As part of a broader strategy to cut costs and modernize its IT, FedEx offered a voluntary buyout to IT and select other workers as it adjusts its talent mix by giving more work to service providers.
FedEx needed that development speed when its main rival, UPS, launched a new service, called My Choice, in October 2011 to let package recipients redirect their packages en route. Creating such a service is a big challenge for package-delivery companies because most of the information they have and the services they provide focus on the shipper, not the receiver. FedEx launched a competing service this quarter called Delivery Manager. "We had to step on the gas, no doubt," Carter said. Delivery Manager would've been almost impossible to do without a single address look-up service, he said.
Another fundamental change at FedEx IT is its move to a private cloud architecture for its data centers. A private cloud in FedEx terms means that all its servers, storage and networking configurations are designed for what Carter calls "general-purpose computing," so that they can run any application workload rather than be dedicated to one function.
FedEx began this private cloud effort after the IT organization mapped out the company's future data center needs several years ago, and the board of directors balked at the capital cost. Using a private cloud architecture instead, FedEx built a data center in Colorado Springs, Colo., that consumes about one-third the power as was originally planned, in about one-fifth the physical size.
Before moving an application into the Colorado data center, which opened in early 2011, the applications were rewritten to run on a common software stack to allow for workload shifting. While some of the software used to run FedEx's data center continues to be proprietary, "we will be OpenStack compliant in a short period of time," Humphries said, referring to the open-source private cloud platform.
The Colorado data center is located at an elevation of 6,000 feet, letting FedEx cool the building using the outside air instead of costly air conditioning. The design is modeled on the ultra-efficient, standards-based data centers that Internet giants such as Amazon.com, Facebook and Google have built. And that infrastructure will let FedEx move some computing capacity to public cloud services from the likes of Amazon, Rackspace and Verizon in the not-too-distant future. FedEx is set to convert a data center based on the same private cloud architecture near its Memphis headquarters.
FedEx faces significant risks from the scale of its change. Carter knows he's losing important technology expertise by cutting staff, but he said he's convinced that the voluntary, staged buyout will help transfer that expertise gracefully to third-party service providers.
While Carter downplays any negative impact from the transition, he doesn't downplay the scale of the change the FedEx IT leadership team is trying to pull off. Said Carter: "People, organization, processes, technology, platforms -- everything that we were doing is being reset."
Editor's Note: After further discussions with FedEx CIO Rob Carter, the editors made a few minor changes to the headline and story.
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