IT crucial to USPS’ updated business strategy

The U.S. Postal Service said it will rely on information technology initiatives and new data systems in the coming year to offset rising fuel costs and to comply with new business requirements demanded by the Postal Act of 2006. IT systems will play a large role in many of the agency’s plans to shave about $1 billion off its costs this year — and for each of the next three years, according to an update to USPS’ Transformation Plan for 2006-2010. One-third of the projected savings will come from enhanced systems and the rest from process improvements, many of which also have IT at their core. Labor costs represent 79 percent of USPS' operating costs, the plan states, and the agency “is redoubling efforts to anticipate and match workload with the most efficient staffing.” However, William Burrus, president of the American Postal Workers Union (APWU), said that figure is misleading because it includes managers and agency executives, who have higher salaries than most union employees. APWU is the largest union, with affiliated employees’ salaries representing about 20 percent of total USPS expenditures and about 300,000 employees. Workers belonging to unions account for a little more than 50 percent of the agency’s costs, Burrus said. USPS released the strategy last month as an update to its transformation plan, originally published in 2005, before the 2006 Postal Act passed. The agency is working to meet new management and price rules laid out in the 2006 legislation. Burrus said he plans to meet with the postmaster general soon to discuss the agency’s short-, mid- and long-term plans to meet the act’s requirements. He said he understands that USPS needs to cut costs, but is worried it is not focused enough on growing the business as well. “My concern is that all of their efforts in meeting their business plan appear to revolve around reducing labor costs,” Burrus said. The updated strategy document emphasizes automating the mail stream, citing key developments and products that are coming out this year. For example, officials say that the rollout of the Flats Sequencing System, which will sequence larger mail pieces or “flats” in the same delivery point order as letters, will greatly improve efficiency. USPS also plans to continue to expand the use of its Intelligent Mail system, which aims to improve tracking, visibility and security by using bar codes containing triple the information previous bar codes held to provide a unique identification code for each piece of mail. A new version of the Delivery Barcode Sorter is also going to be field tested in 2008. The new updated approach lays out USPS’ plans to become more eco-friendly and improve the process through which it purchases, repairs and disposes of facilities through its new Facility Condition Assessment program. Last month, government auditors criticized the database USPS uses to keep track of its facilities for being filled with duplicate entries and errors. The Government Accountability Office’s report states that the agency needs to better prioritize maintenance projects at its 34,000 facilities and should use leading federal real estate management practices to identify and close unneeded facilities. The agency also announced last month that it had replaced the 70 data systems it was using to keep track of its more than 700,000 employees with a new, consolidated human resource system called PostalPeople. The HR system uses SAP software and officials say it is the largest HR software implementation of its kind in the public or private sectors. The new system allows employees to accomplish administrative tasks remotely and gives managers new tools as well. The large number of users and decentralized existing systems being consolidated into the new system represented more of a business transformation than an IT project for USPS, said Pat Bakey, president at SAP Public Services.