From stamp machines to cloud services: The Pitney Bowes transformation
CIO, Pitney Bowes
Editor’s note: James Fairweather, chief innovation officer at Pitney Bowes, has played a key role in modernizing the product offerings at this century-old global provider of innovative shipping solutions for businesses of all sizes. In today’s post, he discusses some key challenges the Pitney Bowes team overcame during its digital transformation, and some of the benefits it has enjoyed from building new digital competencies.
Pitney Bowes will celebrate its 100th birthday in April 2020. Over the past century, we’ve enjoyed great success in markets associated with shipping and mailing. Yet, as with so many established and successful enterprises, we faced slowing growth in the markets that served us so well for so long. While package growth was accelerating, the mail market was declining, creating opportunities and challenges.
To change our growth trajectory and “build a bridge” to Pitney Bowes’ second century, we needed to offer more value to our clients. We needed to move to growth markets, and that required new digital competencies. In 2015, we began a deliberate journey to transform our services, including shipping and location intelligence, for the digital world and make them available via the cloud. We learned a lot throughout this journey. In this post we’ll take a look at three things, in particular, that led to the success of this project—and will help future projects succeed, as well.
Setting expectations and realistic milestones
Organizations tend to undertake product development with a sense of optimism—and it’s often not particularly realistic. You set out thinking something will take a certain amount of time and that you will incur a specific cost, but estimates in technology and development may be optimistic, and costs almost always incrementally increase throughout the development process.
With a digital transformation effort, there’s an additional challenge: You aren’t really heading to a well-defined destination, so the path your team takes can be even more ambiguous. Digital transformation doesn’t have an end state. It’s a process of constant evolution.
For these reasons, and more, it’s important to set informed, realistic expectations—in schedule, in budget, in project scope. It’s also critical that you identify milestones along the way, and recognize and celebrate when you reach them.
When you’re working on a massive, multi-year corporate transformation, after all, it can be hard to recognize that every little action you take each week, everything you win day-to-day, is a part of your progress, your change. So, it’s really important, as a leader, to bring consistency and execution discipline—and be able to point to the progress being made and celebrate accomplishments.
We did our best to follow this advice during our digital transformation. Late 2015 was a critical time for Pitney Bowes as we laid out the technology strategy that would get us to the next century. We were aware of the potential hazards that could arise. You set the strategy, celebrate its publication as an accomplishment… and then nothing happens. To avoid this issue, we broke our strategy out into specific tactics supported by numerous smaller, interim goals. When we started putting big, green checkmarks next to each accomplished milestone, people started realizing that we were making real progress, and were serious about our execution.
One key milestone, for example, was implementing an API management platform. This comprised several granular goals: Selecting a partner, training a subset of our 1,100 team members on the platform, and rolling out our first offering that was built on top of that capability.
We knew that an API platform would be a key part of our digital transformation for three major reasons. First, we had acquired several companies, but their technologies were difficult to share for use cases across the organization. Every time a team needed to use our geocoding or geoprocessing capability, for example, they had to spin up a new environment. By building these capabilities as APIs across the organization, it made it easy to democratize their usage and speed up development.
Secondly, we were running a big enterprise business system platform transformation program and wanted our product teams to be able to consume data from our back-end business systems. This meant that we needed a solid catalog of all these services, so new members of the team could easily find and use them.
Finally, we had a couple of business units that wanted to go to market with APIs. They had a business strategy that entailed selling a service or value, with a vision to build a platform or ecosystem around these capabilities. An API platform (specifically, Google Cloud’s Apigee API management platform) is a huge accelerant in enabling all three of these objectives—it’s how you do this well.
Reusability and the Commerce Cloud
The Apigee platform and team helped us build a key offering that arose from our digital transformation: the Pitney Bowes Commerce Cloud. It’s a set of cloud-based solutions and APIs that are built on our assets and connect our new cloud solutions to our enterprise business systems, such as billing and package management.
Today, we have close to 200 APIs delivered from the Commerce Cloud in the areas of location intelligence, shipping, and global ecommerce. The Commerce Cloud isn’t just a success as a customer-facing platform, however. We often talk about whether our development teams themselves have leveraged its services when developing new products. These discussions help us understand whether a product team has thought through the digital capabilities we’ve already built, assessed which capabilities fits into its roadmap, and adopted the right technology, capabilities, and practices to align with our corporate digital transformation strategy.
Internal use of these shareable services shaves up to 70% off of our design cycles, because so many decisions are already made. Commerce Cloud adoption means you’ve gotten on the path internally, lowered the friction, and are aligned with the broader company digital transformation strategy.
We’re proud of what we’ve accomplished so far at Pitney Bowes. But pride only takes you so far. To determine a project’s success, you need to be able to measure it.
We do have some encouraging external measures: our percentage of revenue from new products climbed to roughly 20% of sales in 2018, compared to 5% back in 2012. And our Shipping APIs, which enable customers to integrate U.S. Postal Service capabilities into their own solutions, has gone from a standing start to an over $100 million business in a few years.
On top of those external results, our business has transformed. We’re no longer just participating in a one-time sale of a product, software, or services; we’re participating in transactions every day that drive client outcomes. The more you can improve the quality and effectiveness of those services, the more you and your client enjoy the benefits of the commercial relationship. That’s a very big business model transformation for Pitney Bowes.
We’ve also sped up our time to market and tightened our service-level agreements. But perhaps most importantly, we’ve developed and adopted a new set of internal processes and a mindset that helps us quickly adapt to changing market conditions. Again, digital transformation isn’t a destination. It’s really a set of processes that enable us to be nimble and keep building a bridge to Pitney Bowes’ future.
For more on the Pitney Bowes transformation, check out these videos and this case study.