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Feb 1, 2001 12:00 AM
As online solutions evolve, printers are taking a cautious approach
This past year was a roller coaster ride for many e-commerce solution providers. New solutions fought first to establish an identity, and, in the wake of April's stock market downturn, for survival.
So what should we expect in 2001? Management realignments and staffing cutbacks were initiated by some of the major players, as others' basic structures and business models were overhauled. Only one thing is certain: The Internet is here to stay, and printers need to develop a specific strategy.
LATE TO THE PARTY E-commerce has been adopted by printers at a slower pace than was originally anticipated. "In hindsight, it's been an evolutionary, not a revolutionary, change," says NAPL managing director Ted Stitzer (Parkland, FL).
A 1999 survey by NAPL revealed that 97.6 percent of its Printing Business Panel, a representative group of nearly 500 printers, have embraced the Internet but are using it primarily for e-mail or to host basic informational websites. Those usage patterns are confirmed in Expanding the Digital Path: E-commerce in the Printing Industry, a recent study of commercial, in-plant, specialty and quick printers of all sizes by State Street Consultants (Boston). The study indicates that few printers offer online buying power to customers (see Figure 1).
Barbara Schetter, director of the graphic arts practice at Raine Consulting (Chicago), places printers in the lower tier of the e-commerce adoption cycle. She says that the more electronically savvy computer, software and telecommunications industries were doing seven years ago what the printing industry struggles with now. "Printing has been late to the party," she says. She believes this is due in part to the evolving structures of the e-commerce models.
Kevin Keane, president and CEO of the International Assn. of Printing House Craftsmen (Minneapolis), says it has been difficult for printers to grasp e-commerce and the available solutions. "It is relatively easy to understand what a press does and what the result is supposed to be," he says. "Workflow solutions reach from the content creator all the way through the back end of the process."
And while most printers believe that doing business via the Internet is inevitable, they have taken a wait-and-see attitude for now.
"The real problem with e-commerce is most printers just don't see the benefit," says consultant Dick Gorelick, president of the Graphic Arts Sales Foundation (West Chester, PA). "E-commerce vendors need to better explain what value they're providing."
Current pricing structures are also giving some printers pause. "Even providers that have been around for a while are struggling to figure out how to charge for these services," says John Zarwan, State Street Consultants principal. "What is the price for sending out a file? Or online proofing services? Should customers be charged by the job? By usage levels? By the byte?"
AVOID INERTIA So how should printers steer their way through the e-commerce labyrinth?
"Every printer needs to have an e-commerce strategy," Zarwan advises. "If printers decide to do nothing, it needs to be a conscious decision with good rationale, not just inertia, fear or uncertainty."
In developing an e-commerce strategy, a printer should first evaluate its clients and find out what value e-commerce applications can provide its customers.
The consultants suggest that printers ask themselves the following questions:
* Will adding online services enhance the print provider/buyer relationship?
* Will it be a cost-effective solution, and in the case of procurement-based solutions, will it generate more profitable business?
* Will it eliminate or reduce human errors?
* What kind of IT talent will be required on my part?
* How should the e-commerce offering be sold to customers?
* How will it change my value proposition?
SOLUTIONS FOR PRINTERS Stitzer says that after reviewing these areas, printers should then evaluate the various printing e-commerce models. Assessment is easier said than done - some companies' models have morphed since their inception and marketing messages have been mixed. The sheer number of e-commerce players also complicates the decision-making process. (See "Who's who in e-commerce," June 2000, p. 60.)
In its Print e-procurement: Changing the Face of the Printing Industry study, CAP Ventures (Norwell, MA) organizes print procurement business models into four quadrants: Digital customer link, print management, vendor/brand management and transaction management (see Figure 2). While these categories provide a convenient system of organization, strict classification remains an elusive goal.
The "digital customer link" category includes brick-and-mortar print providers who have built an Internet interface to support their existing customer relationships online. Real-time inventory management, digital cataloging, and online proofing and ordering are commonly supported by these proprietary solutions.
