CIO Update Q&A with UPS

By Allen Bernard

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Cathy Callagee is vice president of Information Services at UPS. She reports directly to the CIO and has been with the company for 21 years. Prior to UPS, she watched as numerous former employers stumbled around trying to implement technology initiatives that really had nothing to do with the business.

At UPS, all that changed. Even as a young programmer she was exposed to the business and expected to understand IT's impact on its operations. All these years later, she's learned a thing or two about making technology work for the business and how to avoid implementing technology for technology's sake.

CIO Update caught up with Callagee earlier this year to talk about how UPS uses technology to stay competitive, agile and growing.

CIO Update: Are efforts under way to better align IT with the business? If so, what are they?

Callagee: Alignment is a corporate principle at UPS. We look at it differently than other companies and we’ve worked hard to say that at UPS the business drives technology.

This is not a new concept for us. It's something we've had at UPS as long as I've been with the organization (21 years) … which was not the case in the firms I had worked with before. A lot of times the technologists were fooling around with technology for technology's sake.

We will only put technology (in place) … if we think it's going to enhance customer service, we'll do it if it's going to enhance one of our core competencies or if it's going to reduce our costs. We will do it for competitive reasons, we will do it for all of the business reasons and more times than not it it's not just the technology.

PFT (package flow technology) is just a great example of business process change and technology change. Those two things have to come together to work.

What drives those changes? The available technology or the needs of the business?

Clearly, the needs of the business. We do not do IT for IT’s sake. IT is an equal player at the strategy table. IT and business are partners in a collaboration-driven strategy.

For example, our CIO participates on the UPS management committee, which consists of the twelve senior managers for the company. Also, all the major initiatives come through the program project oversight committee (PPOC).

Eight members serve on that committee and our CIO is the chairman. All projects come through there for prioritization. These are enterprise-level, strategic and significant projects, technology or otherwise. It’s truly a cross-functional, collaborative environment.

Additionally, our CIO chairs the IT governance committee. All major IT issues are presented there. The committee is made up of IT professionals and business leaders. Go one level down in IT and we have portfolio managers who correspond with a business partner.

These teams are aligned by process: for each process group, such as CRM, etc., we have a corresponding IT manager. They work side-by-side on strategy and decide what presentations are made to the PPOC and governance committees.

We also concentrate on developing our people and focus on promotion as part of our culture. We move people in and out of IT. For example, you will see people from IT work with M&A as we do acquisitions.

What is the purpose of moving people in and out of IT? Doesn’t that run the risk of messing things up?

To be successful, you have to have technology and business skills come together, you can’t just be a technologist saying you want a seat at the table when all you can talk about is application development. You have to know your core business.

What technologies/methodologies do you employ that provide the most benefit to the company's bottom-, or top-line, growth?

Though UPS is nearly 100 years old, we continually ask ourselves 'Is what we have the best?' 'Can we do better?' We must always be 'constructively dissatisfied' and envision what the future will hold and rally to realize that vision.

Sustainable growth revolves, in some measure, around determining how technology can be leveraged to enable transformation through innovation.

At UPS, four conditions, what we call the 4C’s of innovation, must be in alignment to make transformation through innovation a sensible course of action: customers drive it; a new direction must be connected to the company’s core competency; clarity must exist throughout the new business model; and IT must be embraced by our culture.

For example, in the early 20th century, UPS pioneered the hub model for package delivery operations. We are continuing our innovation tradition with the development of a suite of technology that will make more than 1,000 package centers in the U.S. smarter and more efficient in sorting and loading packages on delivery trucks.

Called package flow technology (PFT), it is a combination of technology and business process changes.

What's the bottom-line benefit of undertaking PFT initiative? It's my understanding that UPS runs just fine the way it is.

What we needed was the optimization of the loop, of the driver's day. And we needed to know what was the best way to take that driver through his or her day.

(UPS delivery van loaders have) … a tough job. Well this made it a lot simpler. It made it easier for our employees (loaders); it made it easier for us as an organization because we didn't have to spend time in training; it also reduced the cost of that particular operation; and the best thing that it did was it now has such rich data about all those packages we are now exploiting.

If we don't take the time to really put business process changes (the driver's loop) and sit down prior the implementation of the technology to say what parts of our dispatch do we need to change. It's like anything else: garbage in, garbage out.

We could throw all kinds of technology out there but if we don't get that business process change right, (technology) will help us but it won't get us to the degree it's gotten us to today.