Digital Imaging, Document Delivery and the United Parcel Service

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Digital Imaging, Document Delivery and the United
Parcel Service

• Wednesday November 4, 1998
• Susan Chapman
• Eduardo Gonzalez
• Nina Lee
• Andrew Robertson
• Jean-Christophe Roux

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288,000

• This is the number of packages weighing less than
  2 pounds that UPS delivers everyday.
• It is also 30 of UPSs revenues (6 billion).
  What if email, which is fine for most of those
  documents, takes the business away?
• The small package segment is already a
  competitive nightmare. FedEx has a strong 56
  market share in this segment.

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To convert288,000 worries into
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288,000 business opportunities!
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...UPS introducesUPS Document Exchange
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UPS Document Exchange

• UPS OnLine Dossier
• UPS OnLine Courier
• Same idea to carry document through the Internet
• But Dossier offers a higher degree of security

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Video Description ofUPS OnLine Dossier
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• Before analyzing the marketing, strategic and
  competitive sides of UPS Document Exchange, lets
  have a look at...

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The technologybehindthe UPS Document Exchange
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• We will focus on
• The main consumer-related specifications that
  have driven UPS technological choices.
• The technologies that UPS chose to meet those
  specifications.

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The main specifications that drove UPS
technological choices

• Universality
• Simplicity
• Reliability
• Security

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• Universality
• Must be available everywhere
• Must be sender-driven
• Must handle various business applications
• Simplicity
• Must be intuitive and user-friendly
• Must NOT imply new IT expenses

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• Reliability
• Must inspire a high degree of confidence
• Must deliver any digitized material
• Must eliminate physical components
• Security
• Must verify identities of sender and receiver
• Must be tamper proof
• Must be trackable

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To meet those specifications,UPS . . .

• Made the obvious choice of the Internet
  (universality and simplicity)
• Allied with ATT to benefit from its Internet
  backbone (reliability)
• Allied with leaders of the On-line delivery
  business (simplicity, reliability and security)

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The technologies that are used

• Step One Have the document digitized
• Step Two Send the document
• Step Three Receive the document

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Step oneHave the document digitized

• Usually, the document is already on the computer
• But if that is not the case, we may need to scan
  the document

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How does a scanner work
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Send the document

• This is the core the UPS Document Exchange
  service
• We will focus on its major feature high degree
  of security

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Before going into the details...
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A little technical up-date!

• Digital Certificates
• Identification and functional role
• The Certificate Authorities
• Digital Signatures
• Guaranty the sender is the appropriate person
• Guaranty the contents were not altered
• Cryptography Primer
• The digital envelope secret and public keys

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Traditional Cryptography
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Public Key CryptographyOnly the appropriate
receiver can open
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Public Key CryptographyThe recipient is sure of
the senders identity
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Digital EnvelopeCryptography

• The trouble is that Alice and Bob must agree on
  the keys and someone may intercept their
  agreement.
• Do you have a solution?
• Yes, the solution is
• Only the appropriate receiver can open the
  document
• The recipient is sure of the senders identity

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Into the detailsofUPS Document Exchange
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• UPS uses this idea of Digital Envelope to secure
  the transportation of the document over the
  Internet.
• This process is designed by
• NetDox for OnLine Dossier
• Tumbleweed for OnLine Courier
• We are going to look at the NetDox solution

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Another three-step approach

• Step 1 From the sender to UPS
• Step 2 UPS in action
• Step 3 From UPS to the recipient

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Step1 From the sender to UPS
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Step 2UPS (NetDox) in action
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Step 3From UPS to the recipient
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Receive the document
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To address theuniversality constraint

• We need formats that are standards
• For text pdf
• For imagejpeg
• For video mpeg
• We focus on pdf

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Pdf format

• Portable Document Format
• Developed by Adobe (Acrobat software)
• Main features by other document formats
• Cross Platform
• Navigational
• Ultra-Printable
• Ultra-Viewable
• Smaller.

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The marketing strategy
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Whats the Product?

• Its fast,
• Its easy to use and safe to use.
• Its versatile.

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Who are the targeted customers?

