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Sefas Innovation White Paper

“Adding Value - Building Your Business”

January 2010
“Adding Value - Building Your Business”
A paper that examines the benefits to Print Service Providers of offering TransPromo capability to
their customers.

Introduction

In today’s uncertain financial climate, providing an economically viable print service is becoming more and more
challenging. Greater competition increased technological and market complexities and declining margins, mean
that Print Service Providers (PSPs) are having to develop and deliver value added services to their customers to
survive and to grow. These services not only differentiate and build competitive advantage, but also offer the
opportunity to recover margin from the diminishing prices that pure print and mailing services deliver.

This paper defines the main challenges facing PSPs, outlines some value added services offered in the
marketplace and specifically examines why Transactional / Promotional publishing needs to become a core
offering for all PSPs.

Whilst the paper is predominantly aimed at outsourced service providers, we must recognise that most in-house
plants now have to operate a commercial (or near-commercial) business model – evidencing best value, offering
competitive pricing, having to meet ever-demanding SLAs and often requiring to bring external volumes within.
Many of the principles covered below will apply as much to in-house operations as to outsourced service
providers.

Customers will demand more applications and more seamless integration with their other
corporate systems and workflows. End users will accelerate the migration to nonprint
communications for cost savings, environmental considerations and convenience.

Gartner: Key Issues for Printing Markets and Management, 2009


Today’s Issues

Print Service Providers are facing an increasingly challenging climate – competition is becoming increasingly
global; service offerings are being commoditised; environmental and regulatory pressures are challenging costs;
and the willingness of the public to adopt mobile and web technology threatens existing print and mail volumes.
Consequentially, operational margins are becoming smaller and smaller.

Rationalisation of the industry into a fewer number of larger service providers is encouraging an environment
where the print and mail process is becoming more commoditised. Providers seek to gain new business through
loss leading printing costs, hoping to claw back margin by delivering added value services.

Gartner predict that Twenty-five percent of the top 20 BPO providers will not exist as
separate entities by 2012 and that this consolidation will give buyers less choice. (Gartner
- Top Predictions for IT Organizations and Users, 2009 and Beyond: Where Is the Money?

There are significant changes in the traditional customer base – especially the
increased buying power of the larger Business-to-Consumer organisations.
Technology, particularly the widespread adoption of document composition tools,
has enabled these customers to produce their print in a wider number of formats,
affording them the ability to more easily move their printing between print
service providers – or even to electronic medium. This flexibility, together with
demand falling faster than supply, has allowed the larger customers in the
market to aggressively drive the price of print & mail down.

Whilst the adoption of document composition tools within organisations has


reduced the number of sources of documents, rarely do we find an organisation
using a single tool. Compounded by a constant stream of mergers and
acquisitions, PSPs are expected to deal with an ever-more diverse variety of
different document formats.

In the UK, whilst a majority of consumers (56%) prefer to receive bills and statements
via mail, 36% expected their use of electronic media to increase within the next 3 years.
InfoTrends - Trans meets Promo: European Perspective, 2009

Working with pre-composed documents formats presents PSPs with new challenges including:

1. How to efficiently absorb the documents from multiple data sources in a variety of formats within the
confines of an investment case;

2. How to add value to pre-composed, ‘print-ready’ documents within the production process;

3. Today these challenges are ever more evident as customers seek to obtain best possible prices for print
production and mailing services. This consequential reduction of margins threatens to affect PSPs’
bottom line, compromising shareholder return and their ability to invest in the future. Success in today’s
print market is not so much survival of the fittest – but survival of the quickest – of those PSPs who can
adapt quickly and adopt new ideas and technology to meet the ever-more demanding needs of
customers.

“It is not the strongest of the species that survive, nor the most intelligent, but the ones
most responsive to change.” Charles Darwin
The Current “Value-Add”

PSPs have to differentiate themselves within the marketplace by turning to technology that enables services
which add value rather than just reducing cost. Such services include:

• Providing more detailed and regular reporting of activity, which allow the customer to meet regulatory
reporting criteria and/or facilitates accurate charge back at departmental, project or cost centre level.

• Giving the customer the ability to see real-time information on the progress of their job through the
adoption of portal services. This enables the customers to plan their own associated activities around
the work being handled by the PSP.

