Tag: New Zealand

NZ Post’s SOA move cuts operational costs by 70%

Posted by | Apr 11, 2007 | |

NZ Post is claiming a 70% reduction in IT operating costs, after moving to a service-oriented architecture and open-source operating system — despite saying it is just 30% through its transformation journey.

Moving to a service-oriented IT environment is the only way forward, says Alan Roberts, infrastructure and architecture manager of New Zealand Post’s postal services group.

NZ Post started its journey in 2003. Today, the organisation’s service-oriented share infrastructure (SOSI) is based on Red Hat Enterprise Linux Advanced Server, Oracle Application Server 10g and the Oracle Database 10g Enterprise Edition.

“We have got a long way to go to turn our [whole] IT environment into service. We have Exchange as a service; Oracle as a service [and] we are currently building an SQL service and an internet service,” he says.

The decision to move to a service-oriented model was driven by the lack of agility of the existing infrastructure and high operating costs. These were primarily the result of the escalating maintenance costs of ageing Sun hardware and an Oracle licensing model based on price-per-CPU, “and we had lots of them”, says Roberts.

The new solution has proven itself. It outperformed the old one by more than 500%, while using only a third of the CPUs. The result was incredible, he says. But to be fair, says Roberts, it’s a known fact that Linux is a very lightweight operating system compared with Sun, IBM or Windows. In addition, the Linux environment was running on commodity hardware, based on Intel or AMD processors, which were gaining performance much faster than the equivalent SPARC-chip, for example, he says.

The organisation has managed to reduce IT operating costs by 70%, mainly by reducing maintenance costs, says Roberts.

“Instead of buying a NZD30,000-40,000 box we buy a NZD5000-7000 IBM Intel box, and we get greater performance and less maintenance cost.”

Most of NZ Post’s 350 servers run Linux today and whatever is done in the future will be Linux-based, he says.

NZ Post runs its organisation as a federated model, which means the various business units — for example, Kiwibank — can use the corporate infrastructure Roberts is responsible for, although they are not obliged to, he says.

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S&P'S affirms NZ Post Ratings

Posted by | Apr 11, 2007 | |

Ratings agency Standard & Poor’s has affirmed its ratings on New Zealand Post, but revised its outlook to negative because of slowing growth in its postal business.

S&P’s downgraded its outlook from stable.

NZ Post’s long-term rating of AA- is S&P’s fourth-highest rating level, reflecting its government ownership, market position and strong cash flow, said S&P credit analyst Anna Hughes.

“The negative outlook reflects the flattening growth of NZ Post’s core postal business and its changing business mix,” Ms Hughes said.

The popularity of email meant growth in letters would continue to decline, leaving NZ Post’s other businesses operating in more competitive markets to contribute a larger share of earnings.

The effect of banking subsidiary, Kiwibank, on the overall business was also increasing.

Kiwibank contributed 23 per cent of NZ Post’s net income, but its modest position in a very competitive market, and moderate profitability, detracted from the parent’s credit position, Ms Hughes said.

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Domestic postal rates to change in June

Posted by | Apr 4, 2007 | |

New Zealand Post is increasing the price of the standard domestic letter by 5 cents to 50 cents from 1 June 2007.
The increase is the first since April 2004, when the price moved from 40 cents to 45 cents.

Peter Fenton, New Zealand Post’s Postal Services Chief Executive Officer, said that growth in the number of addresses to which New Zealand Post delivers and significantly increased costs had made it necessary to increase the domestic letter rate.

“Even at 50 cents it costs less to send a standard letter in New Zealand than it does in Australia, Britain, Canada and the majority of the other OECD countries,” Mr Fenton said.

By comparison, Australia’s standard postage rate is the equivalent of 56 cents in New Zealand currency. In New Zealand currency, the UK charges 65 cents; Canada 66 cents; Ireland 89 cents; Germany NZD1.02; and at the high end of the scale, Norway’s standard postage rate is NZD1.49 (all currency conversion rates as at 30 March 2007).

The changes announced today include FastPost, which will increase from 90 cents to NZD1.00. Parcels, bulk mail and international mail prices are not affected.

“Very simply, the costs of mail delivery cannot be sustained at the current price,” Mr Fenton said.