• Law Firms
• Medical Care Providers
• Banks
• Insurance Companies

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Cost Comparison

• Documents Letter Fax Doc X
• 1 Cost 4.44 6.23 3.17
• 10 Cost 9.62 17.5 3.17
• 100 Cost 61.43 130.1 3.17
• UPS Online offers the potential for dramatic
  savings for its customers.

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Pricing

• Volume Based Discounts within North America
• Monthly Transactions Dossier Courier
• 1-99 7.00 2.50
• 100-299 6.30 2.25
• 300-999 5.60 2.00
• 1,000-over 4.90 1.75
• Volume Based Discounts outside North America
• Monthly Transactions Dossier Courier
• 1-99 12.00 4.75
• 100-299 10.80 4.30
• 300-999 9.60 3.80
• 1,000-over 8.40 3.30

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Benefits comparison

• Method Drawbacks Doc X Solution
• Overnight Time consuming prep. No printing, copy,
  stuffg. Missed pickups No cutoff time
• Internal delivery delays No middleman
• High cost/based on wt. Less expensive,
  based on file size.
• Fax No security/confidentiality Document
  security
• Poor quality Original quality material
• Productivity loss Rapid in time transit
• Calls to confirm receipt Receiver confirmation
• Document tracking.

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Vs. Email

• Email Drawbacks Doc X Solution
• Unreadable versions Reader/translator
• Unpredictable Scheduled Delivery
• Untrackable Document tracking
• Security dangers Identity validation
• Encryption
• Instant desk to desk.

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The History of UPS

• Founded by Jim Casey in 1907.
• Messenger delivery by foot, car and bicycle.
• Established common carrier services throughout
  US by 1975.
• Airline deregulation in 1978, overnight services
  in 1982.
• Corporate legacy Emphasis on internal promotion
  ? lack of IT expertise.

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The Strategy of UPS

• Is it to follow FedExs lead?
• Or to meet customers needs to gain a competitive
  advantage through technological and global
  expansion

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UPS Strategy to Launch DX

• Establish partnerships with major technology
  companies (technical knowledge, shared
  development costs, brand-name recognition)
• Partners develop technology (history of
  well-managed partnerships, Danzas)
• Market with UPS label and through alliances with
  suppliers of ERPs, Internet services, e-mail
  services, PCs
• Move faster than competition

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Why DX fits with UPS strategy?

• Satisfies customer need (fast, secure small
  document delivery).
• Technology development through partnerships.
• Some global impact (especially through OnLine
  Dossier).
• But does it provide UPS with a competitive
  advantage?

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Does DX provide UPS with a competitive advantage?

• Improve customer service
• Decrease overhead and logistics for 288,000
  packages
• Builds customer relationships
• Improve technical knowledge and reputation in
  conjunction with business and e-commerce solutions

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The Competitive Environment
POTENTIAL INTERNAL RIVALRIES

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Potential Internal Rivalries

• UPS works with suppliers partners
• They provide technology
• They help UPS gain market access that UPS lacks.
  
• But some of these partners are positioned to
  compete with DX.

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• Qualcomm iName - makers of e-mail software that
  will include Exchange.
• Mindspring - Internet service provider.
• Compaq Computer - will include Exchange on its
  computers.
• VeriSign, Inc. - will provide digital
  certificates for Exchange
• Adobe systems Inc. - will provide software to
  enable users to display print documents in
  their original form

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• NetDox, Inc. Tumbleweed - two leading providers
  of secure digital delivery solutions. But these
  two partners also offer potential competition!

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• NetDox offers a potential competition.
• DoxIt offers
• Global reach
• Ability to transmit any digital file - text,
  graphics, audio
• Authentication of sender and receiver identities
• Highest level of encryption allowed by law

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• Notarized audit trail
• Verification reports to verify Sender,
  recipient, time, date of delivery, and message
  contents
• Financial guarantee up to 100,000 per
  transaction
• Pay per use - no up front costs
• Works with current system infrastructure

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• UPS is only distributor for DoxIt. Why? Why
  doesnt Netdox simply compete with UPS?

