Panel urges IT reforms at U.S. Postal Service

E-mail and online bill payments could make the Postal Service irrelevant

Better use of IT may be the only way for the U.S. Postal Service (USPS) to survive the challenges posed by the Internet and mounting budget deficits, a report by a presidential commission concluded.

In its final report, released July 31, the President's Commission on the U.S. Postal Service urged postal officials to use existing information technologies to improve its core mission of delivering hard-copy mail rather than spending precious resources on e-commerce initiatives, such as electronic bill payment and certified e-mail. Failure to do so could mean higher taxes to rescue the USPS from a grim revenue forecast.

"Although the Commission firmly believes that the Postal Service should remain focused on delivery of physical mail, it also believes that the Postal Service should take full advantage of the Internet and other technological advances to perfect value-added services that will better serve the needs of its customers," the commission said in its report. "Without significant modernization, the Postal Service will have three choices: dramatically roll back service, seek a rate increase of unprecedented scale or fall even further into debt, potentially requiring a significant taxpayer bailout."

The USPS is a $67 billion organization, making it the 11th-largest U.S. enterprise by revenue; it is also the second-largest employer in the nation. But unlike other federal agencies, the USPS has a charter to operate like a business, financing its operations through break-even sales rather than congressional appropriations.

However, outdated operating procedures combined with a steady five-year decline in volume of first-class mail have rendered the USPS unable to make up for revenue that continues to be siphoned off by the movement to online bill payment services, e-mail and instant messaging, according to the commission. First-class mail accounts for more than half of all USPS revenue.

"Over the next eight years, as much as 20% of bill payment could occur electronically rather than through the mail," the commission report states. "This poses a significant threat to Postal Service revenue since more than half of all First-Class Mail is composed of communications from businesses and other organizations to households, primarily the invoices and payments now shifting online."

In addition to the agency's current debt and unfunded future obligations of $92 billion, significant annual deficits of $4.5 billion to $8.5 billion are possible during the next 15 years, according to the report.

The key to ensuring the future of the U.S. mail system is not to try to compete with private-sector efforts in the online world, but to apply IT systems to the existing traditional mail delivery system to create what the commission calls a "digital postal network of the future."

The centerpiece of that effort will be intelligent mail -- IT-enabled postage that will not only enhance delivery efficiency but also provide more robust security through personalized stamps that include embedded sender identification information. As a result of the recent mail-based anthrax attacks, the commission directed the USPS to work with the Department of Homeland Security to study sender identification requirements for all mail.

"Intelligent mail could allow the Postal Service to permit mail-tracking and other in-demand services via a robust Web site that ultimately becomes the equivalent of an always open, full-service post office," according to the commission report. "Intelligent mail also can significantly improve mail security through enhanced traceability, and could lead to substantial savings through sophisticated, real-time logistics management."

There are limitations to the current technology base, however.

According to the commission, current bar code technology is limited in its reach and isn't completely standardized, undermining the efficiency gains of a uniform approach. In addition, online postage printing options are cumbersome, expensive and confusing to many individual users, and true mail tracking is available only to larger mailers.

"So even where progress is occurring, too often the full benefits do not reach smaller businesses and individual customers," the commission report concludes. "Making this truth even more troublesome is the fact that many of these same services are standard for all customers of private postal carriers, placing the Postal Service significantly behind the curve of not only technology adoption, but also of consumer expectations."

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Copyright © 2003 IDG Communications, Inc.

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