Worth a closer look: SOFO

SANFORD, FL (jbeech.com) – Schools, universally facing budget crunches, are hoping technology rides to the rescue. The sooner the better.

In the news this week; reports of declining tax receipts lead to three additional schools being slated to close next year. Added to what’s turned out to be merely the first, it stirs quiet angst. In other news, we learn in-state tuition is going up. Again. I bet it’s the same in your state.

It spells opportunity. When better teachers are in demand but nobody will pay for them, and in an economy where college graduates are having a time of finding work, and when schools are closing, whomever offers solutions will make some money. A pot full of it.

Since follow the money is always good advice, here’s something you may not be aware of.  Sonic Foundry, NasdaqCM: SOFO. They offer hardware called Mediasite, plus archiving services. This last is important.

What’s it for? It’s a one-box Internet-video webcasting/archiving solution. In a nutshell, it means saving money plus schools. First, examples outside the schools.

Government

It’s the end of the day and a police chief learns an 80-year old Alzheimer’s sufferer has wandered off. “I’ll make the silver alert myself.”, he says wearily.

Within minutes, they fire up a couple of $200 consumer video cameras. These are connected to a black box called Mediasite. The chief steps to the podium and says, “Friends, we’ve got a missing . . .”

This goes online in real time, e.g. it’s broadcast – webcast – live. One minute later (10 minutes if he’s got political ambitions), the ‘webcast’ is also available online; it’s archived. Best of all, it’s easy. No postproduction whatsoever.

This is important because with an elderly person, time may be of the essence. It’s available via a link. e.g. on the home page of local government websites, via feed to local radio and television stations, etc. This can be big with police departments.

Businesses

Alternatively, a public corporation – probably spending more for cameras – but basically the same setup, reports their quarter, or introduces a new product. Again, video goes out live, and is archived for later viewing by shareholders. It’s fast and easy – like Jobs in his prime – but without the hassles. This can be big for businesses too.

Education

However, if every public corporation in America, plus every police system had one, the applicability to schools would dwarf them all. For example, a cash strapped school system buys into the sales pitch as a way to lower costs.

The pitch is easy, build out your e-learning infrastructure, or it’s how distance learners get the same quality education, or perhaps it’s simply because they have homebound students – several kids with mono – needing service.

They purchase a single Mediasite. It’s installed in a classroom along with two cameras (CU and wide angle). There are two mics as well. The lavaliere is for the instructor if he’s the wandering type, otherwise a mic fixed to a podium works. Add to it a handheld wireless microphone to pass around. With this, plus ambient lights they’ve created a studio. It can be done in an afternoon.

All-in it represents $30,000 for consumer-level AV hardware. $60,000 if using pro level cameras and mics. Insiders know consumer/prosumer stuff is plenty good enough for virtually all webcasting. Maybe add in for a computer-whiteboard serving as another video feed to Mediasite (though a cheap camera trained on the blackboard works too). Regardless, it’s chump change in the world of school systems.

One camera and mic can be trained on the instructor. One, or maybe two, cameras aimed at the students, are enough. Getting fancy means instead of the instructor multitasking, because switching feeds with Mediasite’s switcher is easy enough, the class AV-nerd lends a hand.

Subsequently, the math teacher does his lesson plan on solving quadratic  equations. Every hour, on the hour, perhaps with minor orchestration at first, kids shuffle in and out of this one classroom. Before long it’s old hat.

Lessons are webcast and archived. A social studies teacher and the class Q&A about the 4th Amendment, or an English teacher lectures on verb usage. They’re all webcast live and subsequently available via the Internet.

Whether it’s online lecture capture, distance learning, continuing ed, meetings, or cops alerting the public more quickly than a news team can show up, they’re all available instantly. And storage is doing nothing but getting cheaper.

The real money – archiving

Archiving happens on SOFO’s servers. It’s where the real money is for SOFO; the lucrative services revenue-stream. Who’s using it already? They’re big name universities. Foreign governments as well. Our government too, of course. Moreover, after a trial purchases, they buy more. This is a good trend.

Even a cursory look at the list of higher learning institutions, which have made repeat purchases, is compelling. There’s a reason. The technology will certainly make it’s way into local schools where use may be controversial. However, there’s potential for getting world-class instruction online cheaply . . . and saving money.

SOFO is a small issue, there’s certainly no dividend, but it’s early in the game. Do your own homework, e.g. whether there’s a place for it in your portfolio. Now you’ve been briefed on what it is and what it does.

If I were the sales manager responsible for selling this product I’d be arranging dog-and-pony shows at any and every county board that would make 10 minutes for me. I’d hook them for an hour, maybe two . . . and I’d help make SOFO shareholders filthy rich because it’s an easy sale.

Wresting efficiencies from our USPS

SANFORD, FL (jbeech.com) – citizen involvement in divining further efficiencies at the USPS may help reduce debt without hurting service.

Nothing’s quite as American as the special attachment some of us have for our mailboxes. Unsurprisingly, fooling with this aspect of our postal service is something the USPS (and politicians) are discovering is fraught with emotions. Yet the need for greater efficiency means change must come soon.