• Enabling pre-print viewing allows the customer to save considerable time in the proofing process and
can ensure that the content owners are each able to sign off on their component of the document.

• Providing improved Mail Sorting capabilities which, not only offer greater postal discounts, but also
allow a more structured coverage of the mailings – which helps control Call Centre traffic and offers
demographic segmentation opportunities.

• Document composition services - increasingly organisations are seeing the creation & maintenance of
their documents as “non-core” business activities and look to PSPs to manage the composition as an
outsourced service. This has allowed PSPs to build “centres of excellence” for composition services -
managing many customers using shared resources.

• To complement the document composition services, PSPs also utilise document re-engineering
solutions to enable efficient handling of the pre-formatted documents. More than just transforming
document formats; re-engineering enables sophisticated enhancements which allows the PSP to add
significant value to the documents in terms of personalisation, adding colour graphics and/or enabling
simultaneous electronic distribution.

• A recent area of growth has been the extension of portal services which provide a window to allow the
customer to view real-time information. Increasingly, this service is used as a vehicle to enable the
customer to be directly involved in elements of the document creation process itself. Print Service
Providers are more and more commonly able to provide upload, edit and management facilities for
document content.

These value-add services are all helping to offer PSPs’ customers significant value in the way in which documents
are created, produced and distributed – delivering better, faster, more accurate and relevant communication to
their customers. Whilst many of these services are equally as applicable for either Direct Mail or for transactional
printing, the greatest value can be gained from merging the two applications – Transactional / Promotional
production (TransPromo).

In the UK, transactional documents are 20 times more likely to be opened and read than addressed
direct mail from familiar businesses and 40 times more likely than from unfamiliar businesses. By
adding personalised, colour messages on a statement, response rates improve by 125%.
InfoTrends - Trans meets Promo: European Perspective, 2009
TransPromo – A Perspective

“TransPromo” –is probably one of the most widely used (and mis-used) terms in the printing industry today.
There are many interpretations of the term, but reducing it down to its basic definition; it is the process of adding
Promotional material to Transactional-based documents in order to influence a buying decision. It is important to
reflect that the document’s primary purpose is to convey transactional information - it is NOT adding transactional
(variable data) to promotional material to enable 1:1 marketing / personalised print. Variations exist where
personalised educational or informational content can be added to the transactional document rather than
marketing content.

TransPromo benefits your customers enormously – in terms of enhancing marketing campaigns, controlling costs
and improving green credentials – and even if its full potential is somewhat marginalised by European Data
Protection laws (eg UK’s Data Protection Act), the potential of TransPromo is enormous. In the US, Gartner
estimate that TransPromo volumes will rise from 3.8 billion pages per annum to 27.5 billion from 2007-2013 – a
compound average growth rate of almost 50%.

The benefits for the PSPs who are able to offer and deliver a credible TransPromo solution are significant – apart
from the potential higher margins such a service offers, the PSP will find that being integral to the document
content part of the production process will bed the supplier more firmly into many of their customers’ key
processes – allowing for a more durable relationship to develop.

What now? - Realising the new value added opportunities

There are a number of reasons why Print Service Providers can feel confident that offering a TransPromo service
will deliver benefits to their customers and to their own bottom line. Many PSPs already have the infrastructure
to provide such a service, but have yet to fully exploit their own capabilities. Consider the following capabilities
that many PSPs will already have or will have seriously considered investing in:

• Colour Printing Technology – Print Service Providers are at the


forefront of adopting high volume full colour print technology. With the ability
to share the investment cost across many customers, the PSP is able to utilise
their colour print capability to enable the flexibility of TransPromo content with
powerful use of colour at a competitive cost.

• Customer Profiling Data - As a key component of the document composition process, PSPs are
being required to handle increasingly sophisticated data acquisition and mining services. These have
grown from sourcing and handling of mailing lists, as part of Direct Mailing campaigns, into providing
the capability to supply complex information for profiling customers. This data is fundamental to
effective customer messaging.

• Document Composition Services – with a vast amount of expertise in managing content


and business rules, using a variety of tools, pre-established (or transferred) composition “centres of
excellence” are perfectly placed to manage the addition of any new Promotional content.

