Amid tightening budgets, USPS uses IT to cut costs

2014_09_iStock_000013709550_Large (Source:

Editor’s Note: This story was updated on Nov. 7 at 12 p.m. to reflect the announcement of USPS’ 7-day holiday delivery in select markets.

As the United States Postal Service prepares to start another round of mail processing facility closures in the first quarter of 2015, officials said the closures and the tightening fiscal situation for the independent agency will not stifle innovation.

According to Kathy Warnaar, a manager of IT performance at USPS, technology that improves operational efficiency at the Postal Service will save the agency money across the board.


In January, the agency put a ServiceNow cloud-based enterprise management system in place. Originally, according to the USPS’ Vice President of Information Technology John Edgar, that system began as a cloud replacement for an IT help desk but grew into an entire service platform that allowed the agency to pilot new back-end programs to increase efficiency.

“We got started in really looking as a replacement for our IT help desk — incident management, change management solutions,” Edgar said. “The tools that we had in place prior, they’re quality tools, they’re industry-leading tools, but they were very difficult and expensive to operate, and, because of that, it was limiting us in terms of how we wanted to try and change our environment and change the way we were using those tools to help modernize and better measure and operate the IT organization, ultimately, allowing us to better serve our customer groups.”

Warnaar, whose primary focus is mobility, said ServiceNow made it easier to develop applications that employees can use.

2014_11_warnaar_kathy Kathy Warnaar
(Credit: FedScoop File Photo)

“If it takes me six months to nine months to develop an application normally and now I’m doing it in one to two weeks, I’m not paying nine months for those two weeks — I’m paying two weeks for those two weeks,” Warnaar said.


After shifting to ServiceNow as a cloud provider, the post office looked at ways to use the service to make its IT-as-a-service platform more similar to something like Amazon, Warnaar said. In the private sector, a company would look for venture capital or a similar investment to help facilitate that type of initiative, but with ServiceNow, the Postal Service now has the ability to create a new application or service and test it for a low cost and over a longer period of time.

“So here’s the fun thing: No one’s going to give the Postal Service venture capital, and we don’t have that extra money for venture capital, to emulate it,” Warnaar said. “But on a very small scale of money, with very large impact, for a week or two of work, we can emulate venture capital now. We can try something out for just a few thousand dollars that may save hundreds of thousands or millions.”

Saving millions would not be a bad thing for the Postal Service, which has already reported a nearly $5 billion loss in fiscal year 2014, with final fourth quarter numbers due late next week. Postal officials, including Chief Financial Officer Joseph Corbett, regularly attribute the dire financial situation to inaction in Congress on overhauling the Postal Service and a mandatory $5 billion annual prefunding payment USPS must pay to the U.S. Treasury.

After defaulting on the 2014 prefunding mandate Sept. 30, the Postal Service tacked on almost $20 billion in defaults to the Treasury since 2011. USPS’ prefunding payments go toward the health and retirement benefits of future employees.

But some members of Congress have attempted to take action and are aiming to take up postal reform when the legislative branch begins its lame duck session next week.


“I urge my colleagues in Congress to take up comprehensive postal reform and fix the serious, but solvable challenges facing the Postal Service,” Sen. Tom Carper, D-Del., the chairman of the Senate Homeland Security and Governmental Affairs Committee, said in a release. “The bipartisan Carper-Coburn Postal Reform Act of 2014, reported out of the Senate Homeland Security and Governmental Affairs Committee earlier this year, addresses the myriad of challenges ailing the American institution and ensures it has the tools and resources it needs to thrive in the 21st century.”

2012_12_tomcarper Sen. Tom Carper

Carper’s remarks came in response to a report from the Government Accountability Office that addressed the USPS’ latest delivery standards, which will reportedly increase delivery time for some first class mail and periodicals from one to two days. The new standards come due to the closure of mail processing facilities in response to budget cuts as a result of the prefunding requirement and the USPS’ fiscal situation.

“These budget cuts, service changes and facility consolidations and closures have a real impact on communities across the country,” Carper said. “But, in the absence of reform, the Postal Service will be forced to continue these painful measures and others in order to keep the lights on.”

Sen. Jon Tester, D-Mont., opposed Carper’s postal reform bill in committee, and said in a release that reducing mail delivery standards could reduce the faith of Americans in the USPS.


“This report shows what almost everyone outside the Postal Service already knows: the Service’s efforts to reduce delivery standards are keeping families and businesses from getting the services they need and the effects are being felt throughout rural America,” Tester said.

Sally Davidow, the communications director for the American Postal Workers Union, said most proposed postal legislation on the floors of Congress is not in the best interest of postal workers or the American people.

“It would basically permit the Postal Service to implement severe cutbacks, and it won’t address the problem. It doesn’t address the problem,” Davidow said.

Despite the tightening budgets and facility closures, the Postal Service announced Thursday that it would expand to seven-day delivery in select markets for the 2014 holiday season. The expanded delivery will hit major cities and other high-volume mailing areas in the country.

The announcement comes as USPS predicts to handle more than 450 million packages this upcoming season, approximately 12 percent more than it did in 2013.


But that doesn’t mean the independent, nontaxpayer-funded agency is out of the woods. After the conclusion of the holiday season, USPS will return to standard delivery, with the difficulties of facility closures in early 2015 set to impact the mail.

Yet even if Congress doesn’t act to help USPS navigate the murky fiscal waters, Warnaar said the agency would still advocate for a higher emphasis on technology and innovation, despite the USPS’ financial situation.

Even if the status quo remains, “I believe it doesn’t change technology’s importance,” Warnaar said. “Our postmaster general, our chief information officer and our other leadership have continued their support that technology has continued to create efficiencies, new products and new customer loyalty. Technology made us extremely competitive in the package business and is creating more opportunity for us. Technology is a very core part of how we move the mail.”

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