Rob Carter needs a truck to carry around all of his professional awards. Fortunately, as CIO of FedEx Corp, he has plenty of vehicles at his disposal. Among his many honours, Mr. Carter is a four-time winner of both the CIO Magazine 100 Award and the ComputerWorld Premier 100 Award. He was named CIO of the Year in 2001 by Salomon Smith Barney. In this wide-ranging interview with CIO Canada, Mr. Carter speaks candidly on such topics as his most difficult challenges as CIO of FedEx, the emerging technologies that are impacting his business, and what it takes to be a great CIO.
CIO Canada: Among the many difficult challenges you face as CIO of Fedex, what are your biggest current ones, or to coin a popular phase, “What keeps you up at night?”carter: The scope of our global operations makes us such a 24/7 operation. There’s so little time anymore when something is not happening of huge business consequence somewhere in the world. We used to have weekend windows to be able to deal with systems maintenance and things like that. Today, Sunday morning is Monday morning in Asia. We have a huge degree of operational continuity around the globe, so that’s a big deal for us. Along with that comes the need to make sure that what we do is secure and available for the business. Information security, both from a physical aspect (how we manage our facilities) and a virtual aspect (how we manage access to the networks and applications) is just an incredible scope of work for us these days. It’s a daunting challenge, but we feel like we’re very good at it.
CIO Canada: What is the size of your IT operations?
Carter: We have about 6,600 people worldwide, and about 5,200 of those are U.S.-based.
CIO Canada: You are a strong advocate of alignment with the business. Can you point to any key approaches that enable strong business alignment at FedEx?
Carter: A lot of our business alignment starts at the top. I work for the CEO, I have an opportunity to sit on the Executive Committee and the Strategic Management Committee, and I work very hard on the relationships with our other senior executives to make sure that we’re speaking the same language, that our expectations are as close together as possible, and that I understand what is strategic about the business and the direction that we’re headed. Our chairman, Fred Smith, has always placed that kind of value on technology, from our very first CIO, Jim Barksdale, who went on to his own level of fame with Netscape and others, through the work that we’re doing as a team now.
A very current example of our approach to business alignment is the fact that we’re here in Canada. We met with Rajesh Subramaniam [president of FedEx Express Canada] and his executive team this morning. We go all over the world to make sure that we hook up not just with the IT teams but also with the management teams around the business. We’re working extensively on governance process initiatives that allow us to be very easy to do business with from a business partner standpoint. This helps our business partners know how to engage us, so that we have well honed processes that allow us to be aligned with them. We work hard on initiatives like “Voice of the Customer” to make sure that, with the business, we collect a lot of great requirements from our end customers on what it is that we should build and make sure that we’re aligned on, what the priorities are and how we should go about delivering the capabilities that will make Fedex successful.
CIO Canada: What does your global IT governance structure look like?
Carter: We have a federated organization. Some of the things come out of the core – out of Memphis [head office] and some of the US-based development centres – and then there are a lot of reasonably autonomous groups that are very focused on supporting the needs of the businesses around the world and around the US. We work very collaboratively across all those groups on standard architectures, doing things consistently so that we have a lot of reuse and a lot of ability to share resources.
CIO Canada: What issues would senior management at FedEx most like to see improvement in, with respect to the IT organization?
Carter: We’ve probably been more proactive than most IT organizations in seeking that level of information out and in assessing ourselves about what we can do better. The IT team has gotten very focused in five key areas: cost effectiveness, speed, innovation, service levels and business alignment. We have a lot of very focused activities around those five dimensions. How can we be as cost effective as possible? How can we deliver speed to value for the corporation as best we can – prioritization, moving people around, flexibility? How can we be as innovative as we need to be to drive value for the business? What are the things we need to do to make sure that service levels and availability of the systems for our customers and for our business partners and operations are what they need to be? Then we have a very specific set of initiatives around business alignment that make sure that we’re in constant sync with our business partners.
CIO Canada: What emerging technologies are having a big effect on your business?
Carter: All technology appears to be migrating towards services-based architectures, where you make core services available to the Internet and to applications that run on the Internet. A great example of this is File/print Fedex Kinko’s, a joint venture between Microsoft and Fedex Kinko’s to make Kinko’s office and print centres available virtually from any Microsoft Office application. It’s a downloadable, installable capability that will be out on Microsoft.com, Fedex.com, and available at Fedex Kinko’s locations.
When the application is installed, a Fedex Kinko’s icon appears when you pull down the file/print menu. When you’re ready to print something, whether you’re on an airplane, in your office or in your hotel room, you click on the icon and it unfurls the world of Kinko’s to you. With the help of the store location finder, you can send your output to whichever outlet you want to do the printing. You can also choose the finishing options you require, such as binding, colour, single/double sided, or coloured paper. And you can preview the work online to make sure it’s what you expected. You can then choose when you would like to pick the material up, or if you would like to have it shipped by Fedex. It’s a great example of the power of Web services and services-based architecture.
