By Chuck Gehman
In our first installment (High Volume Printing, June 2000, page 74), we identified the types of companies that are promoting “dotcom” services to the graphic communications industry. We also highlighted some of the more prominent companies addressing this marketplace.
The one type of e-commerce company that is creating the most controversy and that is the loudest (in terms of marketing and advertising spending) is the category we described as “the Intermediaries”. These are the archetypal “business to business e-commerce” companies who want to become part of the transaction between print buyer and seller. For this article, we felt it was important to take a step back and really examine what is important to a printing company when it comes to these companies and their services.
It is interesting to note that in the time between the first installment in this series and this article, market forces have caused a number of these companies to postpone IPO plans, layoff employees and re-evaluate their business models. Keeping that in mind, it is truly amazing that still more companies have emerged since the first article who are also targeting the graphic communications industry.
Will we be able to just let this trend go by and continue doing business with the status quo, or do we need to be active participants and make decisions that will change the face of our business? It’s tempting (especially in light of recent events) to just wait and see what happens, but there may be significant benefits in making a proactive decision to work with these e-commerce companies.
Supply Chain
To understand the benefits that e-commerce can offer to printers, we have to take a closer look at the supply chain in the printing industry. I’m sure we’ve all heard the analogy of a printing company and a car company… we build the car, but use fenders and doors supplied by the customer. I think we can all see some validity in that analogy, but the supply chain really addresses broader issues than the customer bringing their own parts.
The fact is, the customer (and various vendors the customer works with, like designers and photographers) is actually a key part of the manufacturing process in our industry. The supply chain in the printing industry goes as far “upstream” as the designer working in their home studio, and as far “downstream” as the bindery, where the end product is finished for delivery to the “end user”.
Even the most efficient operation spends time on what could be considered unnecessary interaction with customers and suppliers: fixing problems, correcting misunderstandings, attempting to agree on color issues, “signing off” on approvals and making last minute changes. Talking to customers is a good thing, however I don’t think anyone disagree that time spent solving problems would be better spent avoiding them altogether.
This is where e-commerce (or really, the new buzzword “e-production”) holds the promise of bringing real benefits to printers. By integrating and automating both the workflow and the transactions that add unnecessary iterations to an already labor intensive process, printing company personnel are free to focus on the real manufacturing process of getting ink on paper.
If you look closely at your operation today, you may well discover that your company is already participating in e-commerce. The fact is that many companies have been using EDI (Electronic Data Interchange) for years to exchange purchase orders. The GCA (Graphic Communication Association) has actively promoted the use of EDI for things like paper purchasing for many years now. Using EDI, printers and their suppliers have cut back on the amount of paper work changing hands, simplified ordering and billing, and reduced errors and miscommunication. In many ways, today’s Business to Business (B2B) e-commerce is really a sophisticated “next generation” of the EDI concept.
E-commerce may not benefit every print-buyer-printer relationship. If you are a printer whose customers print one magazine with you, month in and month out for many years (interrupted by a contract negotiation, perhaps every 5 years, that takes place on a golf course), you are probably not going to execute that transaction in an e-commerce system. If this type of contract is your standard relationship, at the current state of the art, you may not see benefits from going “e”, other than perhaps electronically exchanging POs for paper purchases or other transactions between both companies.
But it is likely that “e-production” can help just about every enterprise in the graphic communications industry, by streamlining the supply chain. If you can more easily provide status information, exchange previously paper documents and even content files, obtain approvals electronically, and generally improve interaction with your customers, everyone wins.
Some of these new services are providing useful production tools like job ticketing, job status (both for internal and for customer communications), and even automated preflighting. Not to mention the fact that these systems can provide extremely high-tech job estimating and job costing that can help your bottom line.
Because of the number of companies in the market vying for both the printer’s business and the business of the print buyers, there will be tremendous competition among them to offer the greatest feature set, at the best price. This means we will see great innovations that, prior to this marketplace phenomenon, would have only been available to companies that would internally develop software or spend an enormous amount of money to buy sophisticated software packages (along with service fees to the vendor, and internal staff to support them.)
We basically get all the benefits, but for what amounts to a small monthly fee that in some cases is similar to what you would pay a company like ADP to do your payroll. Thinking of these vendors in this way, you may start to realize that the real offered far outweigh any perceived loss of control.
