The purpose of this white paper is to point out the main challenges of postal and CEP suppliers and what kind of capabilities companies require to stay competitive in this rapidly changing market. PAC conducted a number of interviews with business decision makers from Strategy & Innovation, Marketing, Pricing and Financial departments as well as IT managers in order to obtain the whole spectrum of the changing requirements and market drivers influencing the organization, processes, and finally IT systems. Numerous examples will provide you with insights into how diversified the market and its services already are and what impact this has on the internal processes of companies in this sector.

1. White Paper
A Question of Survival: How Postal &
Courier Express Parcel Companies
are Transforming their Business
Models
• Challenges of Postal & CEP Companies
• A Selection of Innovative Solutions to meet these
Challenges
March 2012

2. White Paper
Postal & Courier Express Parcel Companies
March 2012
Table of Contents
1. Introduction........................................................................................................................ 4
2. Executive Summary .......................................................................................................... 4
3. State of the Postal & CEP Industry.................................................................................. 5
4. Major Common Challenges and Trends in the Postal and CEP Industry .................... 6
4.1.
Market Liberalization .................................................................................................................6
4.2.
Technological Change...............................................................................................................7
4.3.
Changing Consumer Behavior ..................................................................................................7
4.4.
Compliance With Regulations ...................................................................................................8
4.5.
IT Challenges ............................................................................................................................9
5. Responses to Challenges: Diversification and Innovation......................................... 10
5.1.
Business Diversification ..........................................................................................................10
5.2.
Save Costs – Raise Efficiency.................................................................................................14
5.3.
Reorganization of Business Processes ...................................................................................14
5.4.
Sustainability ...........................................................................................................................15
5.5.
Diversification vs. Core Business ............................................................................................16
6. DPD – Success Story ...................................................................................................... 17
7. Conclusion ....................................................................................................................... 19
8. About SAP........................................................................................................................ 20
© PAC 2011
www.pac-online.com

3. White Paper
Postal & Courier Express Parcel Companies
March 2012
Table of Figures
Fig. 1: Major business challenges for postal and CEP companies impacting the business
model.......................................................................................................................... 6
Fig. 2: Contribution of postal services, parcel services and banking to the overall revenue of
La Poste in 2003 (inner circle) and 2010.................................................................... 7
Fig. 3: Highly secured end-to-end shipping process ............................................................. 9
Fig. 4: Classification of selected postal and CEP suppliers ................................................ 10
Fig. 5: How strongly are these challenges influencing your current business? (answers from
interviews conducted with big postal and CEP companies) ..................................... 15
© PAC 2011
www.pac-online.com

4. White Paper
1.
4
Postal & CEP Sector
March 2012
INTRODUCTION
The purpose of this white paper is to point out the main challenges of postal and
CEP suppliers and what kind of capabilities companies require to stay
competitive in this rapidly changing market. PAC conducted a number of
interviews with business decision makers from Strategy & Innovation, Marketing,
Pricing and Financial departments as well as IT managers in order to obtain the
whole spectrum of the changing requirements and market drivers influencing the
organization, processes, and finally IT systems. Numerous examples will provide
you with insights into how diversified the market and its services already are and
what impact this has on the internal processes of companies in this sector.
The graphs presented in this white paper provide you with the most important
trends. However, they do not fulfill statistical investigation rules, they rather
provide a deep insight into the challenges and resulting business models/
services.
2.
EXECUTIVE SUMMARY
The challenge which the postal sector is facing is that competition is increasing
through market liberalization. At the same time markets and competitors are
becoming more international and long-standing business models have come
under pressure from new digital opportunities. Postal service providers are
therefore obliged to actively adapt to change, as their traditional mail business
has been declining for many years.
The CEP market is a rather fast growing sector, profiting from the ongoing
increase in international trade. In addition, the online retailers gaining ground are
generating further growth in the national and international parcel segment.
Competition is intensifying and thus there is a need to enhance and change
business models, by creating new services. This shift is pushed and enabled by
the use of modern technology.
In this white paper you will find a number of examples describing the
diversification
process
in
this
rapidly
changing
industry
and
some
recommendations on how to expand the business portfolio. The paper is
complemented by a case study of DPD GeoPost (Deutschland) GmbH, a
company that managed to streamline its applications for changing business
needs.
© PAC 2012
www.pac-online.com

