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Commentary & Analysis

The Top Estimating System Requirements in the Modern MIS

Estimating is a core function of Management Information Systems (MIS). As companies look to update, upgrade and replace estimating systems, it is important for printing companies and suppliers alike to understand changing business requirements. This article cites a recent RIT research study on the desired features of modern estimating systems.

By Chris Bondy
Published: February 5, 2017

Media Arts and Technology student Wesley Odell contributed to this article.

Estimating systems are at the core of the Management Information Systems (MIS) that run many printing companies. Although there has been a lot of consolidation through mergers and acquisitions in the print software business in the past ten years, there still seems to be a variety of commercial and home-grown estimating systems in play across the printing industry.

The popularity and efficiency of cloud computing has further expanded technology options and user requirements. As companies look to update, upgrade and replace estimating systems, it is important for users and suppliers alike to understand changing business requirements.

RIT School of Media Sciences led a research study designed to help us to better understand what companies like, don’t like and want to get out of their estimating systems. Owners and operators of printing companies are on the prowl for systems that are easy to use, fast, and cost effective.

The Estimating Process

Estimating in the printing industry is a complex process that involves the gathering and entry of job-specific information in a manner that a suggested selling price can be determined based on underlying cost of materials, labor, and equipment usage for a specific printing operation and print project. It is important to note that each printing operation has a unique set of people, processes, and systems that dramatically influence the production cost of a print project, and the cost/price of print may be quite different from one operation to another. Accurate estimating requires a system that is tuned to the specific production platform and operating characteristics of the individual printing firm. It must deliver a cost and a marked-up price that reflects the total cost associated with the print project and the specific profit margin that the printing company would like to achieve. Inefficiences in the estimating process and lack of automation can affect the accuracy, timeliness and reliability of the resulting quote, creating financial havoc and potential customer loss or dissatisfaction along the way.

The results of this study reflect the requirements of print service providers as it relates to estimating systems, and the typical processes involved in the generation of quotes for customer print jobs. Automating the estimating process is critical to printing businesses who wish to have an efficient job flow in place, since the ability to deliver fast, accurate estimates and quotations is central to their ability to efficiently and profitably secure business.

This study uncovered requirements from print service providers that are important to the timely and accurate generation of customer quotations that should be taken into consideration in both the development (by software providers) and selection (by users) of estimating systems. Another benefit of automating the estimating process is to make the creation of estimates available to a wider variety of printing company employees, placing the generation of estimates and quotations closer to the customer. Most print service providers understand that the faster a request for quotation is responded to, the more likely the company is to win the business. And when the estimating system is integrated into the overall production workflow, it eliminates the need to rekey information as the job moves through the plant.

This project included both primary and secondary research. The secondary research identified and reviewed a variety of estimating systems and their associated websites, while primary research consisted of interviews conducted directly with print service providers either in person or via a web survey. Secondary research enabled the research team to populate a list of potential estimating system features that enabled researchers to more explicitly delve into the value of these features as printing companies were interviewed.

Respondents represent various positions in their respective companies; from estimating and operations, to company leadership. Following the survey, all data was collected and the aggregated data was analysis analyzed to generate results. 

Why Estimating Systems Are Important

The survey provided valuable insight into the critical importance of the estimating systems to the operational success of a print service provider.

  1. Firms feel that there is opportunity for improvement in the ease of use, quotation speed, and efficiency of estimating systems to enable faster quotes. They want estimating systems to be more accessible to all company representatives from anywhere – they also want them as easy to use as possible so new and less skilled employees can easily use the system with minimal training.
  1. There is also a belief that a certain class of estimates (simple jobs without outsourced components or multiple parts) can be conducted in real time and they want to empower individuals such as sales and customer service staff to provide quotations to customers without the need to involve a professional estimator. 

Key Research Findings

Print service providers are constantly looking for opportunities to reduce cost and improve operational efficiency. This is just as true for the estimating and customer quotation process as it is for production tasks. Service providers are interested in fast turnaround on customer quotations with the ability to easily handle any iterations with the customer while the job specifications are being finalized. When service providers take too long to process an estimate or iterate a change to an estimate they run the risk of losing the job to a competitor that can respond more quickly; they are extremely interested in estimating and quotation systems that have the shortest possible cycle time.

