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Findings in Study Reveal What Your Buyers Really Want

6 Jul, 2004

Findings in Study Reveal What Your Buyers Really Want

A survey commissioned by The Electronic Document Systems Foundation (EDSF), a non-profit organization dedicated to the document communications industry, reveals the thoughts and plans of more than 500 decision-makers in an industry cross-section including technology providers/consultants, financial services, manufacturing, telecom, government/education, healthcare, and "other" that includes pharmaceutical and entertainment industries.

The survey, "Document Communications Industry Trends: 2004 Survey Results," sheds light on a number of key business issues that directly affect purchasing patterns and equipment issues in the printing/office automation industry.

Not surprisingly, cost continues to be a major concern. Nearly one-third of those surveyed cited cost reduction as their top priority for 2004.  This means that many buyers will be reluctant to invest in new hardware and software. Instead, they'll be looking for ways to get more out of their existing equipment. At the same time, staff reductions may mean fewer in-house production workers.

How can you take advantage of this trend? Essentially, by thinking like a cost-conscious partner. For example, you could offer to examine a client's existing equipment workflow scenario and suggest ways to increase output and efficiency. Perhaps you could also identify ways to move more work through with less staff. Such input may be welcome. According to the EDSF study, only 15 percent of the respondents expect to be able to reduce costs. The remaining 16 percent in this category have the desire but don't think they'll be able to trim costs.

The World Isn't Paperless

While respondents indicate an interest in digital document distribution, the reality is that most organizations continue to support both paper and electronic distribution modes. At the same time, customers are actively demanding access to web-based promotional materials, and they assume that follow-up hard-copy will be provided. Ironically, digital documents and the Internet are actually increasing the demand for printed documents. What can you do with this information? In many ways, this is good news for office automation equipment dealers. The printed document continues to be the necessary currency of business. Smart vendors will realize, however, that the printed document doesn't exist in isolation. To be a viable part of the future, the printed document--and the printer that creates it--must be tightly woven into the communication infrastructure.

These findings indicate that the industry is at a critical inflection point. On one hand, companies must meet the diverse needs of document recipients, via a web site, via email and in hard copy. Yet with this diversity comes cost, and there is little corporate appetite for increased funding.

Certain companies, especially those in the Financial Services and Government/Education sector, are expected to increase and improve their electronically distributed documented correspondence. The term "correspondence" referred to in the survey indicates those documents that support a transaction or interaction.  They might, for example, notify a client of the execution of a trade or generate a policy and riders for employees receiving health insurance.  An increase in electronic correspondence, however, does not necessarily mean a reduction in print.

About one-third of the companies are likely to increase their paper document production budgets by approximately 10 percent in 2004, while nearly 45 percent will retain the same level of budget as 2003. Among those that are likely to increase their paper production budgets by more than 25 percent, manufacturing and healthcare companies drive this increase in budget. Though cost-cutting is a major issue across all industries, less than 20 percent of the companies will cut their paper document production budgets by 10 percent or more.

What's the call to action here? Seek out those industries, like manufacturing, health, financial services and government/education, whose print needs will continue to be robust.  

The Question of Color

Color continues to be a hot topic in the print world, especially digital variable color. According to the EDSF survey, the use of data-driven color (variable color) applications in print will be higher with 55 percent of the respondents indicating some current or intended future usage in 2004 at some level. However, 45 percent of the companies clearly have no such plans. On one side is the need to increase communication effectiveness, while on the other is the cost of production. Cost concerns continue to drive the market.

Despite the hype of recent years, jumping to the conclusion that a majority of companies are actively using color in any significant manner may be a mistake. Of those that currently utilize data-driven color, one-third produce less than 1 percent of their documents using data-driven color, while only 11 percent currently use data-driven color application in more than 25 percent of their document production. The results indicate that color will continue to be a nice-to-have capability, but costs are likely to continue as a restricting factor. Companies are selective in their use of variable color. They identify a few critical applications and experiment with select documents.

What can you do with this information? Much depends on the economy. If cost were not a factor, according to the study, more pronounced and aggressive adoption of color production would probably result. At the moment, however, color is in a holding pattern, and your best move may be to continue to educate and build awareness about its advantages without expecting big sales anytime soon. By helping clients identify those projects best-suited for color and showing them how to transition cost-effectively, you'll be in a good position to help once purse strings loosen.

