Information about the package will soon be just as

important as the delivery of that package." On

any list of insightful statements about the impact

of technology during the past 35 years, that one belongs near the top. FedEx Corp. (www.fedex.com) founder and CEO Frederick W. Smith made that statement in 1979, succinctly predicting the next quarter-century of IT innovation. The statement has become so totemic that it's repeated-in generic form, to be sure, with no credit given to its original

source--in the corporate literature of rival United Parcel Ser-vice (www.ups.com).

The telecommunications innovations really began in 1980, when FedEx launched a proprietary and then-revolutionary wireless data network called Digitally Assisted Dispatch Sys-tem (DADS). The system increased efficiency by eliminating radio chatter; dispatchers were now able to use text messages

to change drivers' routes and pickup requests.DADS, which is still in use, led to a 30 percent increase in couriers' pro-ductivity- the first day it was used.

In 1986, the company adopted its present generation of wireless handhelds, called Super Trackers. These devices cap-ture package data via a bar-code scan. When couriers return to their trucks, they insert the Super Tracker in their DADS unit, and the information is downloaded to the company's proprietary package-tracking system, the Customer Oriented Service and Management Operating System, or COSMOS.

Urged on by Smith, FedEx has been an early adopter-and, in many cases, a pioneer-of technologies such as videoconferencing, wireless connectivity, and bar codes. But companies that value innovation must put up with its cousin:

failure. Laurie A. Tucker has been at FedEx since 1979 in a host of positions and is now senior vice president of global marketing. She recalls a 1996 effort that never took off; a Web publishing operation. It was intended to help enter-prises set up websites using FedEx-designed templates. It didn't have a prayer. "People wondered what this transporta-

tion company was doing in the publishing business," Tucker says. "But nobody got fired for that. We don't punish people for taking risks."

United Parcel Service Because of FedEx's impressive and well-published record on IT innovation, it's tempting to think of 94-year-old UPS as a plodder that tries hard but always lags by a step. Even UPS CIO Ken Lacy concedes that the company's approach to IT is "very methodical," in

keeping with its button-down management style. "That's just how we approach governance," he says. However, ana-lysts say UPS has played an excellent game of catch-up and pulled even with its rival, which is no mean feat.

In contrast with FedEx's freewheeling, let's-give-it-a-

shot style, UPS has four standing IT committees devoted to finance, governance, strategy, and new technologies. The committees are composed of business executives as well as technologists who report to Lacy and steer UPS's efforts.That may seem unwieldy, but analysts say the system has

allowed UPS to spend not just massively-"We've invested S14 billion-plus since the mid-1980s to build integrated global networks," Lacy says--but also wisely, never decou-pling its IT spending from business goals.

in 1990, UPS introduced its own handheld, called the

Delivery Information Acquisition Device (DIAD). The devices are still in use, having been upgraded several times. In its present incarnation, the DIAD both captures and trans-mits delivery data in real time (UPS is happy to point out that it beat FedEx to the punch on this feature), serves as a cell phone, and has a host of new ease-of-use and maintain-ability features. Today's DIAD runs on PSOS, an embedded operating system; however, the next-generation devices will be based on Windows CE.

UPS also offers an innovative set of application pro-gramming interfaces that let companies create their own hooks into online UPS functions such as package and signa-ture tracking. Called UPS OnLine tools, this initiative en-able business customers to connect their own e-commerce applications to UPS, while simultaneously offering selected

UPS services to their end users' Web browsers. Analysts say the platform-independent tools offer customers conve- nience, as well as a virtual lock-in to UPS services.The Future And what of the future? FedEx CIO Robert

B. Carter becomes animated when discussing his company's upcoming wireless tool, called PowerPad. Carter says the company's other IT focus for the near future is "better inte-grating systems across divisions." In addition to its trade-mark FedEx Express service, the company is a large player in ground, palletized-freight, and international shipping.

Carter's goal is to funnel package data from all these oper-ations into one transparent system.

UPS, too, is upgrading its handhelds. The company is also focusing on automating processes at its sorting facilities in an effort to reduce training costs. And like its competitor,

UPS is leveraging its IT expertise to become a logistics out-sourcer. With both FedEx and UPS consistently hailed as in-novation leaders, that evolution seems like a natural.

Case Study Questions

1. Why does telecommunications play such a key role in

the competition between FedEx and UPS?

2. Why does "information about the package" have such a strategic business value in the express delivery business?

3. What telecommunications products or services would you recommend that FedEx or UPS use to improve their competitive position in the overnight delivery and shipping business? Defend your recommendations.

Source: Adapted from Steve Ulfelder, "Signed, Sealed, and Deliv-ered," Computerworld, September 30, 2002, pp. 50-52. Reprinted with permission from Computerworld.