5. White Paper
3.
5
Postal & CEP Sector
March 2012
STATE OF THE POSTAL & CEP INDUSTRY
Postal institutions are part of a regionʼs capital infrastructure and transportation
networks. The companies have an intermediary role and effect the exchange of
goods, information and money between consumers and companies as well as
social communication.
Courier Express Parcel (CEP) services mostly operate distinctly from traditional
postal services, providing a higher level of speed and reliability. The main tasks
of courier services are the seamless and efficient coordination of collection,
transportation and delivery of all kinds of items. They have explored and
developed a niche for urgent exchange of physical communications, making it
into a billion-dollar global business.
Postal and CEP services are part of the fabric of peopleʼs daily lives. Even in the
digital and electronic age, postal and CEP remain the most accessible means of
communication, parcel and message delivery available. Since the mid-1990s, a
wide variety of influencing factors have caused postal services to re-think their
role in the communications market. Impacts such as direct and indirect
competition, the privatization of postal services, especially in industrialized
countries combined with the separation of operator and regulator roles, customer
demand for better and more reliable products, as well as the emergence of new
communication technologies, have forced postal services to change their
operational and financial strategies in order to remain competitive.
In an increasingly liberalized market, postal and CEP services have become
more vulnerable. At the same time, opportunities have arisen to exploit new
markets by taking advantage of technological advances.
© PAC 2012
www.pac-online.com

6. White Paper
4.
6
Postal & CEP Sector
March 2012
MAJOR COMMON CHALLENGES AND
TRENDS IN THE POSTAL AND CEP INDUSTRY
4.1. Market Liberalization
The European Union, for instance, will have completely deregulated the postal
sector by 2013. In this liberalized market, the main challenge for the legislator
and postal companies is to create the preconditions that will make it possible to
continuously guarantee high-quality, self-financing basic postal and logistics
services.
In recent years postal companies worldwide have been forced into reforms by
the emergence of the private sector as a dominant force in the transportation
and communications sector. In addition, lobbying groups composed of private
couriers claimed that a level playing field was needed, and thus actively pushed
the reduction of the postal monopoly.
The most important point confirmed by all interviewees is that an open postal
and CEP market leads to more players in the market and cut-throat competition,
and thus forces the players to meet the rapidly changing buying behavior of their
customers, reduce costs and drive innovation at the same time. The increase in
HR costs, which is the case in many countries, can hardly be offset by pricing
measures.
Lower Margins!
Market
Liberalization!
Technological
Change!
Cost Cutting
Issues!
Business
Model
Innovation!
Changing
Customer
Expectations!
Compliance
Regulations!
Globalized
Markets!
Sustainability!
© PAC 2012!
Fig. 1: Major business challenges for postal and CEP companies impacting the
business model
© PAC 2012
www.pac-online.com

7. White Paper
Postal & CEP Sector
March 2012
4.2. Technological Change
7
Rapid technological change has enabled a huge variety of new services through
all kinds of channels. Some harbingers have created new services, which forces
the whole industry to be innovative as well and make use of these new solutions.
Mobile technology has made it possible to handle any kind of service from
mobile devices. The creation of digital signatures makes it possible to handle
and authorize all kinds of mail online. With the USPS (United States Postal
Service) for example, the customer can personalize and buy stamps online and
via mobile devices. Not least of all, consumer habits have forced postal and CEP
companies to change their business models and diversify their offers.
4.3. Changing Consumer Behavior
Customer demand for simple solutions is further increasing. There is also a
“We cannot just sell
stamps.”
growing focus on traditional values, such as quality, reliability and security, not
least through compliance regulations. The “digital natives” are increasingly
“Lawmakers should
grant this agency
greater flexibility to
target new revenue
streams and also
control operating
costs”
influencing business models, communication channels and the service level
agreements of postal and CEP services offerings. For some time now, changing
customer needs have increasingly challenged many postal services. This is
particularly evident in the decline in over-the-counter business. From 2006 to
2010, USPSʼ overall mail volume dropped by 20 percent, from 213 billion pieces
of mail to 170 billion1. The following graph shows the change in the business of
Jack Potter, United States
Postmaster General
La Poste Group in France from 2003 to 2010.
Revenue 2010:!
€20.9bn!
23.0%!
52.1%!
24.9%!
Revenue 2003:!
€18bn!
18.1%!
58.9%!
Postal Services!
Parcel Services!
Bank!
23.0%!
Source: La Poste
Fig. 2: Contribution of postal services, parcel services and banking to the overall
revenue of La Poste in 2003 (inner circle) and 2010
1
© PAC 2012
Source: USPS
www.pac-online.com