• Document Re-engineering Services – coupled with Data Profiling, re-engineering enables


TransPromo content to be added to pre-formatted documents, often at a lower cost than managing
through multiple composition processes at source. Further efficiencies can be made by sharing the
TransPromo routines with composition services provided by the “centre of excellence”, thus
standardising outputs. Importantly, re-engineering enables a far wider scope of documents to which
TransPromo enhancements can be made. It enables the PSP to add value through TransPromo
irrespective of customer’s source composition tools.
• White Space Revenue Generation - White-space carries a real value which can be leased
to 3rd parties (adopting the same principles as web sites). PSPs will be in an ideal position to be able
to integrate the content from these different sources and to leverage synergies between their varied
customers. A similar practice has been used where Councils have “sold” the ability for relevant 3rd
party onserts to be included with Council Tax bills, to offset production costs.

• Portal Services – TransPromo effectiveness relies quite heavily on the ability to rapidly change
messages. Through an on-line ability to upload and manage this content directly, PSPs enable their
customers to take charge of the messaging content, proof and sign off via the portal and dramatically
improve on their time to market.

• The Paper to Digital Bridge – building on the above, many PSPs now
have great credibility in the delivery of content through alternative media –
text, web and email and can use this expertise to apply innovative content to
transactional documents. The ability to offer this service is compelling, as most
B2C organisations look to more readily provide billing and transactional
information on-line for their customers.

Where Now? – Next Steps

The effectiveness of TransPromo, in terms of the value delivered to the consumer, to the customer and to the
PSP, is unquestionable and, with white-space on documents now considered valuable real-estate, PSPs are in an
ideal position to leverage this value. Through the technologies PSPs employ, the expertise they have acquired and
through the volume of documents they handle (with associated economies of scale) PSPs should be positioning
their TransPromo capabilities and credentials as their number one service offering.

PSPs need to incorporate their TransPromo capabilities into their strategic thinking – it is the service most likely
to ensure that they retain existing customers, attract new ones and allow them to entwine their service with the
customers’ key business processes – from cash collection to customer satisfaction.

The key next steps are:

• At an Operational level – a thorough assessment should be made of document composition and re-
engineering technologies to ensure that a ‘one size fits all’ approach isn’t taken and that the
TransPromo offering is as flexible, as efficient and as cost effective as possible;

• At a Marketing level – PSPs need to address a wider audience within their accounts – including
Operations, Marketing, Finance / Compliance and IT groups. These are the people who own content (or
parts of the content) and will benefit most from enhanced control and impact of the communication
process;

• At an Environmental level – PSPs need to explore how they and their customers can benefit from
TransPromo applications to more stringently adhere to environmental responsibilities and regulations
by producing less (but more personalised) correspondance in a more efficient way.

Whilst adopting a TransPromo capability, or harnessing current capabilities more effectively, does not guarantee
survival, not to do so will seriously diminish your chances of retaining your current client base and attracting new
customers.
About Sefas

Sefas Innovation provides collaborative document composition & production software to document-intensive
businesses. Sefas’s core business is to provide software solutions to design, improve, control and manage the
production of personalised documents, enabling our customers to communicate with their customers with more
relevant, more timely and more valued correspondence.

Sefas, founded in 1990, has a global presence with offices in France, the UK and the US; and clients that include
many Fortune 500 names.UK-based clients include Santander, Bank of Tokyo, BT, DST Global Solutions, DWP,
EDS, HBOS, Inland Revenue, Nationwide, Royal & Sun Alliance, and RR Donnelley. In 2008 over 10 billion pages
were printed and mailed (or published electronically) using Sefas Open Print software to create, to improve or to
manage the production of documents such as bills, statements, quotations, contracts and schedules.

Sefas has a strong partnership and alliance programme with some of the world’s largest outsourcing business;
with all leading printer and inserter hardware manufacturers; and with a wide range of complementary software
publishers.

Sefas is committed to improve software and services through its innovative, leading edge open architecture
technology platform.
Sefas Innovation Limited
Froomsgate House
Rupert Street
Bristol
BS1 2QJ
Tel: +44 (0)117 906 9920
www.sefas.com
contactuk@sefas.com