Everyone Wants Something From Ken

If nothing else, Old Dominion Freight Lines, a 70-year-old trucking company, is diverse — a collection of seemingly ill-fitting parts and fractious forces.

Its president, for example, expects his company to be as technologically innovative as its Fortune 500 competition. At the same time, Old Dominion (OD) recently acquired a trucking company in which the workers had rarely used computers and would rather not learn, thank you very much. Since its founding in 1934, Old Dominion has been owned by the Congdon family, and they like to run it in their own, relatively idiosyncratic way. But this is also a public company whose thousands of shareholders expect and demand not only a good return on investment but also a strict adherence to federal regulations. Old Dominion has many IT managers who bring years of experience at other companies to the office, but it also has others who joined the department straight out of high school and know only one way—the OD way—to do things.

And in the middle, charged with making all this work, is Ken Erdner.

As vice president of technology and information services at Old Dominion, an $824.1 million less-than-truckload (LTL) carrier, he juggles the often contradictory needs of these diverse constituencies for more than 10 hours each working day. But that’s only one of Erdner’s challenges. He also must meet the rapidly increasing IT needs of the Thomasville, N.C.-based company with relatively minimal resources—a small staff of 80, limited funding and even less time. And he has to manage his $10 million budget well enough to compete with competitors who have more than 10 times his resources.

But remarkably, Erdner, by all accounts, is doing just that. Since David Congdon took over as president in 1997 and put Erdner in charge of IT, Old Dominion has been growing at double-digit rates. With revenue soaring 23.5 percent last year, this rise has left its biggest rivals—Yellow, ABF and Con-Way—in the dust. And during Erdner’s tenure, the company’s attitude toward IT has evolved. In 1999, he was promoted to vice president and given a seat at the corporate table, a first for a CIO in Old Dominion history.

None of this—the growth, the transformation, the efficiency—has been easy to achieve, but Erdner (with the help of his close-knit staff) is getting it done through a combination of hard work, a good sense of humor, a clear sense of purpose and a minimum of three cups of strong coffee a day.

Faster, Faster, FASTER!

Erdner knows his boss put him in charge to move this old-fashioned company in a new direction, to grow without sacrificing the speed and agility possible in a smaller company. “I try to instill a sense of urgency,” says Erdner. But doing things fast and right with limited resources is a constant challenge.Erdner likes to put a positive spin on things. With 80 people in IT supporting more than 8,300 end users (nothing is outsourced), he knows that his people are stretched thin. But hey, things aren’t as bad as they were for Wichita Southeast Kansas Transit (WSKT), the $68 million trucking company Old Dominion acquired on Jan. 15. “They had 500 full-time employees and only two people in IT,” Erdner relates. “We’ve acquired six companies since I’ve been here, and they all had fewer IT people than we’ve had.”

Erdner knows his company is on the low end of IT spending in the LTL industry. At 1.3 percent of revenue, he’s spending less than half of what his Fortune 500 competitors spend—and that includes the OD phone bill that somehow found its way into Erdner’s budget and stuck there.

All of Erdner’s six direct reports would love to have more help. That’s especially true today, as Marc Weiler, the manager responsible for getting 13 recently acquired service centers in the Midwest up and running in two weeks, provides an update at his regular 8:30 a.m. Friday meeting with Erdner. A paralyzing ice storm in Kansas yesterday kept much of the computers and telecom equipment Old Dominion sent from getting to the docks. Luckily, Weiler’s guys (he has a team of three) were ahead of the game before the storm hit. So, he explains, “We’re ahead of schedule,” even though, in light of the storm, “we’re behind schedule.” Both laugh before Weiler moves on to update Erdner on the other 10 projects on his plate, including researching new wireless devices for salespeople, getting contract negotiations under way with MCI (“We could save the company $50,000 a month,” says Erdner) and upgrades to the communications network.