8. White Paper
Postal & CEP Sector
March 2012
Traditional physical postal and payment transaction services in many areas are
subject to pressure from new electronic alternatives, such as email, text
8
messaging, e-banking/mobile banking and social media. The digitalization of our
everyday lives is being driven by the exponential development of technology,
such as processor and memory capacity, bandwidth, wireless communications
and mobile devices. This is leading to increased efficiency and a steady
reduction in the threshold for replacing physical data media.
The diversification of the market and new technologies enable new services to
be offered to customers. In order to stay competitive, it is necessary to integrate
services in bundles, which is a further move to diversification. The bundling of
services results in a requirement to optimize the pricing and rating of services;
pricing must be as flexible as possible to meet customer expectations and
business goals. Some services also include partners that deliver content or
services; sophisticated revenue sharing models are necessary to ensure
payment of partner commissions and royalties.
In addition, billing and invoicing processes must be optimized to manage the
transaction volume resulting from the introduction of new services and bundles.
Enterprise customers need an immediate response within 24 hours to requests
for quotes, and expect highly personalized services.
4.4. Compliance With Regulations
Another challenge is the interplay between competition and the basic service, i.e.
the need to fulfill not only the requirement of the legislator and the government to
provide a basic nationwide service, but also international compliance standards.
After 9/11, postal and CEP providers are no longer allowed to deliver items to all
countries in the world. Moreover, every item sent must be traceable. A parcel is
initially checked by cross-checking with terrorist lists. Then the freight will be
picked up at the supplierʼs site (only indoor) and every single step is checked
and documented via scan. Track and trace requires modern technology solutions
and, in the best case, scanning of various different items from different suppliers
can be done from only one device. The billing of the service takes place after
parcel delivery.
© PAC 2012
www.pac-online.com

9. White Paper
Postal & CEP Sector
March 2012
Security
check of the
parcel!
9
scanning!
Send to the receiver!
scanning!
Sender:
Company / Private
Customer!
Hub!
Shipments!
Receiver!
Send to the hub!
scanning!
scanning!
Only in-house pickup and scanning
at customerʼs site!
Only after the final
delivery and last
scanning the bill
will be processed.!
Fig. 3: Highly secured end-to-end shipping process
4.5. IT Challenges
Many postal and CEP suppliers have a highly heterogeneous IT landscape, with
multiple solutions from different IT suppliers, combined with homegrown IT
solutions. In addition, many companies have decentralized IT systems or are in
the process of centralizing the solutions. Compliance to regulations needs to be
reflected in business applications. With the rapid evolution of products and
services, IT needs to support their introduction to the market and most
importantly support all kinds of customer-oriented processes.
A customer-centric approach implies the use of CRM solutions, which especially
in the postal and CEP industry need to integrate all marketing/sales channels.
CRM solutions can be leveraged to help offer the most appropriate quotes and
pricing for each customer. Finally, effective billing/charging and revenue and
expense management solutions as well as partner financial management need
to be in place and integrated into the ERP systems. In order to be able to
perform seamless billing, an integrated end-to-end solution is required including
pre-paid and post-paid charging models. Many billing applications have been
built in-house so far and require modifications or even replacement in order to
support new business models and help maintain competitive advantage in the
long term.
© PAC 2012
www.pac-online.com

