UPS IT transformation
At a recent conference, UPS Chairman and CEO Jim Kelly sat down for a question-and-answer keynote session with Gartner CEO Michael Fleisher. Apparently the first topic addressed the profile of the economy, and what UPS expects it to do.
Kelly reported that UPS have become a pretty good barometer. We started out in January fairly robustly. February decreased, and March was the same. Customers are telling us they are holding expenses. (The downturn) will last longer than we originally thought. Europe will follow the U.S. by six to nine months, they say, although UPS is seeing 25 percent growth rates in Europe.
Following that Fleisher asked Kelly about the origins of UPS' decision to transform its business using new technologies.
Kelly stated that in the mid-'80s, they viewed themselves as being behind. The business development people, the CIO and the CEO at the time recognized it. “We began investing very heavily, we recruited heavily and we (sought to take) a leadership position. There was some resistance at the top of the organization to that level of commitment. But it became a matter of understanding where customers were going with their business. We weren't first to market with tracking services,” he added.
When Fleisher probed if the economy changed the way UPS think about technology spending today Kelly stated that they have models that project growth, scrupulous business planning. “We have an IT steering team that helps to prioritize what we do. IT is embedded in everything that we do. We can't stop investing. All our people use technology tools to do their jobs drivers use electronic clipboards, we use scanners, telephone people have total visibility to customers. There isn't a part of our business that isn't impacted by technology.”
In response to aligning business with technology and whether it was critical to the success of these transformations, Kelly drew on the fact that they have a marketing committee, a finance committee, the CIO, and we have a customer information process driven by people across functions. They all have input into which projects we should pursue. Once decided, they become IT projects.
Kelly continued, that they get around 85 percent of information on shipments electronically each day. “Our mission is to drive global commerce. We go wherever, however customers want to go. We've broadened our offerings into multiple areas including document shipping, logistics, financial solutions and other areas. All that is driven from that information we gather.
Kelly also believes that the dot-com mania had nothing to do with technology. It was business fulfillment or customer satisfaction (that caused many to fail). Over the years, we've been almost paranoid in measuring (productivity and efficiency). Part of this transition is to focus on what technologies will be available and how we'll be able to use them.
When probed about the future for UPS in five years from now, Kelly stated that in six years from now we'll be celebrating our 100th birthday. We'll be moving more information. We made acquisitions that will allow us to get deeper into the supply chain. The consumer is more educated than ever. They have more power to shop and choose. We will have solutions to get merchandise to consumers wherever they are. Our business-to-business represents 80 percent of our business today, but for the first time business-to-consumer is increasing at a much greater rate this quarter.
He continued that wireless technologies will drive revenues and that scanning technology to move merchandise through a building that's totally automated is a requirement.
