For Posta, technology drives shift in strategy

Monday March 21 2011

By JEVANS NYABIAGE jnya[email protected]

Postal services have been struggling to stay afloat in a cutthroat market dominated by new technologies.

And so Postal Corporation has sought the help of experts from US-based technology giant, IBM, to position the business in this new era.

IBM Corporate Service Corps Team says competition has taken full advantage of the new opportunities – from banks expanding services to organisations moving into the parcel business.

The team says in their report PCK is in a unique position, with a strong network of branches and agencies that provides it with a competitive advantage.

However, PCK faces several challenges in advancing its agenda, specifically an ‘older’ perception, IT limitations and some structural issues.

PCK has been slow to react to the market changes and competition to maximise on its huge presence in the market.

“In order to keep the business viable and promote growth, strategic and tactical changes must be implemented within the organisation immediately,” says Mr John Fredette, marketing manager, IBM Worldwide Advertising, who was part of the IBM Corps team.

The group recommends that PCK align its structure to new business priorities – establishing an executive level sales management team focused on new offerings, and implementing stricter accountability.

It should also seek to add young and energetic talent to the organisation, including the possibility of a new technology internship programme.

“The firm should update the brand perception – to address the ‘out-of-date’ sentiment in the marketplace – and also promote newer services,” said Mr Fredette.

“However, reliability and trust are two brand attributes that PCK should leverage in all marketing efforts.”

He says the firm could maximise the use of partnerships with financial institutions, couriers and IT firms.

Mr Fredette says there has been a revolution in mobile banking and bill payment services. PCK is in a position to make this even more prevalent, and bring banking services their local postal branches.

“PCK is faced with many challenges ahead, and must act quickly in setting the roadmap for future success,” he adds, “PCK is also strategically positioned to succeed if they leverage their greatest assets – the branches and the personal relationship people have with the brand.”

“When did you last see them advertise EMS which is their main revenue stream? We will implement some of the recommendations for the organisation to remain afloat,” said Information Permanent Secretary Dr Bitange Ndemo, during the presentation of the study findings at his office on Friday.

“They can take advantage of fibre optic and give more services to Kenyans rather than staying in an old comfort zone of mail delivery.”

The Parastatal was split from Kenya Posts and Telecommunication Corporation, which also saw the creation of Telkom Kenya and Communication Commission of Kenya.

PCK, with about 700 branches across the country, has a market share estimated at between 40 and 50 per cent yet it enjoyed monopoly status 13 years ago before the liberalisation of the telephone and communication market in 1998.

In the past decade, social mail was the sure way of staying in touch with friends and family. However, with the rapid growth of the mobile phones, snail mail has been on the decline.

This is because communication has shifted to emails, telephone and short message service. Social communication has become impersonal.

Instant messaging, PDFs and emails, for example, have made the art of letter-writing seem downright quaint and part of the snail-mail business seem hugely outdated.

In Kenya, the average number of letters posted per inhabitant per annum has been declining over the years, due to what the PCK refers to as “demographic dynamics”.

In 2005, for example, the average was 2.9 letters, but that declined four years later to 2.4, representing a fall of 17.2 per cent. The number might reduce further as modern communication technology takes root.

Communications Commission of Kenya statistics confirm the deepening use of the internet in the country, with users growing 10 per cent to 8.7 million in 2009.

In 2009, the PCK recorded a 6.4 per cent drop in revenues to Sh3 billion from Sh3.2 billion even as it increased its investments from Sh26 million to Sh120 million.