10. White Paper
5.
10
Postal & CEP Sector
March 2012
RESPONSES TO CHALLENGES:
DIVERSIFICATION AND INNOVATION
5.1. Business Diversification
Postal operators are diversifying in two ways – by products and services or
geographically. Many players add new services to their core business or even
innovate their core business services by using new technologies. Postal
operators can be classified according to their chosen mix of diversified services
(financial, CEP, government services, mobile services, direct marketing, etc).
Deutsche
Post /DHL
Poste
Italiane
La Poste
Austrian
Post
Swiss
Post
TNT
DPD
Mail
27%
18%
52%
59%
32%
56%
8%
Parcels
21%
5%
23%
24%
7%
41%
75%
Logistics & Freight
27%
-
-
10%
5%
-
10%
Telecommunication
-
1%
-
-
-
-
-
Postal Financial
Services
*
74%
25%
-
27%
-
-
Online Services
< 1%
1%
-
-
-
-
-
Others
25%
1%
< 1%
7%
29%
3%
7%
International
Business
68%
n.a.
n.a.
31%
14%
32%
Classification
* Deutsche Postbank generated about 15% Deutsche Post's revenue before it was sold to Deutsche Bank
24%
© PAC 2012
Fig. 4: Classification of selected postal and CEP suppliers
CEP
Competition is becoming more intense in the national and international CEP
market, leading to growing pressure on prices. Business customers are
especially sensitive to prices, but continue to expect a high level of quality. The
parcel sector continues to evolve in a very competitive environment. Posts in
many countries have seen their domestic and international parcel volumes grow
for over a decade, in particular thanks to quality-of-service improvements and
eCommerce developments. In the European Union (25 states) the number of
domestically sent parcels increased by 43% from 2000 to 2010. Private
operators own a large share of this market. Standardization of parcel sizes and
weights has resulted in higher volumes.
The CEP market as a whole has huge growth potential, which will be enhanced
by the increase in cross-border commerce. AT Kearney, for instance, expects an
© PAC 2012
www.pac-online.com

11. White Paper
Postal & CEP Sector
March 2012
annual increase of the CEP market in Europe by 4%2. Other industry analysts
forecast a CEP CAGR (compound annual growth rate) from 2005 to 2015 in Asia
of 15%. The challenge for CEP companies is to convert customersʼ global
11
procurement requirements into new, profitable value-added business models.
TNT, a global express, logistics and mail services company, was able to respond
to the need for flexibility by diversifying and proposing new services, such as the
transport and exchange of hard disks. The company also provides an on-site
repair service for computers with the delivery of spare parts at the same time.
The partner engineer is instructed by TNT and goes to the customerʼs site,
repairs the computer and returns e.g. the hard disk. Another example is the pickup of a flat-screen television, its transportation to the company where it is
repaired and the subsequent redelivery to the customer. The partnerʼs share of
service revenue needs to be calculated in the pricing/charging of the service and
finally payment needs to be made to the partner. Depending on the customerʼs
requirements and priorities, the pricing model is different. Some customers want
prices to be calculated by total time, some want to have travel costs calculated
by distance, other services are charged at a flat rate including any hardware
parts. These highly complex processes require a flexible pricing/rating and
charging model, in order to fulfill a multiplicity of pricing models.
TNT has developed a further value-added service in order to create another
revenue stream, which is called the “Clinical Express” service for doctors and
laboratories: For instance, blood samples must be shipped nationally and
internationally at a certain temperature level in a strict and highly secure
timeframe. This service is of high value and can thus help finance other service
developments. The service can be booked online, via e-mail or SMS, is
traceable at any time and guarantees delivery on time. Included is the parcel kit,
which guarantees the stable conditions required by blood. This service
represents an add-on business, in a high-value segment and needs to be
integrated in the whole pricing/billing structure.
Financial Services
Many postal companies have set up financial services in the last two decades, in
order to diversify their business models. The French Banque Postale for
example generated revenues of about 5 billion Euros in 2010 and contributed
over 25% to the revenue of La Poste Group. The bank has approximately 10,000
branch outlets in France.
However, the financial crisis has had a marked impact on the financial sector in
recent years. The continuing high level of customer demand for financial
2
Belgium, Germany, France, UK, Ireland, Italy, Netherlands, Poland, Russia, Spain, Sweden,
Switzerland, and Turkey
© PAC 2012
www.pac-online.com

