A host of PSPs have successfully managed to “reinvent” or “transform” their businesses. Many now position themselves as MSPs — marketing services providers.
As a strategy for countering the loss of previously printed communications to electronic formats, it makes a lot of sense. There are definitely opportunities for new revenue streams in sectors such as variable data, wide-format inkjet and transactional direct mail. So what’s to stop you starting the transformation?
A number of issues, if the findings of a study InfoTrends undertook earlier this year are accurate1. InfoTrends asked a broad sample of PSPs and corporate reprographics departments (CRDs) if they were making, or planning to make, the transition from PSP to MSP. The answers revealed a slowdown in both categories, with an especially large fall — from 30% to 9% — among CRDs in the throes of the transition.
Given this apparent caution, it’s not surprising that the survey detected a second trend among PSPs, towards what InfoTrends describes as “a renewed focus on core services” in which digital printing, wide-format and offset/conventional printing are the fastest-growing areas of respondents’ businesses.
What are we to make of this revival in “ink-or-toner-on-paper?” Part of the answer probably lies in the challenges PSPs encounter on the journey from PSP to MSP. For businesses in the InfoTrends survey, the top three were acquiring new sales techniques, not having the right skills in the company; and the lack of a clear vision or strategy. Technical challenges come a close fourth.
For some PSPs, a further argument for caution is the occasional high-profile failure of a “visionary” business. To observers and competitors these companies appeared to be doing everything right, identifying opportunities and developing the strategies and capabilities to seize them; yet they still came up short.
Often it happens that the vision was right, but the execution was wrong. In an industry like printing today, where change is fast and furious, imagination only takes you so far before hard graft has to take over. Transforming the business means not only meeting all the challenges just described, but also, when you have, staying vigilant, watching the competition, keeping close to clients, and staying abreast of technology.
It’s a big commitment and one can understand why some PSPs are deferring the transition to a broader, “not just print” business. But the fact is, print’s future — and therefore the future of print service providers — lies in working alongside other channels at the communications coalface. Businesses that don’t recognise this face dwindling returns. You can keep putting off the decision to change, but at some point you have to take a risk.
The thing is to make it a calculated risk. Recognise that coming up with an idea for a new revenue stream — great as it might be — is only the start. Ask hard questions of the business and your people, and answer them honestly. Don’t just look at where you’re aiming for — look closely where the business is now. Which types of work, and which clients, are most profitable? Apply the 80/20 rule to identify where to focus your efforts, and be prepared to jettison the work — and the clients — that aren’t contributing enough to the bottom line. Remember — you’re clearing the dead wood to free up time, capacity and people to go after the new revenue stream.
Higher margins are tempting, but don’t rush headlong towards them — especially when you’re deciding on the production equipment. Recent printing industry history has its share of companies that assumed simply adding a digital solution would transform the business. Some ended up overbuying production capacity by choosing a machine that was too fast or feature-rich — and too expensive — to produce a decent ROI. “Build it and they will come” may have worked for Kevin Costner, but Field of Dreams is a work of fiction…..
So far, so sensible, but it’s a lot to take on while running the existing business. And ideally you also need someone to give you an outsider’s objective view of your plans. You could call in a consultant, but they charge. A better option — one that a growing number of PSPs are taking — is the equipment supplier. Just like PSPs, suppliers are transforming themselves. They acknowledge their role today involves more than just moving hardware and software; like their customers, they’re in the business of developing solutions for a fast-changing industry — and each solution is bought by a different business, with a different history, ambitions and resources.
Thomas Edison famously observed that success is 10% inspiration and 90% perspiration. In the transformation process the 10% is down to you, but partner with the right supplier and you can share the rest.
1 US Production Software Investment Survey 2015, InfoTrends, April 2015.