FedEx runs the second-largest civilian air fleet in the world, with some 700 aircraft and 700,000 vehicles shipping packages and freight around the world. It has 290,000 employees, operates in 220 countries and moves some 8.5 million packages per day, according to David Zanca, Senior VP, IT, Customer Access and Revenue Systems for FedEx Services.

Speaking at the CIO 100 Symposium and Awards event in Colorado Springs, Colo., Zanca likened the FedEx operation to an ant colony. It may look like chaos as an army of ants goes about its business, scurrying here and there, but at some point they all line up seemingly single-file and trek back to their colony.

Keeping FedEx’s planes and trucks in line is Zanca’s IT organization. To do that effectively, it can’t operate in a silo; it has to be tightly integrated with the business. Toward that end, Zanca said FedEx puts its IT staff through a program and process to make sure they understand business strategy. The program even has a name – Partner with the Business – and its own logo. “Anything official has to have a logo,” as he told the CIO 100 audience.

Partner with the Business is built on four main tenets, Zanca said:

  • Collaboration
  • Governance
  • Communication
  • Innovation

Collaboration involves understanding the business side and walking in their shoes. FedEx has seen its CIO serve as a customer service rep, route driver and maintenance worker, he said. The mantra: embed with the business to understand the business.

The process also involves taking independent roadmaps and merging them into one. Marketing, for example, will have its own timelines, revenue goals, enhancement ideas, while IT will have its own roadmap, perhaps one that says it wants to become a more service-oriented organization. The idea is to take all of these sometimes competing efforts and put them side by side to see how it all fits together.

“Until we merged it all and could see where the collisions were, we were always butting heads,” he said. Today, “integrated roadmaps across domains are a best practice that we all need to do.”

Governance has proven to be a tougher nut to crack because each of FedEx’s four main business units – Express, Ground, Freight and Services – operates independently, for the most part. The company is trying to address it by creating multiple levels of governance, with three tiers that address issues that move progressively up the ladder, from staying strictly within one business unit to potentially crossing boundaries with others.

“We don’t have a perfect answer,” Zanca said. But the company is putting in a portfolio model, to try to define the terms and definitions that should be used by each governance body across the company.

FedEx is better at communication, he said. It is a transparent company that “shares victories, flaws and warts.” If there’s an issue, everybody knows about it, including partners on the business side and executives. Part of the reason is that the company is highly metrics-driven, with a “service quality indicator” or SQI, to measure performance.

“If we go outside tolerance, we lose points,” he said. IT executives and business partners alike are compensated in part on how well they meet their SQIs, so “it’s important to share, be open and honest,” he said. “Seek truth.”

Another facet of communication involves having people understand each other’s role in the company, to get rid of stereotypes about this group or that. Toward that end, the company has employees from different disciplines work together, either in the same physical location or via virtual workgroups.

In terms of innovation, FedEx pursues multiple avenues. One is to simply encourage employees to bring ideas forward, as a developer in Colorado Springs did when he had an idea for a FedEx iPhone application. Given some breathing room to work on it, he thought he could have it done in 60 to 90 days.

The developer quickly got the green light, delivered his application and it became one of the original applications included in Apple’s iconic “there’s an app for that” campaign. On top of that, Apple asked FedEx to translate the application into French, so Apple could use it for its forthcoming ad launch in Europe.

“It was music to our ears,” Zanca said. And at the root of it all was “one of our people thinking about what they can do to make a difference.”

FedEx also has more formal, larger innovation initiatives, such as the one that resulted in the company’s recently launched SenseAware product. SenseAware enables customers to monitor the environmental elements of a shipment, such as temperature and humidity, and alerts them if shipments fall out of tolerance. That idea came from a cross-functional, dedicated team that was charged with scanning the technology horizon and coming up with ideas.

It was a “fascinating” process that led to the final product, following about a year’s worth of testing with a select group of customers who provided input on everything from packaging to the alerting system. For the group responsible, “this was their life for two years,” Zanca said. “Now we’ve gone to market.”

He noted that FedEx is not an R&D company, however. “We don’t invent any technology.” Rather, it seeks to find ways to apply technology, as early as possible. “That’s where we want to be,” working with labs and vendors, constantly looking for the next opportunity.

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