CIO Canada: What about RFID?
Carter: It’s a big burning question. One of the things that’s not well understood about RFID is that the actual collection point isn’t really the interesting part of the application; it’s the systems that you build that do something with that information – that make it available, that measure compliance, that provide it to the Internet, that make it available to your customers and to your operations. So one of the things about RFID that’s been underestimated today are those back-end systems and management systems that do something with that onslaught of data.
RFID is really not all that new of a technology. Almost 30,000 of our trucks, vehicles and airplanes have RFID capabilities in them that automatically arrive them and dispatch them as they move in and out of our airport ramps and truck yards. Along with that, the systems recognize all of the things that are on that particular vehicle, whether it’s an aircraft or a truck, and arrives them at the destination simultaneously. So fixed-asset RFID is something we’ve been working with for a long time.
EPC – the tag on carton-level, package-level, and pallet-level shipments – is the one part of RFID that’s getting a lot of attention. It has huge potential to deliver a lot of value for businesses and supply chains, but today it still has many challenges regarding the accuracy of the reads. Information about shipments really falls apart on you quickly if you get 94% or 95% of what you need, especially in a passive environment where there’s not a package standing up and screaming that you didn’t get me. That’s a real problem. Scanning compliance in our systems is 99.9% and above. So EPC is an emerging technology that will go through several years of trial and build out, and companies will find that the heavy lifting around that isn’t just getting the readers to read but doing something with the information once they’ve got that tiger by the tail.
CIO Canada: You’ve received various honours as one of the leading CIOs in North America. What personal and managerial strengths enable you to perform at that high level? What does it take to be a great CIO?
Carter: I think that having the courage to surround yourself with great team members is probably the most important thing you need to do. I have members of our management team that are world-class developers and support people in their own right, and could clearly be the CIO at many companies. You also have to create an environment that people love to work in – where people enjoy themselves and feel a loyalty to the mission and the values of the corporation. I personally believe that you have to lead a balanced life. One of the most important aspects of leadership is that the things that you do outside of work bring huge amounts of value to what you do when you are at work, so I very much enjoy time with my family and time pursuing other interests such as sports and travel. My summation quote on leadership and effectiveness is, “Work hard, lead a balanced life, and have an undying respect for people. That will make you successful.”
CIO Canada: How are you, as the CIO, being impacted by Sarbanes-Oxley? What are you doing about it?
Carter: Clearly, systems are at the core of the controls of any company. Sarbanes-Oxley is about attesting to the control environment of your company, so I’ll start off by saying we have superb systems and the control and integrity that are enabled by the systems that we have that support our corporation are excellent. However, we absolutely are having to do additional work to comply with Sarbanes-Oxley around IT general controls, around documentation of how those controls work, from compliance and adherence to all of those controls. It’s a lot of work right now and a lot of focus. It must be done. On the other side of that, I think we will be even better at the way the systems work and the way they support the integrity of the governance of our corporation and it’s financials, so it’s not something that I sit back and grimace about. But it’s a lot of work and it’s requiring a lot of focus on our part and on the development and support teams’ part, and we are having to set aside some business priorities as we do the work that’s now required by the law.
CIO Canada: What is your view of Dr. Nicholas Carr’s now famous article, “IT Doesn’t Matter”, which appeared in the May 2003 issue of the Harvard Business Review?
Carter: My favourite quote around Dr. Carr’s postulate is from a gentleman named Charles H. Duell, who ran the US patent office at the turn of the century. In 1899 Duell wrote in a paper submitted to the U.S. government that we should close down the U.S. patent office because everything that can be invented has been invented. Dr. Carr’s postulate seems to completely ignore all of the significant trends that say the use and adoption of technology in an interconnected world and an interconnected economy is increasing at near exponential rates.
We are at an inflection point that drives innovation forward now that we have the global interconnect. It’s only been ten years since the commercial release of the Internet browser by Netscape, and there are almost a billion connections around the globe that are driving commerce, that are driving education, that utilize that facility to drive all kinds of innovation. And we’re really at the beginning of that.
CIO Canada: How do you see the role of CIO changing or evolving over the next few years?
Carter: I think the CIO will become more and more of a strategist, and less and less of a tactician and project leader. The strategy around the utilization of information technology for strategic advantage, for customer advantage, for growing revenue, as well as for the classic uses of cost-effectiveness and productivity in an organization, are so across the areas of operations and marketing and sales and customer service – and the CIO will have a responsibility to be across those areas, to see the synergies, to work around the globe. It will no longer be the CIO’s job to take orders and say we’ll go build that widget for you and manage that project effectively. We will clearly still have to have a lot of great people in IT to do that kind of work, but I do think that the utilization of information will become more and more strategic to businesses’ success, and that the CIO will have to be a strategist more than a project manager.