Pitney Bowes executives say changes will pay off

March 21, 2017

STAMFORD — Pitney Bowes did not deliver growing revenues and profits last year, but executives say the company is already sending out improved results for clients.

Last year marked a period of sweeping changes for Pitney, as the technology firm continued its “digital transformation” launched three years ago that aims to implement more innovative and responsive products and services. The transition is ongoing and challenging — as shown by the company’s disappointing financial returns in recent months — but executives said they have faith in the changes.

“This is a very important transformation,” James Fairweather, senior vice president of technology and e-commerce, said in an interview last week at Pitney’s headquarters at 3001 Summer St. “It’s important for our clients, important for our shareholders and the value we create for them, and it’s important for the employees. It genuinely is a bridge to a second century for this company.”

Launched last April, the Commerce Cloud system underpins the shifts that affect a roster of clients that includes 1 million small and medium businesses and 90 percent of the Fortune 500 companies. It represents a digital framework that aims to improve the design of Pitney products and services, upgrade them with cloud-computing capabilities and connect them to troves of data to deliver better analysis.

Forty Pitney products now use a common “design language” encompassing apps’ display, graphics and processes, compared with just a couple of products sharing those traits three years ago. The shared design traits intend to emulate the “visual integration” found in products made by the likes of Google and GE.

“Our experiences look the same across products — it’s critically important,” Fairweather said.

The cloud-computing focus of Commerce Cloud, meanwhile, has allowed Pitney to partner with more firms. With the San Jose, Calif.-based technology firm Apigee, it has produced hundreds of application programming interfaces known as APIs that allow Pitney’s services to mesh with other firms’ software.

Data analytics also figure prominently in the Commerce Cloud system. Fairweather cited the potential of the SmartLink product, which connects digital postage meters to the Commerce Cloud.

“We send a message to clients every month,” Fairweather said. “That message includes your usage from the past month of postal services… and here are ways you could choose different services to save yourself money or improve the delivery performance you’re getting.”

In addition, the Commerce Cloud includes new digital “business systems” that run back-office operations.

Pitney has earned a number of accolades related to its digital upgrades. At the IoT Solutions World Congress last year in Barcelona, it won an award for “Best Business Transformation Solution” for SmartLink.

But the company’s lackluster financial results in the past year have raised doubts among some observers of the company about the effectiveness of the changes. Pitney’s 2016 revenues totaled about $3.4 billion, a 5 percent decrease from the year-end result in 2015. Its 2016 profits amounted to about $95 million, compared with about $408 million in 2015. The company has cited the impact of a $166 million accounting charge in the past quarter on the bottom line.

Pitney executives have said they expect revenue in 2017 to range between a 2 percent decrease and 1 percent increase over the 2016 total.

The company’s developers, engineers and technologists remain confident in the potential of the products and services they are creating, Fairweather said.

“We have to perform financially, but the teams are resolute in their commitment to this resolution,” Fairweather said. “They love learning new skills.”

pschott@scni.com; 203-964-2236; twitter: @paulschott