Getting I.T. Right: What forwarders can learn from DHL’s struggle

Where did it go wrong?

Any statements about the root causes behind the NFE fiasco remain speculation at this stage, but Schubert suggested that one factor may have been the familiar problem of “scope creep.”

“First you design a system to do 10 things, then you increase that to 20, then 50,” he said. “And as the scope gets bigger, so does the necessary buyin from staff and customers. By that time, you’ve gotten to a spending point where there’s no turning back. You have to draw a line in the sand or you’ll never be done.”

Petersen, however, said he believes DHL’s problems ran deeper than a mere technical issue. “It’s not that big companies are stupid and they can’t execute,” he said. “There’s not a technical challenge in the world that can’t be solved for a billion dollars.” Rather, it may have been the human element that was miscalculated.

With these systems, he said, “you’re going to be breaking down empires of middle managers who have accrued power, and they’ve got these 25 people that report to them, and, ‘Oh by the way, the software means you don’t need 25, or you only need four people.’”

Even a gradual rollout may have been a factor, Petersen suggested. Inevitably, the newness of the system will cause a few delays at first, and employees will start to talk. “As soon as people find that this thing is actually making their life harder, you can get so much resistance,” he said. “Give them something new and they’re bad at it, and it’ll look like the software sucks.”

DHL’s unfortunate experience also begs the question: With the demands of today’s shippers and forwarders, is it still possible to roll out a large, enterprise-level IT system that is responsive enough?

“Enterprise rollouts are complex,” said Eytan Buchman, director of marketing for Freightos, an Israel-based freight contract management technology provider. “The more you try to bite off, the harder it gets. When you talk about really large companies with an extended sales process, there are so many things that can go wrong.”

The rise of e-commerce has also recalibrated shipper expectations. “The mentality of commercial shipper has changed,” Scott Sangster, vice president, global logistics network, for software firm Descartes Systems Group. “They expect not just quick delivery — now they want to have a complete end-to-end experience from the time of order until delivery. It’s an oversimplification, but if you don’t have the right data at the right place at the right time – this can cause big delays. The speed of data is almost as important as the speed of freight.”

There is a drive from shippers for more efficiency and more transparency, Buchman agreed. “It’s almost like a ‘Shipper 2.0,’” he said. “A lot of these problems require more specific pinpoint solutions.”

In the near future, said Flexport’s Petersen, all companies will be software companies. “It doesn’t mean they’ll sell the software, they’re going to build the software and use that to differentiate their services,” he explained. “I think you’ll see more and more companies that emerge and say ‘We’re a freight company and a software company.’ Smart companies are going to be nimble and not go spend huge amounts of money until they can prove that there’s a way for tech to improve our business and get the cultural buy-in from within before they embark on some massive undertaking.”

Track and trace systems are an excellent example, Petersen said. “We found that 30 percent of phone calls are just customers asking, ‘Where’s my stuff?’ That’s both a bad experience for the customer and expensive for you. You build a tool where you can track and provide visibility, and it eliminates 30 percent of all the phone calls. That’s going to pay for itself. And you’ll get more loyal customers.”