Modernizing Delivery with Posti

Chad Watt: Welcome to Ahead in the Cloud where business leaders share what they've learned on their cloud journey. I'm Chad Watt, Infosys Knowledge Institute researcher and writer, here today with Petteri Naulapää, the chief information officer of Posti Group, Finland's main postal service and a logistics business and delivery service in Finland, Sweden, and the Baltic nations. Petteri, my sources tell me your first computer was a Commodore 64. Tell us how you got from there, 64K, to head of an information technology or a company that delivers to 3 million households and businesses every day.

Petteri Naulapää: Commodore 64 for me and many others also, that was the first touch to IT. Well, it was I think 1984 or so. And I very much wanted to have that as a Christmas present. And I talked to my parents for ages and ages, and finally they said yes, but it was really difficult to find a Commodore 64 because everyone else wanted to have one as well. And my parents managed to find one from the middle of Finland, hundreds of kilometers, hundreds of miles away from Helsinki where I live. And then they bought it and got it delivered to the local post office and I got it just before Christmas. And then the Christmas holidays I played around with that. I learned to program with BASIC, played all the games. I don't think I slept at all during that time. It was such a fantastic time.

But then going forward, if I think about my career and working history, when I went to university, I actually didn't do IT there as a major. I was learning manufacturing technology and industrial management. And then when I went to work in the first real job as a young engineer, then we decided to buy an ERP system to that company. And then as a young engineer, I was pulled into that project and that's how I got into IT. So my history is more about process development and thinking that how to utilize technology to enhance the operations or customer experience or so on of a company. Then I went to software industry for sales and business leadership roles and then now this is my third CIO role. So that's my history from Commodore 64 to these days.

Chad Watt: I'm curious to a little bit more. You went from a greenfield to ERP and now you live in a world where we're moving ERP and every other asset to the cloud. Is there anything thinking back on that first experience of implementing an ERP that has helped you in implementing the shift of digital assets from on-premises to cloud?

Petteri Naulapää: If we go back to the ERP times, most likely everyone who was in business about 20 years ago remembers that there was an ERP boom and everyone was implementing an ERP. And the big trick was really that how do you change the way you work so that you get the best out of the technology? How do you combine what technology enables and the changes that you're doing yourself? And if we think about the cloud nowadays, you can go there much faster because quite many of the things you used to do technically first are now already done for you, for example, in SaaS kind of solutions, or then when you do new development, then also you have much better possibility to develop quicker. So lots of things have changed, but on the other hand, many of the fundamentals of utilizing technology are still the same.

Chad Watt: How did a delivery business, Posti, a post office that's been around for hundreds of years come to the realization that technology would be so important to your business?

Petteri Naulapää: Well, I think it's been an important part for almost all businesses, but I think especially in a business like Posti because this is a transactional business. So we have a high volume of work that we do. And if we think about the transformation that we are in, we have a part of the business that is declining, and at the same time, we have parts that are growing heavily. And what we have done quite much through in the last two years or so, we have been working on our strategy and also on our purpose and thinking about what do we want to be in the future? And according our new strategy, we are saying that we want to become a modern delivery and fulfillment company with progressive profitability. And for our point of view, that actually means that we will put more effort and more investments in the new growing businesses than in the old.

On the other hand, with our purpose, we are saying that we want to be responsibly delivering what matters to you on your terms. And I would say that this on your terms in the logistics industry, that's a huge promise. That's saying that we want to give the control to the customer means that you as a customer, you can decide when, where, and how you want to have your parcels, for example, delivered. And that is something that no one can really do fully. We can do parts of that, but no one can do fully. And that is what we are aiming with technology as well. So how do we change things that we can really give customer the control?

Chad Watt: So what have you already achieved on that front? How much have you been able to give the customer that kind of control and customization? And I think you're hitting upon something that all businesses technology or not really want to see. There's this phrase I've heard from another company called a segment of one. You basically are serving your customers not as groups of people, but as individuals. How far have you guys gotten on that front?

Petteri Naulapää: I think that we have been really, really good in solving individual problems. For example, we know that customers in Finland, they love to have their parcels delivered into parcel automats, those large boxes that you have, for example, in shopping centers. That's the most popular way to get your parcels in Finland. So we know that's popular. We have been putting investments in getting the widest network possible for that so that we can serve the customer better. Or then in the logistics outsourcing, we've been able to bring more value for our customers by being faster or by giving more data or so on.

