IT Advancements Deliver for UPS

Chairman Jim Kelly cites package delivery company's use of technology, sketches project plans.

United Parcel Service of America Inc. has been a quiet company, steadily increasing its business through new technology but rarely calling attention to its efforts. That stance has masked one of the most technologically advanced IT operations in the Fortune 1000. UPS impressive string of accomplishments includes being the first package delivery company to offer shipping information via a wireless device and building the largest private wireless network and the largest private database in the world. UPS will soon boast the worlds largest automated package processing facility and a certified shipping interface for SAP AGs express shipping solution. UPS Chairman and CEO Jim Kelly has long recognized the contribution that IT makes to the bottom line. eWeek Senior Editor Paula Musich caught up with him recently to talk about the Atlanta-based shipping giants IT operations.

eWeek: How would you rate UPS use of technology for business operations today compared with your competitors?

Kelly: Were exceeding our competitors offerings. Weve been first to market with a number of products. Our technology infrastructure is quite large. The fastest-growing part of our business is logistics—and that includes e-commerce, where we have unparalleled access to customer information. Our challenge is to stay ahead. We were behind 10 years ago. Weve invested a lot over that time. We invest over $1 billion a year in IT spending.

eWeek: Because of all the uncertainty over the economy, a lot of companies right now are trimming their IT spending. Is UPS one of those?

Kelly: That is the one budget that is going up. Were reducing the increase in IT spending, but we have not cut it. We want to continue to invest. Our spending will be less than we planned but more than it was last year.

eWeek: A lot of companies that had signed off on e-business projects have decided to put those on hold for the time being, or they are taking baby steps with smaller pilots. What is UPS doing with its IT projects?

Kelly: There are some 300 that were approved. Well probably hold back 40 to 50. The key is to know what is providing value to your customers. To prioritize them in a proper fashion is important to us.

eWeek: Which of those projects do you feel shows the greatest promise?

Kelly: Theres one called Landed Costs, where we can show the customer time and transit and duty and customers and brokerage costs and through our [UPS OnLine Tools] have all that information beforehand. We are able to process and move goods through borders faster, and we can let customers know the details prior to their shipping. Were also looking at portal improvements.

eWeek: What technologies does UPS believe hold the most promise?

Kelly: Wireless is what were thinking most about. We now offer tracking services, a drop-off site locator for wireless in the United States and Canada, and were starting to move into Europe with it. By years end, it will be available in Asia, too. [Through an agreement with Air2Web Inc., UPS is allowing customers to use phones, Palm VIIs, personal digital assistants and pagers as minibrowsers to track packages, calculate shipping costs and more.] UPS has a venture group [UPS e-Ventures] that works with IT. The CIO is part of their strategy group. Their focus is not to add profit but rather knowledge for where technology is going. In the first year, they recorded $100 million [in revenue].