The wonder is not that Erdner and his team don’t fall behind but that they keep moving ahead. In January, for example, they implemented SAP Financials and Fixed Assets, introduced a more robust handheld for their drivers, investigated a new wireless device for the sales staff and integrated WSKT’s systems with their own. In fact, Erdner feels he and his team are delivering everything the company needs—just not fast enough. The new driver handheld, for example, which took nine months, could have been delivered in half that time if there had been two developers on the project instead of one.

“I’d love to have more resources,” says Erdner wistfully, “just so we could get the same things done faster.”

So Many Customers, So Little Time

Even if Erdner got a bigger staff, he’d probably be just as busy. Possibly busier. He wants to know about everything because, he says, at any moment he could be asked a question by any one of his constituents, and he wants to have a good answer. And in Erdner’s book, “I don’t know, but I’ll look into that and get back to you” is not a good answer.

One of his most important constituents is his boss, the president and COO. David Congdon knows his company’s technology. He knows how many AS-400s Old Dominion has and what runs on each. He knows how much each computer costs. That makes him a very tough boss. Congdon is vividly aware that OD’s growth was achieved while spending less than 2 percent of revenue per year on IT. And he doesn’t really care that the other LTL carriers spend more. “[Erdner] runs a lean shop on a lean platform, and he does a great job for us,” says Congdon.

Congdon is Erdner’s most important customer, but not his only one. Although the company employs more than 10,000 people across the country, just 400 of them are at corporate headquarters. But that’s where most of the technology is. Headquarters absolutely depends on IT systems and support to get things done. The more IT systems it gets, the more it wants. And the instant something goes wrong, the managers run right to Erdner or one of his employees.

Because of this high level of involvement, from his boss to his users, Erdner says he has to keep himself in the loop. He meets with a different manager every morning at 8:30 to get updates on everything from the status of big projects to minutiae such as a new scanner someone wants to buy. Every Friday, he meets with his programming analysts. Today, the first Friday of the month, he brings his 35 programmers and analysts into the big, first-floor conference room at 9 a.m. One by one, each programmer updates Erdner on every nuance of the code he or she is developing. It lasts a good hour and a half. Erdner, a former programmer, listens intently, fueled by the giant glazed bear claw his direct report Burwell brought in especially for him. (Everyone else gets bagels.) “I’m a big-picture guy now,” he insists. “But I like to hear the details.”

“He’s very hands on, and I don’t blame him,” says Senior PC and Networking Manager Lisa Boles. “If anything happens, he doesn’t want to be the last to know.” It’s not uncommon for detailed IT questions to get thrown at Erdner by company execs in the two-hour Old Dominion executive team meeting held on Mondays or by a business user at the coffeemaker. Why is the wireless coverage so bad in Missouri? What happened to the website on Friday at 10:30?”Luckily, I haven’t been surprised by a question in a long time,” Erdner says. But that level of involvement can take its toll. “I get frazzled sometimes,” he admits.

“One of his weaknesses is that he just has too much going on,” says Shawn Pope, an operations and help desk manager who has worked in Old Dominion’s IT department for 22 years. “I understand why he wants to be involved with everything, but there’s just so much. He’s said he’ll work on it, but I don’t think that it’ll ever change.”

Keeping Up with the FedExes

Although Old Dominion has more than doubled in size since Erdner climbed aboard in 1997, it’s still on the small side in comparison with the other LTL leaders. That’s why it believes it has to be smarter and more innovative to compete. And competition is always top of mind for Erdner.

He begins his monthly staff meeting with his six direct reports this Friday afternoon by going over the latest data on operating ratios (ORs), the leading industry indicator. ORs reveal how much a company spends to earn one dollar of revenue. Old Dominion’s has improved for the past 13 straight quarters, and Erdner announces that for the fourth quarter of 2004, it’s 91.4, meaning the company’s making nearly nine cents on every dollar of shipping. “It’s the best we’ve ever finished since I’ve been here,” he tells his team. “And considering our growth, that’s tremendous.”

