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Printers don't just put ink on paper anymore. From design consulting and pre-press before the print job, to mailing and fulfillment after a publication is built, printers are evolving into one stop shops.It's the strategy of choice for leading printers facing evolving technology, expanding customer requirements, and the raw economics of a tough market. But are publishers well-served by this trend?It was inevitable, perhaps, that printers would add services beyond applying ink to paper. Technological advances continue to render certain craft skills obsolete, or less important.At the same time, many publishers want to streamline operations by focusing on core business processes. This inspires publishers to outsource printing-related tasks to external vendors.But managing these service providers is work, too. Indeed, it's an art form unto itself. And the more service providers there are to manage, the more time and energy publishers must devote to the task.When a single printer can handle the lion's share of a job, it simplifies the workflow by reducing management overhead, and relieving publishers of staff and equipment burdens.This can increase cycle time and cut costs—the Holy Grails of the publishing world today. It's no wonder printers of all shapes, sizes, and geographic locations are scrambling to offer a broad array of application services.But the rush to embrace application services could cause some printers to overreach."The trend is growing," says Dr. Ron Davis, chief economist at the Printing Industries of America (PIA), an industry trade group in Alexandria, Va. "Printers are looking to get into these activities, but there's a problem. You can be a very good printer, understand the business model, and have all the skills. But some of these new additions to the business, such as database management or inventory fulfillment, require different skill sets. Printers can't just hang their shingle out, and expect that will deliver good service."Davis' analysis indicates that, for printers moving into application services, "there is some investment in machinery, but the serious part of the investment is in expertise and people."TO BUY OR BUILDSome printers have been acquiring whole firms to expand their base of service offerings. Others have been investing in entirely new service infrastructures, such as mailing, distribution, and online capabilities.In both cases, harnessing expertise is the key. This can come from building capabilities internally, buying specialty companies that complement the existing services, or by cobbling together a team of specialty providers—but always using the printer as the principal face the customer deals with.PIA's research indicates that, in some areas, almost all integrated providers are providing services in-house (for example, roughly 85% of printers surveyed that offer fulfillment and inventory management do so in house).Printers who vertically integrated operations (i.e., added application services) to win or retain business argue these efforts respond to customer demands for convenience, quality, and time.For CRW Graphics, in Pennsauken, N.J., the decision to expand their service offerings came about five years ago. It's an ongoing effort to defend their quality provider reputation, says Will Glassman, VP of sales and marketing.Technological changes provided smaller, cheaper platforms. For example, publishers could use an Apple Macintosh to do image manipulation, instead of a Scitex unit."Now any small printer can do quality pre-press," Glassman says. "Scanning is in the same category. Small guys are nipping at our heels, because they can now do quality work. So we decided to offer more added-value services. They include digital printing, [and] complete digital front-end workflow. We installed a complete mail house and fulfillment capability. So we can now do pre-press to printing, to binding, to mailing."Executives at Publishers Press, a magazine printing and services specialist offering a menu of integrated services, agree: Boutique printers find it difficult to compete against broad, end-to-end, full-service offerings.A VALUE PROPOSITIONBut leveraging application services as a competitive tool is only part of the story. Printers also say application services are about providing increased value to publishers."We're all about providing value," says Ned Kulka, marketing director at Publishers Press, in Shepherdsville, Ky. "That's how we choose the services we deliver."Kulka says Publishers Press has been offering and performing mailing services for a long time. Now the company has added co-palletizing, shipping several different magazines together on the same pallet. This provides great economies of scale to their customers, Kulka says."The Postal Service has minimum charges for shipping, and our short- and medium-run customers usually fall under the minimum," Kulka says. "The fixed cost-per-copy for shipping goes up. Co-palletizing different magazines lowers the cost per copy for all the publishers sharing the charge. There's reduced damage, and faster delivery, too."The Allied Healthcare division of Medical World Communications Inc. finds co-palletizing valuable. And they are increasingly making use of other application services provided by Publishers Press.The Los Angeles based publisher of magazines such as Rehab Management and Decision in Imaging Economics is now using Publishers Press for reprints, promotional pieces, and collateral."The printing industry is becoming more one-stop," says Tina Antikadjian, Allied's VP of operations. "Publishers [Press] is at the forefront of that. They are jumping on new services, and doing things for us that we used to go to several outside vendors for."Antikadjian says this makes Allied's workflow faster and simpler, because they can send materials together. Ultimately, Publishers Press ended up winning all of Allied's prepress business, in addition to the printing work. And now they've captured Allied's mailing and distribution, through their co-palletization service."Their pricing is competitive, and their quality is top-notch," Antikadjian says. "We go to them first. They handle all of our pre-press. So when they came up with the co-palletization option, we jumped on it."RISK AND RELATIONSHIPSBut concentrating prepress, printing, and distribution on a single service provider is not without risk. The more work a publisher doles out to a sole provider, the greater the risk if something goes wrong (such as a fire at the plant or labor unrest).Allied's Antikadjian looks to the relationship to reduce risk. "Trust plays a big role," she says. "We see how they work to build the relationship, and see what they do when they make a mistake. You need to work closely together every day," she says.Risk aside, some publishers prefer to work with multiple printers, mating the printer with the project at hand for a best-fit solution."We're bucking the trend," says Jim Offel, general manager of Diablo Publications Inc., in Walnut Creek, Calif. "We use Hudson Printing in Salt Lake City for printing, because they are an outstanding small- and mid-size run printer. On jobs bigger than Hudson's core competency, we use Quebecor World, which can get us on four or five presses at a time, and turn jobs around in 24 