Pitney Bowes 2014 Annual Report Download - page 19

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ITEM 1A. RISK FACTORS
Our operations face certain risks that should be considered in evaluating our business. We manage and mitigate these risks on a proactive
basis, including through the use of an enterprise risk management program. Nevertheless, the following risk factors, some of which may
be beyond our control, could materially impact our business, financial condition, results of operations, brand and reputation, and may
cause future results to be materially different than our current expectations. These risk factors are not intended to be all inclusive.
We are subject to postal regulations and processes, which could adversely affect our revenue and profitability.
A significant portion of our revenue and profitability is directly or indirectly subject to regulation and oversight by postal authorities
worldwide. We depend on a healthy postal sector in the geographic markets where we do business, which could be influenced positively
or negatively by legislative or regulatory changes in those countries. Our revenue and profitability in a particular country could be affected
by adverse changes in postal regulations, the business processes and practices of individual posts, the decision of a post to enter into
particular markets in direct competition with us and the impact of any of these changes on postal competitors that do not use our products
or services. These changes could affect product specifications, service offerings, client behavior and the overall mailing industry.
The volume of physical mail delivered via traditional postal services has been declining and is projected to continue to decline. If we are
not successful at addressing this decline and transitioning to more digital-based products and services, our results of operations and
profitability could be adversely impacted.
The historical decline in mail volumes has had an adverse impact on our revenues and profitability and is expected to continue to influence
our revenue and profitability in the future. We have been employing strategies for stabilizing our mailing business and providing our
clients broader access to products and services through online and direct sales channels. In addition, we are introducing new products
and services and transitioning our current products and services to more digital offerings; however, the margins associated with these
digital offerings are typically lower than our traditional mailing business. There is no guarantee that these offerings will be widely accepted
in the marketplace, and they will likely face competition from existing and emerging alternative products and services.
Further, an accelerated or sudden decline in physical mail volumes could have an adverse effect on our mailing business. An accelerated
or sudden decline could result from, among other things, changes in our clients' communication behavior, changes in communication
technologies or legislation or regulations that mandate electronic substitution, prohibit certain types of mailings, increase the difficulty
of using information or materials in the mail, or impose higher taxes or fees on mailing or postal services.
If we are not successful at meeting the continuing challenges faced in our mailing business, or if physical mail volumes were to experience
an accelerated or sudden decline, our financial results could be negatively impacted.
If we are not successful in increasing revenue in our DCS segment, our consolidated revenues, profitability and long-term growth could
be adversely impacted.
We are executing on a strategy to grow revenue significantly in our DCS segment. The successful execution of this strategy will require
us to make continued investments in research and development opportunities that offer the greatest potential for near and long-term
growth. These investments include, among other things, new and enhanced offerings in our global ecommerce, location intelligence and
customer engagement solutions, and the specialization of sales channels. However, the process of developing new technologies, products
and solutions can be time-consuming, costly and uncertain, and there are no guarantees that we will be successful developing new
technologies and solutions to meet rapidly changing customer needs. Further, even if we are successful at developing new technologies
and solutions, they may not be accepted by the marketplace.
We may not realize the anticipated benefits from our planned implementation of a new Enterprise Resource Planning (ERP) system, and
the transition to the new ERP system may not be uninterrupted or error-free.
We are in the process of implementing a new ERP system that is expected to provide operating cost savings through the elimination of
redundant systems and strategic efficiencies through the use of a standardized, integrated system. We have made and will continue to
make significant investments and incur incremental expenses over the course of the implementation of this ERP system. We expect this
implementation will begin in 2015 and occur in stages over the next few years. If the implementation of the system is not successful, or
is delayed, the expected operating cost savings and strategic efficiencies may be delayed or may not be obtained or sustainable.
Further, the transition to the new ERP system will affect numerous systems necessary for the company's operation. If we fail to correctly
implement one or more components of the new ERP system, we could experience significant disruption to our operations. Such disruptions
could include, among other things, temporary loss of data, inability to process certain orders, failure of systems to communicate with
each other and the inability to track or reconcile key data.