Central Trucking, a Texas-based carrier that once did more shipping in that state alone than Old Dominion did in total, came in at 110 in Q3 of 2004, meaning they were losing a dime on every dollar of revenue. “They’re in trouble. If you go out to their chat rooms on the Web, their employees are saying, We really hope Old Dominion buys us,” Erdner says to a round of laughter in the conference room. But he goes on to note that three competitors are doing better: “ABF rebounded nicely in Q4 to 90.5. And Con-Way is…oh, wait…we beat Con-Way,” he announces. “Yahoo!”

There are several Goliaths in the LTL business. Most notably, there’s FedEx (although LTL is only about 11 percent of its business), which has nearly 5,000 IT workers on staff. Other Fortune 500 competitors include Con-Way, with 287 IT employees; Yellow Freight, with 361; and ABF, with 200 (according to the most recent available figures). “The competition?” says Erdner. “Oh yeah, their IT staffs are huge.”

To compete, Erdner must stay up on the latest technology. “I just can’t find the time,” says Networking Manager Boles. “He’s always throwing articles into my inbox with a note: ‘Hey, maybe there’s something here for you.'” But keeping up with technology is only a start. Erdner must also make sure his staff innovates. Eighty percent of CIOs who responded to our survey on IT-enabled innovation (a supplement to our “State of the CIO” research) cited the IT department as a source for business innovations, over business unit leaders or their company CEO. And that’s the case at Old Dominion. “Erdner is not your typical IT person,” says Vice President of Field Services Terry Hutchens. “He’ll challenge you and say, I’ve got a resource. What can this person be working on for you? Or, I’ve got an idea for how we can make you more efficient.”

Time to Blue-Sky New ideas tend to come largely from two yearly offsites and the monthly Thursday morning meeting Erdner has with his management staff. In contrast to the analysts and programmers’ meetings, this one is pure blue-sky. Today, Erdner says he’s divided Old Dominion’s revenue, and that of its top four competitors, by the number of IT employees, to create a new metric: revenue-to-IT-employee. Currently, the big guys are all between about $5 million and $7 million of revenue per IT employee. Old Dominion is making $10 million per IT employee. Looking 10 years out, Erdner has created a plan for hiring 42 more IT staffers (in areas from networking to wireless to new technology) while increasing OD’s revenue-to-IT-employee figure to $25 million. His six direct reports don’t immediately comment on the fact that his plan is predicated on Old Dominion more than doubling its revenue per IT employee over that same time. Instead, they tease him about why Boles (who Erdner refers to as his “bestest buddy”) and Senior Applications Manager Barry Craver are slotted to get the most help in 2015.

Then, a discussion on the best wireless devices for salespeople in the field leads to the thought that maybe they need something else entirely. The sales application they use most is way too complicated to access on the Palm Treo 650’s tiny keyboard. Wayne Capwell, Erdner’s e-commerce manager, had just been talking about his research into Web services (in the hope that Erdner would give him the green light to invest $50,000 in a discount version of IBM’s WebSphere development tool). Could we create a Web service that would enable the salespeople to query the system from the road through an e-mail and a simple subject line? Craver wonders aloud. Maybe they could type in “customer info” and the customer number and the app would retrieve the information and send it back to the salesperson via e-mail.

“If we do something with Web services,” Erdner interjects, “are we going to have to add another person?”

“Yeah,” says Craver. “And while we’re on the subject, can we get back to your numbers for 2015? Aren’t we going in the wrong direction with this revenue-per-IT-employee figure?” Erdner could double his staff over the next 10 years and still have a better revenue-to-IT ratio than the competition—a more attractive proposition to his direct reports.

A few of the ideas that have emerged from these sessions have proved significant. Most never turn into anything. They may be too costly, or they may deliver too minimal a return. But when you’re running as fast as you can just to keep up, you can never stop.

Just ask Ken Erdner. If you can catch him.

The events in this story occurred on Jan. 6 and 7, 2005.