GAO Report Calls for Improved USPS E-Commerce Initiatives

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The General Accounting Office issued a report yesterday that identifies areas of improvement for the management of U.S. Postal Service's eCommerce initiatives.


The GAO report, which also has an overview of the legal and policy foundations of the agency's e-commerce initiatives, recommends that to help ensure more effective management and oversight of USPS' e-commerce activities, the Postmaster General should:


• Take actions to ensure that e-commerce and related initiatives are appropriately identified and maintain accurate and complete information related to the status of the initiatives;


• Follow processes and controls that have been established for developing and approving e-commerce initiatives;


• Provide complete and accurate information on costs and revenues for the financial data on e-commerce initiatives.


The report was presented by Bernard L. Ungar, a director of the GAO, at a senate subcommittee hearing that was held by Sen. Thad Cochran, R-MS , head of the. international security, proliferation and federal service.


The subcommittee asked the GAO for the report in November 1999 because, at the time, members of Congress and postal stakeholders raised issues relating to the merits of USPS developments of non-postal products and services, including those that are e-commerce related. The agency conducted its review from January to April, 2000.


John Nolan, deputy postmaster general, USPS, said at the hearing that he fully subscribes to these recommendations.


"These are among the program elements that we have already been working to improve before and during the course of the audit," Nolan said. "The still emerging e-business marketplace puts us all through a learning process, as we seek to understand and anticipate revolutionary changes, and to take the steps needed to serve."


Nolan said that the postal system faces an especially formidable transition as electronic alternatives achieve wider penetration and acceptance over the next few years.


He said bills and payments -- now responsible for about half of the First-Class Mail stream -- are at risk to electronic diversion. In addition, he said Standard-A mail -- the agency's second largest market segment -- also confronts increasing competition from Internet alternatives.


But, as postal customers adapt their own practices and services in order to survive and flourish in the new economy, so must the USPS, Nolan said.


"We intend to provide services using modern technology to improve and build on our existing services and relationships with customers, to continue filling the needs that the postal service has traditionally served," Nolan said.


The USPS this month initiated a nationwide experimental offering called Mailing Online, Nolan said. The service makes bulk mailings quick and easy for customers who want to send their messages electronically over the Internet to a participating printer, for entry into the mail stream near the point of delivery.


Earlier this year, he said the USPS also started several other eCommerce services, including eBillPay, which enables customers to submit and pay bills electronically, and PosteCS in cooperation with Canada Post and LaPoste of France. This global service gives customers who have depended on the mail for their international business correspondence the option to continue to meet the same needs through electronic transmission, while maintaining their relationship with the USPS.


He also mentioned the USPS' new Electronic Postmark, which provides a technologically updated version of a time and date service similar in function to the conventional postmark. Participating customers will be able to use this service in a number of applications to offer their own customers the assurance of authenticated business correspondence.


Nolan said developing the optimum systems for managing eCommerce initiatives is an ongoing challenge for the USPS, and as a result, over the past year, the agency has made management changes based on its experience with these programs.


For example, the agency restructured the management of e-business programs under the senior vice president and chief technology officer and a new position of Senior vice president, corporate and business development.


"We are also putting in place a revenue and cost attribution process for eCommerce so that progress can be measured and subsidies can be avoided," Nolan said.


In addition, he said that this past February, "we created an e-Business Opportunity Board, including appropriate senior officers and chaired by me, to provide oversight and direction for e-business proposals and initiatives."


One of the first tasks of this Board will be to establish a clear statement of USPS' e-business goal, strategy guidelines and criteria for adoption of new initiatives.


"Under this Board, we now have a more rigorous process for the development and review of proposals over their life cycle," Nolan explained. "The process is designed to facilitate the prompt action required by the eCommerce marketplace, while providing the careful evaluation and documented business planning necessary to evaluate proposals, control resources, identify measures of success, and evaluate performance. E-business initiatives are reviewed at successive stages and must be approved by the Opportunity Board. In addition, new eCommerce service initiatives must be presented to the Board of Governors for review.


Nolan said that he expects eCommerce services to perform against much the same management expectations that it would apply to other new services.


ECommerce services should be developed and managed to establish a presence in the marketplace, he said.


" With an appropriate introduction period, usage should demonstrate that they are providing a needed service and should be able to pay their own way. In the fast-changing electronic world, not every service will prove successful. Those that show they are filling the needs of the marketplace will be emphasized, and any that do not will be modified or dropped," he said.
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