See how the first users of wireless technology blazed the trail for companies today
Read about the challenges that faced the early adopters
Discover how going out on a limb is sometimes the right thing to do
You wouldn’t want to have been a field sales representative for Frito-Lay back in the early 1980s. After delivering America’s popular salty snacks all day in the sweltering heat or freezing cold, the reps had to return home to sort through a load of paperwork before they could crack open a cold one and put their feet up. Since the field sales guys technically owned the merchandise once they took it out of the warehouse, their day wasn’t done until the books were settled by hand.
To hear then Frito-Lay CIO Charlie Feld tell it, most of the reps could hardly balance their own checkbooks, much less deal with corporate accounting tasks, so they often drafted their wives to help them. Sorting through the wads of receipts and forms was a nightly ritual that didn’t exactly qualify as quality family time.
So Frito-Lay’s 10,000 sales reps were happy to get their hands on first-generation handheld computers (HHCs) in 1986 that considerably lightened their homework. Based on a Fujitsu device with a homegrown application, the HHCs would transmit daily sales figures each
evening back to the corporate mainframe in Plano, Texas. With a careful pilot program, Frito-Lay’s first foray into wireless technology was a success–salesmen bought into it and the entire program paid for itself.
Although the sales reps loved the new app, not much was easy about being one of the first companies to implement wireless technology. For one thing, there were hardly any vendors at the time. Pioneers like Frito-Lay had to fund multiyear research and development efforts and then cobble together their own solutions–at great expense, in both time and money. There were no standards for hardware, software or radio frequency data transmission. And–at least at first–there were no public networks that companies could use to transmit their wireless data. All this doesn’t even take into account the doubters. Very few people believed that wireless devices would ever be as reliable as that sales rep and his wife hunched over the kitchen table.
In fact, the wireless pioneers made their investments in wireless technology not because they wanted to, but because they had to. They had no choice. In the case of wireless technology, necessity truly was the mother of invention.
By the early 1980s, companies such as FedEx, United Parcel Service of America (UPS) and Frito-Lay had experienced such wrenching growth that they could not continue without the aid of some cutting-edge technology. The paper-and-pen technology that had run these companies’ field service operations up to that time had reached the end of its natural life.
Exigent circumstances have a way of greasing the wheels when it comes to money for research. Or, as Doug Fields, vice president for UPS, puts it: “When them that’s got the bucks has the ideas, it’s a lot easier to get funding.” Fields, a 12-year UPS veteran, oversaw the early 1990s rollout of his company’s self-developed handheld delivery information acquisition device (DIAD), which couriers used (and still do use) to track information about package deliveries.
How times have changed.
For those going wireless today, basic principles gleaned from early experience still apply. As Feld can tell you, it’s most important to pilot your wireless application on a tiny group, as he did with his selected early adopters at Frito-Lay. You must have a time frame to begin the formal rollout, of course, but be flexible. Wait for perfection before going to the next step, he advises. Deploying a flawed wireless application can do incalculable damage to user acceptance.
And don’t forget that in the scheme of things, wireless is still new technology. As such, Winn Stephenson, a senior vice president of IT for FedEx, advises that you devote an in-house team to it. “Even with all the advances in public networks, wireless has enough subtleties and nuisances to be managed as a separate component. Any significant deployment requires quite a bit of work to understand coverage issues, performance, latency and other issues. You need someone in-house to sort through all this for you,” says Stephenson.
“Who’s This Package For?”
A decade after its 1971 founding, FedEx was growing by rates between 35 percent and 50 percent per year. That was good news for the company, of course, but bad news for the roughly 8,000 couriers and dispatchers delivering packages to homes and businesses nationwide. The dispatchers were using a Motorola two-way radio system–broadcast over proprietary FedEx voice channels–to contact the drivers (also called couriers) to let them know where to go next. But each channel could adequately support only about 100 drivers. The company was quickly running out of bandwidth. As the number of drivers using the same channel went up, it became more difficult to access an open channel because of system overload, and drivers struggled to hear which message zinging over the system was meant for them.
