After NotPetya, FedEx invests in security and flexible IT

Dive Brief:

FedEx's revenue for FY2018 was $17.3 billion, up $1.6 billion from FY2017 despite losing $400 million from the NotPetya attack in June of last year, according to the company's fourth-quarter earnings call. Higher rates and increased freight traffic were credited for the growth in revenue, though David Cunningham, president and CEO of FedEx Express, acknowledged the roles sales, customer service and IT played in recovery.
Though revenue was up, integration expenses were a lot higher than usual due to the attack, said EVP and CFO Alan Graf. The company is now investing more in cyber and flexible IT. After FY2019, the company expects to have between $250 million and $300 million integration costs left.
The shipping company is broadening its tech portfolio by adopting blockchain autonomy, sensor-based logistics and FedEx's Bluetooth low energy sensors, said Rob Carter, EVP of FedEx information services and CIO. However, adjusting the infrastructure, Wi-Fi networks and data management in backend systems to support the changes is slow to roll out.

Dive Insight:

FedEx was hit by NotPetya, also know as Nyetya, last year and it cost the company an estimated $400 million. The shipping company said its subsidiary for international courier services, TNT Express, was infected by the wiper attack.

How companies choose to embrace technology after a cyberattack speaks to their acceptance of digital transformation. Organizations able to integrate cybersecurity into their business model and design it to become a competitive asset are more likely to make it through cyberattacks relatively unscathed.

For example, by embracing infrastructure as code, companies are better equipped to deter an attack by undermining an attacker's return on investment.

FedEx is embracing technology upgrades across its operating models. While technology improves nearly all aspects of business operations, FedEx is focussed on "how we combine technology with physical and human assets," said Raj Subramaniam, EVP, CMO and CCO.

The company's eyes are set on improving its flexibility to accommodate customer needs. But FedEx's leaders know that investing in new technology will ultimately drive operating costs down and therefore increase profitability.