hours."Diablo is also using Applied Graphics Technologies (AGT), Los Angeles, for digital asset management, IT consulting, and other technical publishing services, Offel says.If quality, value, and service selection are three ways of being useful to a publisher, time is the universal resource every business wishes it has more of. Some printers are focusing their application services to add time to publishers' lives."We condense manufacturing cycles for our clients," says Don Samuels, managing partner of Pictorial Offset Corp., in Carlstadt, N.J. Rather than acquire new businesses or work with subcontractors, Pictorial Offset is building its application services suite from the inside out.This is "to drive efficiencies and contain costs," Samuels says. "Combining all these services can't be a way to make more money. [Rather,] we're driving time from the cycle."But the effort to add application services and compress cycle time has its own set of startup and ongoing costs. "It builds on a whole new set of overhead costs," Samuels says. For example, to compensate for the shrinking number of trade binders, and accelerate time to market, Pictorial Offset built its own bindery.Binding machines don't come cheap, and margins on binding projects are razor thin. But being able to offer integrated binding services is a plus for customers, improving client acquisition and retention. "We needed to build a bindery, [because] the world of trade binders has shrunk," Samuels says. "There are very few trade binders left. The machines run faster now, but the cost to buy new machinery is just as high, and the margins are thin. But we need to be more self-sufficient, and produce work efficiently where lead time is condensed."FUTURE INVESTMENTThe company's most recent foray into application services: Pictorial Mailworks, a new data processing, mailing, and fulfillment services company.Handling mailing for clients "means we can have product in the mail faster than we can deliver the product to another outside mail house," Samuels says. "We printed collateral for a large auto manufacturer, had people from their agency approve it, and mailed it—all in one afternoon."Competitor Applied Graphics Technologies of Los Angeles is aggressively working to have its services span the service cycle. "AGT is designed to address all media, from magazines, to posters and billboards, to the Web," says Robert Godwin, VP of business development.That means keeping an eye out for the next wave in communications technology, and not limiting the company's positioning to that of a printer. For example, as AGT's entertainment industry clients abandon video tape in favor of digital video, AGT is adding DV-related value-added services."One of the [new] services we provide is helping publishers and advertisers manage their marketing assets, and re-use them effectively," Godwin says.AGT's clients agree. "They bring vast IT resources to the table," says Diablo Publications' Offel. "We just used them to perform a major upgrade of our Web infrastructure. It pairs our creative abilities with their bits-and-bytes. As much as anything, AGT is really an IT company now; they leveraged technology for what we need."AGT's Godwin spends a lot of time thinking about future application services. Automated advertisement submission that works for multiple magazines is one such area that AGT is developing.The company has licensed technologies such as Full Press pre-press workflow control software, and Web Native, a server-based asset management tool. Both products are developed by Xinet Inc., Berkeley, Calif.AGT is also using Mass Transit Enterprise, from Group Logic, Arlington, Va. Mass Transit supports secure B2B file transfers across high-speed wide area networks, including the Internet.AGT licenses these and other software products, then customizes them extensively "with some home-cooked code" to better align them with customer requirements, and add value, Godwin says.For example, Godwin's programming team is using Microsoft's Visual Basic and Macromedia's Cold Fusion to integrate its off-the-shelf products into cohesive offerings. They're also building connections between new technologies and AGT's legacy systems, such as AGT's license management and billing systems.The programming team's mission: to expose as much customer functionality via AGT's Web portal as possible. Integrated modules customers can now access through AGT's Web portal include soft proofing, asset management, ad tracking, inventory management, and POD (print on demand).EXTREME CUSTOMIZATIONCustomization addresses crucial requirements for many publishers. And some printers are taking customization to the limit, developing and introducing software-based application services of their own design.That's the case with MagSend, a popular automated advertising workflow system developed by printing services provider CRW Graphics. (Disclosure: MagSend is used as part of PrintMedia's workflow.)With MagSend, advertisers upload their ads electronically. The software automatically compares the ad to the publisher's specifications, stored in a master database of some 600 publications.If the ad meets the specs, MagSend pre-flights it to the specs, checks that all required images are present, and creates a locked file which is sent directly to the publisher's printer.As with other application services, MagSend promises to save publishers and advertisers time and money, and expand the wiggle room for last-minute edits and additions."If the ad needs to be delivered in five different trim sizes, we can do it," says CRW's Glassman. "Because all the work is digital and electronic, it drives the cost way down. Plus, advertisers can make changes until the very last minute."Other printers are also eyeing a move into software development, to build solutions from scratch that perfectly meet their client's requirements. For instance, Allied Healthcare is now talking with Publishers Press about co-developing a workflow system."Nothing off the shelf will work for us," says Antikadjian of Allied. "[Publishers Press has] the staff to put it together for us."As publishers take advantage of their printer's application services, they see opportunities for new solutions. Antikadjian would like to see a service that provides "digital archiving of entire issues, and a way to make it very accessible," she says. "Publishers [Press] has the storage space, and they already have the investment."To be sure, application services are a slippery slope for printers. Once a printer begins offering integrated application services to its publishing clients, there is no turning back. Clients inevitably want more."Non-printing services are now 8% of printers' revenues, and it keeps going up," says the PIA's Davis. "You can expect to see growth in electronic services and in the database end."The technologies are new, but solving publishers' problems is a tradition among printers—one the smartest players will continue to explore."Printers have always created value by making publishers' lives simpler," says Bob Lindgren, president of the Printing Industries Association of Southern California, in Los Angeles. "To thrive in this changing, more integrated environment, [printers] must get really good at managing complexity."- Jeff Angus

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