Around this time, Stephenson and his team began to search for a method to replace the voice-channel system. FedEx engaged Mobile Data International (now owned by Motorola), a small Vancouver-based company that provided a terminal that allowed couriers to receive dispatches via digital transmission. Initially, drivers would report package-delivery information to a central station every evening and upload the day’s data into the mainframe back at corporate headquarters in Memphis, Tenn. By the second generation of this technology, the devices wirelessly transmitted the data directly from the courier vans back to a central station.
Although Stephenson considered himself fortunate to have found Mobile Data International, the courier-management system was hardly turnkey. FedEx IT development staff worked for months and even years to develop the SuperTracker, a handheld bar code scanner system, that was fully rolled out in 1986. “We didn’t have a model to say how to build this. We just had a huge problem that we were forced to solve,” he says.
FedEx senior management spent more than $100 million on wireless technology hardware and development work during a period of about three to four years. Securing the funding–not exactly chump change in the 1980s–was a straightforward affair because management viewed the project as strategic. “[Wireless] was part of our go-to-market strategy. It fit our concept of what we wanted our products to look like,” says Stephenson. “It reduced the number of additional dispatchers we had to hire each year. It made it possible to grow that fast.”
FedEx’s investment has paid for itself many times over. In fact, the courier-management system formed the basis for FedEx’s famed application in which customers can determine the whereabouts of their packages by their tracking numbers on the phone (and now on the Internet).
The 1 Percent Solution
For another wireless pioneer, however, the funding process wasn’t quite as painless. Frito-Lay began examining alternatives to manual collection of product sales information as far back as 1975, but the enabling technology for mobile computing did not yet exist. “Until the PC came out, the technology was just so cumbersome. You couldn’t even fit the [first mobile devices] into a route truck back then,” recalls Feld, then Frito-Lay account manager for IBM. With the advent of the PC in the early 1980s, however, the time was ripe. One of the first things Feld did when he left IBM and joined Plano, Texas-based Frito-Lay as CIO in 1981 was to kick off a major R&D project.
By 1984, the team had identified Fujitsu, Norand and MSI as potential vendors of HHCs for use by the field salespeople (who also delivered the products). The project was slated to cost $40 million (including hardware, development and training costs). “That was a fair piece of money back then,” recalls Feld, now CEO and president of the Feld Group, a Dallas consultancy. Although the benefits of moving to an automated sales data collection system were huge, the CEO of Frito-Lay parent PepsiCo told Feld it would have to be self-supporting. If Feld wanted to go ahead with the project, he would have to get each of the sales divisions to agree to reduce their selling expenses by one percentage point, from 22 percent of sales to 21 percent of sales within one year.
The genius of the one-point program was that it forced Feld to get rock-solid buy-in from each sales division right out of the box. If sales managers were willing to cough up cost savings or precious sales increases, they had to want the HHCs pretty badly. And they did, because Feld’s team sold them on the idea that the wireless system would cut down–if not completely eliminate–the hassles of toting around clipboards and reams of paper every day.
Feld selected Fujitsu as his partner on the project and rolled out the HHCs to a handpicked pilot group. This initial group was only about 50 people, or half of 1 percent of the total field force. That was no accident. Feld wanted to ensure the application was in perfect shape before he widened the rollout. Since salespeople are famously resistant to change, Feld interviewed sales managers across the country until he came up with people who seemed to be open to new ideas and practices. Once the pilot was deployed, Feld and his team lavished the pilot group with extra care and attention, making sure problems were solved quickly and taking their suggestions for application improvements. “This small group felt pretty special because we had technicians working with them and responding to their problems on a daily basis. They developed a sense of pride that they were part of the invention process,” says Feld.
Getting it right at the pilot stage was absolutely critical. “Once you get outside your small test group, people get discouraged if things don’t work right,” he says. “The application needs to be rock-solid from the start.” With a happy group of pilot users to spread the word throughout the organization, it would have been understandable if Feld had just left it at that. But Feld did more to cushion the rest of the group against the deleterious effects of change. Well in advance of the high-profile Priceline ads, Feld hired actor William Shatner to make a training film for the Frito-Lay field force. “Shatner interviewed a number of the salesmen from the pilot group. They talked about how they were scared of the [HHCs] at first but how they’d never go back to paper. It really broke down the resistance to see their peers talking about it like that,” says Feld.
