Just as the most important business-technology undertaking of Rob Carter's career was winding down, Mother Nature intervened with 175-mph force. In late August, as high winds and rain rattled windows in FedEx Corp.'s hometown of Memphis, Tenn., Hurricane Katrina plowed through Alabama, Louisiana, and Mississippi, shutting down businesses throughout much of the Gulf Coast. It was a disaster of unprecedented scope, even for a company that deals with rough weather all the time, forcing Carter and his IT team to quickly improvise. Yet again.

Photo by Jeff Sciortino

Reacting fast and in creative ways to changing business conditions has become a signature of Rob Carter's management style. You might expect nothing less from the CIO of a $29 billion-a-year company that guarantees millions of customers it can "absolutely, positively" get their packages delivered around the world, often overnight. But asking a CIO to be innovative and obsessively efficient is one thing; actually doing it is another. More than two years into an ambitious project to focus on six business-technology objectives, Carter has shown that he can deliver, earning him recognition as InformationWeek's 18th annual Chief of the Year.

Katrina hit just two weeks before Carter was scheduled to take the stage at a companywide town-hall meeting, so large that the FedEx Forum basketball stadium in Memphis served as the venue, to talk about the progress his team had made on the company's 6x6 Transformation program, so called because it involved six goals with a 2006 deadline. But first, there was Katrina to deal with.

The hurricane's ferocity rendered FedEx's regional facility at New Orleans International Airport unusable, forcing the company to hastily establish an alternative site not only to divert the regular flow of traffic away from the worst-hit areas but to ensure that much-needed relief supplies would be able to get there.

At Lafayette Regional Airport, about 140 miles west of New Orleans and 35 miles from the Gulf of Mexico, FedEx established in two weeks what would normally take months to build--an IT and communications infrastructure to let the company's workers scan, sort, and ship a high volume of packages. The single FedEx turboprop plane that normally taxied daily into Lafayette soon was replaced by three 727 jets shuttling packages to and from the airport.

Neither FedEx's Lafayette, La., contractor nor the airport was set up to handle the volume of FedEx business that circulates throughout the region. The company first had to establish a telecommunications network using VSAT (very small aperture terminal) equipment and IP phones as well as FedEx's own private radio network.

The company returned about 10,000 packages to their senders and headed off new shipments into the area in the days following Katrina. That meant reprogramming more than 100,000 handheld computers to keep deliveries from being sent to undeliverable zones throughout the Gulf Coast. "We had to let them know what ZIP codes were valid and invalid as a result of the storms," Carter says. "The network had to be primed so people would understand the service impacts we were dealing with. You don't want to tell people you'll prepare a shipment, then send it back and tell them we're not going there."

Katrina and the subsequent hurricanes marked the worst regional disaster Carter has had to respond to in his 25-year IT career. But business continuity on a grand scale is nothing new to Carter, who was one of eight IT executives recognized by InformationWeek in 2001 for their responses to 9/11, when FedEx delivered emergency supplies to Ground Zero and helped relief agencies track shipments in real time. To manage its own business at the time, FedEx leaned heavily on its integrated package-tracking systems to help automate the switching of air-freight packages to ground-shipping routes because air travel was grounded for days after the terrorist attacks.

Given the immense complexity of keeping FedEx's huge fleet of airplanes and ground vehicles moving amid ice, snow, and wind storms, Carter knows to prepare for the unexpected. "We store a lot of equipment at our Memphis hub that can be dispatched at any time, although we've never dispatched as much equipment to one place as we did after Katrina," he says.

Budget Minded
Despite the ubiquity of E-mail, instant messaging, and mobile devices, FedEx continues to thrive. In its most recent fiscal year, ended May 31, FedEx reported revenue growth of 19%, to $29.4 billion, and a 73% jump in net income, to $1.45 billion. The revenue line got a boost from the acquisition of the Kinko's copy business, which gave FedEx an important customer-facing retail outlet but also added to the IT department's already considerable systems-integration work.

FedEx, which delivers more than 6 million packages a day, has been challenged to keep its edge in a market where competitors such as UPS Inc. and DHL International GmbH continue to expand and innovate, and where business customers are constantly looking to cut the costs of all kinds of services, including shipping. It was the backdrop of a tougher business environment (some called it a recession) and slowing growth in 2003 that was the catalyst for Carter's bold 6x6 Transformation proposal.