"Print management" companies offer third-party products to printers to automate some of their internal management processes and offer print to customers via the Web. Internet-based functions such as online ordering, tracking, RFQs and scheduling are available through these vendors. Unlike "digital link"' services, these packages take an entire project's execution online, sometimes tying in management systems with the Internet interface.
BUYER-CENTRIC SERVICES CAP Ventures associate director Holly Muscolino believes that print buyers - not providers - will drive the transition to e-commerce. "Corporate buyers may be more likely to accept new technology to manage or improve processes, especially if there is a mandate to do so," she says. "Larger corporations on the buyer side might also have more funds to spend on e-commerce infrastructures than do printers."
The "vendor/brand management" companies target these print buyers with tools to reportedly facilitate the overall process of procurement - including print. Some also serve as organizational databases for print buyers' marketing and creative activities.
Functions enabled by the "vendor/brand management" software include online catalogs for ordering products; online RFQs, specifications and job tracking; financial spending reports; and contract generation. The solutions are process-intensive, rather than transaction-focused.
Vendors occupying the "transaction management" quadrant, on the other hand, are sometimes referred to as auction facilitators because their primary focus is on procurement - not overall management issues. Solutions in this category generally do not interface with business management systems and are less relationship-based than other models. The software accommodates bidding, designing and ordering, specification entry, and order placement.
NO ONE CLEAR SOLUTION Much debate surrounds these "auction" sites. Some observers argue that the auction format encourages lowball bidding on print jobs. Income for that project is further reduced when the printer pays the e-commerce company a service fee. On the other hand, "if printers really understand their business and incremental pricing, they can come up with different pricing models as a way to fill gaps in their production schedules," asserts Stitzer.
The general consensus amongst the consultants is that Web-based procurement solutions for commodity items, such as business cards and letterhead, will be adopted more widely and rapidly than solutions that offer online processing of complex items, such as annual reports. In the aforementioned study by CAP Ventures, 62 percent of the 300 print buyers surveyed indicated that they would be comfortable ordering those commodity-type jobs via the Web. Only seven percent of those same buyers, who procure print for corporations, advertising agencies and design firms, would be agreeable to handling complex projects entirely over the Internet.
Industry watchers contend that an all-encompassing solution doesn't exist - yet.
"No one knew the clear way to do this," states Keane. Nonetheless, he urges printers to be patient with the vendors. "E-commerce people are not the evil empire; they're trying to find the workable solution."
In the meantime, printers should approach e-commerce options as they would any other new opportunity: with careful consideration and a great deal of strategy. Schetter suggests biannual meetings with key clients to fully understand where they are using e-commerce within their organizations and if they are members of any Internet consortiums. "That will give you a lead as to where, when and how you as a supplier might be able to participate with them in e-commerce and not be left behind," she advises.
Attending Internet-focused seminars is another way to become more familiar with the offerings in e-commerce. All of the industry trade associations' conferences will cover the topic. Events, such as Vue/Point and Seybold, feature panels of real-world users. And, of course, there are also online discussion groups - the e-Production forum (www.printplanet.com) is always lively.
WHAT'S TO COME The specific future of e-commerce in printing is difficult to predict, because it is still a relatively new field. And its perpetually changing nature is difficult to chart as it happens, much less forecast.
Both the CAP Ventures and State Street studies indicate that adoption rates of e-commerce will increase. State Street found that among printers not currently involved in online procurement, 47 percent expect to move in this direction in the next few years. CAP Ventures found that 17 percent of print is currently procured via processes that are at least partially Internet-enabled. Based on buyer responses regarding how much they expect to use the Internet for print procurement, CAP Ventures estimates that Web-based procurement will jump to 80 percent in the next five years.
As e-commerce evolves, though, pundits expect a reduction in the number of competitors, by virtue of closings or acquisitions. "Consolidation is long overdue. There is overcapacity in the industry in every aspect in the whole chain, from manufacturer to printer," Zarwan states. The already crowded field is made interesting by the e-commerce plans of Heidelberg, Fuji and Agfa - each is scheduled to bring Internet-based solutions to market in 2001.
