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Print management companies have changed the face of the industry in the past 10 years. Now they are some of the biggest buyers in the sector, controlling annual print spends running to tens, and in some cases hundreds, of millions of pounds.

But they are entering a new phase. Rather than just being the print brokers of old, they are looking to generate extra revenue by streamlining their own processes and by offering new services to their clients, such as data management and content creation. The shift to controlling parts of a client’s marketing supply chain beyond print has meant that several of these firms no longer consider themselves print managers at all, but rather business process outsourcing (BPO) companies.

With this change kicking in, PrintWeek brought together nine of the most powerful players in UK print management and BPO, and one well-known printer, to discuss the state of print in 2008, prospects for the future and how UK printers can benefit from their growth.

ROUND TABLE DELEGATES
SB - Simon Biltcliffe, managing director, Webmart
Biltcliffe is a former Polestar man who sees his company as the EasyJet of the industry, offering ‘low-cost’ print management

AC - Alistair Cane, executive director, Adare
Cane joined Adare a year ago from Williams Lea to revamp its customer-facing operations, shortly after Adare rebranded itself

JC - Jason Cromack, chief executive, AccessPlus
Cromack has headed up AIM-listed TripleArc and its print management arm AccessPlus since 2002

CGS - Charles Grant-Salmon, chairman, 4DM
Grant-Salmon is the well-respected chairman of one of direct mail’s most influential firms

RM - Robert MacMillan, managing director, HH Associates
MacMillan founded HH as a spin-off from Howard Hunt; the company is on track for turnover of £100m this year

GM - Gary Mahoney, managing director, Charterhouse
Mahoney has led growth through acquisition to make Charterhouse a £60m firm

SN - Steve Nunn, managing director of marketing solutions, Williams Lea
Nunn, a Williams Lea veteran who shuns the words ‘print management’, is a big-hitter who last year sealed a £700m outsourcing deal with Reader’s Digest Association

TS - Tim Smith, category director, Polestar Applied Solutions
Heads up Polestar’s digital and print management divisions

SV - Steve Vaughan, chief executive, Communisis
Vaughan entered print in September 2006 and has been outspoken on his vision to change Communisis, and the wider industry, from manufacturing to a service industry

AW - Alastair Watson, director of strategic sourcing, RR Donnelley Global Document Solutions
Watson joined RR GDS in March 2007 from his previous high-power role of head of procurement at William Lea

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PrintWeek – What is print management in 2008?

JC Well it’s not print broking. The days of going in and asking the customer how much they’re paying for a print job, saying ‘I can do it cheaper’ and then making as much of a saving yourself as you can are long gone. It’s now about the technology you can put in place to streamline the communication process and it’s about the services you can provide around the core, which is the communication.

AC I’d stretch it further – it’s marketing communications strategy of which the print element is only a small part. I can have a whole host of conversations with a client without ever mentioning the word ‘print’. It’s all around their marketing communications supply chain.

GM Print is key to it still – it’s how we get into these places. But what we’re offering has to be a lot more and I think the creative side is where we are looking to go more.

SB At Webmart, we don’t aim for big contracts so for us, it really is offering a best value proposition. Give us the PDF and we do the rest – clients want us to do it as cost-effectively and as quickly as we possibly can. How we do that is by automating as much as we can to give them the best value.

What challenges do print management and BPO firms face?

SV We need to stop mucking around with revenue and we need to talk about how to make money. If there’s a future for print management, it has to be about where the margin is, how you drive that up and how you make it more sustainable. The answer is that it’s about turning this into a services business, and not either a sourcing or manufacturing business. If all that you’re doing is trying to make 1% on buying print from somebody else, good luck to you.

AW We position ourselves very much as information management and communication management, but when you look at what we’re delivering, I think it’s a challenge to translate that end-to-end vision into a joined-up solution for our clients. That’s common wherever I look.

JC One challenge for us in 2008 is how to engage with customers at a strategic level, especially as there isn’t necessarily enough talent in the industry. Senior people like us around this table are trying to do that, but we’re all charging at a thousand miles an hour and looking over our shoulders wondering where everyone else is. So the challenge is making sure we develop very clear propositions that both our customers and our people can understand, and then educate the talent to actually deliver that message.

SN There isn’t the talent in the sector because whether you’re a BPO, a print manager or a printer, you’re broadly drawing on the same pool. There isn’t an understanding of what’s happening in other manufacturing sectors. We haven’t got to be rocket scientists here – go and look in any other sector that’s more mature than ours and we should be plagiarising what they are doing. Not enough people understand that.

TS Having associations with manufacturing is a double-edged sword. In terms of creativity, if you haven’t got any manufacturing, you can be as creative as the world allows you to be. Where you have manufacturing and boxes, whether they be laser boxes or printing boxes, to a certain extent you are constrained by those and you have the problem of filling those boxes. The positive side is that there are direct manufacturer benefits, in particular, where it is higher volume. I see the market splitting what was all traditionally bundled together. Separating out the commodity, where you go direct to the manufacturer, and the niche and specialist requirements will come to the industry experts to gain support on that.

