Incentives to Change

For agencies and publishers, adopting e-commerce solutions has never been more urgent.What a year 2000 is shaping up to be! The fervor of e-commerce for publishing is just beginning and has inspired interest from the press: Business Week highlighted a recent Goldman Sachs study that predicted media and advertising will reduce operational costs by 10 to 15 percent once e-commerce solutions are in place. The analysts conclude that implementing e-commerce will translate to a three to 12 percent improvement in the bottom line.Just when we've begun to understand Noosh, Collabria, Impresse, printCafe and others, the Wall Street Journal reports that the field is crowded and consolidation is likely. Boy, do things move fast on Internet time!Industry guru Terry Nagi, while speaking at a recent Communication Graphics Association (CGA) forum, advised: "E-commerce is going to alter business forever. Understand it, before it consumes your business." A printer representative who shared my dinner table that evening exclaimed truculently, "We certainly aren't going to make any e-commerce changes unless our clients make us."Overcoming inertia to move on to a new business paradigm resembles what some have described as "watching pachyderms procreate." The challenge of change is anticipating how to move forward at the speed of your business, and I'd bet on Nagi's assertion.Defining e-commerceFor many in this industry, e-commerce is just about Web sites and browsers launched on a desktop. From his podium, Nagi asked the audience how many use the Internet for browsing and e-mail. Most raised their hands. But for the consumer, buying and auctioning, it seems, represents a tiny portion of Internet activity, while business-to-business commerce represents a model that is four times grander.From a historical perspective, the process of exchanging information related to the manufacture, sale or distribution of product or service, predates the Internet. General Motors, Ford and Chrysler began deploying electronic data interchange (EDI) in the late '80s. National cable systems began exchanging electronic insertion orders and invoices as early as 1997. Replacing phone calls and faxes with automated transactional communication has allowed the cable industry to remain competitive. After implementing an EDI insertion process, gross cable spots billing escalated from $60 million to $300 million for one agency.If it ain't broke …So, what's wrong with our existing processes? Perhaps nothing, if neither your customers nor shareholders expect to reap the benefits of e-commerce. In the current workflow, content begins its life as digital data. It's converted back to analog for proofing. The same could be said for insertion orders. It doesn't make sense; it's less efficient, slower and error-prone.This process—perhaps still in use at your own company—lacks efficiency and integrity. Many publishers still choose to lay out an issue on an office wall. Others have more efficient processes. Certainly, the workflow choices we make are largely related to cycle time, but how does this principle apply to e-commerce? Are these solutions only pertinent for high-profiles weeklies?The answer is analogous to any infrastructure solution. Is the telephone only useful to blue-chip companies that reside in high-rises in big cities? Of course not. Just as most businesses are allowed to choose their level of telephone service, e-commerce solutions are also scalable—in design, functionality and price. Universally, companies of all shapes and sizes can benefit from their efficiencies.The competitiveness of the industry, the intensity of the information we move, and the pervasive need to move it more quickly, contribute to the hypothesis that the need for e-commerce is acute. The industry can ill-afford to continue the use of paper-based information systems, particularly when ad materials are now digital. Industry groups, such as the Graphic Communications Association (GCA) and the Newspaper Association of America (NAA), are working together to produce a standard format for the exchange of business and production information.Advertising agencies. If anything, they stand to gain by urgently embracing it. Think of the value-added opportunities. Agencies can create a competitive edge by implementing a creative, production and customer-support operation that enables real-time customer access to job status reports.Well-being awaitsYou may still be asking: "Are there other benefits? What's the urgency?" Above and beyond the cost savings, e-commerce tools will allow agencies and their collaborative partners to:-scale up processing throughput to better manage peak periods often associated with seasons, new business acquisitions and deadline-driven peaks and valleys;-wring out production and business discrepancies (databasing technologies can compare information more accurately and efficiently);-eliminate wasteful, duplicate keystrokes that are labor intensive and often lead to expensive and embarrassing errors;-break free from the phone and fax machine;-create an automated system for exchanging electronic insertion orders; and-get paid sooner and enhance customer satisfaction.Extending the benefits of e-commerce solutions to the print advertising industry is long overdue. The few with the foresight to proactively establish the standards and tools that enable digital communication will be in a leadership position, while those that lag behind will have little alternative but to follow. Therein lies the urgency.Research, development and implementation will all be for naught if industry standards are not applied to the e-commerce solutions we embrace. Without standards, consider the potential for disaster: One advertising agency has a 30-year-old media database, while another just purchased a new SQL application program. Both need to send information to a publisher's internally developed database/layout program. But can you really expect them to be able to talk to one another? The only thing they have in common is electricity!Fortunately, we are approaching a meeting of the minds, as publishers and agencies join forces to create an initiative for digital exchange. We envision a day—in the not-so-distant future—when e-insertion orders and material with standardized metadata will allow for real-time processing and status messages electronically uploaded to agency systems. E-bills and e-tearsheets will be a reality, and real-time e-processing of invoices will allow publishers and agencies to generate revenue faster.The benefits and goals I've raised here represent some of the issues I expect to explore in upcoming issues of Publishing & Production Executive, and I welcome you to take part in some interesting dialog. -Craig C. ShraderCraig Shrader is president of Commerce Xchange, a provider of standards-based EDI and XML e-commerce technology to the publishing industry.

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Incentives to Change

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