Advantages to the buyer
Clearly, a lot of the FUD (fear, uncertainty and doubt) that exists around e-commerce in the printing industry is based on the fact that many of these companies have aggressively targeted the printing company’s customers. We’ve seen this before in our industry, and to many, this is spelled “get your checkbook out.” Some prominent executives in the printing industry have used stronger words.
When you listen to customers who have endorsed these new systems, it is easy to understand why they are naturally gravitating toward eproduction. A good example of this is Bank of America. Its national Creative Services team, headquartered in San Francisco, California, handles over $50 million in print services. As a user of the Noosh system, says Sue Ward, VP and Director of Commercial Print, “Bank of America is now able to look into the system and see exactly what is going on and where things stand during production.” Prior to using the on-line system, the bank had three separate internal systems, none of which provided the complete picture of where all their jobs were at any given time.
If you are one of Bank of America’s print vendors, you’re going to have a difficult time saying no when they ask you to participate in this scenario. Fortunately, the e-commerce providers have listened to feedback, and have changed their approach and pricing models to be much more printer-friendly. This includes, on the part of some of the vendors, no charge to the printer—only the print buyers are charged transaction fees on jobs run through the system. This makes a lot of sense, since in order to obtain the benefits inherent in the systems for a print buyer, their company would previously have had to buy many thousands of dollars worth of software and systems to get the same result.
Printing as a commodity?
Another big uncertainty that printing companies have with e-commerce is that their business will look like a commodity in the marketplace. A big objection is that price will become the only consideration that the buyer cares about when purchasing print through these systems. While it is beginning to appear that this just isn’t true, it is certainly a valid concern.
To address these issues, companies like Collabria, printCafe, httprint, Printable and others are all focusing their development and marketing on the printing community, rather than the print buyers. When you, as a printing company, choose to work with one of these vendors, the end benefit will be either a procurement site branded with your company’s name, or an extension of your existing web site that provides the e-commerce functionality. Customers see your brand, with the e-commerce vendor’s technology behind it.
Sunnyvale, California printing company R.W. Nielsen implemented the Collabria system, and uses it as a sales tool when calling on new prospects. According to Eric Nielsen, the firm’s president, “We send them to a demo site Collabria has set up that’s branded with our logo. When it piques someone’s interest, we give them a complete demonstration and leave them with the URL, password and user ID on the demo site so they can explore on their own. We haven’t had one demo where people say, ‘I’m not interested in this.’”
These systems will charge you a fee, typically either for setting up the system, and then a small transaction charge for each completed job. Some just charge the transaction fee and provide the setup at no charge to help you get started. Many printers feel this approach is a less intrusive way of “going e”.
More than one system
According to a recently circulated Trendwatch FastFact (#80, June 27th, 2000, find out more at www.trendwatch.com), only 4% of print businesses are using a “dotcom” company. While that may be true at this time, it doesn’t seem like a number that will remain static.
One particularly important reason to align your company with an e-commerce vendor early, is, as discussed previously, the possibility that your customers may end up choosing one of these systems for you. Worse, they could choose more than one system for you. The possibility is very real that, just as we’ve all had to keep copies of PageMaker and Quark installed on our Macintosh computers, we may now have to subscribe to more than one e-commerce system and have our staff learn how to use them.
Some printers, like R. R. Donnelley, MailWell and Consolidated Graphics, have already announced relationships with e-commerce providers. In our next installment, we’ll talk to some of these companies and find out how they chose their vendors and what drove them to be proactive about making this move.
It is possible that by embracing a system early, doing your due diligence and educating your employees, your company can substantially influence how your customers will adopt these technologies. This will not only prevent a loss of control for your company, but more than likely will result in your company becoming a leader in this important area and providing new benefits to customers that will make them more loyal to your company.
Existing Systems and Infrastructure
As these service providers extend their reach, one big issue is how they will interface to our existing systems. For our companies to reap the benefits inherent in “e-production”, we will need integration.
One of the features I like most about using my American Express card is that I can download the monthly statement detail into Quicken on my home PC. This is a very rudimentary example of the type of integration that we can initially expect from these services. But we’re going to need more, and soon.