While complaining about the mail approaches a national pastime, the USPS does a lot of things right. A perfect example is found at the very end of the delivery chain where things work rather efficiently, especially in the form of Community Mailboxes. While the styles vary (with some designs being quite old), individual units serving 8-16 families offer the chief benefit of minimizing stops for the postman.

Could the USPS garner further efficiencies by consolidating underutilized community mailboxes and thus, reduce the number of extra mail stops? Since even little bits of thrift add up, the aggregate savings should be quite welcome by the USPS if it’s accomplished without disrupting things too much. Thirft is always a concern but it’s especially true right now because of mounting concern for meeting pension obligations.

While some would consider these savings small potatoes, in the grand scheme of things if the answer is yes, then the old saw about a million here and a million there adding up to real money becomes quite apropos. During times when the belt is being tightened a notch, greater efficiency is an imperative for the USPS.

Mailboxes

The two principal places most Americans come in contact with our USPS are the individual mailbox and the in town post office. The mailbox is the least efficient terminus for mail because it’s one-on-one service, or Retail Mail. The individual box, usually found mounted by the front door, or on a post out by the road is the single most personal point of interaction with government, which a citizen typically experiences.

The most efficient interaction we experience with the USPS may be referred to as Wholesale Mail. E.g. the many mailboxes, which form walls at the post office. Combined with counter services like selling stamps, plus sending and receiving packages, it results in the post office being another familiar nexus for citizens as well.

The USPS has a never-ending quest for efficiency. It’s because gains, no matter how small, add up. For example, groups of post-top mail boxes exisit because they reduce mail stops. Boxes may be colorfully decorated too. Whether involving a unique look, or bright colors, they’re expressions of American individualism.

More efficient still, and midway between a single community mailbox and the post office are groupings of community mailboxes. In this example, nearly 100 families are served by placing 6 units of 16 together. The resulting close physical proximity makes delivery more efficient for the postman while retaining convenience for citizens. Score this concept as a clear win-win for the USPS and us.

However, examples of underutilized community mailboxes aren’t difficult to find. Perhaps citizen involvement may help the USPS find additional efficiencies. This thesis is a test of this idea.

Seeking greater efficiency

Rooting out and eliminating inefficiencies within the USPS’s generally efficient system will require postmasters keenly interested in saving money. From consulting with postmen, to getting off their duffs to see for themselves, it will take action. For example, this community mailbox located on the corner of Brisson and Pine Way (ZIP-code 32773), is underutilized because it contains several empties.

Located a mere 250 yards further into the route, this community mailbox (on the corner of Pine Way and Hallelujah, and also within 32773) contains empty units too. It represents an extra mail stop in close proximity and thus, considering residents won’t be greatly inconvenienced, consolidation may be something of a no-brainer for the postmaster.

Especially because of an added incentive; the mail truck often gets stuck turning around on this dead-end private dirt-road. It happens so frequently, in fact, the residents took it upon themselves to widen it considerably just to ease the task. Yet it still happens . . . a lot. Since calling for a tow truck isn’t cheap, this really should not be a difficult decision.

Strangely, it is too tough a decision for the postmaster Traci Murray of 32773 because the status quo continues. Add to it resident letters citing concern due to lengthy road blockage, plus fear the mailbox itself may be struck by drivers at night and it’s a rather perplexing situation.

Ignore the fact both of these community mailboxes are underutilized. Ignore the fact ongoing expenses for towing (three or four times in the last few years) will likely continue. Ignore resident’s concern for being blocked in, or delaying an ambulance when a truck is stuck again. Yet how can we ignore when a postmaster knowingly does nothing to plug the holes in the boat and show little interest in doing anything to save money? Simply put, why is this happening?

Conclusion

Ultimately, USPS postmasters need to do get out of the office more often because money saving efficiencies exist right under their noses. When ordinary citizen’s observations of easy savings are ignored, it’s time to wonder this; can America really afford this kind of mid-level USPS management?

While it’s only money, it’s our money. I take it personally. Do you?

Eliminating USPS infrastructure

SANFORD, FL (jbeech.com) – the USPS is drowning in debt and wants to shut down facilities and reduce service. Are there reasonable alternatives?

Recent news about the USPS (United States Postal Service) seemingly centers on shutting down facilities and eliminating Saturday delivery to reduce costs.

USPS management first tried raising the price of stamps. Demand for mail service went down. They blamed email and raised prices more. This hasn’t worked either.

Now, with things so dire they can’t cover anticipated pension obligations, the geniuses want to mothball infrastructure. That, and eliminate some ZIP codes altogether. They even want to eliminate our Saturday delivery.

I say no. Not just no . . . but Hell no.  Since any idiot can complain, here’s what we should do instead.

Lower stamp prices

Management whines about email eating into them. I agree, but I say bullshit too because raising the price of stamps is like raising the price of anything. It makes folks use less. Anyway, they been raising postage prices since before email.

Moreover, it’s not as simple an argument as email eats into the business. There’s still demand for physical mail. However, as with everything else, raising prices decreases demand. This is basic stuff, folks!

