A Reality Check from the Field

by Aaron Hale

The clock is ticking in the grab for market share for digital print services. It doesn't matter that short run and on-demand digital color print is already commoditized-- the market demands it. VDP is swiftly evolving on the heels of that commoditization and those who are savvy are now entering the realm of MSP (Marketing Services Provider) to stay on the higher end of profit margins. So what are you doing?

Necessity requires no decision.
Traditional Proverb

There is no decision-- just do it! Call the sales rep who has been pestering you for the last nine months or so and pull the trigger. Ink the deal for that digital color production press that costs as much as your house (or more!) and get in the game!

Here is what production grade press placements looked like last year and with end of 2007 in sight this year promises to be just as aggressive.

So what does this mean to you? Money out of your pocket? Yes, but more importantly the ability for your business to sustain a competitive position. Even if you've been smart enough to have been outsourcing your client's digital work to a trade partner to help build your business case to support the acquisition of a digital press and its related TOC (Total Cost of Ownership) it's still T minus 10 seconds and counting.

So what are the obstacles?

Picking the box

  • Canon, HP, Kodak, Oce, Xeikon, Xerox, and now Ricoh/IBM all deliver great products. You need to look closely at your different customers' applications and determine the machines that best match the technology (speeds & feeds, imaging capability, duty cycle, online finishing, which's greener, etc.). For example, speed is critical if they do transactional printing. If they publish books or booklets, the inline finishing features may lead the buying criteria. And if they do photo-related work or their jobs are very graphically rich, then image quality is the primary factor.
  • At the end of the day it's also a marriage of application and relationship. Who do you want to get in to bed with and to what degree they will really support you (business development services, technical support, etc.)?
  • Total Cost of Ownership (TOC)
  • This is a combination of purchase price, consumables and service. What is the best fit for your organization's infrastructure? A pay-per-click model may be best according to the ebb and flow of your print volume and certain service considerations, but if you have a good pressman who is mechanically inclined and computer savvy, then a shared support model such as Kodak's or Ricoh's operator replaceable component systems might suit you better.
  • From my experience on the supplier side, I know there are some very creative ways to secure financing. You may have to go outside of the manufacturer's normal channels and there are ways to leverage your existing equipment. You can, for example, take a 10-year lease on your big iron that is coming to --or already is-- close to term, and by refinancing it partially or fully, cover the monthly payment on a digital press. Some companies will even subsidize the purchase in exchange for a commitment to purchase consumables for other equipment that they manufacture.
  • Output Quality
  • While there will always be a place for the look and feel of offset printing, the bottom line is that clients use print as a medium to communicate. Marketers are transitioning to data-driven solutions and that means some type of digital print. Similarly, the benefits of 1:1 communications and brand leveraging can outweigh the esthetics of the printed piece.
  • According to an Industry Measure special report: "Digital Printing: Transforming Marketing for Small, Mid-Sized, and Large Businesses," September 2007, 57% of graphic designers who are some of the most discerning print buyers around are "very satisfied" or "satisfied" with the selected output characteristics of digital presses. The benefits of digital printing capabilities (personalization, versioning, print on demand, etc.) far outweigh any minor quality issues where the client is concerned.

By the time the fool has learned the game, the players have dispersed.
Ghanaian Proverb

Late entry does have its advantages. There is now a wider and more diverse choice of technology and holding out has probably fostered better affordability. Although Xerox has always had its mid-level production DocuColor series, other options, such as HP Indigo's 3050, Kodak's new M700 and Canon C7000-VP equipment can get you in the game without breaking the bank.

The urgency, though, lies in surmounting the associated learning curve. Although there is no extended makeready process as with an offset press, your operator still must learn tasks such as calibration, maintenance, imposition, variable data collation, and maximizing consumable components.

It will also take time for your sales and customer service staff to gain the experience that will enable you to realize the full potential of digital printing. This is a major factor in the equation. You really can increase a 17% margin to 30-35%, but you must master and balance the nuances of pricing, client expectations, press limitations, and communicating the value proposition if you are to hit your profit target consistently.

There is more to a successful roll-out than just installing a digital press on the floor. You will need to most likely re-purpose and/or bolster your infrastructure with add-ons such as workflow engines, VDP composition software, and digital savvy personnel. Most importantly you will need to adopt a paradigm shift in your approach to sales.

Take heart, though. For years, digital press manufacturers have been investing heavily in their business, customer development programs, and have developed very effective mechanisms to build customers' digital business. As these programs have matured, vendors have also begun bundling products and services to facilitate the more sophisticated Marketing Services and Print Solutions Provider models as well.

Digital press manufacturers have developed very effective mechanisms to build customers' digital business.

The door of success is marked "push" and "pull."
Yiddish Proverb

So whether you are the push type and you charge through the door with a vengeance or whether you choose to let the backdraft pull you through, the important thing is to get through it. It's a door of opportunity. Just don't leave it shut.

Please offer your feedback to Aaron. He can be reached at: [email protected].