Estimating systems should also be optimized for two specific types of quotations: standard job estimates, and complex RFQ’s. Standard print job estimates can be further segmented into simple and complex print jobs. For simple print jobs, estimating systems should be streamlined and simplified such that an individual in the printing firm without extensive estimating experience can easily provide a customer with a quotation in a matter of minutes for a simple print job where all cost exposure is contained within the confines of the single estimate (no no outsourced components). Further optimization can be achieved with the capability for a sales or customer service representative to process a “simple print job” estimate in an untethered fashion via a smartphone or tablet. This mobile capability also needs to include the ability to generate a final formatted customer quote or quote letter from the mobile application as an integrated and fast method for simple print quote generation.

In addition, estimating systems should be able to be expanded to accommodate workflow barriers associated with complex print jobs that include multiple components and components acquired externally. Improvements in the request, management, and integration of third-party estimates that are included in the quotation process is key. Efficiencies in the management and integration of each modular job component as part of a multi-component print project needs to be seamlessly orchestrated. In addition, future estimating systems should be able to provide optimization with a systemized RFQ workflow for the automation of information entry through completion of a detailed RFQ proposal. 

Estimating systems also need to be more compliant with industry standards including out-of-the-box compliance for workflow standards like JDF (Job Definition Format). These extended workflow features will ensure that once job estimates are completed, they can easily be converted to production work orders in a manner that requires minimal or no rekeying of information for conversion to a work order in a compliant format for direct use in production by other JDF compliant systems. 

About the Companies Interviewed

The companies that participated in the study had varied time in the industry, with a median range between 31 and 50 years.

The average revenue for the companies interviewed was distributed as follows:

11% from Pre-Media

56.4% from Print

20.8% from Finishing

12.8% from other sources.

With respect to markets served, 87.5% of respondents were engaged in promotional printing, 64.3% transactional, 50% in publishing, 42.9% in labels and packaging, and 7.1% served other markets.

The User Experience

Training Requirements:

  • 3 days of training was required for more than 75% of those surveyed.
  • 64% of those surveyed reported their systems required mid-level skills or experience to produce a quote.

Ease of use:

  • Ease of use was found to be the most important feature of an estimating system.

Accessible:

  • Real-time quoting is viewed as an important feature as it can help printers secure jobs from competition.

Optimized Workflow:

  • Print jobs should be put into two categories: standard job estimates and complex RFQs.
  • Standard jobs can be given to less experienced staff members to quickly complete, and complex RFQs can be given to an experienced individual.
  • Estimating systems can be expanded to better deal with outsourced work and other third-party estimates.
  • Estimating systems should easily create and interact with industry standard job formats such as JDF for efficient workflow

Prof. Chris Bondy is the Gannett Distinguished Professor at RIT School of Media Sciences and is the co-founder/author of Unsquaring The Wheel. Chris has over 30 years’ experience in printing and direct marketing leading operations and research and development. He is industry consultant, trainer/speaker with expertise in workflow, strategy and technology.

 

Discussion

By Howie Fenton on Feb 06, 2017

Chris,
Nice article. I like the distinction between standard job estimates and more complex jobs. More and more lately we are seeing a lot of those standard estimates offered through web to print software. Have you estimated how many estimates are offered through web to print software and the ease of use of transferring the data from a Print MIS system to a web to print system?
Howie

 

By Robert Lindgren on Feb 06, 2017

Prof. Bondy's discussion assumes that estimating systems are cost prediction systems. He does not address the reality that they, by using BHRs, treat fixed costs as variable thus obscuring the impact of volume on enterprise profits. More importantly, estimating systems actually function as pricing systems. Conventional estimating systems are severely handicapped at pricing because they do not explicitly contain information about the value of the project to the customer, the relationship with the customer or the external competitive conditions all of which are central to pricing which maximizes overhead contribution and therefore profit.

 

By Chris Bondy on Feb 06, 2017

Hi Howie,
Thanks for your comments! As we look closer into job type, we do see a classification of "jobs" that lend themselves to more automated Web-to-print transactions vs. the formal estimating process. We did not ask for a split on this segmentation, yet when we re-run the survey we will include a question to identify the % of estimates handled via W2P. With respect to the ease of transfer from print MIS to W2P system, this is a tough one to characterize since some W2P systems have catalog pricing systems embedded and some MIS systems are expanding with Web portal options. As you know, not all such transformations are easy, we have not drilled down enough in this area to share formal results, however a formal study on this point would make a lot of sense to me.
Best,
Chris

 

By Chris Bondy on Feb 06, 2017

Hi Robert,
I agree, the scope of the study did not include details regarding the finesse that takes place in the “deal” process with respect to cost vs. price, and value extraction. We did however uncover that deal makers (especially sales folks who are “hunters”) want more real-time what-if-analysis so that that can understand the cost/price relationship in the context of today’s work (plant utilization) and price elasticity. It seems we have work to do with respect to HCI (human-computer interaction) to deliver this value proposition to service providers in a manner that matches other industries where cost/price analysis is done real-time with the client at the moment of need. I realize we are only scratching the surface on this topic for sure!
Best,
Chris

 

By Robert Lindgren on Feb 06, 2017

Chris...