But then if we look about the future, our ambition level is growing at a high speed because we see that it's not enough that we solve individual problems. We really have to be able to go into the role of the customer. We want to look from the customer point of view that, okay, so if I order today, and as you mentioned, you expect to get it this evening. So what needs to happen in our value chain within our company so that we can give you the promise on whether it's today or it's tomorrow that we know that we can give you the promise, we can keep the promise, and we can also inform you on the way transparently on what is going on? And that is really what we're working on now that how do we utilize for example, data, to be able to orchestrate the whole value chain so that we can do that and give customer the real control?

Chad Watt: Can you come back to the boxes you described? We have those here as well. I think we may use different terminologies. This is basically kind of a lockbox in a retail setting where I know that my parcel has been placed in there and I visit the store and I'm able to either wave my phone or what have you. Two things. Tell me the name again and why would you say that those are popular with your customers? What insights do you have on why that's popular with your customers?

Petteri Naulapää: Yeah, I mentioned the parcel automats. Actually, the other word for those is parcel locker. So meaning that, for example, in a shopping center, you will have a big area where you have tens of different boxes or even in the biggest, you might have hundreds of lockers. And in Finland, most of the customers see that is the most convenient way to get your delivery because if you want to have the delivery at home, then it means that you have to be at home at the same time or then you have to accept the fact that it's left outside and someone might grab it or something. So that's the most convenient way. And they are in most places where people go anyway like stores or on the way home from work or so on. And most of the customer satisfaction comes from customers getting the deliveries where they want to have them. So they can choose already now if they want to have it home or if they want to have it in the locker and so on. That is a big part of also our technology development or how we make that happen.

Chad Watt: How has your cloud oriented approach enabled you to better serve your customers in the way they prefer?

Petteri Naulapää: I could talk about that from different angles. Well, I'll take a few examples. And first of all, when we talk about customer experience, I see that there are two different angles for that. One is that how do we make the customer touchpoints more favorable? For example, how do we make it more convenient for you to use our services? But then the other angle is really about how do we make sure that we keep the promise? So if you expect to get delivery today, this evening, then we have to be able to deliver at that time. And if we think about the cloud approach for those two things, first of all, we utilize data, for example, for making sure that our quality levels are in the right state and that we can really do what we have promised.

Then on the other hand also, if you look at cloud technology, we have invested in some new things also for the customers' benefit. One good example is in our last mile, we for a couple of months have now been doing a pilot where actually we give the customer an ability to choose the delivery time home within a plus minus 15 minutes radius. So we ask you what time do you want to have the delivery? And you can choose it and then you can follow also and track that delivery for you in that. And we started that in one market or in one town and we got the customer satisfaction at 4.9 out of five for that service during the first month. And that's a huge, huge successful work.

And I think this is a typical example on where the technology gives you a possibility to do things differently. So the technology of course is needed to be able to do this, but I think that at least equally important was the fact that then our operations came up with a completely new way of delivering and working. Then also we put quite much effort into the delivery workers so that you know how they approach the customer and how we get direct feedback also from our service. And this results in a very good service level, very good customer feedback, and also great service.

Chad Watt: Obviously you use technology with a focus on your customers to a great degree. Let's talk a little bit more about how your cloud systems have empowered your employees to do their jobs better.

Petteri Naulapää: Well, actually you have a route you have to follow, you have to understand how you deliver different things, what kind of codes you need so that you can get into different yards and so on. And if we think about that work, it's heavy work and attrition rate is actually quite high. So the question is that how can we make that work more meaningful? And how can we make that work also more fun? And that's one area we also wanted to go with technical platform to support that work.

So we took a gamification platform talking from the technology angle, and the idea was that when you do your work and if you, for example, are able to go through your whole route, you will get points. But better even is that if you can help someone else, for example, a new employee to deliver what they're supposed to deliver, then you also get points for that. So it sort of promotes your own work, promotes also helping each other. And then if you learn new things, you get points and so on. So we have gamified in a way that work a very heavy job. And by this, then also bring up the team spirits and they work together with the idea to get a more meaningful work for the employees.

Chad Watt: It sounds like a kind of collaborative version of the game that children were playing a few years ago, the Pokémon Go, but for delivery service workers.

Petteri Naulapää: It is in that sense, similar to that. This is something that was designed together with the employees. So we had the designers, we had the developers, they went to one of the locations with pilot locations and they started how should we do this? And they went along with our delivery people and they started to think about how to do it. So it was a co-development work.

