Innovating to Create IT-Based New Business Opportunities at United Parcel Service

Abstract

Although the role of information technology (IT) in enabling competitive advantage is well established, many organizations still find it a challenge to convert IT investments and assets into new business opportunities. The case study in this article describes how United Parcel Service (UPS) has used IT investments to create IT assets and IT competencies, which have led to business capabilities, then to new business opportunities. These opportunities were identified by examining the value network that links UPS’s internal value chain with its customers to uncover information and IT needs of various business partners. In particular, we describe five new IT-based business opportunities that benefit UPS and its customers: (1) outsourcing rural deliveries to a competitor, (2) getting customers to do UPS’s work, (3) helping customers respond swiftly to product recalls, (4) fixing customers’ mistakes and (5) doing customers’ work for them. There are five key lessons from UPS’s experience: (1) Integrate internal IT systems before integrating customers’ processes, (2) Identify service gaps in customers’ business where your IT can add value, (3) Encourage and be open to ideas from front-line managers, (4) Focus first on cost-cutting business opportunities, then on revenue increasing ones, and (5) View information and IT as two distinct assets.

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