Charlie Pesko launched his keynote on Day One of the Eleventh On Demand Conference and Exposition by likening 2002 to the perfect storm in the U.S. printing and publishing industry as the industry was hit hard by economic trauma, new and disruptive technologies such as WiFi, and the growth of the Internet, resulting in digital technology replacing paper for many applications, a concurrence he described as catastrophic and one which requires print services providers to reinvent themselves in order to thrive and survive. He said, The printers that get it' are adopting a whole new business model. Those who get itget it all the way. And if they have adopted color digital, they are also adopting value added services.
In structuring the conference, CAP Ventures felt strongly enough about the importance of value-added services that an entire special interest day, which I had the pleasure of chairing, was dedicated to the subject. With ever-increasing competitive pressures and print apathy threatening to increasingly commoditize the printing industry, successful print service providers are striving to differentiate themselves and protect declining margins by offering an array of value-added services designed to meet specific customer needs. From digital data repositories to fulfillment and distribution, these services address every phase of the printing and publishing workflow. During this special interest day, attendees heard from innovative print service providers who have used value added services to transform their businessesand to generate double digit revenue growth even in the midst of the printing industry's Perfect Storm.
The day was comprised of five sessions, which will be briefly reviewed here. Barb Pellow, Gannett Professor and Administrative Chair, RIT School of Print Media, kicked off the day by discussing recent RIT research, which is available online, free of charge, at http://print.rit.edu. This research reflected that successful digital printers were likely to share common characteristics. They:
- Understood their customer base and the respective target markets and applications
- Did not define themselves as digital color printers, but offered a value-added service portfolio
- Established a balanced business model letting them make investments in the future funded by current business
- Had a well-defined Internet strategy to address future market opportunity
Pellow shared several case studies from this research that clearly demonstrated how successful service providers had structured their businesses for success. A key element to the success of these providers was their positioningwithout exception, they positioned themselves as moremuch morethan simply a print provider. This free research is well worth reviewing.
The second session of the day explored the establishment of a Web-enabled infrastructure that offers increased access and improved productivity for both the service provider and customers. Prismatek's Butch Porcaro spoke about how companies were successfully implementing PrintTHAT!, Prismatek's online job submission and tracking solution, as part of a well-defined Internet strategy, and shared his thoughts relative to meeting the challenges involved in developing and deploying a viable Internet strategy. Tom Delano of Ames On Demand discussed his company's breakthrough custom publishing solution, primarily targeted at the educational publishing market and the simplification of the process for the creation of custom course materials. Both examples were received with great interest by an audience made up of internal and external print service providers, vendors, consultants and the media.
Often overlooked, fulfillment services are the icing on the value-added cake, and were discussed in the third session. As customers increasingly seek end-to-end solution providers who can address specific business processes in a turnkey fashion, leading print service providers are jumping into the fray, offering their customers integrated business solutions in which fulfillment and distribution play a key role. The panel consisted of Brad Caudell from the new R.R. Donnelley, Chris Nedza from CMD Services in Atlanta, and John Lyons from Mimeo, an Internet-based provider of print and fulfillment services. All three speakers represented different fulfillment implementations and demonstrated that, while fulfillment services require a high level of expertise, the size of the business is not necessarily a limiting factor. Mimeo and CMD Services have revenues estimated in the $20 million range, while R.R. Donnelley is the world's largest printer at $8 billion in revenues with some 45,000 employees. (In fact, the audience was wowed by Caudell's presentation about the composition of the new Donnelley, the first time many understood the full implications of the Donnelley Moore Wallace merger.) But all of the panelists agreed that partnering with a fulfillment specialist is an excellent way to get your feet wet in terms of offering these complex services.
Speaking of partnering, the next session, entitled Partnering for Prosperity: Leveraging Customer Data, dealt with the ability of a Web infrastructure to enable the building of a portfolio of services under a single umbrella while drawing upon the expertise of a variety of business partners to create a one-stop-shopping environment for customers. This session featured experts in marketing strategies, content management and database marketing who are NOT printers, but who thoroughly understand the printing business and know how to partner effectively with printers to deliver results their customers have only dreamed about. Presenters included Brett Knobloch from JGSullivan Interactive, Arthur Burkhardt from iGiLiTY and Kate Dunn from Digital Innovation Group who spoke about their work in producing customized and personalized solutions for marketing materials, point of sale materials and direct mail, respectively.