Thanks for your comments. The ultimate business reality is pricing the product. the objective should be to maximize revenue by not leaving money on the table, but getting the order. These are external issues (value, relationship, competition, etc.) that have nothing to do with cost which is internal. Given the answer for the price, a cost estimating system can be used to decide whether to accept an order. If we use it in this way we should only use the variable components of cost (wages, materials, commissions, etc.) and not the fixed components (plant overhead, depreciation, administrative, etc.)as these will continue whether we accept the order or not.

 

By Donald Goldman on Feb 06, 2017

Hi Chris,

Your study sounds useful and helpful in either guiding the development of useful estimating tools or having people look at the way their system is implemented. As indicated by Bob Lindgren, what is called estimating is often pricing which is driven by the market, competition or opportunities. But one of the major purposes of the estimating process is to assist in the planning of the production workflows including the optimum use of machines and materials to meet the quality and turnaround time for the job. This and consistent use standards and reduction of math errors was an original incentive to the computer-assisted estimating pioneers. A properly produced cost estimate, adjusted when the actual copy/artwork/specs are received, should be the basis for job planning and scheduling along with production cost comparisons (sans variable costs) when the job is produced. Unfortunately, estimating becomes inaccurate and unusable as a planning tool when the rates, standards and BHR's are incorrect, not kept updated, are overwritten or ignored for the sake of "getting the job". Your survey should also address the use of an estimate in the production planning and scheduling of the jobs. There is no reason an estimate cannot be used with intelligent development of templates or other means of equipment selection or work flows. Even pricing can be rule based so Web to Print or other self-pricing by customers or sales can be done provided the estimates are backed by accurate production methods and costs that can be passed on to planners. I wonder if the people surveyed were asked if the estimates they currently use could be passed on (providing the specs of the job are the same) to production planners and schedulers to guide the job production or is the cost estimate unacceptable as a planning guide. Most of today's true cost estimating system (not pricing systems) can generate templates for simplistic or repetitive types of jobs and a means of "planning" complex jobs. Pricing is not fixed and can either be set by some rules or manually to meet competition. But if the price estimate cannot be used by production then the fault is not in the estimating system per se but in its implementation, upkeep or knowledge of the estimator. It has been my experience that too often people are looking for a new estimating system when the one they are using could do the job if reinstalled correctly. Perhaps answers to some of these questions are already answered in your survey but if not a subsequent study on this topic should include this and some of the other issues raised by Howie and Bob.
Cheers,
Don

 

By Robert Lindgren on Feb 06, 2017

Don's observation about the usefulness of an estimating system for job planning are right on. However, I'm concerned about his comment on the correctness of BHRs. BHRs are misleading because of their inclusion of fixed cost. This inclusion has historically led printers to have a press for every sheet size because the BHRs say that they are minimizing cost. The reality is that they have excess mechanical capacity and thus wasted capital. A focus on variable cost only would make it clear that fewer machines used more intensively is the best path to profit.

 

By Mark Myers on Feb 07, 2017

This article fascinated me more than any I have ever read since the meat of it has been my mantra for over 20-years. I owned a large 100+ man printing company in SE Florida and was so obsessed with obtaining an easy to use estimating and MIS system, that after purchasing a $100,000 system in 1995, which did not perform as promised, and was returned after costing me thousands of dollars, that with an engineering background I started to write a program for the company.

My concept was a single screen approach where all the complex intricacies such as shrinks, spreads, gutters, paper weights and thicknesses were easily handled automatically behind the scenes, as most involved in the estimating process like the CSR’s and sometimes the estimator did not understand their significance.

It quickly morphed into something more sophisticated including the Job Ticket, PO’s, Profit analysis and job scheduling to handle the company’s growing needs. My unusual approach caught the eye of all my suppliers especially Unisource and Xpedex who convinced me to commercialize it and make it available to the public. It took me 2 years to complete the project which I introduced at Graph Expo in 1995. The response was so overwhelming that shortly after returning I turned the company over to my employees and dove full time into improving and continuing to simplify the user interface.

