It was 1994. The year-old Web was drab. Then, Federal Express did something that turned every head in the business. A few IT guys spent two weeks hammering out some rudimentary software scripts tying the company's package-tracking system to its Web site. Site visitors could locate their packages simply by entering a tracking number.

E-business was born.

"It was not acceptable in our minds that customers should be willing to take goods that were very valuable to them and just throw them into this big anonymous transportation system and hope it came out on the other end," CEO Smith says.

The system "inspired a lot of confidence in FedEx and its next-day guarantee," says Jim Uchneat, former purchasing manager at Digital Equipment Corp.

FedEx actually was driven more by its own cost interests than a grand vision of a global informational ecosystem, Uchneat says. Still, by virtue of its focus on overnight shipments, FedEx forced all shipping companies into real-time tracking.

Indeed, without FedEx's online services, it would have had to hire about 20,000 more customer-service employees. That explains why the company spends about 10% of its $17 billion annual revenue on IT.

FedEx is using the same information assets to expand its empire further. It's giving online merchants the tools to embed package tracking on their own Web pages, linked to FedEx's mainframe. The company has also launched consulting services to manage warehouses and distribution systems, and even build entirely new electronic supply-chain infrastructures.

"Businesses that rely on fast-cycle transportation will tell you straight up that absent FedEx and the people who emulated our system, they couldn't exist," Smith says. "Michael Dell couldn't do it without our type of system. It would be impossible. They exist because our system exists."

go on to the next story, "Internet Strategy Gives UPS A Broader Base Of Customers."