The official rollout began in 1986, and soon the sales reps were sucking up the HHCs as fast as they could get them. When the application began to take hold and business continued as usual, the atmosphere among sales reps became euphoric. “It was a pretty exciting time,” recalls Feld.
The HHC application had immediate fringe benefits. For the first time, for example, Frito-Lay was able to change prices on products quickly and to have different prices for different geographic regions. Previously, with the paper forms, drivers had to fill out forms that were preprinted with price information. It would have been too cumbersome to change the prices on the forms often. The HHC system gave a lot more flexibility. Most of the reps were undoubtedly happy to get back their evening private time.
“The system paid for itself from day one,” says Feld, because the sales force had agreed to give up 1 percent of their sales budgets to fund it. “But really, we justified it on the basis of operating necessity also. We couldn’t continue to grow at the rate that we had been without putting some kind of system in place.”
Of course, it wasn’t all smooth sailing. Upgrading the application meant changing the hardware as well as the application itself in certain situations. For every major change (about once a year or so), Feld and his team had to go through the painstaking process of getting all the devices back from the thousands of field service reps and then deploying a whole new round of devices. It was tedious, time-consuming and expensive. “If we decided to put a new application scheme on the handheld, our cycle time was about a year to get the new application burned into the programmable memory,” Feld remembers, grateful the days of hardware-centricity are past. (And now the Internet has smoothed the task of software distribution beyond anything he could ever have imagined.)
The Consortium From Hell
UPS also had to go to extraordinary lengths in its wireless efforts. With the rollout of its DIAD I in 1990–a project that cost $350 million for research, development and deployment–Atlanta-based UPS needed to find wireless communication capability so that the drivers could transmit information continuously on collection rather than going back to a central location at the end of the day to manually upload the data. The options at the time were to buy radio transmission services (but this was mostly in metropolitan service areas, or only 40 percent of UPS’s delivery area), use the nascent public cellular carriers or build their own radio towers and construct their own network. UPS chose the second option.
At the time, there were about 200 independent cellular carriers (each market had the local phone company plus a private carrier) covering about 90 percent of the geographic area of the North American United States. In the beginning, UPS was under contract with more than 100 cellular carriers. The cost was high. Vendors charged a lot to their few customers in order to recoup the costs of building their own networks. And managing 100 different providers was a nightmare. In order to get a reasonable price for the services and reduce the management headaches, Fields decided it would be best to get their top cellular carriers to band together in a consortium to serve UPS. The value proposition to the vendors was that it was a painless way for them to add more than 65,000 daily users to their service without much in the way of incremental cost of sale. UPS would get lower costs and less paperwork.
So Fields and other UPS IT managers approached their top cellular carriers–GTE, McCaw Cellular, Pacific Telephone and Southwestern Bell–and asked them to form a consortium called the JVMC (joint venture management committee). Asked what the initials stand for, Fields jokes, “The consortium from hell.”
The rub was that the carriers operated under anti-price-fixing federal regulations that forbid collaboration among cellular carriers. Therefore, the UPS team was required to negotiate separately with each carrier. The idea was to end up at the same price without letting any carrier know exactly what price they’d reached with the others. Eight people from both sides were present at each negotiation, and UPS had to negotiate with four separate companies. Not surprisingly, the process ate up an entire year.
In the end, however, the cellular service was solid, the prices came down, and UPS was able to grow. “It was a remarkable thing. Going into it, I don’t think we had that much confidence it could be done,” says Fields. The consortium still exists. Today, UPS uses the national Motient satellite network from Motient Corp. as its primary wireless provider, but it also uses the consortium as a backup when the Motient network is down and in the few areas Motient doesn’t cover.
Like Feld and Fields, Stephenson is proud of what his company built during the early days of wireless, when most companies’ field service representatives were tethered to their head offices as if by an umbilical cord. “Society was not used to wireless then. There were no cellular phones, even. It was a whole different era back then,” says Stephenson.