Reinventing Pitney Bowes

Jeff Hayes
Jun 17, 2010

Pitney Bowes is best known for selling, leasing and servicing mailing equipment to a large customer base across North America. While this business has grown steadily and generated strong cash flow for many years, it has come under significant pressure as Internet-based services displace first-class and direct mail.

Over the last 10 years Pitney Bowes has been deliberately re-inventing the company through acquisitions, partnerships, and internal initiatives to provide new services, reach new customers, and expand into other geographies.

After meeting with the Pitney Bowes senior leadership team last Thursday, our take is that the company is strongly focusing on software-based solutions and related services that complement its traditional mail business, generating substantially more revenue from enterprise accounts, and steadily expanding outside of North America.

Technology Fair at Pitney Bowes Global Innovation Day

Technology Fair at Pitney Bowes Global Innovation Day

InfoTrends believes that Pitney Bowes will continue to be pressured by the relentless disruption of the Internet (as are many document-based technology vendors), but that it is embracing this disruption with a spirit of innovation. Our sense is that PB still faces challenges related to its brand perception, its ability to effectively sell new solutions that don’t involve a postage meter, and its breadth and depth of international business. Pitney Bowes management recognizes these challenges and is taking steps to address them through marketing, partnering, new employees and training.

Key Highlights from PB Strategy Briefing

Used its strong, stable cash flow to make nearly 90 acquisitions over the last ten years. Most of these acquisitions have been related to software and services with a focus on more deeply serving Enterprise accounts.

  • Group 1 Software (mailing efficiency, data quality and customer communications software)
  • MapInfo (location intelligence and GIS company)
  • Digital Cement (professional services firm that provides relationship management strategy and services)
  • Emtex (multi-vendor and multi-site print operations software)

Dramatically increased revenue from Enterprise accounts (500+ employees) which now account for approximately $2.6 billion (47%) of $5.5 billion total sales

Fostered a culture of innovation

  • Concept Studio — a corporate group of nine people that works with business units to accelerate the innovation process
  • Innovation Idol — an employee competition to generate ideas and select one that will receive corporate funding
  • IdeaNet — an internal social media innovation tool where business units issue “challenges” and generate ideas from employees
  • Joe Timko — a former McKinsey consultant and Bell Labs executive that PB recently hired as its Chief Strategy and Innovation Officer

Actively building partnerships including strategic relations

  • HP for its inkjet technology
  • SalesForce.com for cloud-based services

Rolling out a series of innovative solutions that leverage the company’s expertise in location-based marketing, data/predictive analytics and production workflow focused on key vertical markets

  • Finance
  • Insurance
  • Health care
  • Telco
  • Retail

Announcing an innovative portal to meet the needs of the SMB (small medium business) segment with a broader set of services beyond simple postage and supplies purchases including:

  • Target market planning
  • Marketing templates, stock images, marketing copy
  • Purchasing email blasts, PURLs, and direct mail print and mailing
  • Response analytics
  • List management
  • Platform for future partners to provide additional solutions or link to other portals

InfoTrends believes many other document technology vendors and services providers should take notice of the transformation taking place at Pitney Bowes. Business transformation is not easy, and requires strong leadership and a long-term commitment. The era of steady, predictable earnings growth coming from selling devices that deliver recurring revenue streams is coming to a close in many market segments. Vendors need to continually challenge themselves to find new value propositions that address contemporary customer issues.

Look for a more detailed InfoTrends analysis on the Pitney Bowes transformation strategy in the coming weeks.

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