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Sep 1, 1998 12:00 AM

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We are entering a media-savvy society in which the broadcast function appears to have limitations, observes Forrest P. Gauthier, CEO of Varis Corp. "That's where the real opportunity for digital printing comes in. Digital technology's real strength is when each page in a document is different--total page composition based on demographics. The objective is to create a document that meets exactly what the end-user's need is."

The Varis CEO makes a valid point. The success of any business depends upon meeting the customers' needs. And with digital on-demand printing, commercial printers also must understand their customers' customers' needs. In other words, what is of value to the ultimate end-user. By drilling deeply into this issue, and coming up with creative solutions, printers can tap into new market segments that hold the promise for increased sales and increased profits.

This year, the opportunity for on-demand printing was just over $12 billion, claims David Sigler, manager of Oce's On Demand Printing & Publishing Group. That includes black-and-white and color. "We think 48 percent, and growing, is process color."

In the immediate future, the exec projects between 16 percent and 20 percent growth per year. "One of the reasons for this growth is the migration from offset, some of it is application enabled and some comes from the continuing evolution of variable data. In a variable-data campaign, money is generally reallocated from a different medium, perhaps broadcast. That money then flows to the variable job, representing net new dollars to print."

Before we investigate the components of variable data in detail, however, let's take a look at the keys to success in print on-demand. In the digital printing arena, it's not enough to just buy the press and wait for work to flow in the door. Instead, you must begin from an end-user perspective to more intelligently determine what the market is.

"Technology is only part of the answer," observes Sigler. "When you look at financial statements for successful on-demand businesses, actual manufacturing costs are not a huge component of a total communication strategy. Although we believe workflows and manufacturing costs are important, printers must be careful not to focus exclusively on these areas. If you focus only on technology, you have only low pricing to fall back on. Rather, commercial printers should understand that perceived value to the customer is most important, and that depends on elements beyond simple printing." The savvy printer will look to high-value market segments based on end-user benefits. The two most clear-cut benefits are cycle time and targeting.

Let's look at an example of that. If you are a software manufacturer creating developer kits, there may be an opportunity for print on-demand. You need 180 developer kits delivered on Monday, but the programmers are working up until the preceding Thursday. Friday, you are going on press. In this application, the cycle time value is huge. Then, of course, the kits can be targeted to those 180 people.

The same can be said of scientific books, for example. Some titles only will be attractive to a handful of people with the technical background to be interested in buying this type of book. If you use traditional offset printing, you probably will run a lot of these titles and stick them on a shelf because of the economics involved in the process. With digital print on-demand, small quantities of these titles can be produced only as needed.

What is the ideal run length for print on-demand? Well, of course, that can vary widely, depending upon the application and the equipment used. However, Sigler, in talking about the Oce DemandStream continuous web printers, looks to 1,000 to 1,500 copies of a 250-page book as ideal. And using that digital printer can save time throughout the entire process. Collation, for example, is accomplished digitally within the system. So if you have a 500 ipm printer such as the DemandStream 8080 DI, the job can be RIPed and the printer immediately starts producing the 250 pages in book block form.

These features make book publishing a good market for on-demand printing, but hardware and software services is probably the second largest market at this time.

Regardless of what market you may serve, however, it's wise to remember that it's difficult to succeed if pricing on a cost-plus basis. This is especially true in the print on-demand market.

For example, consider the exec at a major international bank who takes a walk at lunch. He sees a sign at Kinko's that says copies are available at $.02. He returns from his walk, calls his on-demand vendor, who is charging $.04 a copy and wants to know why Kinko's only charges $.02 a copy. Why can't he have it for the same price?

Well, of course, that print buyer is ignoring a lot of things going on inside the entire value chain. His on-demand provider is receiving a PostScript file and a few hard copy originals, then, in a matter of hours, turning around a 24-page document that is extremely time-sensitive. Now your basic store-front copy shop will not be able to do that.

What the on-demand process provides is the little extras that add professionalism to the document. Corporate documents carry the prestige of the institution and they can't be distributed without those things. Value-added extras include inventory management, web services, fulfillment, management reports and more.

On-demand also means being able to productize the offerings. On-demand printers must figure out what the customer needs across the entire value chain. "If your company represents just electronic printing, you can't really hope to survive in that contested space," claims Sigler. "There are a variety of other services that go with the offering to make digital printing and publishing on-demand successful businesses."

It is very expensive to create a manufacturing process the first time. However, once created, the digital printer should learn how to move new products down the pipeline. Drill deep into your market. Create related product lines. Sell more to key customers. And keep focused on the types of products that yield the highest profits because of manufacturing efficiencies. Once you've defined your markets, it's time to look at specific products. Continuous-web printers such as Oce's DemandStream printers allow use of unconverted mill roll paper instead of pinhole tractor feed paper. The unit has an output rate of up to 500 ipm in duplex mode, that works with a PrintManager 9500 to increase throughput while lowering per impression costs.

