Pitney Bowes: Stamp of Approval
When it comes to innovation and cooperation, Pitney Bowes set the bar early. Arthur Pitney patented his first postage-stamping machine in 1902, and Walter Bowes brought his stamp-canceling machine to the Post Office Department (now the U.S. Postal Service) six years later. Working together, Pitney and Bowes created the first Post Office-approved postage meter. Out of this collaboration, Pitney Bowes was born in 1920, when Pitney’s American Postage Meter Co. merged with Bowes’ Universal Stamping Machine Co.
That tradition of innovation and collaboration continues, as Pitney Bowes, which holds approximately 3,500 active patents, focuses on enhancing its products and services, while simultaneously changing the strategic vision of the IT organization.
The changes started when Gregory Buoncontri, executive vice president and CIO, joined the Stamford, Conn.-based company in 2000. Before that, he says, “Our IT organization was good on execution, but probably not as good as we should have been on innovation. It would have been premature [to make changes] at that time, because adoption of technology is not something that should come solely as a result of the IT organization. There has to be at least a receptive, if not a proactive, agent on the business side of the equation.”
Since then, Pitney Bowes has brought its information technology infrastructure to the next level, according to Buoncontri. It began by setting a course to transform the IT operation by bringing all its disparate parts into a single global organization.
“When we first put this single global organization together, our internal customers wanted reliable, efficient delivery of services,” says Buoncontri. “When we got that right, we moved to the next stage, which was largely about trying to find ways to solve more problems. Now, in the third phase, we are on the cusp of figuring out how to use IT to transform our business models to offer even more value to our external customers.”
In every IT project today, the IT department makes a strong business case to show that the new technology, in a measurable way, will reduce costs or provide the ability to scale to more transactions, or handle a greater volume, without a corresponding increase in costs.
Worldwide IT Oversight
Buoncontri has oversight of all information technology for Pitney Bowes worldwide, with responsibility for the standard array of IT activities, including systems deployment, infrastructure, technology assessments, partnerships and approval of expenditures. Under him are the leaders of the various technology areas (including infrastructure, enterprise systems, customer relationship management, governance and planning, sourcing and quality), along with the IT heads for each of the geographic areas.
The centralized IT organization supports all the business units. “We run IT as a shared service, rather than having a distributed IT organization,” Buoncontri explains.
Pitney Bowes has 36,000 employees in 130 countries, with major pockets of employees in the United States, Canada and the United Kingdom. The IT department that supports them has 200 employees, plus an additional 427 people working on IT through Wipro Technologies, a services partner based in Bangalore, India, and East Brunswick, N.J.
To get a comprehensive picture of the needs of the business, the IT department does a monthly operations review with its internal customers, including business units and field service technician teams around the globe. In addition, project review meetings ensure that projects continue to adhere to corporate goals, and investment priority meetings decide the order in which important IT projects should be deployed.
“We constantly look at what we [in IT] are doing in the context of whether it is what the business wants and needs,” says Buoncontri. “We need to know that each project is supporting either a current or an emerging need.”
Pitney Bowes is vigilant in measuring its success and making sure that its IT practices are evolving in ways that match the evolution of the company as a whole. “The IT organization is very open to benchmarking against other companies and adopting best practices,” says Buoncontri.
To achieve these goals, the IT department avoids the trap of “doing things the way they’ve always been done” in favor of constantly looking at improving itself, Buoncontri says. IT does that by, among other things, providing continuous staff training in both business and technical skills, by ensuring that outcomes are measurable, and by defining what a successful outcome looks like prior to beginning an IT project.
Sharing the Work
A second prong in Pitney Bowes’ IT strategy has been to outsource extensively. Several years ago, the company decided to give much of its application development and maintenance activities to partner Wipro.
“We felt it was important to look at opportunities that would enhance how we perform as an IT organization,” says Buoncontri. “Our view was that, going forward, our company would need more from IT in terms of innovation and solutions, especially those that our external customers could capitalize on. We wanted a model that would allow us to devote more mindshare to those areas and less to tactical work.”
The partnership with Wipro has allowed Pitney Bowes to leverage a variety of benefits, including cost savings, access to a larger pool of labor and skills, and a higher-quality end product.
“Wipro also made us adopt more stringent software quality measures, since it is Capability Maturity Model Integration (CMMI)-certified,” says Buoncontri. “Working with a partner that is certified at this highest level is a catalyst to get us to do it.”
The move to an outsourced model was difficult, especially since it decreased the size of the internal organization. (The IT department retained about one-third of its development activities and one-third of the staff members—those identified as being most important to the company.) To make it succeed, the department needed clear and consistent communication—both with internal IT employees and with Wipro.
“We needed a good idea of the outcomes that we wanted [from Wipro], and we needed to treat them as a true partner,” says Buoncontri. “This is not a customer/vendor relationship; it’s a strategic relationship that has to be balanced.” The goal was for both organizations to be equally involved and to share the benefits equally.
The new structure allowed Pitney Bowes to create a strategic IT plan that was closely mapped to the company’s business plan. “It also allowed us to create a new vision for the IT organization,” Buoncontri says. The vision involved transforming its business models through the strategic use of technology. “That’s something a company needs to do every five to seven years,” he adds.
A streamlined IT organization and strategic use of outsourcing has allowed Pitney Bowes to focus on implementing technologies to support the business objectives of the firm. In its initial forays, the IT department has focused on enterprise resource planning, customer relationship management, mobile capabilities and greater use of the Web.
“None of these technologies are revolutionary, but we know that the general landscape [of other businesses] is making greater use of these technologies, and we have to do that as well,” says Buoncontri. “We’ve demonstrated to our organization that we can perform in the first quadrant in terms of cost and productivity.”
In addition, the company has expanded its vision for the IT workforce and expects to focus on hiring businesspeople who know something about technology rather than the other way around. “We need to be more consultative and solutions-oriented,” says Buoncontri. “For example, rather than having people who are professionals in SAP and know something about finance, it might be better to have finance people who know a little SAP. That way, we can have a much greater ability to drive business outcomes.”
By leveraging a combination of technology innovation, strong planning, collaboration and strategic outsourcing in its IT department, Pitney Bowes is reaping benefits in terms of business growth. Its half-year results for 2008 show revenues of $3.2 billion—up from $2.9 billion in the same period last year.