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Commentary & Analysis

Embrace Software (Just Like You Did with Manufacturing)

Software is the tool to remain relevant and integrated with the new communication methods. The print industry’s future will depend on embracing software like we did manufacturing – creating new reasons to print and optimizing and integrating existing applications.

By Jennifer Matt
Published: June 19, 2012

A friend of mine recently asked me to help organize hackathons (coordinated coding events) at his children’s primary school in San Francisco. When I asked what motivated him to do this, he answered “software is the language of the future, I want my kids to understand how it’s made and believe that they can make it.”

Software is the language of the future

If you think my friend is crazy (I only have crazy friends), take a look at this TED video by Thomas Suarez – a 12 year old app developer. If you have doubts about our future, watch this video – you can’t help but be hopeful about future generations.

What’s this got to do with the print industry?

I purposefully selected extreme examples of how prevalent software is becoming in our lives, even 12 year old children’s lives, because I want to make a point about how NOT prevalent software is in the print industry. Case in point, last month my team and I attended drupa in Germany. Because it only happens every four years, drupa gives us a chance to take a longer view of our industry. The most shocking realization for me (a software person) was the overall lack of software solutions at drupa.

… we have the Olympics of print (drupa) and 95% of the show floor is about hardware solutions / manufacturing capacity. Our focus is on solving a capacity challenge that is no longer a problem.

Hall after hall after hall filled with manufacturing capacity solutions. Last time I checked we don’t have that kind of capacity problem anymore – we have the other kind of capacity problem (way too much capacity for the contracting global print market).

Remember, I live in San Francisco – we’re a bit biased towards software out here (among other things), so understand where my perspective comes from, but I think the print industry is so skewed in the other direction (manufacturing-focused) that we could use a few more software people to tip the balance.

What do we need software for?

Print is still an effective communication method and print will always be a key part of the growing packaging market. The marketing communication segment of the print business has a formidable competitor in the digital space – communicating to your customers electronically has some inherent advantages over physical (atoms-based) print products. There’s nothing we can do about the efficiencies offered by electronic communication, so we should focus on what we can influence – how print is purchased, how easy is it to do business with us, and how connected can we make print to other communication methods.

All of the things we can control involve one thing - software. Yet, we have the Olympics of print (drupa) and 95% of the show floor is about hardware solutions / manufacturing capacity. Our focus is on solving a capacity challenge that is no longer a problem. Our challenge in this industry is to stay relevant and integrated among the ever growing options for communication. My belief is that we do that by embracing software like we embraced manufacturing.

I looked at all the new print engines at drupa and the impressive positioning around applications. I get it, we are moving through a huge offset to digital transition in the midst of the largest scale change in the overall communication business (atoms to bits). The focus of the vendors matches up with the willingness of the market (printers) to invest. The printer’s mindset is well positioned to spend six to seven figures on new manufacturing equipment. On software, the number might be as low as three to four figures. On services to actually deploy, utilize and earn the ROI on the technology, I’m not even going to quote that number, it’s embarrassingly small.

We as an industry feel comfortable making huge investments in capacity because we understand the business and return on that investment. We as an industry don’t understand the technology investment, don’t trust its ROI, and therefore don’t invest or reap the benefits of the investment. Many printers feel they have been burned at least once on a technology investment. I’ve heard it hundreds of times, we bought this; they said it would do that, it never did – we lost our entire investment. We don’t trust technology, we don’t trust technology companies, and we don’t for a second look at our part in the failure.

I’m not defending technology companies, I was a part of many of them in this industry, I personally made a lot of mistakes for which I take full responsibility. When any partnership fails, both parties play a part in the failure. When partnerships succeed the same is true – both parties play a part. Buying technology is the easy part. Building a return on that investment takes business strategy, execution, and commitment. A technology vendor can help, but for the most part the ball is in the printer’s court on these things. A technology vendor should not get in the way of your strategy. Buying technology is not a strategy, it’s a procurement event. I hope this doesn’t shock you, but many printers I talk to answer the question “what’s your online strategy?” with the name of their vendor.