We must be able to plug the data from these services into our accounting and estimating systems and look at historical data from jobs that are complete. We’re going to want to upload our production data into these systems so we can use it to job cost and benchmark that data against prospective new jobs we’re going to bid on.
Beyond the accounting systems, we’ll need to have an interface to our workflow and scheduling systems that will allow us to integrate the production information we need. We need both content (i.e., production files) and context (the information about the jobs: accounting, personnel, scheduling, etc. which is sometimes referred to as “metadata”) in the systems to have them really benefit our manufacturing operations.
Perhaps the most ambitious company in this area is printCafe. They have acquired several companies that are deeply involved in the IT area of a large number of printing companies, both MIS (management information systems) and production. Their goal is to seamlessly integrate both the e-commerce aspects of e-production and IT functions of the printing company into one neat package. The business integration of the many companies they’ve acquired will be quite a chore unto itself, but if successful (and there’s no reason to doubt they won’t be), this could be the system to beat.
Finally, these systems may require changes to your current IT infrastructure in order for them to work. For example, do all your personnel have access to the corporate LAN and/or a robust Internet connection?
Emerging trends
While a tremendous amount of seemingly proprietary technology is being built in the labs of companies from Boston to Silicon Valley, a number of groups have emerged that seek to enable these systems to communicate and inter-operate with one another. These groups may be able to fulfill the promise of “e-production” efficiencies that current services alone may not be able to provide.
The first such group to emerge is printCafe’s PCX (eProduction eCommerce eXchange) initiative, which is a specification for companies to interface to the printCafe system, and, potentially each other’s disparate systems. This group includes Digital Art Exchange, Inc. (DAX), 58k.com, Group Logic, httprint, MAN Roland, MediaFlex.com.
In May, 2000 Quad/Graphics, Quebecor World, R.R. Donnelley and Banta announced that they are working together to create “supply-chain efficiencies for industry participants worldwide by establishing standards and leveraging enabling technologies”. These efforts include what they are calling XPP, which stands for “XML for Printers and Publishers”. According to their press release, they believe that working together they will “enable customers who frequently work with multiple print providers to streamline the print process in areas such as job planning and administration. The companies will also address standards and common interfaces for administering the procurement of materials such as paper. The group will encourage broad participation among printers, customers and suppliers worldwide with the goal of enhancing industry relationships.” On July 5th, 2000 these companies announced the inclusion of publishing company partners Meredith Corporation, Reader’s Digest Association and The New York Times Company in their efforts.
Another group has also announced a sort of consortium of vendors to promote XML standards for inter-system communication. This group is calling itself PrintTalk and includes Noosh, Impresse, Collabria, Parsec, Graphic Arts IT, Printers Software, Inc., Streamline Solutions, and Profit Control Systems. The group has begun work on an interface specification that is based on cXML (Commercial eXtensible Markup Language) and Adobe’s JDF (Job Definition Format) specification.
Summary
To quote Mills Davis, CXO and Sr. VP, Consulting Services, printCafe, “The urgency to get on with it comes from a sense that this new platform is like water freezing. It's a change of state where all the rules change. You don't want to be caught below the ice, or stuck in it. You want to be on top of it and put on your skates”.
“The process of freezing the pond may be complex, but once the water freezes, nobody will care which parts of the pond froze first. We'll just have a simple, solid foundation to skate on. The technologies beneath the Internet are very complex, but you can get to anywhere on it with a simple point and click.”
I believe it… do you?
SIDEBAR ABOUT PRINTPLANET.COM/EPRODUCTION FORUM
To find out more about the topics discussed in this article, and about e-commerce for the printing industry in general, check out the eProduction forum on PrintPlanet.com (www.printplanet.com).
Printplanet.com provides e-communities centered on a variety of topics of interest to graphic communications industry professionals.
The eProduction forum discusses Business to Business eCommerce, eProduction in the publishing world, and allied industries. Specifically process management tools and web-based print buying products available to use in end to end integration of publishing/printing production from conception to delivery. On eProduction, you will find over 1,000 of your fellow industry professional subscribers worldwide engaged in discussions of these topics 24 hours per day, 7 days per week.
