Pitney Bowes Picks The Right Path By Reaffirming Its Managed Services Business

CraigleclairSherimcleishBy Craig Le Clair and Sheri McLeish

Pitney Bowes’ affirmation today of its US Managed Services (PBMS) will be a relief for its many customers that have been in a holding pattern since it was revealed they were reviewing (read: shopping) the unit last November. Assessing its portfolio of software, hardware, and services made sense with relatively new CEO Murray Martin on board, but doing so publicly was detrimental in the short run as it created a huge FUD factor around a relatively sound component of its mail stream solutions business. So it’s with relief that at the conclusion of its review of strategic options for the PBMS business that Pitney Bowes will look to cultivate this services arm. In fact, if it hadn’t we would have been really surprised, considering the document processing services (DPS) business is growing, and with a $1B operation Pitney Bowes already has a strong foothold in it.

During the past year, DPS offerings have separated into three distinct segments: hosted repository services, document output services, and distributed output services. The segments are now linking in ways that promise to show real value. Pitney Bowes has a leg in each of these segments, and only a few others like Xerox can make that claim. Giving up PBMS is akin to giving away the crops while keeping the land and farm equipment. Valuable, yes, but not nearly as enriching as leveraging the investment for further growth.

There’s definitely room for a hardware-independent approach to providing managed services. PBMS supplies hardware for its managed services through strategic partnerships with providers such as Sharp, Konica Minolta, and Canon, and it has acquired a supplies company, Print, that provides print supplies.

Yet the real potential is coupling Pitney’s growing software business that focuses on marketing services and location-based intelligence with document process services. The software assets better support the real goals of communication such as outbound campaign services. Pitney Bowes’ hosted repository services offerings, which include data transformation, repository services, workflow, and records management, will grow as well. And with the development of its eDiscovery outsourced services, these can all be bolstered by their software assets.

If you look at the successful transitions that hardware providers such as IBM, Unisys, and others have made, it was to services first. That’s because services are the easier transition and a nice link between the software and hardware. Why Pitney Bowes even considered jettisoning the managed services division is open to question, but at least now we know the answer, and so everybody can breath a sigh of relief and move on.