InformationWeek

ome might say it's a leap of faith to invest millions of dollars in technologies still unproven in American businesses. Don't tell that to UPS.

United Parcel Service Inc. in Atlanta is putting its faith--and $100 million--in a wireless infrastructure that's based largely on Bluetooth and 802.11b, two up-and-coming short-range wireless transmission protocols that have yet to earn a reputation as trusted, stable standards.

Executives at the $29.8 billion logistics company don't consider the wireless initiative, called UPScan, a major risk. Maybe that's because handling 13.6 million packages and documents for nearly 8 million customers each day requires a bit of moxie.

More than likely, though, it's because UPS execs have spent months and sometimes years testing the technologies, have based their choices on business requirements, and have mapped out well-timed implementations.

The company's 802.11b and Bluetooth projects started out small. That's precisely what a company needs to do when taking on a new technology, says Bob Egan, VP of mobile and wireless at Gartner. "The model that UPS is using is a model that a lot of other companies need to get their arms around," Egan says. "UPS was both very tactical and very strategic in their planning and implementation scenarios."

It's possible to turn high risk into high return. With consolidated wireless platforms that require fewer repairs and less IT support, UPS says it expects the $100 million investment to pay for itself within 16 months. According to UPS, when transaction volume reaches the millions, any system that can increase the flow of information and reduce costs, even by a few cents, makes a difference. "If you're doing 25 million packages a day [at peak times], and you save a penny on each one, the return on investment involved in some cases of adopting new technology is pretty short," says John Nallin, VP of information services for UPS.

But UPS expects more than return on investment. "Wireless technology is core to our business," says Jerry Skaggs, VP of information services and manager of the Ramapo Ridge facility in Mahwah, N.J., one of two UPS data centers. The other is the Windward facility near UPS's worldwide headquarters in Atlanta.

Moving millions of packages around the world and managing the flow of information associated with that Herculean task is the challenge UPS has been dealing with for years. Since its inception as a small delivery service on the streets of Seattle in 1907, its operations have grown from horses and buggies and a paper-based tracking system to the now-familiar brown delivery vans, a fleet of aircraft, and wireless hardware tablets used to scan packages and transmit delivery information to UPS's central network. The network feeds the New Jersey and Georgia data centers, which house a total of 15 mainframes with 16,942 millions-of-instructions-per-second capacity and 140 terabytes of company and customer data. It makes what UPS says is the world's largest installed IBM DB2 database system.

These efficiencies have enabled the the company to progress to an overnight delivery service that can provide customers with nitty-gritty details, such as the location of each customer's package, when it will be delivered, and who actually signed for it.

UPS is evolving to better serve its customers. Over a five-year period, it will consolidate and replace nine different wireless hardware systems with three, incorporate Bluetooth and 802.11b for short-range transmissions in warehouses, and do away with multiple proprietary operating systems running on the various devices employees use to gather and transmit information by adopting Microsoft's Windows CE.

A longtime proponent of wireless technology (see sidebar story, "For UPS, Wireless Technology Has Become A Tradition"), UPS has accumulated numerous wireless devices, applications, operating systems, and programming languages. The result? Its IT department was stuck with a morass of systems that couldn't interoperate or be upgraded easily: 200,000 wireless-device terminals made up of 18 different models from 13 different vendors running 19 different applications and seven different operating systems. "Over time, you can accumulate a lot of different models and devices, and I had 138 people in IT working to support all the devices," says David Salzman, program manager of information services for UPS.

So last July, when the time came for a companywide wireless upgrade, which typically occurs every five years, UPS executives decided on a major overhaul. "For portable equipment, the sweet spot is five years. After that, it all starts breaking down," says Salzman. "We saw an opportunity to consolidate." The company also decided to go with the two new short-range transmission protocols.

Salzman is spearheading the UPScan campaign to consolidate the systems. After assessing each application, the needs of each user, and how wireless is being used as part of overall business processes, UPS settled on three new versions of established devices within UPS, code-named Sapphire, Ruby, and Emerald.

UPScan first focused on fixed-mount wireless systems called Sapphire, which are attached to walls or inside vehicles. With Sapphire, UPS consolidated six internal applications and used 802.11b wireless LANs to connect the devices to UPS's fixed networks. Salzman and his team are gathering information on what needs to be incorporated in the next generation of UPS's Delivery Information Acquisition Device, code-named Ruby, which is a computer hardware tablet drivers use to enter tracking numbers for each package. UPS expects to issue request-for-proposal alerts to hardware developers next month to build Ruby.