UPS' e-comm wake-up call (Part 2 of 2)

By Sandra Gittlen
Network World on E-commerce in the Enterprise, 12/08/99

In the last newsletter we described an e-commerce issue that came up at UPS beginning in 1996. The package-delivery company wanted to give its customers access to the company's shipping and tracking tools. But customers no longer wanted that access through a stand-alone proprietary system. They wanted to call up a single application and have package delivery be a seamless part of the process.

But to do that, UPS had to come up with new software. Normally, UPS would have developed its tools in-house. But a company called TanData, a third-party package-handling firm in Tulsa, Okla., already had the management software in place that UPS was looking for.

Alan Amling, director of e-commerce at UPS, says it was a "build-or-buy decision," and UPS decided to buy. The company invested in TanData and adopted the modular multicarrier shipping management system that TanData offered its business customers. A sticking point for executives, however, was the fact that TanData's software combined data from all the major package delivery firms and let users choose which one they wanted to go with. "It was hard to tell senior executives that we were going to invest in a company that allows users to choose our competitors," Amling says. But in the end, he convinced them by saying that if UPS didn't do it, someone else would.

From the TanData software came the UPS Online Tools suite, which UPS offered to some of the major e-commerce and ERP vendors, including IBM, SAP and Oracle, for integration into their product lines. The UPS Online Tools suite lets customers access tracking, label printing, cost calculators, address validation and pricing information from whatever application they are using.

UPS also formed alliances with business application providers such as PeopleSoft to meld its tools into the back-end corporate processes. As a result, customers such as Land's End can now check addresses when entering an order, track packages at customer service and verify delivery at accounts receivable. At the same time, Land's End customers, for instance, can check if the package shipped, monitor transit problems, access receipts and get authorization to return items via the traditional online storefront.

Forming the alliances has been challenging, though, as various vendors use different methods for hooking onto databases. UPS offers its partners three options for connecting to its central database. The first is an API that hooks directly to the database. Amling says this option loses the look and feel of the Web, though. To solve that problem, partners can use HTTP datastreams, which bring the information into Web form.

The last option, which Amling says is still in the works, is XML. Using XML tagging, partners can integrate information in the UPS database with their online forms. For instance, a user could check shipping and handling costs without leaving the purchase area. Instead, the e-commerce application would draw the information from UPS' database as an XML query and it would appear as part of the main purchase form in a field tagged for shipping information. Currently, XML is only available for UPS' tracking tool, but Amling says more offerings will be rolled out throughout next year.

Another big growth area for UPS is wireless. End users want to be able to manage package delivery from their palm computers. UPS worked with Palm Computing to develop an application that lets Palm VII users track their packages from the wireless device. It also tells users where the nearest drop-off location is.

Amling says UPS has learned its share of e-commerce lessons. "In the beginning, it was a decision of, Are we going to compete with storefront apps or ERP apps," he says. Instead, the company did things the Internet way and worked with others. UPS learned that partnerships are easier to form than brand-new businesses. UPS focused on its core business - shipping packages - and let others worry about the rest. Throughout the process of moving online, Amling says he has had to convince UPS executives that competition is good. For instance, executives thought investing in a multicarrier system would cannibalize the profitable proprietary system the company had in place. But Amling says cannibalization is okay as long as you're the one doing it.