David G. Zanca is the senior vice president of IT, customer access, and revenue systems at FedEx Services. Zanca is responsible for bringing market leadership across the customer-facing domains of all the FedEx operating companies. A primary focus for Zanca is the extension of a “connectedness” strategy that embeds FedEx services into mobile devices and applications that customers and partners use every day.
Thomas Wicinski is vice president of digital access marketing for FedEx Services. Wicinski and the digital access marketing team develop, manage, and launch market-leading software, web services, and fedex.com to enable customers and partners to access all business services offered by FedEx.
David Zanca and Thomas Wicinski of FedEx Services describe how FedEx is a connected enterprise and provides digital access to its services on the customer’s terms.
Interview conducted by Vinod Baya, Bo Parker, and Surajit Kar
PwC: David, how are the mobility, cloud, and social technologies trends impacting your world?
DZ: What we are seeing is that these trends are making technology much more pervasive than before, and one significant shift is the changing customer behavior. It’s a behavior shift in how customers interact, where they interact, and what they expect. During the past decade, the growth in e-commerce has been substantial, but it was from a small base of total retail. This past Christmas season we experienced a very different phenomenon. We clearly saw the shift from the consumer doing all the shipping of goods to the e-tailer shipping on behalf of the consumer. This shift suggests that consumers are doing less driving to a retail store, loading up the car, taking it home, and shipping the presents to their family. Instead, they window shop in local stores, go home and buy online, and the e-tailer ships it.
It’s also very clear that the platform of choice for consumers has changed. The access from the mobile platform is showing strong momentum, and shipment tracking from mobile devices exploded this year. The ubiquity and convenience of mobile devices is resulting in more frequent lookups, so we have more continual interactions with our customers.
PwC: Thomas, you lead digital access marketing for FedEx. What are you seeing in this regard?
TW: From a marketing standpoint, one of the strategic pillars of our digital access program is providing access to FedEx services on customers’ terms. Our capabilities should be accessible where customers are, and we have done that from the very beginning of the company. For instance, in the past we have distributed desktop software, which would run on the dock at the end of a fulfillment line to generate a label. That’s a production scenario, and we’re fitting into the customer’s context; in this case, somebody who’s operating a fulfillment office and needs to generate a label.
Today it goes to the other extreme. As David said, we are becoming more relevant on mobile phones. Every package that gets sent has a recipient. Increasingly for all recipients, the mobile device is a device that they live on, as much as any other. I compare this to where we were in 1993 and 1994 when we were deeming the web as the next place for FedEx to be. We are growing in that same way now, as mobile and cloud and social will have some of the same implications.
PwC: FedEx has a long history of treating information about the package with the same importance as the package. How does this principle embody itself in your company?
DZ: That’s right. In the late 1970s, our founder and CEO Fred Smith said, “The information about the package is just as important as the package itself.” It’s a vision that has given our company a culture that values information and that uses it in all we do. The vision embodied itself by seeding a connectivity DNA. Almost every piece of our business is instrumented; it has some degree of intelligence and automation on it. Our planes are all intelligent and they tell us where they are. The trucks, the couriers, the knowledge workers, the hubs—almost everything has technology embedded in it and tells us where it is or what its state is. Without the connectivity, we would not get the information about the package that we and our customers value so much.
Connectivity is core to our operating model, and we have become good at enabling, creating, and managing a connected world. Also, we keenly seek out new sources of information to increase connectivity and, as Thomas said, make relevant information available to customers in their context.
PwC: What are the fundamental characteristics of having the connectivity DNA?
DZ: We essentially operate two networks: the physical network of planes, vehicles, and packages, and the second network of information about the package. The information network is a digital equivalent of the physical movements of our assets and packages. Extending and combining the two networks is how we create value for our customers.
On the surface, you may think of the information as what we present to customers to track their packages. It is much more than that. Indeed, the customer wants to know where the package is, but the information about the package tells us all sorts of things about our internal quality, productivity, effectiveness, and operations. Information about the package helps us run our business better. That comes from a digital operating model where all our assets are connected and surface information to increase overall value to us and the customer. For example, over the years we added more and more scans on a package as it moved from pickup to delivery, which digitized more locations and increased the granularity of information we capture. A typical package, over its journey, gets scanned more than 25 times today, and we make a subset of these scans available to our customers.
Other characteristics also push us to be more and more digital. Although most people think of us as transporting documents, the company was founded on the notion of the fast cycle times necessary for critically needed goods, such as equipment and computer spare parts, that must be moved quickly to repair a broken-down machine or equipment. So speed and responsiveness are core to our operating model.
PwC: What is an example of where you are stretching the edge of connection?
DZ: Looking back, when most other sites were just rendering content, our tracking service was one of the first functional web applications. Fast-forward 20 years, and our first iPhone app was one of the first functional apps from a business perspective. Our web applications from 20 years ago and our mobile apps from today both stretch the connections between our enterprise and our customers. There is a lesson in innovation here: the ideas for both of these came from somebody in a cubicle playing with the web technology or the iPhone well before the web or building apps were popular. We encourage such experimentation with emerging technologies.
As I said before, almost every piece of our business has embedded sensors and intelligence. Looking forward, where we haven’t had the intelligence and will be adding it is on the package itself. The bar code provides some intelligence, but one must actively scan the package. This will change over time. One of our solutions, SenseAware, which we now use on a small percentage of our packages, makes the package intelligent. It’s essentially a cell phone that calls home and tells us, “Here’s where I am,” and provides information about location, temperature, velocity, light, vibration, and so on.
