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Key into profits

May 1, 1996 12:00 AM

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Database management services are one way to unlock the secrets to making money from storing digital data

"It's nothing new," comments one graphic arts expert.

He's right. In one form or another, printers and prepress houses always have stored customers' information. In today's digital world, however, clients can retrieve stored data, browse through it and reuse it, all without leaving their offices. This presents an opportunity for printers and prepress shops to glean added profits by forging an extra path through which to satisfy buyers. After all, graphic arts companies already house the information and are the most logical partners to help "repurpose" data for subsequent jobs - both print and non-print.

While it's true that the industry traditionally has stored customer data, an important change is occurring today. Firms heavily involved in archiving are cultivating a novel view of their companies, a new business philosophy. "Whoever controls the information controls the world," relates George Fiel, president of Image Systems, Inc. (Menomonee Falls, WI). In line with this belief, instead of dubbing themselves solely printers or prepress houses, many shops consider themselves image libraries or data warehouses - a significant distinction.

"The change is part of the evolution resulting from digital workflow - we realize what the most important part, or core, of the business now is," continues Fiel. "In the new workflow, without data management and a way to archive, retrieve and hold data, nothing works. It becomes the most integral part of what you're doing. It's like a heart."

He's right. The idea is not to simply store information, as some firms do, but to offer an array of data management services as well. This is where graphic arts firms are most likely to generate profits.

Storage and archiving embraces other issues as well. Customers, secure in the fact that they own the stored data (after all, they created it), may find themselves caught in a tug-of-war with printers and prepress firms who believe they own the information. Also, how do shops charge for storage, browsing and retrieval? Since printers and prepress houses previously buried the price of film storage in the total job cost, they may have a tough time if they charge separate fees for digital data.

"If shops say they offer digital data and storage, the question is, in what form have they stored it and how have they made it available to customers?" asks Dave Zwang, a Danbury, CT-based graphic arts consultant. "Most firms simply store parts of a job; it's the more sophisticated operations that offer digital data management with retrieval and browsing capabilities, file tracking and more."

Interested shops can delve into the storage and archiving arena in two ways - invest in the data access lines, hardware, software and other necessary pieces themselves, or utilize the resources of a firm such as NetCo. (Minneapolis) or Monet (Tampa, FL), which offer packages enabling firms to efficiently provide this capability.

The concept of digital storage is gaining importance, in part because technology has provided a greater array of opportunities to reuse images and text. More and more data is being transformed for use in CD-ROM publishing, the Internet, digital video, Web pages and more, according to Robert J. Nuelle Jr., director of advanced technology, World Color Digital Services (Orlando, FL).

The types of firms most interested in storage? Publications, magazines, newspapers, corporate customers, etc. "Our greatest interest comes from corporate clients who print brochures and subsequently reuse the data for multimedia pieces," relates Dale Kowalski, product and service development manager for McKay Communications (Midland, MI).

"Also, it's our large customers who continue to talk about the need for a simple archiving system that gives them file accessibility. Many are developing more digital assets and having a hard time managing them and tracking where the images are." One year ago, McKay Communications became a beta site for a Monet digital telecommunications, image management and storage system.

Customers of Image Systems have similar needs. So, five years ago, the shop began storing and archiving data - and finding a new identity.

"We consider our firm a public library," relates Fiel, whose company holds 6 to 7 terabytes of clients' digital information. "In a library, you can check out books at no cost once you have a library card. In our case, the library card is simply the fact that you do business with us. We don't charge for retrieving, browsing or archiving. As in a library, we want people to enter the database as often as they want and not feel penalized for browsing, retrieving or storing information. We make money once we put those images into production to be reused."

Another firm, World Color Digital Services, sees itself as a data warehouser and houses approximately 2 terabytes of information. In fact, the firm has some customers for whom it functions solely as a data warehouse and doesn't handle output. "These clients may simply want our expertise as a data management concern," relates Nuelle. "Some, for instance, will ask us to put files on a Syquest disk to ship to a Connecticut printer. If the printer and market are in Connecticut, why print at our location in Orlando?"

But, can these firms profit from such services?

"No," stresses Ira Gold, a Rockaway, NJ graphic arts consultant. "Offering these services is just the cost of doing business. We have trouble believing firms that say they make a lot of money because this is a maintenance service most people won't pay a great deal of money for. If you're lucky, you'll reel in enough money to cover expenses. After all, most customers don't see the service as a value-added one."

On the other hand, "In the long run, there's probably no doubt this will be profitable," argues Zwang.

"We see an opportunity for profits," agrees Nuelle of World Color Digital Services. "We wouldn't offer a service if both customers and the company couldn't benefit from it."

The discrepancy in opinions may be due to the value-added services some firms provide. This, they state, is where the dollars lay.

"Do more than say, 'we'll take care of your information and store it for you,'" says John Jebens, vice president of Monet. "Successful firms say, 'we'll offer a good method of image management, help choreograph your projects and create a system that's accessible to you in a meaningful fashion.'"

For example, World Color Digital Services produces a corporate image library for a large corporation. The former scans clients' images, creating a CD with low-res images (World Color archives the high-res), corporate logos and forms in QuarkXPress. Next, it presses 100 to 150 CDs, which the corporation distributes to designers, notes Nuelle. Designers then build promotions with the low-res images. Finally, when jobs are ready to be output, World Color pulls up the high-res images and produces the project.

