United Parcel Service Inc., a cowinner of CIO Insight‘s 2002 Partners in Alignment Award, presented at the conference, began aggressively investing in technology in 1986 and now spends more than $1 billion a year on its technology infrastructure—nearly as much as it spends on its fleet of planes. UPS delivers more than 13 million packages daily with the help of digital package tracking and computerized customs clearance through a global telecommunications network that links 25,000 distribution sites. UPS revenues for 2002 were expected to be up 30 percent, from $30.6 billion.
To keep IT aligned with business strategy, UPS maintains four senior-level governance groups that keep in touch with customer needs, tap into the latest technologies, standardize technologies within the company, and provide a forum for exchanging information about new technology inside and outside UPS. Yet with all its efforts to stay aligned, CIO Ken Lacy concedes that it’s tough, especially in an acquisitive, multinational corporation. What follows is an edited text of Lacy’s remarks.
It takes work to stay aligned. It’s an ongoing process. It’s not like you lead and everyone automatically falls into line and that’s it. Often, the players change—somebody retires or moves on into another job or takes on different responsibilities, and then you get a new person who has a mission that they have to accomplish. Getting them to understand that we all have the same mission can take a little time.
Sometimes, somebody will go out on a limb and do something outside of the box. When that happens, we’ll have to bring the person back into the fold and make sure they play the game the right way. We want to give people the creativity and the ability to do the things they want to do, but we have an organization that stretches around the world, and when you’re very service-focused, as UPS is, we can’t have things we don’t know about going on, like service problems somewhere in the organization.
One thing that’s hard to get people to understand is that it may always be easier to get an outsider to do an IT project than it is for us to do it, but that’s not always the best route to business success. In other words, UPS has structures and rules in place, and if you want to work with us and play with us in our global world, there are certain things you can do and certain things you can’t do.
I refer here to the extended enterprise—the IT shops of the companies we’ve acquired as subsidiaries or taken on as partners. Many of these people have a hard time at first dealing with our rules. They can sometimes feel like there are ways to get around us, and that somebody can make a presentation to them and say, ‘I can do this for $150,000 where it takes Ken Lacy $1 million to do the same job.’ The difference in the $150,000 and the $1 million is that the $150,000 is a stand-alone, low-transaction situation, while mine, probably, adds the ability to take that and ramp it up to critical mass for large numbers of transactions.
Most of the time, when people go out on a limb, they’ll end up spending that $1 million they said they could save by going outside, and then still not have the ramp-up they need.
In an extended enterprise, you have to think about alignment between IT shops, a kind of IT-IT alignment, if you will.
Doing that has always been part of the challenge, but especially so in this downturn. I think alignment is tougher to achieve in a downturning economy because you have to prioritize your resources along with all the other demands the organization has. You’re going to actually have to say no to some people, and when you do that, it obviously doesn’t sit well with everybody.
But we can’t do everything. Balancing that equation to make sure everyone is on the same page is difficult. Having top-down support from the CEO makes it easier, but it’s a new kind of balancing act you have to go through now.
Candidates for CIO Insight‘s Partners in Alignment award were evaluated on the following: a clearly articulated business strategy; processes that foster alignment; a culture of collaboration; significant investments in technology; and measurable results.