12. White Paper
Postal & CEP Sector
March 2012
services provided by postal companies in spite of the crisis is a clear sign of the
considerable trust that postal financial institutions enjoy.
12
In Switzerland, PostFinance is doing everything it can to retain this trust. The
company plans to exploit the market and cost potential on both sides of the
balance sheet in order to further strengthen Swiss Postʼs most profitable pillar of
income. Swiss Post intends to continue focusing on fundamental customer
needs in retail finance and specifically aims to expand its business activities
within the specified framework. The Swiss PostFinance offers a (pre-paid)
method of payment. With a PostFinance account, the retailersʼ customers pay for
their purchases directly from their computer or mobile phone. In addition, the
company offers customers an e-bill. This solution allows the customer to send
invoices electronically to private and business customers, without any media
discontinuity and without incurring printing and postage costs.
These are only two examples of diversified service offerings of postal financial
services. Existing IT solutions have frequently been homegrown so far and the
implementation of processes to reflect new pricing and billing models have
resulted in high maintenance costs.
Communications market
Private as well as business customers are increasingly using electronic media to
communicate. This has resulted in a long-term drop in traditional mail volumes,
particularly letters, and declining demand for conventional post office services.
For instance, La Poste has estimated a decline in revenue from traditional mail
of 30% by the year 20153. The industry is experiencing growing pressure on
margins and a need for pricing flexibility, and must thus develop new services to
retain customers.
In order to compensate for the declining volumes in traditional mail, German
Post offers the E-Postbrief, which is an online postal service where everyone
can send secured letters via e-mail. The customer needs to register online and
afterwards identify himself at a Deutsche Post retail outlet with a passport or
identity card. After successful registration the user can send letters online, but
these can also be transferred to the recipient in a printed version in case the
recipient has not yet signed for the E-Postbrief. This service is also offered for
registered letters. The launch of this new service has required changes to the
pricing model, especially for the bigger B2B customers. Volume discounts must
be calculated differently, a different price is applied if letters are sent online or
offline. Through a gateway connection large customers can negotiate loyalty
discounts for high volumes.
3
© PAC 2012
Source: Le Monde, 24/05/11
www.pac-online.com

13. White Paper
Postal & CEP Sector
March 2012
Another example is Poste Italiane. The company has become a mobile virtual
network operator (MVNO) through its PosteMobile solution and has enriched its
13
service portfolio by providing a new access channel to its services, such as bill
payments, telegrams or micropayments. The services include pre-paid and postpaid voice, Internet, M-banking (mobile banking) or gaming and M-commerce
(mobile commerce) solutions. The new sales channels will increase the volume
of transactions handled in the pricing, billing and financial management systems.
“Like all postal
services, we are
seeking to leverage
the potential value of
the postal network.”
Jean-Paul Bailly, CEO of the
La Poste group
La Poste has also created a new revenue stream in the telecom business lately.
The company has decided to develop its La Poste Mobile offering (as the 10th
MVNO on the SFR network). To this end, a joint venture majority-owned by La
Poste was created in 2011. The companyʼs differentiator is to create simple prepaid and post-paid rate plans in the mobile business. Instead of developing its
own service delivery platform, the group created a joint venture with Debitel.
Media services / content services
Media services complete the portfolio of some postal suppliers, such as the
Swiss Post. With a holistic approach to media management, Swiss Post helps its
customers
implement
communications
across
all
channels
efficiently,
consistently and on time.
The advantage is consequent cost savings across all communication channels
with media management.
Swiss Post analyzes the customersʼ processes and communications in order to
develop new media concepts for production management and purchasing
processes of physical and electronic marketing materials. This means in detail:
§
Identification of potential cost savings based on cost, process and product
analysis,
§
Optimization
of
processes
and
products
throughout
the
customer
communication,
§
Pre-press and pre-media services, such as typesetting and layout design,
§
Professional purchasing and vendor management for the adoption of holistic
procurement of promotional material,
§
Coordination of communications campaigns across multiple channels,
§
Permanent supplier evaluation and performance monitoring.
The media management offering enables visibility and security with individually
agreed service level agreements. Swiss Post needs to integrate this offer into
the overall pricing and billing process to the customers.
The La Poste group offers direct marketing and electronic archiving services to
small and medium-sized businesses with its Maileva offering.
© PAC 2012
www.pac-online.com