What do we do?

We embrace our ignorance and start the inevitable learning curve of understanding how to operate a business in the digital world. It’s so different. I was at a meeting at Google last month and this quote made me gasp, “we don’t get the idea of physical products, why are they so complex?” Yes, a young woman with a big job at Google had never worked on a “physical product.” Wow. I’m not sure if it makes me feel old, wise, or out of touch. Mostly I find it fascinating which I think is the path we should all take – not fear, but fascination and curiosity. Yes, things are changing, your expertise isn’t as valued anymore but the good news is that you’re capable of learning new things if you have the right attitude.

No matter where you and your business are now, you have to be more software focused moving forward. Software is the tool for engagement with your customers, automation, tracking your financials, and providing you the data to make data-driven decisions. Software is the language of the future – how comfortable are you and your business with this new language?

Jennifer Matt is the managing editor of WhatTheyThink’s Print Software section as well as President of Web2Print Experts, Inc. a technology-independent print software consulting firm helping printers with web-to-print and print MIS solutions. You can reach her at jen@whattheythink.com.

 

Discussion

By Erik Nikkanen on Jun 18, 2012

Of course software is important but if the logic behind it is faulty then the results will not be as one desired.

There are lots of problems in any business and software developers work on problems they think they can do something about. It may be that often the most important problems to solve are not easily solved with software and therefore get ignored.

 

By dion martin on Jun 19, 2012

Hi Jennifer

I don't think I have read anything that is more relevant and couldn't agree with you more. We are just a very small printer on the tip of Africa, but when I meet suppliers to talk new investment we make it clear we are not interested in machinery we are interested in software solutions. Because these solutions will make our industry sustainable in a digital age, will allow us to offer value added services and allow us to stay ahead of our competitors. We look at it as such...when looking at buying a new digital printer, the finisher is an add on, the printer in the central piece of equipment. That is the way we used to look at things. Now we look at software as the central tool and the printer is really just the add on.

The problem is most traditional printers or suppliers don't get it. Hence the fact some big printers and some big suppliers will fall by the way side. When it comes to software, you can almost do anything. By that I mean if you have a need for it an app can be written at a cost. We just need to listen to our clients, understand their business and needs, and creatively come up with ways of solving these issues. Most importantly we mustn't limit those solutions to just print. Print in a shrinking pie...we need to cast the net wider and software is the way to do this.

What I think we battle with is the cost involved for app development. Buying machinery is so much easier and with a simple calculator and half a brain you can justify and calculate profitability. But with software often it is an almost intrinsic value that needs to be unlocked. We will think nothing of spending 6 figures on machinery but the thought of that sort of money on software is just scary. It is going to require a huge mind shift to bridge this divide.

Cheers
Dion

 

By Chuck Gehman on Jun 19, 2012

Wonderful piece, Jennifer. I think the key takeaway is that the math allowing investment in capacity doesn't work anymore (or it's a lot harder), so achieving that ROI is no longer possible.

We need to get out of our comfort zone as an industry, and clearly it is software where we need the most work. And it's the area that can provide the most benefit today, at the lowest cost. It is what allows your company to take market share from others-- essential since the market is shrinking.

But as you so eloquently put it, only if you-- the Printer-- make it work. This operational expertise can't be outsourced-- not to India or China, nor to your nephew. You have to own it.

 

By Dick Rossman on Jun 19, 2012

Great post Jennifer - perhaps a few of your next posts can highlight some of the new software we should be looking at.

 

By Jennifer Matt on Jun 19, 2012

Erik,

Your first comment tells me I'm preaching to the choir - "of course software is important."

I understand your next comment as well. I didn't say software was flawless (far from it) or that software should be used to solve everything.