The Internet Doesn't Reduce Print

The majority of respondents, nearly 80 percent, provide some electronic promotional literature on their web sites. According to the survey, 13 percent have all of their promotional material available in an electronic format that can be accessed and downloaded from their web sites. About 18 percent  have digital versions of the majority of their promotional documents--about 60-80 percent. The remainder offer half or less of their promotional documents in electronic form.

How does that break down by industry? According to the survey, Technology providers/Consultants lead the pack in digitizing promotional literature. Over 46 percent have digitized about 60-80 percent of their entire set of promotional literature. Next in line is Government/Education sector companies, where nearly one-third report that more than 60-80 percent of their promotional literature is digitized. About 20 percent of those in the financial sector said nearly half of their literature was available in electronic format.

Considering that digital distribution has been available to most companies over the last three years, you might expect a decrease in print production. According to the EDSF survey, however, while the use of electronic distribution has grown, print production budgets have not decreased. Instead, making documents available electronically most likely increases the use of their paper equivalents.  Either buyer or seller may feel the need to follow up with more traditionally recognized paper-based material.

What's the message here? Companies that thought they could replace literature production with web-based alternatives are in for a surprise. The need for print, and printers, is stronger than ever. There is, however, limited ability to integrate a company's web site and the document production facilities needed to fulfill requests. This is an ongoing issue even though 56 percent of those surveyed offered customers the ability to place web-based orders for paper-based documents. Here's the problem, according to the study: The logic to order paper-based literature, dynamically route such orders, batch them into manageable fulfillment requests, and ensure that shipping costs don't escalate are complex. And here's the opportunity: Help clients figure out how to streamline this process so they can manage it more effectively.

Patterns of Document Production

The majority of those surveyed--71 percent--continue to produce documents for customer correspondence internally, and that doesn't seem likely to change. Only about 10 percent get most or all of their documents produced externally. Given recent industry reports that indicate a keen interest in outsourcing for strategic purposes, this seems like a controversial finding. According to the survey, there may be a disconnect between survey participant perspectives on outsourcing and that of senior management. The term outsourcing is widely used in a number of different contexts: off-shore development, Business Process Outsourcing (BPO) of human resource and purchasing functions, and data center or help desk IT outsourcing.

Where exactly does print outsourcing fit? The answer is unknown, but most likely the distinction of BPO seems most applicable when one considers the process of customer correspondence to include tasks such as enrollment, fulfillment, as well and printing and mailing. 

For the 27 percent that produce all work internally, there is the question of maintaining a competitive advantage given the diversity of application requirements. For a firm that produces just credit card statements, for example, this might not be an issue. For those dealing with a broad array of complimentary marketing documents, solicitations, and promotional materials, however, an additional source would be more appropriate, according to the EDSF survey. "Co-sourcing," a term used to describe a mix of internal and external production, allows a company and its suppliers to focus on a particularly narrow set of applications providing the requisite economic benefits of increased utilization and manufacturing efficiency. This approach is becoming more pronounced, as 70 percent of respondents have at least some amount of work spread between their internal function and a supplier.

Top Customer Priorities

What are the critical document communication issues for your customers this year?  According to the EDSF survey, they are: Cost reduction, going electronic, and meeting diverse customer requirements. The pattern of money-saving priorities continues, however: Given the choice to save a buck or speed delivery times, the answer will undoubtedly be the need for savings.

Two cost-saving customer requests may be worth noting: Tracking mail and combining multiple documents/correspondence. Both offer organizations an opportunity to reduce costs. According to the survey, tracking mail may allow companies to more accurately staff call centers and reduce excess capacity. Another cost-saver, combined mailings, is attractive to both the mailer and the recipient.  The fact that both of these are included as customer preferences make them issues you may want to address.

To receive a complimentary copy of the EDSF survey  "Document Communications Industry Trends: 2004 Survey Results," visit www.edsf.org or contact the foundation at 310-541-1481.

Jeanne Mowlds is the Executive Director of EDSF and can be reached at jcmowlds@aol.com.



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