Chad Watt: Developers and delivery workers and this is what they came up with.

Petteri Naulapää: Yeah, yeah, working together and thinking how to solve it. And I think that's really exciting. We've rolled it out to thousands of people now.

Chad Watt: Let's talk about artificial intelligence. How is Posti using cloud and AI to make better use of all the data you collect and share?

Petteri Naulapää: First of all, we have a lot of data. This is a transactional business and we gather data from different points of operations. And already for years, we have been utilizing AI in different areas. And I think that in the beginning, AI was quite much about solving individual problems in a certain area of operations, for example. And then I think it was three years ago, we decided that actually, this is something where we can get even more benefit if we invest more in it. And we decided to build center of excellence where we took these data scientists, these data engineers, BI people, and also RPA or robotics people into the same center of excellence and we also hired more talent and we really started to invest in AI.

And we have about 30 algorithms in use, production use in different areas. Some of them are quite straightforward. Like in our flight business for example, we have most of the delivery orders we get as EDI because quite often, lots of different errors or then the data is in wrong place or in the info section, you have some work-related things and then AI cleans it up and then a robotic process then actually delivers into mode that our systems understand and then we can deliver what the customer has asked for and then also save money with quality and efficiency and so on.

Chad Watt: We've talked about the virtues of migrating to clouds. What are some of the common pitfalls you have to work through as you're shifting to cloud?

Petteri Naulapää: Well, if we think about our journey to cloud, to be very honest, I think it has started in just one part of the company, starting in one cloud, someone else doing something somewhere else. We didn't really have a great strategy in the beginning. We just started to use cloud in different areas. And when I talk to my colleagues in different companies, I think the situation in many places is quite similar. But what we have realized at some point is that we need to be better in understanding that what we want use the cloud for, and then also put together things like governance, following like what are the costs of the cloud? How should we utilize it in a better way? What kind of own competencies we need to be able to run cloud in a more effective way and also what makes sense to be in cloud and what doesn't make sense to be in cloud. And I think that that's really about deciding and making your cloud strategy that is important because after that, you can then start to work according to that.

Chad Watt: You mentioned there's what should be in cloud and what shouldn't be in cloud. How have you kind of come to your decisions on that? Do you have a methodology? Are there some things that absolutely go in cloud, some things that absolutely don't go in cloud?

Petteri Naulapää: Well, I'd say that nowadays, most of the new development automatically goes to cloud because it simply makes sense to you. If you're starting sort of greenfield from nothing, it's the quickest way to go there. And I think about three years ago, we thought let's take everything to cloud, but then we thought, let's pause for a while and see what makes sense to take into cloud and what doesn't. If we have an old legacy system that we are not really developing, the costs are low, then we have to think about what would be the reason to take that to cloud? And I think an obvious reason is cybersecurity because that is something where you can have better control over the security of the system. But on the other hand then, looking at what is the benefit of different parts? Also then looking at different new applications. Most likely, in almost all cases, we want to take it as software as a service approach if it makes sense for the system or not. So everything new into cloud software as a service as much as we can, and then old legacy case by case.

Chad Watt: I believe that Posti has the honor of running Santa Claus' Main Post Office. How many letters does he receive every year and how do you use technology to help Santa Claus in his correspondence and delivery work?

Petteri Naulapää: Well, Santa is an important thing in Finland and I guess all around the world and a very important customer for us or a partner, what you said in a way. And I think it's about half a million letters that are received every Christmas. And of course we want to do our best to help Santa to be able to concentrate in the main business, not just the letter business. We have a high level of automation in our letter business. So we have automatic sorting machines and so on. So that we can be very efficient and give a full service for Santa as well. Then Santa can concentrate maybe more in children and also thinking about how to serve Santa's audience in a better way and we take care of the logistics on the back.

Chad Watt: Well, Petteri, thank you for your time and sharing your thoughts today.

Petteri Naulapää: Thank you, Chad. It's been fun.

Chad Watt: Great. Enjoyed it. This podcast is part of our collaboration with MIT Tech Review in partnership with Infosys Cobalt. Be sure to follow Ahead in the Cloud wherever you get your podcasts. You can find more details on our show notes and transcripts at infosys.com/iki in our podcast section. Thanks to our producers, Catherine Burdette, Christine Calhoun, Dylan Cosper, Dode Bigley, and Yulia De Bari. As we say at the Knowledge Institute, until next time, keep learning and keep sharing.