The final session of the day, Putting It All Together: A Vendor Perspective, featured Alice Fackre from PageFlex, Denise Miano from NEPS (formerly a unit of Moore Wallace, now being operated as an independent company) and Udi Ariei of EFI (formerly of Printcafe). These experts talked about the challenges and opportunities faced by service providers in the areas of content acquisition and creation, content preparation and content production, respectively. Arieli also briefly introduced his Theory of Global Optimization and the importance of Computer Integrated Manufacturing (CIM) in the printing industry.
By the end of the day, attendees had a much clearer grasp of what is meant by Value-Added Services, and how to go about beginning the process of reinventing themselves for future success in the face of the industry's Perfect Storm.
Universal Copier/Printer (UCP): Do We Really Need Another Category?
Also introduced in Pesko's keynote was the concept of the Universal Copier/Printer, a color enabled black & white multifunctional device that offers black & white copying and printing at the same cost as a monochrome device, with extremely competitive color cost and a low equipment acquisition cost. Pesko said, This green button technology will drive more color printing back into the enterprise at the expense of commercial printers.
CAP Ventures attributes enough importance to this topic to have dedicated a keynote to it on the last day of the show. Hosted by RIT's Frank Romano, the session also featured Kevin Kern from Konica Minolta and Mark Matthews from Toshiba. Romano pointed out that with black printing having traditionally been more costly when produced on color printers in the traditional color printer world, this new category offers the ability to ultimately eliminate the need for B&W printers and copiers. Romano did his usual entertaining presentation on the subject, taking an otherwise somewhat mundane topic and making it interesting for the audience while still getting the intended message across. In explaining the UCP, Romano likened it to the microwave, which he said is the UCP of the kitchen, saying that the machine that does more stays around.
But do we really need another category and another acronym? And is UCP the right term? Couldn't we just call it a multifunctional device or a multifunctional peripheral, terms that are already well entrenched and well understood? After all, they are multifunctional devices with one more functionalitycoloradded to the mix. Or maybe, as Romano suggests, we could call them Swiss Army Printers. Or as my colleague at OnDemandJournal, Noel Ward, proposed, they could be called the Leatherman Pocket Tool of Printers.
Be that as it may, the industry is churning out a number of offerings that fall in this category. Kevin Kern spoke about the trends in this space, including the rapidly decreasing cost of equipment acquisition and operation and the rapidly increasing range of capabilities and functionality. He identified a number of barriers to adoption, though, including the fact that most organizations have no deployed color strategy, with color leaking into most organizations through ink jet, low cost lasers and outsourced production. Another barrier he discussed was the difficulty of controlling color cost once devices are installed and ensuring appropriate business use while limiting personal use. As far as future direction, Kern sees further compression of acquisition cost, continued improvement in ease of use, reduction of color cost per page largely enabled by the use of chemical toner, and improved cost accounting and control, all of which will help in overcoming the barriers. He projected a rapid growth in placements versus monochrome devices, and cited market inertia as a heretofore limiting factor, stating, It has been the Year of Color since 1984, but we are sensing in the marketplace today a rapid acceleration of placement of color in both production and in the office.
Matthews did an excellent job of explaining how manufacturers are able to dramatically reduce the acquisition and operating costs for these devices, while improving speed, paper handling and output quality. He cited two areas on which manufacturers must focus in order to drive down costs: electrical and software systems, and the hardware itself. He stated that manufacturers are now able to integrate more capabilities onto a single component board, and that manufacturers like Toshiba are implementing a single software architecture that works for both black & white and color, and for all speed ranges. Toshiba calls this its eBRIDGE controller. He also cited rapid R&D and manufacturing economies of scale as contributors to the reduced cost model.
Time will tell what will happen with the category debate, but there is no question that affordable digital color is now a realityand it will get more affordable in the future as manufacturers rapidly move to develop products and strategies designed to overcome color adoption barriers.