FedEx boasts a long history of innovation. The 45-year-old delivery company is the home of the world's first global tracking network for shipments, the first PC-based automated shipping system and the first automated customer service centre.
But the systems that success is built on are rarely sufficient to sustain it. Years of growth and acquisitions had left FedEx application portfolio bloated to more than 2,600 applications which included more than 14,000 custom interfaces by 2009. They were impeding flexibility and wasting millions of dollars.
FedEx CIO and Information Services Executive Vice President Robert Carter devised a strategy to remove the outdated and overpriced legacy technologies and replace them with more efficient systems.
"We're trying to weave business value into this mess but we simply can't do it this way," Carter said during his keynote speech at the Technology Business Management conference in San Diego in November, as reported by CIO UK's sister title CIO US.
"We had created a world where we spent too much time looking out the windshield ahead of us and not looking in the rear view mirror and recognising that we were collecting technical debt as we went along," he said.
Technology business management
Carter created a systems map of all the FedEx applications and interfaces to understand the current situation. The complexity it illustrated was daunting, but a sense of clarity had been established. Carter wanted to establish a set of core technologies for the company to serve the business.
At the heart of the transformation strategy was an emphasis on an IT infrastructure that not only supports innovation but provides business value. He found a system to support this following a meeting with Apptio CEO Sunny Gupta in 2010.
Gupta is the co-founder of Apptio, a leading developer of technology business management (TBM) software-as-a-service applications. The TBM systems his company develops provide a platform for technology leaders such as Carter to make decisions around technology based on data analysis to maximise the business value of IT expenditure.
The tools measure the costs of installing, developing and maintaining each individual piece of software and hardware across the infrastructure. Carter used them to identify and eliminate any inefficiencies in FedEx's bulging collection of applications.
A notable example was the FedEx aircraft maintenance. The company was spending $10 million a year on an aircraft inspection system that sent engineers climbing into aircraft for inspections and then into a golf cart that drove them towards a shack where they would enter data into an inventory management system.
Now the engineers input inspection data directly into mobile devices through an app called Workbench at a cost of just $2 million per year.
Saving money to drive innovation
The application portfolio was converted to a as a service-oriented architecture (SOA). A single service was established to manage requests for address and identity management data by directing data calls from hundreds of different apps, with a private cloud to deliver underlying infrastructure.
The savings made by the new systems can be invested in emerging technologies, such as a Bluetooth enabled sensor to track packages at a lower cost known as TRON, while the data generated will help guide future IT strategies such as the company's moves towards Agile development and DevOps practices.
"We are several hundred million dollars cheaper because we keep finding unique ways to drive value," says Carter, who will become CEO of FedEx Services on 1 January.
"When the business and IT partner and work together all I have to do is get out of the way and watch good things happen."
[Read next: Seven tips for a successful business transformation]