Magazine Article | July 1, 2001

Head Of The Class

Source: Field Technologies Magazine

While your company was wrestling with Y2K, UPS was implementing wireless applications for its customers. Find out why the nearly $30 billion package delivery company was an early adopter of wireless and what you can learn from its success.

Integrated Solutions, July 2001


It's the kid who shatters the perfect curve by not only scoring 100% on the test, but also nailing the extra credit questions. By simply being on top, this kid makes you feel uncomfortable, even though you reside on a safe plateau with the rest of your classmates. As you can attest, it's not much different in the business technology world.

While wireless technology is finding its way onto the radar screens of most IT organizations, few are bragging about real implementations. But, there is at least one company that has been involved with wireless technology and applications for some time now. In fact, UPS (United Parcel Service, Inc.) forayed into wireless with its DIAD (delivery information acquisition device) initiative in 1990. The wireless DIAD devices reside in the familiar brown parcel trucks where drivers input data which is transmitted through a cellular network to the Atlanta-based company's back end systems. Initially, UPS used a cellular network from the major carriers. Now, the company relies mostly on a national satellite network from Motient Corp. (Reston, VA). "We're still the largest user of cellular networks in the world," adds Robert Conner, senior director of interactive marketing at UPS.

Away from the brown parcel trucks and at the individual customer level, UPS has less control when it comes to transmitting data wirelessly. The company can't force its customers to utilize wireless applications, and it can hardly mandate a particular wireless device to end users. In short, UPS' customers are really the dominant variable in the company's wireless equation. It's an X-factor that most companies know about, but few are able to exploit.

Initial Wireless Tests Prove Valuable
In early spring of 1999, it's safe to say that predictions of Y2K doom and gloom were on the minds of most IT staffs, and UPS was no different. However, not all of the technological energy at UPS was devoted to eradicating the Y2K menace. A small portion of the 360,000-employee company spent its time researching wireless technology and how UPS might best extend wireless applications to its customers.

Today, it seems obvious that wireless technology will play an increasing role in facilitating both B2B (business-to-business) and B2C (business-to-consumer) transactions. The Yankee Group (Boston) predicts that over 225 million people worldwide will be making banking, brokerage, and retail transactions over wireless devices by 2005. Another analyst group, Ovum (Boston), projects that there will be almost 600 million worldwide wireless Internet users by 2005 - about 100 million of those users will be in North America. Back in 1999, however, wireless technology had little traction. "We surveyed our customers about how they would like to receive services from UPS," recalls Conner. "From the customer responses, we could see a change taking place. Our customers told us that they weren't only working at their desks or on laptops. Our customers were becoming more mobile, and they liked the idea of getting information while they were on the move." Moving from concept to reality was another challenge altogether.

The initial results of the study led UPS to offer two wireless applications (package tracking, package drop-off locator) to Palm VII users in late spring of 1999. Of the 40,000 Palm VII users at the time, UPS realized that about 5,000 were accessing the wireless applications it developed. Buoyed by these findings, UPS was set to expand overall wireless offerings to its customers in the United States and the rest of the world.

Obstacles To Your Wireless Implementation
Conner readily admits that UPS' core competency lies in delivering packages and not in wireless technology. Because this realization meant the company would have to rely heavily on vendors, UPS identified several critical issues that needed to be addressed before a wireless rollout could commence.

  • Customer privacy and data security were the biggest issues that potential vendors had to address. UPS' number one priority was to protect its customers and its data.
  • UPS wanted its customers to only receive UPS information. "In the process of facilitating the transaction, wireless hosting vendors wanted to deliver ad messages in addition to the UPS data. A lot of vendors insisted on this model, but that was something we were not going to take part in," comments Conner.
  • UPS wanted support for the myriad wireless devices that its customers would be using to access data.
  • The vendor's hosting service platform had to handle the traffic that UPS was anticipating. And, there had to be a well-constructed backup plan if something went wrong.
  • UPS insisted on 24/7 support and service. "Believe it or not, when we were doing due diligence in the fall of 1999, most companies were nervous about offering that kind of support or didn't have staffs in place to make it happen," remembers Conner.