What especially caught my attention in the article was the continuing emphasis of companies wanting an exceedingly fast and easy to both learn and use, with a simple transition to CSR and other employees, and yet completely mimic the company’s specific culture.

The articles emphasis also on a Cloud Application where all employees would have access even from their smart phones or Tablets was the main consideration when we introduced at Graph Expo in 2016 EstimatorCloud.com which from my perspective answered all the criteria so emphasized in the article, especially Ease of use, Real-Time Quoting and minimal training required as the program was almost 100% intuitive, and also very affordable.

It seemed that you had interviewed me and wrote about all the unique functions available, as all job functions are automatically completed when the job is accepted… and I always thought that was the way it should be.

One of the frequently asked questions that the article did not cover was one we recently solved by adding an imposition window where you can in a matter of seconds select press sheet and item size along with 4 different lot quantities, and Impose-It instantly calculates the best layout while minimizing the stock usage. I believe that I have never seen that included feature on any affordable software package.

I believe that the printing industry has changed so quickly that many estimating presentations have neglected the impact that digital printing has had on the industry and how all the standard estimating systems have neglected to redefine the in-line finishing operations and individual profit centers and their differences. Bindery used to be bindery but todays software needs to compensate for the fact that many finishing operations happen in line on the digital presses like Web Finishing and can no longer be associated with standard bindery pricing.

I would love to be interviewed or answer any questions about efficient easy to use Estimating software as it has been a passion of mine for over 30-years.

Thanks for your interest… Mark L Myers President www.EstimatorCloud.com

 

By Robert Lindgren on Feb 07, 2017

Mark's interesting comments included:

Bindery used to be bindery but todays software needs to compensate for the fact that many finishing operations happen in line on the digital presses like Web Finishing and can no longer be associated with standard bindery pricing.

This is a perfect example of the ability of the estimating process to take a production improvement and give it away to the customer. Not only that, but since the rates include overhead, the system marks it up before fiving it away.

 

By Luther Erlund on Feb 07, 2017

Mark - I do not believe that this was an invitation to try to promote your product, company or history. This was an educational and thought provoking analysis of MIS/ERP functionality. You should consider coordinated multi-channel marketing program to support the industry that you try to sell to.

 

By Mark Myers on Feb 07, 2017

I take great exception to Robert Lindgren's comment as it only views the Printers with value added perspectives, and not those of the myriad of new digital printers trying to compete against the giants who in many cases give away small jobs as an inducement for the large work… so competitiveness becomes a struggle for those newcomers into the industry.

The new highly competitive nature created by such behemoths as 4/Over who offer no value added except low pricing have become the norm and competition director, and that is why any estimating system needs to allow for such a competitive structure. Without that built-in opportunity, the competitiveness of the business could easily crush the small entrepreneur.

I do not believe that there are many systems where specific bindery operations are tied to the press as well as the profit structure individualized to the piece of equipment. Since I do not want this to sound like a commercial if you want more info on this currently available solution contact me at Sales@EstimatorCorp.com

 

By Mark Myers on Feb 07, 2017

In response to Luther Erdlund’s comment I would like to state that long before I got into the software end of the business I had been looking for the exact kind of solution parameters described in the well put together article by Chris Bondy. Since none were commercially available that had those desired parameters, I spent the next 21 years learning coding to create the solutions they talked about. Unfortunately, almost all of today’s systems seem to care little about the Estimating portion, and spend 90% of their efforts on the workflow parts.

Let’s face it… If the printer does not realize that the estimating is his #1 priority then he is in for sub-par performance, as we all know that without sales there is no business, so let’s give the estimating its due and recognize that fast accurate easy to deliver estimates IS the backbone of every printing company unless they are an in-house plant. I would be happy to recognize all solutions that provide what the article says is important in the meantime as I stated before I know of no other solution that quite fits like a glove to the one described in the article other than EstimatorCloud.com and I believe that today’s printers need to know all the solutions available not just those so magnificently oversold by the industry’s behemoth’s. I mean by that, probably 70-90% of most systems go underused as they are too complex to operate unless by expensive fulltime fully-trained company specialists which todays mid-size and smaller printers cannot afford, and those who could afford it would probably not find a very good ROI. The vast majority of printers in the $100,000 to $25,000,000 class just need a fast easy to learn and use system that is consistent and reliable and matches their local market requirements. Nuf Said…

 

