Key takeaways:
- Through low-code digital transformation, Canada Post built a parcel delivery service from a declining mail service (60% reduction in mail over 10 years) and then grew parcel business by 25% in a year.
- To become a parcel delivery service, PostNL grew from a 5-person team to 50, and from a 10-app portfolio to 100.
- Using low-code, PostNL built a core supply chain logistics system that supports 10 million transactions per day and managed 250 million parcels in 2018.
- PostNL built an app with low-code that allows 4.5 million users to follow parcel delivery.
The founders of Canada Post and PostNL, two parcel delivery and postal service companies, built their organizations over 200 years ago to do one thing: connect people through delivering mail.
In recent years, however, mail has begun to decline, prompting these two logistics enterprises to shift away from what they’ve done for centuries and move into the parcel delivery market. The move meant changing the technology they use, transforming the way they work, and altering the mindset with which they work. All while doing this at massive scale.
Gerrie de Jonge, CIO of PostNL, and Anik Dubreuil, CIO of Canada Post, used low-code development to not only update legacy systems and change mindsets across their companies. The digital transformations were successful for both enterprises—allowing them enter a new competitive market and continue to connect people.
Return to sender
In the past, when Canada Post experienced financial challenges, an easy fix was the price increase on stamps. The cost of a stamp to mail a letter went up, which quickly solved the problem.
Mail, in the digital world we now live in, has declined. According to Dubreuil, “8 billion pieces of mail were delivered 10 years ago. We’re at 3.2 billion right now.” The precipitous drop has forced Canada Post to shift from mail delivery to parcels. Which, as she says, is “easier said than done.” Reinventing themselves and competing against parcel delivery giants like Amazon isn’t easy. But it’s even harder when you’re 255 years old.
“We are not built for that,” Dubreuil says. “Our DNA is not that way. And that’s true for the business but also true for IT.”
Dubreuil charged herself with putting together a massive digital transformation strategy that would enable the business to shift from mail to parcel.
Competing against parcel delivery giants like Amazon isn’t easy. But it’s even harder when you’re 255 years old.
de Jonge and PostNL experienced similar challenges. Also centuries old and built around the mail business, PostNL has seen a 10-12% decline in mail services, which has impacted their business a lot.
de Jonge, too, shifted to a parcel delivery business model, one that overlooks all delivery networks in Benelux. Not only did this include your usual parcel deliveries like an online shopping purchase, but specialized parcels as well: foods, pharmaceuticals, and diamonds, for instance.
With the shift to parcel delivery, de Jonge has seen his team grow from 5 people to 50 and his application portfolio jump from 10 apps to 100. The applications were all point solutions—designed to solve a specific business problem—which, in the long run, is an unsustainable way to address rapid growth. They needed to look at and revise their total logistics application landscape.
Delivering a low-code digital transformation in logistics
The massive job of revising the entire application landscape was more than PostNL’s IT team was equipped to tackle. de Jonge first looked for solutions external to PostNL but decided that they needed to build something themselves. Without the proper software engineering experience, a low-code development platform was the next logical step for de Jonge. “Since we didn’t have a software engineering capability ourselves,” he says, “Mendix or low-code was a logical option to look at. So that’s how we ended up looking at Mendix and we are now building the core of our logistics systems based on Mendix.”
By leveraging microservices architecture with Mendix, PostNL was able to re-platform its core supply chain system. The results of this new massive environment have had a profound impact. Last year, PostNL delivered around 250 million parcels, a 20% increase from the year before. Per parcel, there are 18 events or touchpoints. That equals out to roughly 10 million transactions a day. de Jonge’s team also built an app that allows its 4.5 million users to follow parcel delivery and re-route it if necessary.
Leveraging microservices architecture with Mendix, PostNL was able to re-platform its core supply chain system.
For Dubreuil and Canada Post, they had had a 9% e-commerce penetration in Canada, a low figure compared to other countries. Still, Canada Post’s parcel business was growing 25% year on year. The effects that such growth had on IT were beginning to show. Dubreuil needed IT systems to scale out, and they needed to do it fast.
So Dubreuil decided to do it differently than they had done in the past.
Dubreuil implemented agile in the development team, but given the scale of the Canada Post’s digital transformation initiative, the old traditional development methods didn’t jive with agile. Dubreuil identified Mendix as the development tool of choice because it aligned with their new agile project management methods, and it allowed them to rebuild Canada Post’s core system.
Putting trust into the hands of a new way of working was a bit nerve-wracking for the development team, who were used to having their hands on a keyboard, coding away. Dubreuil took a leap of faith and had the team start using Mendix to refactor Canada Post’s addressing system.
“That’s the heart of what we do,” Dubreuil says of the address system. “Those systems are 20 years old, and they cannot support our ambition in terms of what we want to do for going into the parcel business.” The obsolete address system wasn’t GPS compliant—there was not dynamic routing capability that would better service delivery agents’ needs.
Canada Post is a big Siemens shop. To Dubreuil, the Siemens-Mendix merger was a match made in Heaven for them because they could manage their applications at the IT level as well as the OT level. Mendix’s holistic management capability gave Canada Post the opportunity to, as Dubreuil puts it, “accelerate our transformation to agile, to DevOps, and leverage a local platform to be faster, cheaper, and actually get to market so that we can leverage the parcel opportunity.”
Addressing the culture shift
With both companies going through massive digital transformations, scaling out their application development programs and processes, they both realized that it’s more than just technology. It’s about the people, the makers in IT and the business, working together.
It’s not just another tool. It’s another way of working
de Jonge introduced agile to the organization and instituted DevOps practices. “We flipped our organization from a project-based approach to team-based,” he says. That required a whole reorganization. Historically, digital transformation initiatives only have a 30% success rate. What’s helped PostNL with its successful digital execution is the combination of agile and low-code development, because you can quickly deliver and show results to the business and your customers.
“It’s not just another tool. It’s another way of working,” de Jonge says.
Dubreuil expressed a similar take on digital transformation. “We may consider [just buying another tool]. Just do the contract, bring in the tool, give it to your team. It’s going to work. Wrong. It’s not going to work. Your people need help … So we move them from waterfall to agile, train everybody in 3 months in agile. Just training is not enough. They need to know how to now work in a different way.”
Dubreuil did not underestimate the level of change management and hand-holding that would need to happen. For her, that’s where Mendix fits well, giving Canada Post a new way of working.
With Mendix, the Canada Post team‚—including those with barely any IT experience—were empowered to start building apps. Low-code development allows people to take their knowledge of the product, come up with a solution to a problem, and go make it.
This post has been updated. It was originally published on June 11, 2019.