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• Tumbleweed offers a service called Posta 2.0
• This system offered to Posta Service Providers
  (PSPs) that include (not exclusively) UPS
• Posta 2.0 uses hardware and software components
  from Sun Microsystems to allow more concurrent
  users and faster delivery.

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• Posta 2.0 is built on a CORBA-based architecture
  meaning the Posta server software can be
  installed across a cluster of servers to increase
  performance.
• Targeted customers for Posta are different than
  those for DX.

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The Competitive Environment
POTENTIAL INTERNAL RIVALRIES
OUTSIDE COMPETITORS
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Outside Competitors

• The United States Postal Service will offer a
  competing product called Post Electronic Courier
  Service (Post E.C.S.).

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• Post E.C.S. is not yet available
• will deliver documents with differing levels of
  security from secured SSL or PCT internet
  connections to optional RSA file-encryption on
  the Post E.C.S. server.
• will allow recipients to read any document
  regardless of the software applications used.

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• Pitney Bowes also offers a digital document
  transferring solution called iSend.
• iSend offers all of the same technological
  features as Exchange. However, it does not offer
  insurance.
• iSend was created through a partnership between
  Pitney-Bowes and Tumbleweed Software.

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• With iSend, you can pay as you go with per
  transaction pricing, or through a monthly
  subscription, which allows you to pre-pay for a
  number of packages at a reduced price.
• If you opt for pay as you go, you pay 1.00 per
  package plus .50 for encryption, .50 for
  password protection, .50 per additional
  recipient and .25 for confirmation.
• The monthly package entitles users to 20 packages
  for 19.95.

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• FedEx, which has more than 40 per cent of the
  worlds courier market, is not planning to
  introduce a digital fleet. There is no customer
  demand for such a service, it says. Most
  companies are satisfied with their own ISPs and
  e-mail systems.
• -Financial Times (London), June 26, 1998

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The Competitive Environment
POTENTIAL INTERNAL RIVALRIES
OUTSIDE COMPETITORS
SUBSTITUTES
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SUBSTITUTES

• There are alternatives to pay-per-use digital
  document transfer including
• devices that scan and encrypt documents for
  internet transfer and
• encryption solutions for web-based e-mail.

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• Hewlett Packards 9100C Digital Sender is a
  desktop sending device.
• It enables users to digitally send paper
  documents to an Internet e-mail address, fax
  number, JetSend technology-enabled device,
  network printer or personal computer.
• The 9100C retails for 2,999

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• Netscape Communicator currently allows users to
  download digital certificates to encrypt their
  e-mail for free!
• Doesnt offer the same level of encryption.
• Doesnt insure delivery
• Doesnt integrate universality like DX does

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Conclusions
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• Where does DX fall on a 2x2 matrix of
  Functionality vs. Technology?

• We conclude that existing solutions should be
  reinforced rather than opting for DX.

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Is it a promising business?

• YES
• High sales forecast (31 of packages over
  Internet by 2000)
• Inevitable progression for courier business
• Gives customers faster, cheaper document delivery
• Less infrastructure costs for UPS

• NO
• UPS adds nothing but its brand name equity to the
  process
• UPS cannibalizes its own sales with the venture.
• There are better solutions than the one UPS
  offers.

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• Other problems
• Low barriers to entry for other competitors
• Demand will have to be built up and trust issues
  overcome.

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• We conclude that UPS will not add to the value
  chain of its customers through DX more than
  lower-cost substitutes.
• Customers would be better served by augmenting
  existing e-mail (along with attachment features)
  with digital certificates for encryption.
• Possible Solutions
• Sell an integrated software solution
• Provide flat rate for use of secure server to
  transfer documents
• Provide Document Management (add value).

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Strategies for the future UPS and Document
Management
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Document Management

• Technologies used to manage distributed
  documents, disseminate information and input and
  retrieve documents (imaging).
• Its the integration of imaging, workflow,
  groupware and other technologies.
• Why? Integrate UPS into value chain
• In 1998, the electronic document management
  market totaled 2.9 Billion

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The Integration of Information additional
markets for UPS?
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The students referendumWill UPS succeed?
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