By May 2000, UPS had selected Air2Web (Atlanta) as its wireless hosting provider in the United States and began building the wireless solution that would eventually be deployed in September of that same year. While UPS initially offered customers two wireless applications, the new system increased that functionality to four services. In addition to package tracking and package drop-off location, customers could wirelessly access shipment pricing and parcel transit time data.

While UPS will not release internal results of wireless usage, Conner indicates the project is an unqualified success. More specifically, the company reports that package tracking is the most popular wireless feature followed by package drop-off locator as a relatively close runner-up. Access to shipment pricing and parcel transit time data are the third and fourth most popular services, respectively.

Device-Type Options Expand Usage
While UPS' initial wireless solution reached customers using Palm VII handheld computers, this represented only a small number of the wireless devices in the hands of UPS users. To extend wireless service to significantly more customers, UPS' platform provider had to accommodate the many wireless devices on the market today. Working with Air2Web, UPS offered its wireless services to customers in the United States who use one of five types of wireless devices - one-way SMS phone, two-way SMS phone, WAP-enabled device, Palm VII, and BlackBerry device (for a detailed explanation of each device, see above sidebar). Although not a perfect solution, it did give UPS the broad coverage it was hoping for. "By including five types of wireless devices, we have the ability to hit 94% of wireless consumers in the United States," adds Conner. "That's what we were excited about."

Of the five device types, only one-way SMS is not capable of handling back-and-forth messaging. UPS overcame this obstacle by integrating voice recognition technology into its wireless solution. This allows one-way SMS users to verbally list the tracking number for a particular package. The voice recognition software converts the audio information to tracking number data. The system then tracks the package and automatically sends the tracking information to the user in the form of an SMS message. With the other four handheld devices, two-way communication is straightforward.

Where's The ROI On Wireless?
Wireless is no different from most technologies in that once a company cuts a check it begins measuring the ROI (return on investment) on what it just purchased. In fact, the META Group (Stamford, CT) cites generating a reasonable ROI as one criteria for judging the success of a wireless deployment. While UPS' wireless initiative has improved customer service through anytime/anywhere information availability, hard-dollar savings have been tougher to come by. Some less squishy metrics have come in measuring the number of inbound tracking calls to UPS and hits on the company's Web site. Since the implementation of wireless services, the growth rate in both areas has slowed. The Web site ( continues to get 3 million hits per day, and the calls to CSRs (customer service representatives) pour in, but the monthly increases are less than in the past. While the savings in reducing inbound calls to UPS are significant, they're not enough to justify the wireless implementation. "We have to find a way to pay for this technology. There are cost reductions in eliminating inbound calls, but we need more than that," states Conner. "To that end, we are evaluating a host of options."

One avenue for generating revenue through wireless technology is offering premium services to customers. For example, UPS may push tracking information to customers before they request it. As for additional revenue models, Conner was tight-lipped. The overarching question in regard to any premium service is, "What information does UPS have that is so valuable that customers are willing to pay for it?"

At the same time UPS is trying to generate revenue through its wireless applications, the company is also looking to expand its current service. UPS plans to share its research with some of the larger companies that use its services. For instance, UPS could partner with a Land's End to provide parcel tracking information automatically to the catalog retailer's customers. In a move to make its wireless service more global, UPS plans to roll out wireless tracking applications to Canada and Latin America. Europe and Asia, which currently have only tracking capability, will receive enhanced services similar to U.S. customers.

If your company's wireless plans haven't progressed as far as UPS', don't get discouraged. The smartest kid in the class tends to change from year to year. There's nothing to prevent you from being on the good side of the bell curve. More than likely, however, you'll still be in the company of UPS.

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