Industry standards also pose a hurdle. As Zarwan puts it, print buyers who submit electronic RFQs might access nine different printers with nine software solutions, for example. Most of the interfaces are not built to accept the same kind of data, forcing buyers to fill out nine separate sets of specifications in nine different formats. This is e-commerce working against itself - instead of making the process more efficient, it can sometimes actually complicate the workflow.
"There are companies outside of the industry that make software that make these things talk to each other," says Zarwan. "Standardization is important."
Efforts have been taken by some industry groups to establish standards for this. In Q3 2000, CIP4 (Cooperation for Integration of Process in Prepress, Press and Postpress) acquired all rights to the Job Definition Format (JDF), an open, scaleable, Web-compatible job ticket standard. CIP4 is using JDF to complete specifications that will support automation and that will allow equipment from various vendors to work together.
STANDARDS TALK "JDF is a goal that everyone is aiming to be compatible with," says C. Clint Bolte, principal of C. Clint Bolte and Associates (Chambersburg, PA). "But there isn't a practical printer that has put enough on the line to see what benefit could come from it."
PrintCafe, for its part, proposed PCX, the company's attempt to integrate its e-commerce interface with the business management systems it has acquired (Logic, Hagen, Programmed Solutions, etc.). Its proposal of PCX as a standard prompted the development of rival PrintTalk, a consortium of software manufacturers, printers and e-commerce retailers. Both printCafe and PrintTalk use the Commercial eXtensible Markup Language (cXML) and JDF as the basis for their specific work. It should be noted that printCafe initially did not base its standard on JDF, causing some in the industry to view it as proprietary and a rival to CIP4/JDF. It announced at Graph Expo that it would incorporate JDF into PCX.
PrintTalk released its implementation of the Request for Quote, Quote, Order and Order Acknowledgement specifications at Graph Expo, and submitted them to CIP4 for inclusion in its ultimate standard. Why? Bolte says that at this point, JDF and CIP4 are mostly concentrated on press and postpress areas, and e-commerce vendors must make sure the online and prepress areas are not left out. "If e-commerce vendors can't facilitate that, they're dead in the water," he states. Unfortunately, a timeline for release of a CIP4 standard has not been indicated.
Although it might be difficult to endure the growing pains associated with new technology, printers are advised not to turn their backs on e-commerce. "The bottom line is that printers cannot ignore this stuff," urges Keane. "It is not going away."
A: Digital customer link * An internet interface built by a printer to facilitate their customers' transactions
B: Print management * Workflow management * Print process improvement
C: Vendor/brand managment * Vendor relationships * Business process improvement
D: Transaction management * Spec and bid/auction focus * Design and order
SOURCE: CAP Ventures
* Feb. 28-March 2: E-printing and publishing tutorials, ON DEMAND Printing & Publishing Conference & Expo, Jacob Javits Convention Center, New York City. Contact: www.ondemandexpo.com.
* March 9: "Is e-business the future of print?" NAPL Top Management Conference, Four Seasons Biltmore, Santa Barbara, CA. Contact: NAPL, (800) 642-6275.
* March 26-28: E-Commerce State of the Union-Clearing the Confusion, VUE/POINT, Footprint Communications, Crystal Gateway Marriott Hotel, Arlington, VA. Contact: Graphic Arts Show Co., (201) 461-5252, or www.gasc.org.
* April 8-13: "Web Conference," "Managing the Web-enabled company," Seybold Seminars Boston, Hynes Convention Center, Boston. Contact: Key3Media Group, Inc., (650) 578-6900 or www.seyboldseminars.com.
Search our online archives for: * "Getting more from your website," September 2000, p. 64.
* "Telecom turns ASP" August 2000, p. 42.
* "Who's who in e-commerce," June 2000, p. 60.