Commentary & Analysis
FREE Special: Parceling out httprint: Where do we go from here? Marc Fors, President & CEO
As httprint prepared to announce their headquarters shift from California to the UK,
By Gail Nickel-Kailing
Published: September 22, 2003
As httprint prepared to announce their headquarters shift from California to the UK, Marc B. Fors, President/CEO, shared some of his thoughts with WhatTheyThink correspondent, Gail Nickel-Kailing. Named president and CEO in January this year, Marc has more than 25 years experience in the printing industry, with a pedigree that includes RR Donnelley, Maxwell Graphics, Quebecor Printing, and Sheridan Books. Now that the company is moving to the UK and Marc will once again become a free agent, he shared his insights with WTT about the divvying up of httprint, the state of e-printing and publishing, and his vision of the future.
WTT: Marc, first let's sort out all the parts of httprint and get a handle on what will happen to them. httprint was one of the few companies that came from the service side, rather than from the technology side, and evolved down a slightly different path. What do each of these portions do?
MF : httprint has been an outsourcing print services company that morphed into a technology company during the heyday of the dot com excitement. The company had print expertise and knowledge and was run by people from the print and document space. As a result, the software was built by people with a deep understanding and appreciation of print and print buying. It's an industrial strength application; a strong Java-based ASP solution.
There have been three business segments within httprint: business process outsourcing to manage and procure print for corporations, a contract/custom publishing operation, and the ASP software solution that was developed by the company to manage procurement across multiple vendors.
- Global DocuGraphix has acquired certain portions of our software code along with customer outsourcing contracts. They will be responsible for the contracts that are in place and will continue to grow their outsourcing business.
- Meredith Publishing has assumed the custom publishing operation that was creating and publishing magazines for companies like Direct TV and the LA Dodgers. We had staff that wrote the articles and did the photo shoots as well as manage the production.
- Incentrix the software solution will continue to be supported and sold in both Europe and the US by httprint. The remaining US operation will essentially be a smaller business unit responsible for US sales of the software.
WTT: Recently we did a report called Where are they now? that looked at a number of dot coms that were active in 2000 and those still in business today. E-procurement of print just didn't take off like everyone expected. Why do you think the adoption rate of print e-procurement solutions has been so slow?
MF: I'm convinced that the enterprise buyer is indeed interested in tackling print spend and improving the productivity of their print purchasing activities. The opportunity is real. However, they've just not been willing, in sufficient numbers, to make it a high spending priority and invest capital dollars for software license fees at least in the U.S. Our experience abroad has been significantly better.
Budget pressures from the U.S. economic downturn are a factor, and certainly the early dot coms tainted the market by promising more than they could deliver. Overall, print procurement systems just don't seem to be a pressing priority for sourcing VPs or for CFOs to address right now despite high, well-documented returns on investment.
Major enterprises have also been confused about what sector of the industry they should look to in order to get the job done: Equipment manufacturer? Dot com? Existing print supplier? ERP software company?
Several other factors have slowed adoption rates:
- Multiple internal stakeholders exist with conflicting interests and agendas.
- Outside influencers, such as advertising agencies, haven't been comfortable with print spend visibility.
- Print is complex; it resists commoditization, and isn't well understood at the top of most organizations.
- Downsizing of print procurement personnel over the years has stripped many buying organizations of print expertise so there are fewer qualified people to articulate the advantages of a print e-procurement solution and champion the project.
- Risk of failure in implementation is still perceived as high.
WTT: There has been so much invested in all of this. At one estimate, the total invested was probably between $600 and $700 million. Is the technology that resulted going to come home to roost? Where will it all find a home?
MF: I believe, and industry research now supports, that the true market opportunity for this technology resides within the larger print services companies, the outsourcing companies and the document services companies.
I predict that, in a very short time, major print companies will bundle powerful procurement software inside of their supply contracts much like they did with the desktop publishing technology in the 1980s - they leveraged it to close big deals. Many of these same companies have already recognized the need to have their own procurement system for client connectivity.
They have benefited by the research and development that has been done and have taken steps to acquire developer expertise and code, often purchased from struggling start-ups, to launch their own initiatives. Standard Register's SMARTworks is a prime example.