14. White Paper
Postal & CEP Sector
March 2012
5.2. Save Costs – Raise Efficiency
14
As mentioned above, driving out operational costs is a necessity, due to market
liberalization and to the number of new market entrants. Customers demand
lower costs while expecting improved quality of service.
This leads to further investments in services and communication platforms like
the “Post Manager” of Austrian Post. This investment has enabled Austrian Post
“Enhancing our service
offering and including
partners is as important
as delivering highly
secure services to our
customers.”
Mag. Mirjam Teicht,
Austrian Post
to compensate the declining revenues in traditional mail business. Austrian Post
collects all the invoice data of a customer, be it from telephone, television or
Internet providers, on one platform and thus makes it easier for the customer to
pay bills from a single platform and compare prices with other suppliers.
Customers can archive their sensitive documents on the Austrian Post platform,
accessible via official legal digital signature. This makes the whole process less
cost-intensive and thus Austrian Post can remain competitive in the long term.
Especially when it comes to higher volumes, the pricing structure of such
services needs to meet customer expectations and enable offers to be
personalized for each customer.
5.3. Reorganization of Business Processes
New services, sales channels or partner networks require new business and
logistics processes that need to be permanently streamlined in order to work as
efficiently as possible. Poste Italiane for instance has implemented a new
logistics platform and also integrated its partner UPS into the supply chain. This
way the company has been able to ensure real-time monitoring of every single
“Poste Italiane has
tremendously changed
towards a multi-services
company during the last
decade. Our ICT
systems had to cope
with this rapid change.”
Stephano Sappinos,
Poste Italiane
item/service within its logistics chain from order entry, processing, sorting to lastmile delivery. The company is now able to provide full reporting to end
customers and finally initiate the billing process as the services are fulfilled.
Especially when it comes to handling all customer interactions from pricing,
delivery, billing to customer care, an integrated approach is necessary to ensure
a 360° view of the customer within the organization. Systems and processes are
required which can easily streamline complex pricing, rating, charging and billing
processes. Organizations need to be prepared to process high volumes of
micro-transactions associated with payment for these diversified services.
© PAC 2012
www.pac-online.com

15. White Paper
Postal & CEP Sector
March 2012
New Business Models/
Partner Networks
15
Compliance Regulations
Reorganization
New Territories
Cost-Saving Issues
Technological Innovation
Declining Prices and
Margins
Changing Buying
Behavior
Market Liberalization
New Competitors
0%
10%
very strong
20%
30%
strong
40%
50%
weak
60%
70%
very weak
80%
90%
100%
© PAC 2012
Fig. 5: How strongly are these challenges influencing your current business?
(answers from interviews conducted with big postal and CEP companies)
5.4. Sustainability
Postal companies also need to identify opportunities to continue their efforts to
promote sustainability by acting in an environmentally friendly and socially
responsible manner. Many postal and CEP organizations are convinced that, in
the future, successful companies will increasingly be those that are tangibly and
quantifiably committed to society and the environment.
GoGreen, DHLʼs program for environmental protection is part of Deutsche Post
DHLʼs corporate strategy. The company committed to improving the CO2
efficiency of its own operations and those of its transportation subcontractors by
30% by 2020, compared to a 2007 baseline. In 2010, DHL started piloting
86 electric vehicles to set logistics standards and reduce their dependency on
fossil fuels.
The main goals are to achieve transparency of the environmental impact, with a
focus on the carbon footprint. Furthermore, the company aims to generate value
by offering green solutions to customers. DHL wants to demonstrate leadership
in fostering green technologies by mobilizing employees in strengthening their
environmental knowledge and helping them engage in environmental protection.
Swiss Post also reduced emissions in 2010 and 2011 through the rail transport
of mail and the use of hybrid postal cars as part of its sustainability initiative.
DPDʼs “Total Zero” program for instance is a carbon neutrality commitment that
will be made available to its customers in its five major markets from July 2012.
© PAC 2012
www.pac-online.com

16. White Paper
Postal & CEP Sector
March 2012
This way, DPD will ensure that every parcel sent via its network will be carbon
neutral with no extra costs to its customers.
16
5.5. Diversification vs. Core Business
Especially in the postal and CEP industries, which are still in the process of
liberalization, one of the main questions is whether a company should diversify
or stick to its core business. Diversification can take the form of new services
and new markets or geographic expansion.
For a purely public postal company facing weakening traditional mail services,
the choice seems to be clear, yet the question remains which way to go. And for
an already diversified company there is still the question of consolidation or
further expansion.
Generally there are four dimensions that need to be considered when thinking
about expanding the business:
§
Market size: How large is the market for value-added services such as the
pick-up of a TV, its transportation to the repair service and its delivery back
to the customer?
§
Market growth: What are the expected growth rates in this market in the
next 5 to 10 years? Reflecting market risks, such as further regulations,
market shift (print à online). Customer buying behavior.
§
Market penetration: How many other players are already active in this
market? Is it rather a niche market or a highly competitive area, with
declining prices and low margins?
§
Capability: Does the company have the capacity, such as market
knowledge, personnel, technological know-how and, finally, the financial
stability to enter a new market? Is there a (stable/potential) partnership in
order to make this kind of investment?
For each new market segment the whole picture needs to be drawn before
taking a decision. If, for instance, a company intends to enter the German CEP
market it needs to be aware of the following parameters. The market is
comparatively mature, shows growth rates above GDP. But market penetration
is very high and thus the company would need massive capacity or very good
partnerships in order to enter this market.
© PAC 2012
www.pac-online.com

