We have outsourced all our telecom infrastructure and services

DQI Bureau
New Update

Alex Pilar joined DHL in Prague in 1991, where he held different positions

until 1996 when he became the managing director of DHL Express Czech Republic.

In May 2001 Pilar was appointed IS director for the Europe, Africa and the

Middle East region based in London. Two years later, he became the global

program director responsible for IT integration across the combined companies of

DHL. This also included establishment and consequently, management of the IT

center in Prague, which forms part of DHLs global IT infrastructure. And with

over 1,000 employees, it provides IT services to DHL entities globally. In

September 1, 2006, Pilar took over the role of executive vice president in the

IT global business services division of Deutsche Post DHL based in Bonn, which

he held till his appointment as the CIO, DHL Supply Chain in June last year.


How is DHL structured and how is IT managed across its group companies?

DHL Worldwide consists of four divisionsDHL Supply Chain, DHL Express (CIO,
Ralf Schweighfer), DHL Forwarding (CIO, Martin Lattka) and Deutsche Post. All

the division CIOs report to the IT board headed by the CFO. We all come together

and discuss the issues and challenges and ways to resolve them.

You are an exceptional case of a CEO becoming a CIO. You were the head of

DHL Express Czech Republic and then took up the role of CIO of DHL Supply Chain.

Can you please elaborate?

Yes, I have been switching between business and IT. It is probably not

common, but it is not totally unusual. We do try to move people around. DHL has

a tradition of moving people around jobs and functions. I personally had a

background of both tech and business. It was more natural when I was moving from

the role of managing director at DHL Express Czech Republic to my current role

of CIO, DHL Supply Chain.


Can you share the IT transformation journey at DHL and at DHL Supply


We started IT transformations in the individual groups before DHL was

acquired by Deutsche Post. The group has grown through acquisitions and this has

added to the complexity and changing landscape overnight. But our strategy has

been clear and stable for the last seven years, and it was aimed at optimization

and transformation. They have built an internal IT company called DHL IT

Services (DHL ITSC) which we are using to consolidate and optimize

infrastructure, hosting, and application support. This has been going on for

about six years. I was privileged to build an IT center in a nearshore location

in Prague which has 1,000 people and is one of the two key IT services

locations. Apart from Prague, we have one in Cyberjaya which is in Malaysias

Multimedia Super Corridor (MSC) and has around 1,200 people. This is how the

group is optimizing and consolidating the hosting, infrastructure, telecom,

application support, and help desk. This is an ongoing activity and is very


What we are also doing at the group level is taking all this to the next

level. For example, over the last twelve months we have outsourced all our

telecom infrastructure and services globally to different vendors. We have split

that activity in regions. In North America, AT&T is our partner and in Europe it

is Telefonica. The reason for this was that we thought we could optimize within

the group to a certain level and get a lot of savings from that consolidation,

but there is a limit to which this can be done within the organization. The next

logical step is to outsource and that is exactly what we did when it came to

telecom infrastructure. We intend to save between 20-30%. Our savings from

telecom outsourcing in Europe for five years will be to the tune of Euro 150 mn.

Why did you decide not to outsource IT and only telecom?

Telecom was the most logical decision to outsource. But when it comes to

hosting, we are very confident and continue to consolidate and optimize the

existing infrastructure and we will continue to do that. We also use T- Systems

as a strategic partner in Germany and in some places in Europe. We will continue

doing that in-house at captive locations for some more time. We are also scaling

up in terms of application support and application management. That is where we

are starting to see initiativesmore division specific because supply chain

would have different applications from other divisions.


How difficult is it to align IT to the unique supply chain requirements?

It is a continuous process because business is evolving and constantly

changing. Our guiding principles for making that right is to first of all listen

to our customers and understand what their expectations are. We believe that our

strong advantage against the competitors is global experience and knowledge from

various implementations in warehouse and supply chain. We are trying to design

and optimize in the true sense to best in class business processes, which have

been developed over time with our experience around the globe.

What was the impact of the slowdown on IT budgets?

It was a positive impact as we managed to reduce costs. We spent most of

last year on ensuring that cost of everything was just right in light of the

prevailing situation. More importantly, we were able to redirect our spend and

capacity into innovation and development of the new product. So, we were not

only getting the cost out but were saving on infrastructure and telecom as well.

As a part of that we redirected some of the savings into high value activities

like application development.

Sudesh Prasad