Another company, Commercial Communications, Inc. (Waukesha, WI), sells multi-year contracts "for which we take over all clients' literature management," relates representative Eric Hegwood. "We support the creation of buyers' documents for output through Docutechs or conventional presses, or on CD-ROM, the Internet, etc. Then we archive their literature digitally. Client orders may come in through a batch order process directly from the clients' corporate offices. We have a small inventory in stock so we can ship the orders or print the product and ship it in two to three days."

"Companies also can go one step further," says Zwang, "and establish a facilities management service. They can install a computer and network at the client's site, and hire someone to manage this facet of the company."

World Color currently is benefiting from storage and archiving, but not only through its value-added services such as establishing corporate image libraries. The firm also takes pains to teach clients the value of digital data storage.

"We help customers to consider digital information an asset so they put a value on the data's continued existence," relates Nuelle. "We tell clients, for instance, that there's a cost to capture digital information, and if they must recapture that data, they've thrown away those dollars. If buyers spend $100 to do a scan and have to turn around and do another because someone can't remember where the scan is, they've just thrown away a significant investment in a digital asset."

A final hint to profiting from this service? Make it easy. "Provide as much seamless integration with the customer's own system as possible," advises Zwang. "Buyers shouldn't even realize their data is stored off-premises. The process should be just as if they click on their own drive and whatever they needed is there. The service must function this way for customers to justify the costs involved and be sold into something like this."

Simplifying storage and archiving also includes returning customer material upon request. While it would seem obvious that clients own their stored information, some graphic arts execs have given birth to controversy by asserting that the printer or prep shop owns the material.

This notion may have been initiated in the past when "buyers brought printers or prep houses original photos, galley type or mechanicals, and shops did photography, color seps and the value-added work, then provided a set of films to be printed," relates Gold. "Industry standards at the time decreed that the final material belonged to the customer, as did the original materials provided. However, film intermediates used to get to the final films belonged to prep houses or printers because they created these products."

But the fact is, clients believe they own the digital data, and if shops fail to return buyers' information, they not only have lost that customer for good, but most likely will suffer from negative word-of-mouth advertising as well. They also may find themselves facing a court date. Indeed, execs polled for this article recommended returning all the customers' work upon request.

"The material belongs to the client. We just manage it," asserts Kowalski.

"Customers own all the data," stresses Fiel. "If buyers want their information returned, we'd immediately give it to them and charge them for mailing costs and the CD production, if we use that avenue to transfer data."

"If a buyer wants to pull work from us, we'd copy it onto a medium, which will cost the client X number of dollars per hour, plus a material fee," adds Gold. "Although we know the client is going someplace else with the work if we don't give it back, the buyer still will leave. This way, if the next shop does a poor job, we have a chance of getting that customer back. If we cause trouble, we've lost the client for good."

"Some firms now write an agreement into their contracts stating what belongs to whom so there's no misunderstanding," relates Zwang.

With any luck, most firms won't have to worry about customers removing their data (at least not often). But, all printers and prepress houses offering this service must decide how much to charge for it.

One consultant advocates separate fees for retrieval, browsing and storage based on megabytes. Another advises charging on a time-used basis.

"We charge per megabyte for storage every month," relates Dave Aeschliman, senior vice president of Quantech, a Milan, IL electronic prepress house. The firm installed a Monet digital telecommunications and image management and storage system in November 1995.

"If customers wish to prepare stored information for CD-ROM or the Internet, for example, that's bid on a time and materials basis," maintains Hegwood. "We'll offer a timeline on how long it will take to put together that product and provide a quote."

Universal Press (Providence, RI) charges clients on a per-megabyte basis to retrieve images, but builds that cost into the next job, whether it be slated for conventional printing, the Internet, etc. There's no storage fee (the firm doesn't yet offer browsing capabilities).

"Fees are set on a client-by-client basis because large firms might retrieve images 50 times a year, for example, so their rate is less than that for the firm that produces one job a year with us," relates Jonathan Crutchfield, director of technologies for the firm, which holds more than 250 gigabytes of information on-line.

Image Systems takes a similar tack. Since it offers storage, browsing and retrieval at no cost, it charges on a per-image basis when the images are put back into production, such as when they're placed into documents, Fiel relates.

"Designers may want to examine six different versions of an image in a page design before selecting one. If they're charged every time they study a picture, they see that as a penalty and consider us difficult to work with," explains the industry exec. "We want to make our system easy for clients to use. This way, they'll continue storing with us and we'll know when they're involved in new projects. In fact, when clients access data, a customer service rep is notified and gives the client a follow-up phone call to offer assistance with any upcoming work." The firm charges $7 per image for images less than 4 x 5 inches.

Obviously, clients can store and archive their own information. But, most want to avoid the hefty equipment investment and administrative worries involved in maintaining data, such as periodically updating stored data. For instance, once or twice a year Image Systems sends customers thumbnails of its library electronically or via paper print. Clients then indicate which items they want permanently archived; the shop transfers this information from online storage to CD.

Universal handles the situation differently. "Customer information is held on-line as long as the job is in progress. When that project is completed, the data automatically is archived to DLT, according to Crutchfield.

Finally, printers and pre-press shops must realize that storing and archiving customer information is the future. "Shops have no choice but to offer the service," concludes Gold. To be successful, firms also have no choice but to go beyond mere storage to offering value-added services, such as data management, facilities management and more. Then they'll have the keys to unlock new profit centers.

How can you encourage customers to turn to you for information storage and data management? Here are a few hints from Robert J. Nuelle Jr., director of advanced technology, World Color Digital Services (Orlando, FL):

* Cultivate a track record in data management.

* Make data management a principal component focus of your business.

* Work with customers to meet various integral needs or unique mission critical requirements.