17. White Paper
6.
17
Postal & CEP Sector
March 2012
DPD – SUCCESS STORY
About DPD
With the shipment of 2.5 million parcels a day DPD is a leading international
provider of parcel and express services. The company has the most efficient
road network in Europe and delivers to 230 countries worldwide. Customers can
choose services from an extensive product range of national and international
parcel and express services for business and home deliveries. A workforce of
24,000 and 18,000 vehicles operate at more than 800 locations. The majority
shareholder in DPD with 83.32% shareholding is the GeoPost Group, a whollyowned subsidiary of French Groupe La Poste. With a consolidated turnover of
3,440 billion Euros in the year 2010, GeoPost is currently Europe's secondlargest provider of express parcel services.
DPDʼs business and IT challenges
In order to stay competitive, the company has had to deal with some challenges:
First of all, the German business unit DPD GeoPost (Deutschland) GmbH has
about 45 subsidiaries, many of them handling their own IT, as well as
pricing/charging and billing systems. This led to inefficient and cost-intensive
business processes besides a largely decentralized and thus cost-intensive IT
landscape. Moreover, it was difficult to set up and maintain common compliance
regulations with all subsidiaries.
Customer data were redundant or inconsistent and resulting in inefficient, partly
manual handling of the order-to-cash process.
At the same time DPD was (and still is) launching innovative new services to
fulfill the needs of the dynamic online markets. These services and their revenue
stream need to be integrated in the existing pricing, billing and finally accounting
systems.
DPDʼs solution
In order to obtain maximum ROI from the investment, DPD created a
comprehensive project plan for implementation, testing, and roll-out. The new
system was rolled out to a few subsidiaries at a time to keep the risk of business
disruption to a minimum. As the centralization of the processes caused a
restructuring of staff, efficient change management was needed.
In order to achieve potential savings and efficiency increase, DPD replaced its
homegrown billing application by standard software. Through the integration and
adaptation of SAP software, DPD has standardized and automated its order-tocash processes.
Using the SAP ERP application as its integrated solution base, DPD centralized
45 software instances and databases into a single software solution. Replacing
© PAC 2012
www.pac-online.com

18. White Paper
Postal & CEP Sector
March 2012
DPDʼs proprietary billing application with the SAP for Telecommunications
solution was quite unusual but effective. Telecommunication companies use the
18
same services-oriented basis for billing as DPD. So, the solution was perfect,
with SAP Consulting customizing and enhancing the industrial solution portfolio
to the specific shipping needs of DPD.
DPD now relies on process integration within its finance and accounting activities
as well as on integration with other areas, such as marketing & sales, as well as
on pricing and billing. The sophisticated authorization concept allows the
accounting team to execute any task from any subsidiary and the company has
gained new flexibility in process reengineering.
Operational benefits
“Integrated and
standardized business
processes generate
greater value while
lowering costs at the
same time.”
Martin Bäcker,
DPD GeoPost (Deutschland)
GmbH
The increase of revenue generated through improved processes and new IT
systems was estimated at approximately 0.25%-0.5% as a result of centralizing
data management and improving data quality. The new systems provide
significantly higher data quality and transparency by introducing fully automated
data flows. In addition, the improved business analytics enable reporting across
subsidiaries and finally the possibility to detect further possibilities for
improvement.
There are indeed positive effects of more satisfied customers using the e-billing
services. Benefits actually concern many parts of the DPD organization and
finally lead to better service to customers.
Cost reduction
A flexible IT foundation has been created, which supports future business
challenges and organizational and logistical changes. Harmonized data, a
reduced number of applications and automated processes also lead to lower IT
costs, among others gained through centralizing several software instances and
databases into one integrated solution.
DPD managed to save about 0.2% in terms of total revenue by automating the
billing process and reducing the IT infrastructure costs. Manual corrections of
data inconsistencies are no longer necessary.
© PAC 2012
www.pac-online.com