For example, compared to a printed brochure, emailing a PDF isn’t as good for my business because it generates inferior result. A keen observer of humanity, Lynn theorizes it’s because guys don’t think far enough ahead to print the PDFs before heading to the toilet.

She’s probably right but nevertheless, I use more and more email in the business. However, it’s not because it’s free. It’s because the USPS keeps raising my mailing costs.

Let’s lower stamp prices because increased demand is a high quality problem.

Eliminating ZIP codes

The USPS physical plant can be roughly categorized as big stuff and little stuff. Big stuff  is the infrastructure we’ve built out to automate delivery. E.g. the major sorting centers.

Little stuff are individual post office facilities. It’s about eliminating some ZIP codes. The present cadre of USPS management want to dismantle big and little stuff both. The big stuff is about Saturday delivery.

Sunday delivery

Granted, reducing physical plant will cut costs. It works like pulling the plug on the patient stops the medical bills. Anyway, now the high brows want to mothball the high speed physical plant because it’s too expensive. They want to shut the whole thing down on Saturday’s too. No way Jose!

How about this instead? When we lower the price of stamps, demand will pick up. So let’s crank our high speed delivery infrastructure up. Way up. Let’s run it 24/7. Maybe if instead of cutting Saturday delivery we keep the place humming all the time. Maybe even on Sunday’s too.

Cutting the big stuff, like our automated high speed infrastructure right now is like
buying a Ferrari, which gets repossessed. Worse, it gets repo-ed before you take it out to see what it can do. In a word, dumb!

Lower prices stimulates demand. It always does. Of course, this isn’t to say we can’t reduce some infrastructure. We just need to be smart about it.

Pareto distribution

I read where a small postal facility is slated to be closed, which eliminates the ZIP
code. The problem is it costs $86,000 to operate but only generates $30,000.

Genesis Hobby distributes product to 415 hobby shops. 85 of these retailers generate about 80% of our wholesale business. Since 83 stores would be exactly 20%, it’s proof positive we’re nothing special because Pareto distribution applies.

Moreover, this power law (better known as the 80-20 rule), is found throughout the business-world. Examples abound; like 20% of customers requires 80% of the hand holding, 20% of products generate 80% of total sales, etc.

Raise your hand if you think the USPS immune to Pareto distribution. They’re not immune any more than we can repeal gravity. Eliminating ZIP codes reduces the QOS (quality of service), which we citizens are accustomed to. Bad idea.

Killing the Golden Goose

Perhaps somewhere in the world there’s a businessman who would dump 80% of his customers because they only generate 20% of the income. In our case, dumping 330 of our 415 hobby shop customers would be profoundly stupid.

Stupid because fewer retail locations would reduce sales opportunities. Stupid because it would hinder our customer service for which, we’re famous. Moreover, the 20% haircut would likely put us out of business. In toto, it would be akin to killing the Golden Goose.

USPS bureaucrats, intent on closing both larger and smaller facilities, plus reducing Saturday delivery would reduce the QOS for which the USPS is justly famous.

This is why we love the USPS. Citizens find the idea unpalatable. This, despite the fact cutting costs are always a good idea.

I’ve lived and used 3rd world postal service – in comparison – it’s stinks. Thus, in all this, bear in mind the present USPS management is perfectly capable of killing off the best postal QOS in the world . . . if we answer incorrectly.

Sadly, Congress may let them, which seems bizarre because modest alternatives may preserve that for which the USPS is justly famous.

Right sizing

With respect to the above mentioned facility, I wouldn’t close it – not yet. Instead,
let’s see how we may offer similar service for $30,000 versus $86,000.

For example, perhaps a local hardware store or beauty salon would be pleased to
devote a little bit of space to hosting mailboxes (and selling stamps). After all, during these cash-flow difficult times this may be a tidy addition to their bottom line, so they win too.

Remember, once upon a time (before bureaucrats and stand-alone post offices), this is how a lot of postal business was done. Before eliminating smaller ZIP codes let’s first try to substitute do with less for do without.

Finally, let’s discuss change at the top.

Postmaster of the United States

This problem isn’t insurmountable. As I taught my middle-school math students, the way to solve big problems is by first breaking it down into smaller problems.

I’m unwilling to see my postal system ignobly dismantled. Not if a better guy can fix it. Solutions are what count. Lower the price of postage to stimulate demand. Right size physical plant instead of shutting it down.

However, if none of this floats your boat, since present USPS management hasn’t gotten the job done, here’s my last proposal. If Herman Cain looses his bid for the Presidency, I hope the President has the sense to appoint him to the job of Postmaster of the United States.

Offer it to him on a Dollar-a-year basis because he’s made plenty of money already. That, and anything we offer would be an insult to the man. He’ll accept because he’s a patriot.

Ultimately, the guys presently at the very top of the USPS have driven us into a ditch. increasing the price of stamps, mothballing facilities, and reducing Saturday delivery isn’t what we want.

It’s time for a change. Let’s do it soon too. Let’s do it before they drive us off a cliff.