The U.S. Postal Service, which will soon have survived another annual deluge of holiday-bound letters and packages, plans next year to pick up where it left off on its massive IT modernization road map. The organization will build on successful time-and-attendance, retail accounting, and general-ledger implementations of the past few years with improved accounts-payable and human-resources applications, as well as bar-code technology needed to keep pace with its private-sector competitors.
The package-delivery market has changed a lot since 1971, when a law passed by Congress took effect, transitioning the Post Office Department from the president's cabinet into the U.S. Postal Service, an independent organization within the executive branch. "We are clearly in a more competitive market than we were before," Postal Service chief technology officer Bob Otto says.
While relative upstarts including DHL, FedEx, and United Parcel Service have the ability to negotiate special shipping rates with their customers, the Postal Service can't take such competitive measures. The organization's greatest challenge since the Postal Reorganization Act's passage has been ensuring that it remains a self-funded public entity that relies on its own revenue rather than tax dollars. No small task, considering that 1.8 million new business and residential addresses are added to postal routes each year.
"For us, the objective is to generate enough revenue to finance our universal delivery service," says Richard Strasser Jr., the Postal Service's CFO and executive VP.
Everything about the Postal Service's operations rivals the scope of the world's largest companies. The organization delivers 202 billion pieces of mail annually. During the Thanksgiving-through-Christmas holiday season last year alone, it handled more than 20 billion pieces of mail. To manage volume like that requires the efforts of more than 700,000 employees and generates annual operating revenue of more than $68 billion. The Postal Service's Egan, Minn., IT and operations facility manages $2 billion in employee payroll every two weeks.
The Postal Service had many reasons to launch a modernization program to replace a number of decades-old customized applications with off-the-shelf software. One of the most important goals of its Oracle general-ledger migration was to change its financial reporting time frame from every four weeks to every month. The Postal Service's previous reporting schedule didn't always align with the end of the organization's fiscal year on Sept. 30, making it difficult to make precise year-to-year comparisons.
"They have to be able to view their business in terms of seasonality and competition," says Lynda Taskett, principal with Deloitte Consulting. Deloitte, along with IBM, provided consulting and systems integration services to the Postal Service for its general-ledger migration, which is the largest Oracle general-ledger implementation Deloitte has ever done, Taskett says.
"You really need to see data each month to better correspond with the private sector," says Jean Paris, manager of the Postal Service's financial systems modernization program. "Our main goal is to have complete, accurate, and timely data available in our [NCR Teradata data] warehouse."
The Postal Service's move to a Web-based Oracle time-and-attendance application in 2001 and implementation of Retek Inc. retail accounting software the following year also pushed the organization to upgrade its general-ledger application. The retail accounting software, for example, collects revenue and transaction data from more than 40,000 Postal Service branches and posts that data to the Oracle general-ledger system and a back-end data mart.
Retek's software "let us move our accounting workload out of district offices and into a central location," Paris says. "The general-ledger application is where all of the other systems' data ends up."
Since implementing the Oracle general-ledger system last year at its shared-services center in St. Louis, the Postal Service has been able to reduce its accounting clerk staff by 1,000 positions at 80 district locations, primarily through retirement and reassignment, Strasser says. The operating costs of these districts range from $300 million to $1.5 billion annually, depending on the district's size. In fiscal 2004, the first year using the new system, the Postal Service realized $50 million in savings.
Otto is particularly proud of the Postal Service's ability, with the help of Deloitte Consulting, IBM, and others, to overhaul its mammoth general-ledger system within a year. "Going through and changing all of our systems from reporting every four weeks to every month was a Y2K-type of project," he says. "We had to rebuild the interfaces of 60 different systems that connect with the general-ledger system."
Next on the technology team's agenda is the modernization of its accounts-payable system by August. The new Oracle-based application will manage payments for equipment, services, and supplies.
The Postal Service also plans, by the middle of 2007, to implement an SAP HR application to manage benefits, career services, and promotions for the organization's more than 700,000 employees. The system will also be configured to feed data directly into the Postal Service's payroll system.
The Postal Service is also planning to roll out within the next few years a bar-code system that will let postal workers flag mail that requires special service, such as certified delivery, time stamping, or a signature upon delivery. "Eighty-percent of our letters are sorted into delivery sequence using bar codes," Strasser says. "This software upgrade would allow us to embed special instructions in the bar code."
The Postal Service plans to continue collaborative efforts between its IT and financial leaders. That's a good sign. Such collaboration is important when modernizing the underpinnings of an institution born before the Declaration of Independence was signed.