“Due to the growth in the number of addresses around the country, the postal delivery service is stretching further than three years ago. New Zealand Post is delivering to 120,000 more places now than this time in 2004. And we’re delivering to 347,000 more places than 10 years ago.

“A significant part of the cost of running this postal network is fixed and New Zealand Post has also absorbed a number of business cost increases over the last three years.

“Inflation has increased by 8.3 per cent since March 2004 and labour costs have gone up by 10.8 per cent for frontline operational staff.” He said that labour costs make up around 40 per cent of the cost of mail delivery.

Mr Fenton added that there was no need for people to rush out and buy extra stamps now. “A 45 cent stamp will be accepted until 1 June,” he said. “After that, people can add a 5 cent stamp to top up. New Zealand Post has ordered sufficient numbers of 5 cent stamps for people to use from June on.”

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New economy services slashes costs for exporters

Posted by | Apr 3, 2007 | |

Up to half of New Zealand businesses sending items overseas would be prepared to trade off an extra day or two in delivery times in exchange for a big saving in international courier costs.

That’s why New Zealand Post has launched a new cut-price international courier service that will get merchandise to Australia in just 2-3 days – and 10 other countries within six days – and will cost 30% less than their premium courier service.

The aim of International Economy Courier is to provide a far more cost-effective service for exporters and other organisations.

New Zealand Post’s International General Manager, Clare Kernot, says studies by research company Nielsen show that many parcels and documents “don’t have to be on someone’s desk in Sydney the next day”.

“The Nielsen research shows that many organisations – particularly exporters – will be more than happy for a parcel to take two to three days to cross the Tasman if it means they’ll make big cost savings.”

Kernot says New Zealand Post wants to fill “a major hole in the market – between the low-cost international mail services and the high-cost courier services offered by most international courier companies”.

She says an astonishing number of people overseas are, for example, buying innovative New Zealand products from New Zealand websites. “Many people are prepared to wait a few days for parcels to turn up. Our International Economy Courier service offers all the security, track-and-trace and door-to-door delivery of full-price courier services – it just runs at a slightly more leisurely pace but costs considerably less.”

Delivery of a 5kg parcel from New Zealand to Sydney will cost NZD53.75 under International Economy Courier compared to NZD76.79 via New Zealand Post’s premium International Express service.

International Economy Courier will deliver items weighing up to 30kg to 11 countries – Australia, Canada, China, Hong Kong, Japan, Singapore, South Korea, Taiwan, United States, Ireland and the UK. Items travelling the farthest distance – to Ireland and the UK – will be delivered in 5-6 days.

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New Zealand Post Group records NZD 38.2 million half-year profit

Posted by | Mar 22, 2007 | |

The New Zealand Post Group has reported an unaudited after-tax profit of NZD 38.2 million for the six months to 31 December 2006 – up 10% on the NZD 34.7 million profit for the same period in 2005.

Operating revenue for the half year was NZD 616.7 million (2005: NZD 565.4 million) and operating expenditure NZD 561.9 million (2005: NZD 515.9 million).

The company will return an interim dividend of NZD 20.3 million (2005: NZD 16.7 million) to the Government shareholder.

New Zealand Post Group Chief Executive John Allen said the result was largely driven by the continued strong performance of Kiwibank and Express Couriers Limited (ECL) – the 50% owned joint venture that was formed with DHL in 2005.

“New services like the Prezzy Card launched in PostShops in November, mobile banking through Kiwibank and our Real Aotearoa stores which stock collectables and stamps alongside quality New Zealand souvenirs are just some of the new ways we’ve continued to diversify our offerings over the past six months,” explained Mr Allen.

“In addition, New Zealanders are continuing to be attracted to a genuinely New Zealand-owned bank. Kiwis are thinking as much with their heads as their hearts – they are going after innovation, low rates, accessibility and quality of service,” Mr Allen said.

During the period, Kiwibank more than doubled its after-tax profit to NZD 11.4 million – compared to NZD 5.4 million for the same period in 2005. Mr Allen said more than 500,000 customers have now joined the bank.

Within the Postal Services business, the amount of domestic mail sent continues to decrease – down 2.9% in the six months – but this has partly been offset by growth in parcels. International mail items continue to grow.

Mr Allen said the company expects strong competition across all parts of the business and ongoing pressure on mail volumes in the next six months.

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