office to send letters and packages and pay for their postage, as well as create custom postcards from vacation pictures and immortalize their loved ones on unique stamps.

The service delivers these stamps directly to the customer’s home and also offers a wide variety of collector’s items on its Web site. It can even help customers move: Instead of informing individual banks, insurance companies, utility companies, and media companies of their new address, customers can simply compile a list of every company and institution they wish to inform. Correos then handles the rest.

Everything Integra

Muñoz knows how crucial information technology is to the future of his company. “At Correos, modernization and automation are not a choice – they’re solutions. In the postal service industry, information technology is our main ally in improving productivity and service. We reach over 19 million homes in Spain with 25 million letters each day. Customers want to know what we’re doing with their mail. Thanks to IT, we can widen the range of our products and increase speed,” he says.

The name of this IT strategy – Integra – reveals its main goal: integrating all projects and systems. Correos has essentially overhauled its IT landscape by creating a standardized platform with SAP ERP, automating business processes and improving the flow of information. To handle the expected amount of data traffic, Correos outsourced its entire network to the telecommunications company Telefónica.

Thanks to the resulting increase in flexibility, Correos’ marketing department, for example, can more quickly implement the annual price increase stipulated by Spanish law. Using the SAP Customer Relationship Management application, its sales and distribution department can now rely on a uniform customer database. “This saves time and money and helps us provide better customer service,” says Muñoz.

Configuring its new human resources system proved to be a challenge. However, with a human resources solution that SAP developed specifically for Spain’s public sector, Correos has no problem handling payroll from a central location for its 67,000 workers, whether they be normal or state employees.

The number of bills Correos processes made its implementation of SAP software for sales and distribution an even greater task. SAP Services helped the company achieve the corresponding scalability. “In critical processes like billing, we rely on the SAP MaxAttention support option,” reports Muñoz. “That way, we can optimize our processes despite the increasing volume. Integrating product data into our billing system also enables us to quickly expand or otherwise modify our portfolio.”

Another significant advantage comes from the fact that major customers like the department store chain El Corte Inglés also use SAP software. This makes exchanging data with Correos easier and will soon make electronic billing possible. Spain’s postal service is also planning a Web portal with an array of features, including one to enable corporate customers to retrieve bills and orders from its financial systems.

Mail carriers online

Correos issues Personal Digital Assistants (PDAs) to its mail carriers for transmitting information on the delivery status of letters and packages to the company’s system. “This enables us to reduce the time we spend on preparation and end-of-route tasks by 75 percent. It also generates less paper and provides real-time information for all our mail,” explains Muñoz.

He refers to the company’s plans as the largest mobility project in Spain, with 30,000 mail carriers set to receive data entry devices this year. According to the CIO, Correos will progressively expand the devices’ functionality to include applications such as electronic signature capture. He considers an incremental approach important because most of the company’s carriers have had little experience with IT. Muñoz and Correos are witnessing the benefits of taking this level of care and providing thorough training: Many of their employees take pride in working with such modern technology.

Correos is also optimizing its logistics by implementing radio frequency identification (RFID) tags. When applied to letters and packages, they transmit their location and the time to a central system. The company can measure, for example, how long it takes to deliver a letter from the point of acceptance. “Based on the results, we can optimize our processes and speed up delivery,” says Muñoz.

Contactless data transfer also simplifies the registration of package and letter receipts. Up to 1,000 deliveries enter the company’s distribution centers at once, where a scanner reads each one into the system. This reduces manual work and increases data reliability.

A digital future

Correos ties its future to the expansion of digital distribution channels. While the number of postal deliveries in Spain continues to increase, this trend will not last much longer, Muñoz says. “That’s why we want to offer more online services, like electronic P.O. boxes.” These boxes enable banks, telephone companies, and utility companies specified by the customer to send their bills and letters to the Correos Web site rather than to the customer’s home. The customer can then simply log in to access this correspondence from public and private issuers safely.

“Interacting with our customers and distribution partners through online channels, like our Web shop and customer portal, is becoming more important,” says Muñoz. To get employees behind this transition, Correos invested in professional change management. The company held training courses throughout the country in support of its SAP implementation and kept its workforce up-to-date in every phase of the project, which made everyone feel involved. “SAP supported us with its best practices and motivated us to modernize our operations,” Muñoz says in summary.

To make the decisions that will keep Correos at the top of its industry, its executives need constant access to current data. Here, Muñoz relies on business intelligence systems. “The idea is to provide our executive board with an integrated, consolidated overview of our customers, workforce, and finances,” he says.

Since the company works with both the SAP NetWeaver Business Intelligence component and Business Objects software, it hopes that SAP’s acquisition of Business Objects will improve the integration of their products. As soon as this occurs, Correos will be on the cutting edge of every trend – in both the real and virtual worlds.

Correos

Correos (Sociedad Estatal de Correos y Telégrafos) is the national postal service of Spain, based in Madrid. Correos leads the postal industry in Spain in the non-urgent transport of documents and goods. The company distributes more than 5.9 billion deliveries each year to 19 million homes and two million companies, making it one of the largest postal services in the world. Correos is the leading company in the country in terms of capillary action and national coverage, with more than 10,000 points of access all over Spain: 2,200 multiservice offices, 100 special service units, 1,730 distribution units, and 7,976 rural service points (customer service and/or deliveries). Correos employs more than 67,000 people and reports revenues of €2 billion (approximately U.S.$3 billion).

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