CGS Manufacturers should realise exactly what you’re realising, that there’s a commodities sector and there’s add-on products. If you take my business, there’s a core activity which produces 300m packs and we will never expand that. So we’ve added on extra bits around the business which are less commoditised. That means we can bolster our margin through other bits and pieces such as data management or colour digital. Print management is seen as a mature market in the UK. What are the growth opportunities for print management and BPO companies in 2008?

SN If you’re an outsourcing business and it’s your mantra to improve the way your customers communicate with their customers, then we haven’t even scratched the surface. If you’re a print manager, then maybe it’s a mature market, but I’m not a print manager. If you’re asking me what’s happening in 2008, then I’d say more of the same and on a bigger scale.

AC There’s maturity in terms of how people buy print, but there’s a very immature – that is, undeveloped – approach to how people change the way they communicate. That’s where the conversation’s happening. The BPO market is enormous.

AW As long as the revenue we get from print remains a high proportion of the revenue we all enjoy, there is an imperative to take cost out of that side of the process. I think there is still a major opportunity to get a much better holistic view to manage what we print on behalf of our clients and to aggregate that in a much better way, so that we can give our print partners a much cleaner profile of work and help them. Very often, our view of the print we manage is very client-driven – each client team does their thing, but there is not a single integrated view. That has a negative impact on the way that we’re able to talk to the supply base in the most effective way. There’s a big profit opportunity there, still.

Is the expansion of print management in Europe an opportunity for UK printers?

RM Print management across Europe is a huge opportunity. For UK printers, the client might be headquartered in Germany or Holland, but if it’s a pan-European contract, part of that will be UK business that will certainly be serviced in the UK. So absolutely.

AC It also adds a threat to the UK marketplace because the more we jolly Englanders go out there and understand the vendor base, the more we see the opportunity to offshore potential work from the UK. I haven’t been involved in conversations where it’s coming the other way.

How can printers be better suppliers to print management and BPO firms?

CGS Traditionally, printers are not good sales people. There are lots of things we know how to do, but we’re not very good at telling the marketplace sitting here. The manufacturers need to be banging on your doors saying ‘have you thought about this, can we look at this or offer that alternative?’ All we do traditionally is sit around and rattle out quotes, when we really need to look at each product, and understand what the client is trying to do with it.

GM We have to change as print managers too, because a lot of people we employ just want you to rattle out quotes – very sadly. It isn’t what we around this table want them to do.

AC If everybody went round the table and said who their best partner was, I bet 100% that it would be an organisation that knows exactly what it wants to do. If a company decides to specialise, it may have to lose a bit of short-term revenue, but the opportunity long-term is fantastic because every single print management company around this table would want to put work with that company. That’s the opportunity.

SB Suppliers in Europe generally have a much better idea of where their niche is. In the UK, people are quite acquiescent and will take any old work, and try to make a silk purse out of a sow’s ear. Printing companies should start doing a lot less but a lot better, like Europe has done.

RM I agree. What European printers do, they’re extremely good at, but they will say no if a job doesn’t suit their press configuration. And they make more money.

SB You, as the print manager, get a great price, and they get a great return – it’s win-win, isn’t it?

GM It’s easy for us to say that as print managers. But you also have to pitch that to a man who’s sitting next to his printing press with not enough work on it. It’s a bold step, even it is the right one, not to take on work and go for a specialisation. That’s where we have to work with the printers.

SV I’ve been staggered by how defensive the whole industry is. It’s very inward looking and the response to competition is cost reduction. It becomes about pursuit of volume rather than pursuit of profit. That’s the biggest shift about how to make this industry more value-creating. Spend time with your customers, understand what they really want to achieve, and then you might achieve it more easily and more effectively.

SB I always find it surprising that when you look at the kit that people invest in and the options on that kit, and then ask them how often they’ve used a particular option, the answer will often be never – literally, never. So there’s a huge amount of added value that can be created, not by investing in new kit but using the equipment that you’ve got more broadly. t Without any new investment or capacity, you’re broadening the sales and the product and you’ve got to get a better price for it. And it’s the printer’s job to bring it to the attention of the print manager.

SN Never let it be forgotten, though, that from the manufacturing base there is only ever going to be one desire and that is to produce it more effectively and more efficiently, and that means, sadly, for less money. Not less profit, but less cost. We would be doing a disservice to our vendors, suppliers and partners if we in any way convince them that 2008 is going to be different and we won’t come banging on the door looking for improvements. Our customers will – the market is driving us that way.

What are the prospects for the whole print industry in the coming years?

TS For me, it’s an industry transition so the name of the game is to change. For those that manage the change effectively there’s an opportunity and for those that can’t, there isn’t. We will see outside influences in terms of environmental issues. But at the same time it’s about being best in the field and that field’s just got bigger because the world is getting smaller.

CGS As a manufacturer listening to this, there’s a positive feel about service providing. If you can be best in class, manage your business effectively and be creative, there’s a lot of opportunity for you.

SB There’ll be big winners and big losers. It’s down to a cultural decision that the printer’s got to take. If they are part of it, there’s a big opportunity to take cost out of the business and specialise – otherwise they’ll be a generalist and probably try to become a print management company themselves.

RM For print managers and BPOs, the business has developed from print brokers and there’s a great growth opportunity. We should all be very upbeat. We’re in a great business with a great future.