With SenseAware, we push the edge of connection deeper into our operations, because the product location and sensor information is available continuously in real time as it moves in our system. At the same time, we get deeper in customers’ contexts, as they are in constant touch with their packages and can take actions if necessary. I think in the next 10 years or so, you could see some type of intelligence being placed on all packages. It might be sensors, it could be tags, but clearly the technology is going to evolve and improve.
TW: That’s right. SenseAware is a continuation of our accessibility strategy. With it, one gets accessibility to the next level of detail that customers are looking for. Tracking information gives great comfort to our customers. The market and competitive dynamic now suggests that not only do our customers want more information about the packages, but they also now want more interaction with FedEx and expect us to react to changes and resolve problems if they occur. This is called intervention—customers are expecting it. They’re trying to ensure successful delivery, not just know that something went wrong along the way. That’s one of the fundamental business shifts that’s causing us to need to provide more information than we ever did before.
PwC: So in some sense, the customer is becoming part of your operating environment, and you need to surface more information to bring that value to the customer?
TW: Absolutely. It allows us to have a closed-loop system with our customers. A very interesting thing about our business is that every transaction is high intensity. Customers anxiously await their packages. We recognize it is the most important thing to the person who’s getting the package, so we try to build the experience and our operations with that notion in mind.
More information matters on packages because if something occurs, then we and the customer can do something about it. Right now, SenseAware gets used a lot for perishable items in the medical industry. If a temperature drops below a certain level, then that item could be damaged. The customer can drive an operational change, such as return, reship, reroute, or any other suitable action. From our viewpoint, it’s an element of being in the customer’s context by ensuring successful delivery.
PwC: How have the methods for making your capabilities accessible changed over time?
DZ: We have multiple platforms that we support to interface with our vast pool of customers, and our methods have surely evolved over time. We started in the 1970s, making our systems and information accessible by our customers. As Thomas indicated, the early methods were proprietary, and we gave customers software and sometimes hardware to access our transaction systems, generate shipping labels, and so on.
More recently, we are also using web services, and it is by far the fastest-growing platform right now. Customers call our APIs [application programming interfaces] or web services and access real-time information. In either case, we empower and engage millions of customers. Underneath all of that, we try to have a common code base all across, so you’re not writing custom software for every channel each time. Your mobile device may have some native apps running, but they are calling web services that are the real brains for shipping, tracking, and so on.
TW: You could say that we have gone from a proprietary specification at the very beginning, distributing a piece of software, to now where we are migrating to a pure web services capability. We’re seeing more of our partners move to using the web services, which basically gives them one less piece they need to worry about. We’re definitely seeing a market shift there.
PwC: What are some changes you are seeing in terms of how IT operates?
DZ: One change I see is that we in IT don’t have to do all the coding anymore. The key role for my group is to be the owner, producer, and platform of the services. Business units, even third parties, can use the services to develop a new capability; they can write the thin veneer of code around it and we don’t have to do that. It’s a win-win situation: less work gets added to an already full IT pipeline, and the new capability comes to market quickly. We may be involved in some code review, but we’re going to end up concentrating on being a platform of core services.
And we’re already experiencing this because we have third parties that take our software, couple it with their software, and then sell that as part of their capability in the marketplace.
PwC: So you are co-creating new capabilities? Is this an easy change to make?
DZ: Indeed, we are co-creating with the constituents we serve. And no, it’s not an easy change to make. It’s a big change and needs to be part of IT strategy and it takes some leadership. At the highest level, this is an architectural change. You need to architect your platform and environment for co-creation and treat APIs as products that you publish and maintain for long periods of time.
PwC: What are the technologies enabling this change?
DZ: We maintain a FedEx Developer Resource Center, where third-party developers from enterprises or commercial developers can find our web services in a WSDL [Web Services Definition Language] specification for shipping, office and print, and other capabilities.
We also have a continuously connected strategy where we create a thin layer of services, which are independent of end-user devices and use cases. We take our enterprise services and apply that thin layer of customer experience services on top, which in turn exposes our services as RESTful [representational state transfer] web services. Then we have all the different types of end- user devices flowing across the top.
So, we’re powering a new multitude of customer solutions that do not have to be fully developed by my IT shop. Thomas and other marketing leaders, as well as third parties, can create new solutions for our customers by using the services we expose. This expands the value universe a lot quicker than submitting the work and adding it to our queue.
PwC: One premise PwC has is that all sizable companies are becoming software companies, although it’s not their core business. Do you think of yourself as a software company in some regard?
DZ: As we look at our API strategy, our web developer center, and how we share information with third parties, we are starting to think of it more that way. The question is what makes a software company. For us, that means: Are you thinking platforms? Are you thinking of allowing others to build new capability on top of your platform? Do you manage APIs as products? Are you thinking in terms of publishing APIs and making them available?
PwC: And are you driving an ecosystem?
DZ: Yes. And how do you manage the ecosystem? I think sophisticated enterprises are starting to think more like a software company—as a platform and an ecosystem.
TW: When I talk about the priorities in my digital access group, one of them is to think and act the way a best-in-class software company would, as a company that sells software for its own business. We have absolutely been implementing this. You called it a business model; I call them business processes. That would be very consistent with what a company does that sells its wares.
Between David’s group and my group, we are a pretty big software company sitting inside of this big transportation company. Many of our activities are identical to what a big software company does. When I benchmark our group, I actually do it against the leading software vendors, long before I look at what our transportation competition does. So the idea of having a single platform that will support multiple customer interfaces—that’s our mechanism to do it in an affordable manner.