"The Oce technologies are key elements in our effort to streamline and automate our entire production process," comments Michael Shea, general manager of Ames On-Demand, which serves the digital book publishing market. "Using the 8080DI, we can more easily manage the front-end digital document flow and offer customers the added value of customized books and published materials."

Although fast turnaround is now the primary differentiator in digital printing, targeting value will increasingly become a factor in the future, asserts Sigler, which may be one of the reasons why Oce and Varis Corp. have entered into a co-marketing agreement uniting VariScript software and the DemandStream continuous form printers.

VariScript was first introduced at Print 97. The software had been beta testing in Europe and the U.S., in a variety of applications. Intended to facilitate all aspects of variable data printing, with particular emphasis in applications requiring that all information in a document be personalized, VariScript is at heart a workflow solution. But Varis' CEO Forrest P. Gauthier observes that some customers only use a portion of the entire solution.

"You don't have to use the Varis workflow," says the exec. "But in order to do variable printing, you must have a viable workflow. You can't have variable documents produced in high volumes without a quality control structure."

There's a responsibility in the printing industry to make high-volume targeted marketing a viable solution, asserts Gauthier. "If print providers claim to be able to produce targeted documents, but don't deliver quality and accuracy, customers will give up on the idea. In the long run, that means leaving print behind for other media.

"We have a responsibility to make sure that when we say we can target individuals with print, we can do it effectively, with high quality, cost efficiency and accuracy," concludes Gauthier.

The Varis exec believes the real power of digital printing, within a 10-year timeframe, will be a fundamental transformation of our industry. "It will take print and revolutionize it from a broadcast media to a targeted media. That's a big shift. From its inception, printing has been the art of duplicating. That's why the industry talks about quality--we want a copy of an original.

"But digital printing, combined with variable data or database publishing, has the ability to create a custom document at press speeds. That's where we believe the printing industry can go," says the exec.

"We believe print runs will get shorter," continues Gauthier, "but we don't believe daily volume will decrease. Printers have to keep a clear head about run lengths and daily volumes."

VariScript is a suite of products designed to handle the various stumbling blocks that may be inherent in variable-data printing. Starting with job data collection, moving to page generation, preflight and RIPing is not enough in producing accurate variable-data printing. Verification and auditing also are part of the value package.

For example, in the Varis system, job data is not collected until ready to run. "We wanted a mechanism to do data collection at the time you print rather than ahead of time," states Gauthier. "This avoids mistakes and re-dos brought about by last-minute changes."

Using an electronic job ticket, components of the job are collected, along with job priorities, stock, finishing options, etc. Then the page composition engine uses fitting algorithms to select objects and create new pages. This component is completely database- driven, allowing for individualized page composition.

"The number of columns, copy flow, even document page count can be varied," explains the Varis CEO. "And the page composition module handles its functions 'on-the-fly,' eliminating the need to buffer pages and allowing last-minute customer changes. From a user standpoint, when you push the GO button, the system composes, RIPs and prints. You can make changes of any sort and immediately go back on press."

VariScript also has a standalone proof and preflight stage that runs on SUN with NT and Mac interfaces. Preflighting for variable data is different from that for platemaking. It encompasses more than PostScript files, fonts, graphics, etc. In variable data printing, users must make sure that the database records are accurate and usable, as well as checking the text and graphics.

At the end of the preflight cycle, the system generates an error report and allows operators to make corrections, if required.

An audit record is built, recording everything the system is doing. During preflight, each database record is checked and the job is actually composed to make sure the data is accurate. Isn't that time consuming? "Our highest speed systems run at 4,000 pages per minute," explains Gauthier. "Our composition engine runs 40 times faster. After all, preflighting would not be practical if it took as long to preflight as to print."

The auditing system monitors page verification, post production, the print engine and the RIPs.

As with all printing systems, the job isn't complete until it is finished. As the market begins to do more sophisticated database marketing in which each customer may have different inserts or varied document lengths, variable data controllers also must manage the finishing operations. Using systems such as VariScript, software can communicate in real time to finishing equipment, specifying exactly what each job requires. This can be something as simple as a gatherer or folder, a boxing machine or even a label printer.

Is variable data printing really the wave of the future? "Today, we are at an early stage with only about 40 systems installed," comments Gauthier. "But those 40 systems are producing 37 million documents a day. We believe the future of digital printing has enormous potential within the print-for-profit context."

So whether you identify a market for print on-demand in one-to-one marketing, custom publishing, distribute-and-print, or reliable just-in-time delivery, targeted digital printing can pay off for the commercial print market. The key to success, however, is in understanding your customer and being able to provide the "extras" to differentiate your operation from the competition. If you can do that successfully, it is possible to start enjoying the benefits of those 50 percent gross margins that savvy digital printers claim.