Software has its place and in my opinion that place is growing. There is software in our parking meters here in SF now. Its helpful - I don't have to think or carry piles of quarters around anymore. It tells me when the meter is free, it only takes my money off a pre-paid card up until the maximum parking time. It also alerts our parking enforcement when its expired. It's software, and for that business operation its a perfect tool to use to build in efficiencies.

You are right there are lots of problems that can be solved using other tools.

Jen

 

By Jennifer Matt on Jun 19, 2012

Dion,

Business investment has to be easy - as you said, equipment is an easy ROI and printers will continue to invest in their manufacturing equipment. The challenge to software providers is for them to stop focusing on the endless feature game and start helping define, track, measure, and prove the ROI.

If I see one more web to print demo where they say, reduces your labor, saves you time, makes your customers happier - with no proof! Show me the proof, show me the metrics, show me the ROI and I will invest. If I could continue that rant, can we all agree to stop using the word "robust" unless we're talking about a great cup of Kona coffee?

My favorite scenario is when customers actually demand the software. I haven't seen an RFP/RFI in a long time without the requirement for online ordering. Its an expectation now - not a differentiator.

Don't wait until your largest customer goes out to bid to embrace online ordering or production automation. Do it on your terms and bring that innovation to the customer BEFORE they start shopping with your competitors.

Jen

 

By Jennifer Matt on Jun 19, 2012

Chuck -

We built a comfort zone over many decades and made a boat load of money inside that zone. Its a really comfortable "comfort zone".

I like the analogy of standing on a beach; safe, warm, dry, and with an excellent view of the sunset. We have to step off that beach and get through the surf - there is calm water on the other side but if you surf like I do - you'll get decked more than a few times on your way out.

Jen

 

By Dave Erwin on Jun 19, 2012

Billions and billions of dollars have been invested into the research, development, manufacturing, selling and servicing of “big iron” systems for this industry. The good news was a manufacturer could essentially sell the same “box” for 5, 10 or even 15 years. Sure, they may add new racing stripes every few years, but the core engines were the same. That is simply not the case anymore. Technology is moving very fast and manufacturers cannot get the ROI desired on the new platforms.

The big hardware guys are starting to get it as evidenced by the recent acquisitions, especially seeing the likes of Xerox buying ACS. They see, as do others, that it is faster and cheaper to add value to the customer communication life cycle through software and service than it is through hardware and output.

Participants in our industry will move more slowly partially because they still have “big iron” they are trying to amortize (and have leases on) but more so because their internal IT infrastructure has little to no focus on developing, integrating and supporting new software applications and services. They are simply too focused on supporting the existing systems and infrastructures used to drive ”big iron”, …some dating back to before the engines were ever installed – recipe for failure.

Ask yourself the following question…how much of your IT infrastructure is spent on the maintenance of existing systems?

The time has come for PSP’s to look outside its’ own operations to resources that will utilize best practices, align with key initiatives and complement core competencies. This will ultimately accelerate development, enhance performance and expedite the re-engineering of your product based culture to one based on software and services.

Customers will consume and use information how they want to, when they want to and where they want to. If we do not will to deliver it the way they want it – they will go somewhere else. If you don’t believe me, ask Kodak.

 

By Caleb Tower on Jun 21, 2012

This was an excellent article and I couldn’t agree with you more about the role of software moving forward. One excellent reference point is a printer in Canada – Ball Media. Last year, Ball Media’s facility was completely destroyed in a fire – including the digital printing equipment and large-format printers. The only thing Ball Media had left was a customer list. Rather than shutting down the business, Ball Media re-invented its entire business model.

Out of necessity they started to outsource all of their clients’ printing needs. How was this company able to re-start almost immediately after a major fire? Software! They found an off-the-shelf software system (P3Expeditor) that organized and streamlined their outsourcing and were back in business in a few days.

When they looked at replacing their printing equipment they realized their new Print Management business was far more profitable and less risky than owning equipment. Software saved their business and transformed it into a more profitable and efficient enterprise.

 

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