Telegraph Create/Microsoft cloud case study 1: Royal Mail/Sue Tabbitt/Feb 28th 2011.

At Royal Mail, the cloud has a bright silver lining
By Sue Tabbitt

Difficult times call for drastic measures. So it is that Royal Mail, traditionally a very conservative organisation, finds itself blazing a trail in cloud computing.
The organisation has reaped countless rewards since taking the leap with its office applications. Instead of paying £30 a year per gigabyte to store documents, Royal Mail now spends just £1 - £1.50, because it is sharing high-capacity resources with other companies. More significantly, it has achieved a level of business agility that would otherwise have cost up to £10 million to attain, according to head of infrastructure management Adrian Steel.
Facing threats of increased competition and now privatisation, the national postal service is under growing pressure to operate more efficiently. For the IT department, the challenge is even greater. Without a flexible, scalable IT infrastructure, there is only so dynamic the company can be.
It was for this reason that Royal Mail began to look into the cloud option - at a time when it was still very much 'bleeding edge', Steel notes. "It was 2008 and we were entering the recession," he explains. "We were looking for rapid modernisation."
Although it already had an external service provider running its IT systems from a data centre, flexibility to adjust the terms of the agreement was limited. The company needed to be able to scale and adapt its IT systems more dynamically, without paying a premium for the privilege.
Royal Mail has swapped an old, licence-based Lotus Notes office application for a flexible, modern solution (Microsoft BPOS) which is hosted entirely in the cloud. Servers, software, storage and bandwidth are supplied on demand, so Royal Mail pays only for the resources it consumes. When staff numbers swell by 20% to cope with the Christmas rush, the systems are scaled up accordingly - then switched off again in January.
Over its current four-year contract, the company will save 10-15% on maintenance costs alone, as it no longer owns the IT systems involved; these are now the responsibility of Microsoft and CSC, Royal Mail's broader IT service provider.
Security and compliance is not an issue, Steel adds. Royal Mail started conservatively, placing only its office applications in the public cloud. It chose Microsoft's dedicated BPOS cloud service, where dedicated servers are allocated to the company's content (so there is no chance of this finding its way onto the same hardware as that used by potential rivals). As a further precaution, Steel's team has opted for another of Microsoft's solutions, Hyper-V, for more sensitive line-of-business applications such as payroll. This enables Royal Mail to simulate a cloud environment, privately, from the seclusion of CSC's data centre, using server virtualisation to achieve the required flexibility and scalability. "Importantly, we can seamlessly move applications in and out of the cloud as and when we choose," Steel notes.
The success of Steel's bold initiative has been surprising, even to him. A survey of 30,000 users revealed 'phenomenally' high user satisfaction with the transition.
Crucially, the project has not been solely about maintaining the status quo while throwing in a bit more flexibility. Operating on a platform that has been optimised for the cloud means employees can collaborate with unprecedented ease.
Soon after going live, 142,000 online meetings were hosted in the cloud in a single month. Developing additional customised collaboration applications based on SharePoint is easy too, with CSC deploying these within days. Examples include a system for booking rooms (users can search and view suitable venues and check availability) and a corporate 'YouTube' application.
"We spent a lot of time making our version of SharePoint very graphical so that it draws users in," Steel notes. "This is important, because we know we'll be using the cloud increasingly in future."
Steel is now something of a cloud evangelist. "In terms of its importance, cloud computing is right up there with the Internet itself," he says. "It has given us a foundation to adapt and change so, whatever the future holds, we are ready. Decisions are infinitely quicker now."