Wu Choy Peng, Group CIO of NOL
Headquartered in Singapore, Neptune Orient Lines (NOL) is a global container shipping, terminals and logistics company. Its container shipping arm, APL, provides world class container shipping services and intermodal operations. APL Logistics offers international end-to-end logistics services and solutions. NOL’s terminals unit has facilities in Asia and North America. This publicly held company employs more than 10,000 employees all over the world.
According to NOL, the company’s group IT has been building an agile IT environment, introducing measures that extend beyond systems enhancements over the past few years. These measures represent bold new ways of positioning IT as a partner in transforming business and delivering cost-effective business solutions, achieving differentiation for NOL in the transportation and logistics industry.
The REMODEL programme
NOL Group IT’s overarching plan to transform the company’s IT environment is known as the “REMODEL” programme.
REMODEL stands for ‘Replacement and Modernisation of Legacy Systems’. According to the shipping company, the programme represents the strategic intent to build a solid business-IT foundation, delivering new capabilities that will lead to growth and industry leadership in innovation, customer experience and service excellence was launched in 2007. Whose brainchild was it? “I wouldn’t say it is one person’s brainchild,” confessed Ms Wu Choy Peng, Group CIO of NOL. “There was a clear consensus that this was something the company needed to undertake.”
According to Choy Peng, NOL started working on the strategy and the roadmap of REMODEL in the first half of 2007, and went to the board for approval in August that year.
“I must say that the NOL IT systems today are still amongst the best in the shipping industry in terms of their functionalities and capabilities,” said Choy Peng when asked about the need to start this specific programme. “But like all other companies, and the shipping industry in particular, our systems were developed many years ago. Obviously, there is a need for change so that we can respond to the changing demands of our business, as well as reduce our risk of technology obsolescence.”
“The REMODEL programme helps us to build a very strong foundation to deliver new capabilities that will bring about industry leadership in innovation, customer experience and service excellence,” she said.
When completed in 2012, the company is confident that REMODEL will fill the technological gaps that are essential to gaining a competitive advantage in supply chain management, further augmenting strategic data visibility, collaboration and decision making with business intelligence and decision support tools.
The four initiatives
The REMODEL programme rationalises 15 application suites into four key initiatives, namely:
1. The Customer Experience initiative focuses on developing a high degree of automation between booking and yield management capabilities. Bookings will be highly automated and integrated with customer and commitment data to ensure customer requirements are fulfilled. Customers will be provided with exceptional visibility on the status of their cargo throughout the supply chain. “With a more efficient customer service organisation, we will be well-positioned to win and retain customers,” NOL said.
2. The Yield Management initiative creates a new range of capabilities, including network simulation, modeling and rapid optimisation. New capabilities that enable more real-time modeling will be developed.
3. The Operations initiative concentrates on precision execution and planning of cargo delivery. This initiative delivers on service excellence and optimises asset utilisation by providing operational visibility to those who move the cargo and make operational decisions every day.
4. The Foundation initiative focuses on building the platform upon which the systems and tools described above will be developed. It will result in the consolidation of multiple data sources into single rationalised entities to improve data quality and speed of delivery. It also includes replacing obsolete and out-of-support software to mitigate risk to business continuity.
With REMODEL in place, the NOL container shipping business will have a comprehensive, end-to-end view of the conveyance network with cross-functional visibility, accurate and timely information, data analysis and decision support capabilities. Through IT, NOL can deliver and meet customer needs while continually reducing costs and increasing productivity.
Impressive ROI
The company said that the REMODEL programme is set to deliver millions of dollars worth of benefits. Beyond economics, REMODEL integrates 6 processing platforms across different operating systems and more than 250 applications, the company said. It epitomises a big step in harnessing IT for competitive advantage to deliver business intelligence, an enterprise-wide view of customer data and high quality information exchange with suppliers, partners and customers.
“The project itself has impressive ROI,” said Choy Peng. “It is enough to say that the REMODEL programme will deliver millions of dollars worth of benefits, and the benefits are in the areas of business productivity gains, margin increase and IT operating cost savings.”
“Now there are other qualitative benefits as well, and I think sometimes we don’t pay enough credit to qualitative benefits. First of all, I think we will eliminate risks of major failure of critical systems that are running on obsolete and unsupported platforms. Secondly, we will definitely gain greater visibility and insights into operational, financial and customer data. Thirdly, the new systems will be more user-friendly, and they will be more reliable and better able to handle today’s and future business volume. We still intend to grow when the tough times are over, so we must make sure that our systems are ready when the company grows. And last but not least, with newer technologies with better integrated systems, we will be able to introduce new functionalities better, cheaper and faster.”
The programme will benefit customers too. According to Choy Peng, there are two types of benefits: one set of benefits is very internal-focused, and that generally has to do with better yield management, better insights and productivity gains. But the other set of benefits has to do with customers, and once we deliver better value to the customers, the assumption is that we will get more revenue, and we will be able to increase our margin.
The shipping company maintained that despite current economic uncertainties, the REMODEL programme would persevere, but judiciously. Through meticulous and collaborative planning by the IT and business management teams, business requirements have been compartmentalised and made isolable. This has enabled NOL to maintain its agility in responding to changes in both business needs and fluctuating financial times. “In the coming months, key and strategic modules can still go ahead without affecting the entire initiative,” it said. “As business and economic conditions improve, incremental investments can scale accordingly.”
REMODEL and human capital
As part of its IT strategy, NOL’s Group IT focuses a lot on building and effectively harnessing the human capital through its people strategy, a collective decision- making process involving business users and a learning environment, amongst others. Is there a connection amongst these and the REMODEL programme, or are these completely separate?
“Well, I think they are inter-related,” said Choy Peng. “The purpose of stronger IT governance is to make sure that both business and IT work very closely on IT change initiatives because our IT investments are first and foremost business investments. So, stronger governance gives greater control and accountability to the business.
Stronger governance also makes it very clear as to who is responsible for which decisions, and who is responsible for which outcomes. The REMODEL business case is entirely driven by the business, and if the IT function does the business case, it will have no credibility. The business case has to be developed and signed off by the business because it is a major business investment. So I think there is a strong relationship between strong IT governance and the fact that we are able to develop such a solid business case for REMODEL.”
“About human capital strategies, I can tell you that with REMODEL, the IT team itself needs to be remodelled—we need new skills, we need new people with different experiences, we need to do things differently in order to deliver the REMODEL programme. And interestingly, the REMODEL project has actually given us the opportunity to attract very qualified IT professionals, because they are excited to be part of such a major programme.”
Progress report
As mentioned above, the project was kick-started in 2007. Choy Peng told said that the project will be about 30 to 40 per cent complete two years down the line. “We have made good progress,” said Choy Peng. “Our first project was for finance and cost accounting—it is on target to complete in September 2010. All functionalities that are currently performed by our legacy WALKER system will be replaced.”
“We have set up a vendor master, data master, and we are putting in place master data management too, so it is really a foundation layer for the finance and cost accounting system as well as other REMODEL projects,” she said. “We have also proposed for a global CRM implementation. If funds permit, this project will kick off sometime this year, and with this we will also start working on our customer master data, so that we get a 360 degree view of our customers.”
“There is another tangible area of progress. We have today a much more detailed end-state solution landscape—we know exactly what it might look like, and we have already gotten a roadmap for transition from today’s technology landscape to the remodelled landscape.”