The goals are clear:
- Strengthen and give value to the consultative sale without third-party involvement.
- Use technology as a value-add to sell and retain major contract customers.
- Raise internal productivity by reducing transaction costs and increasing communication efficiency.
In my view, this is just going to accelerate. However, a basic Web-portal to track an order or a simple e-catalog isn't going to get the job done. A real print procurement system has to be scalable and capable of bringing all the potential users and vendors together efficiently.
I believe the print supplier who provides customer-connectivity software that allows a key customer to interact not just with them but with other vendors as well, will have a clear competitive advantage and will create long-term ties with that customer.
A major client may juggle single vendor solutions for a period, as they experiment, but will certainly demand full integration across their supply base as their own needs and understanding of the technology matures. When you are able to say to a major client: I will provide you the enabling technology to find efficiencies across your entire print supply chain regardless of vendor, then you will have a real opportunity to extend your own services and increase your share of that client's business in the long term. It will take a print company with vision and courage to see that opportunity, but that is where it is going.
WTT: So, do you think print buyer expectations have changed? Are they looking for something more?
MF: The buy-side enterprise market has moved beyond the initial hope for improved transactional efficiency that much of the industry software was initially designed for. The market is now saying they require a procurement tool to deliver more integration into the actual production process, and to connect to the back-end accounting, inventory, fulfillment, and distribution systems of their key vendors.
Only a handful of the remaining e-procurement companies have that architecture and ability: httprint is one. Noosh has redefined itself with their Version 5.0, and Printable is also a very capable, creative, and well-managed company.
Market leaders are also buying, in increasing numbers, variable data solutions that can actually drive the current generation of digital equipment in a JDF-compliant environment. Any print e-procurement solution needs to be robust enough to integrate with these solutions, merge multiple databases dynamically, and drive today's production equipment directly. INSystems, ADP, and Exstream have powerful, proven solutions here.
While it is hard to believe, the potential customer market has effectively raised the bar in functionality without actually buying, in any real volume, the initial products that most of the print e-procurement space has had to offer. Customers want print-procurement efficiency, but they now want it to be part of their real-time production and fulfillment activities, and they seem to prefer to shift the costs and the risk of system performance squarely onto the shoulders of their print supply partners.
WTT: Where do you see the larger procurement software companies fitting in?
MF: I don't think the larger software companies see print as a priority. They never have. Oracle, Ariba, and SAP, among others, all have robust sourcing suites, yet these companies have not yet endeavoured to build a print procurement module to compete with the technology of our still-nascent industry.
Overnight shipping, office supplies, contract employee services, and raw materials have been the first quick-save hurdles for them. They seem to try to squeeze print onto a commodity or service module where it doesn't really fit. It is very possible that they have acknowledged the same barriers to the enterprise sale and the same product complexity issues that the print industry is so familiar with. They also know that large-scale demand and interest is not there yet to justify the effort, i.e., no appreciable portion of their customer base is coming to them saying they want to be able to tackle printing procurement services independent of supplier-provided tools. It is likely that they are waiting for real customer demand to develop and then plan to acquire a company that has already done most of the development work.
I would watch for DiMS! to do something in this arena. They seem to understand print better than the rest and are a very nimble company.
WTT: How about taking a look into your crystal ball What do you see next?
MF: We've all noted the multiple consolidations and seen the field of solution providers, both real and pretender, narrow over the past couple of years. The companies that are now left in the print e-procurement space are the ones that have had the most time to truly understand the print market requirements, who have spent the most to completely build-out their products, and have proven them out in the field.
Xerox has snapped up some very good assets recently and others are quietly following suit. Fresh partnerships are emerging like the recent Noosh/Heidelberg connection. The parallel I see here is like the consolidation in the hardware sector where Cisco and others have snapped-up the smaller WI-FI companies who had invested a lot in research and development to get that market going.
I think you are going to see more print-based companies, at least the ones that are really interested in re-defining themselves, acquiring existing software code from the remaining print e-procurement players. The buy vs. build analysis is compelling.
WTT: Thanks, Marc. Keep us posted as you embark on your next adventure. Best of luck!