19. White Paper
7.
19
Postal & CEP Sector
March 2012
CONCLUSION
As demonstrated above, the postal and CEP industries are among the fastest
changing sectors in the world. Market drivers lead to diversification, fundamental
changes in service offerings and pricing, which require new models to ensure
survival.
Successful postal and CEP companies are diversifying their business and
adopting customer-centric strategies that enable their organizations to have a
360° view of the customer across all channels. As they change their business
models and introduce diversified services including online and on-demand
services, their existing legacy applications are frequently too inflexible to support
the rapid introduction of innovative services.
As they streamline their operations and roll out new service offerings, postal and
CEP companies should consider adopting flexible pricing, billing and revenue
management solutions which can easily be integrated into their existing
applications portfolio.
Further technological change and the increase in the use of Internet technology
will further push this transition phase in the postal and CEP industries. New
investments in innovative solutions supporting these changes are a key success
factor of companies in order to stay competitive and survive.
© PAC 2012
www.pac-online.com

20. White Paper
8.
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Postal & CEP Sector
March 2012
ABOUT SAP
Optimize resources and logistics for streamlined operations with SAP
Solutions for Postal Services
SAP can help postal services organizations provide comprehensive customer
service and tightly coupled logistical processes – resulting in reduced costs,
increased productivity, and streamlined operations. Our software can help you
tighten and fine-tune processes across various lines of business so you can
deliver a higher level of customer service.
SAP Next Generation Billing provides a centralized rating platform for mail, and
Courier, Parcels and Express Services (CEP). The platform, which consists of
applications for convergent charging, convergent invoicing, and customer
financial management, enables you to streamline your consume-to-cash
process. Combined, these applications form a sophisticated next-generation
billing platform, enabling mail and CEP companies to efficiently manage
payments, collections and accounting – optimizing financial care for large
volumes of customers and transactions and scale with their business.
Complex revenue sharing with both up- and downstream partners can be easily
managed while deploying elements within existing IT software landscapes –
adding value where it is needed most and providing companies with the reliability
and efficiency they need to manage billing and real-time payments across a
diverse matrix scenario.
The IT department is empowered to react faster and to fully support marketing
requirements taking new services to market faster due to its integrated support
of the complete customer financial lifecycle, out-of-the-box integration, support
for third-party invoicing and automated receivables management processes.
SAP offers an integrated, end-to-end rating, charging and billing platform from
customer enrolment with multi-channel CRM, pricing and offer management to
service delivery and payment of services delivered.
On the logistics side, SAP Transportation Management (TM) can help reduce
transportation costs, and improve flexibility and efficiency. SAP TM supports
integrated storage, fulfillment, and transportation processes with no data
redundancy and reduced integration risk. The traceability and visibility of orders,
shipments, items, and CEP processes are in the same environment.
Especially diversified postal organizations can take advantage of SAPʼs
experience and solutions across 25 industries ranging from Banking, Insurance,
and Telecommunications to Retail.
As market leader in enterprise application software, SAP (NYSE: SAP) helps
companies of all sizes and industries run better. From back office to boardroom,
© PAC 2012
www.pac-online.com

21. White Paper
Postal & CEP Sector
March 2012
warehouse to storefront, desktop to mobile device – SAP empowers people and
organizations to work together more efficiently and use business insight more
21
effectively to stay ahead of the competition. SAP applications and services
enable more than 176,000 customers (includes customers from the acquisition of
Sybase) to operate profitably, adapt continuously, and grow sustainably.
For
more
information,
visit
http://www1.sap.com/software/next-generation-
billing.epx
Twitter: @SAP_NextGenBill
© PAC 2012
www.pac-online.com

22. OUR LOCATIONS
22
CONTACT
Author:
Martin Barnreiter
Principal Consultant
+49 (0)89 23 23 68-19
Email: m.barnreiter@pac-online.com
Published by:
Pierre Audoin Consultants (PAC) GmbH
Holzstrasse 26
80469 Munich, Germany
Tel: +49 (0) 89 232 368-0
Fax: +49 (0) 89 719 62-65
Email: info-germany@pac-online.com
ABOUT PIERRE AUDOIN CONSULTANTS
From strategy to execution, PAC delivers focused
and objective responses to the growth challenges of
Information and Communication Technology (ICT)
players.
Founded in 1976, PAC is a privately held research &
consulting firm for the software and ICT services
market.
PAC helps ICT vendors to optimize their strategies by
providing quantitative and qualitative market analysis
as well as operational and strategic consulting. We
advise CIOs and financial investors in evaluating ICT
vendors and solutions and support their investment
decisions. Public institutions and organizations also
rely on our key analyses to develop and shape their
ICT policies.
For more information, please visit
www.pac-online.com.
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