By Chris Bondy on Feb 07, 2017

Hi Don,
Great to hear from you, old friend! Thanks for the post!
With research as you know, we are always in a quandary of balancing breadth-depth and time constraints, having said that, I am delighted about the discussion that the study has stimulated. It seems to me that more work is needed, here is my growing list:
- Quantify the split between W2P and traditional MIS estimate volume (Howie)
- Plant utilization and variable cost/fixed cost/value-add drivers for real-time pricing (Bob)
- Workflow segmentation, simple jobs vs. complex projects (Don)
- Seamless cascade from estimate to work order (Don)
- HCI requirements for print MIS (all)
- More ???
Thanks,
Chris

 

By Chris Bondy on Feb 07, 2017

Hi Mark,
Many thanks for the post! I believe that consumer behavior is driving change and the bar for all software needs to respond to the consumer-level HCI … if we are not open to approach new problems and old problems with new and innovative approaches, we will never advance. I think we can all benefit from some of the perspective that you share. I am not taking any sides; I feel that we are a long way from providing an easy-to-use and easy to integrate MIS solution that moves seamlessly from estimate-to price- to job instructions. We have come a long way, but we definitely have work to do to reconcile the bridge between selling and delivering … I will continue to push everyone to that higher bar.
Best,
Chris

 

By Robert Lindgren on Feb 07, 2017

I believe that Mark Myers misunderstood my observation. What I was counseling about was letting the estimating system give away the production advantage. If you're selling against someone whose virtue is cheap, then you have to be cheap or move on. If you're selling value, you should get paid for it. Conventional cost driven estimating systems don't know the difference.

 

By Mark Myers on Feb 07, 2017

Robert... I always agree that there should be a distinction between selling price and value, obviously doing work for a broker requires different pricing and any good system like our or others takes that into consideration when selecting the ultimate customers. Also most printers do not recognize Activity Based Accounting ABC and write off CSR and estimating expenses as a necessary part of doing business instead of recognizing that PITA customers are a lot more expensive especially when you get 1 out of 20 or 30 estimates and they constantly call to find how their job is progressing, that is an expense that should be factored into handling the customer as it is a real business overhead that does not need to be just absorbed. 40 Years ago I recognized the 80-20 split in orders vs customers so we raised the prices for the difficult 20% hoping to drive them away so we could better handle the 80% Volume, and guess what... we did not lose any of them so we just expanded to meet the rush... Mark

 

By Robert Lindgren on Feb 08, 2017

Mark... I like your story about raising the prices on the difficult 20%. My take on it is that it worked because they were willing to pay more because the additional service and attention was valuable to them. Recognizing that fact should have triggered an upward movement in the pricing policy. The point is that prices are limited by external reality, not internal costs. If it were otherwise, we would have a sign in the shop saying "work slow" so that we could charge more.

 

By Mark Myers on Feb 08, 2017

Robert: I believe what I was trying to illustrate was not that our regular pricing was too low but that Estimator has always taken the position that pricing cannot revolve about budgeted hourly rates as not too many years ago, was the rage, but bases its serious algorithms on local conditions and what the local market pricing need to be to remain competitive.

Using the BHR method, if your price was too high because costs were, you would not get the jobs except from very loyal customers… so you had to be competitive so Estimator always produces a detailed cost analysis on every estimate so the printer can easily address those areas that were on the high end and easily look for ways to cut costs and improve profitability.

The icing on the cake may have been that the difficult clients recognized that we put up with their demands and were willing to not move to another printer…

 

By Robert Lindgren on Feb 08, 2017

Mark... Your estimator's comment that BHRs cannot be relied upon for pricing is right on. An approach tailored to local competitive conditions is correct in the aggregate, but it needs to fine tuned with customer specific information--are we treated like a sole source or does the customer get ten bids for everything. Then on significant projects, it needs to be further fine tuned to consider the importance of the project to the success of the customer (major new product roll out or instruction sheet stuffer) and urgency for customer (we really need it yesterday or it's just gointo inventory), etc.

 

By Mark Myers on Feb 08, 2017

Robert: If the client is appreciative of your loyalty he repays that by doing his job by getting competitive prices and alerting you if you seem to be high on large important jobs. I have also found with many estimating systems that errors can easily happen by selecting the wrong stock and having it priced incorrectly or by mistakenly entering the # of folios instead of the # of pages in a catalog, so any good system can easily correct those unwitting errors. I designed EstimatorCloud to eliminate almost all of those easily correctable situations, as I wanted my sales team to be able to price in front of the client and hopefully walk away with the order.

 

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