Think about your ink

The idea of outsourcing an organisation’s printing solutions, widespread in western Europe is slowly catching on in the Middle East, as firms begin to see the benefits of designing a bespoke document management system to fit their everyday needs

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By  Dylan Bowman Published  April 16, 2006

|~|35198body.jpg|~|The printing solution for companies is more than just the need for a cheap printer and ink cartridges, believes Lexmark’s Francois Feuillet.|~|By outsourcing its printing and air-conditioning systems, National Commercial Bank (NCB) in Saudi Arabia has been able to save enough money to open two bank branches, according to one of the bank’s senior executives. Hosam Al-Yousof, NCB head of support services, told delegates at this month’s Dubai Financial and Technology Summit (FT Summit) that having Xerox install an end-to-end printing solution at the bank’s new IT centre in Jeddah had resulted in a reduction in costs, print volume and printing devices while gaining greater access to state-of-the-art technology and skills. The financial benefits of outsourcing could be substantial: analyst firm Gartner calculates that companies spend 1% to 3% of their revenue on document output including printing, copying, faxing and scanning. Al-Yousof says partnering with Xerox reduced NCB’s capital investment down to zero and gave the bank greater control over costs and shared the risks associated with implementing a new printing infrastructure. Research suggests such an approach has definite merit. Pharos Systems, a US-based resource management solutions vendor, be- lieves that the overall document output costs of an organisation each year can be as much as US$2,000 for any employee in the organisation. When you consider that statistic, and that, according to Forrester Research, this output is growing by 21% each year, outsourcing the print infrastructure and its management to a third-party in the way NCB has done eems to be worthwhile looking into. In Western Europe this appro- ach to printing is fairly commonplace, but according to Lexma- rk’s Middle East general manager Francois Feuillet, here in the region companies have yet to catch on. “At the moment I think that it is quite weak in the region compared to Western Europe in terms of asking for solutions instead of saying, ‘I want a cheap printer with ink cartridges,’ which remains the bulk of the requests in this region,” says Feuillet. “There is something more than just printing, it is the printing solution. We do believe in the printing solution,” he adds. The Middle East’s approach to commercial printing of just buying and installing a device can now seem outdated compared to other regions with many companies around the world now looking to partner with printing vendors — outsourcing the hardware, software or sitting down with the vendor to design a document management system that fits the firms’ needs. Feuillet believes Middle East customers will eventually move to implementing solutions rather than just purchasing printers, but it is going to take some time for this to happen here. “I think the printer customers will go there eventually, but from what I see in the region it is not there yet,” he states. “I definitely think we can offer to customers a proper approach to printing for them to not just to consider it as just a printing device but as a service solution,” he goes on to say. This type of approach, Feuillet explains, is really the management of a company’s printing, and can incorporate everything from deciding who is allowed to make the more expensive colour prints to the number of printers a company has, right down to the locations of printers in an office. “We can identify with the customers what they want and what they need to print and even manage their printing flow between the different areas of their organisation,” says Feuillet. “Information and documents move within the company, but maybe do not need to be printed every time. With the customer we identify their printing needs, their locations, their usage and also their corporate policies, for example some corporations do not want their users to print in colour because it is costly,” he goes on to add. Executives from all the region’s major print solution vendors stress the importance of this type of approach in helping companies get the right solutions, as getting your printing strategy wrong can have a major impact on your bottom line in all sorts of ways. “The right solution can help companies get their customer process right, resulting in increased customer satisfaction and retention, smooth in-house processes and an increased bottom line,” highlights Anand Kumar, Brother International’s deputy general manager. Chris Govier, Xerox MEA product business manager, adds: “When a printing solution is purchased perhaps for the wrong reasons there can be significant downsides including delays in completion of projects and inaccurate construction requiring re-builds. From a promotional perspective, products or solutions being portrayed by poor quality are clearly not the intended or desired outcome.” Outsourcing all a company’s printing functions and having a third-party provide the hardware, software and manage the printing flow as Saudi’s NCB has done is just one end of the printing solutions spectrum. Printing solutions can incorporate this level of outsourcing, but can also include a vendor just advising on what printing hardware or software is most suitable for a company or a more integrated solution such as the vendor drawing up a strategy for a company’s printing needs. If a company is not going to do its commercial printing in-house then another option is to have it’s printing done externally at a next-generation digital printing press. Marcus Doo, managing director of digital print vendor Spectrum, which last month installed the first Xerox iGen3 digital production press in the Middle East region, says the technology is a viable alternative to in-house commercial printing and represents the future of commercial printing in the region. He highlights the versatility of digital printing through its ability to maximise the potential of variable data, which allows companies to give marketing literature like brochures and leaflets a very personal touch. “If you look at printing in two or three years time as things more forward, variable data printing is the technology of the future,” says Doo. The key applications for iGen3 in the region are similar to those covered by in-house commercial printing — short-run, on demand printing of literature such as brochures, books, flyers, postcards and newsletters. The three-ton machine measures 30 feet in length and is capable of producing over one million pages a month, all with unique content that can be targeted at specific recipients. Andrew Hurt, Xerox Emirates general manager, claims the system cuts turnaround times compared to offset printers through its web-to-print facility and digital printing technology, offering large organisations the opportunity to improve customer relationship management and allowing commercial printers to identify new revenue streams. “When people talk about the new business of printing they talk about turn around time, and that is becoming more and more important in the market place,” says Hurt. “They also talk about run length and of course the big one, which is the prime driver for this business, and that is the variable data aspect and the web to print capability,” he notes. Despite the major benefits of avoiding initial costs of purchasing the hardware and not having to allocate space for it — which in a small office can prove to be a problem — sending a company’s printing to a digital printing press can be costly and therefore many companies may choose to keep their commercial printing in-house. Even when a company does go for an in-house printing solution, to maximise the financial benefits the system can bring, it must have a clear idea of what is required of the solution and the vendor or partner. What kinds of documents need to be printed? Are these documents supposed to be heavy on graphics? Are all of those documents supposed to be in colour? Is it only A4 or is it A3? Is stitching required? Is labelling needed? How many documents are going to be printed? Are these requirements going to change over time? All these questions have to be answered in order for an organisation to make an accurate decision on what solution best fits its commercial needs. “Companies should look at what they do today, what they envisage they will be doing in the future and look at how to maximise their investment,” explains John Ross, Oki Middle East general manager. Tomas Valjak, HP commercial value manager, adds: “I think where any end-user should start off thinking from is to really have a look at the requirements. It is important to be clear on what you want to produce because that triggers what kind of technology to go for.” When Saudi’s NCB was looking at upgrading its printing infrastructure it had strict guidelines with which it judged potential partners. Al-Yousof says to make this kind of relationship work it is important the partner has a technical edge, good local knowledge, an outsourcing division and proven track record in the sector, and the deal is financially sound. Previously the bank had three vendors for all its printing services, but upgraded to a single system managed by Xerox. “Today I don’t have to work about what software they use or the upgrades of it and the users and the license. I don’t have to worry about the state of our technology in terms of printers. I don’t have to worry about the mailing and enveloping machines. Xerox takes care of everything,” Al-Yousof explains. Ehab Guindi, Xerox Saudi operations director, adds: “The Xerox Global Services team is working closely with NCB to ensure that the bank experiences real cost savings, improved utilisation of assets through the process of networking the latest document management technologies into a managed office network.” ||**||The total costs|~|Ross-again-1body.jpg|~|John Ross of Oki Middle East. |~|Arguably the most important factor, which can dramatically affecting a company’s bottom line, when looking to implement a commercial printing solution is working out the total cost of ownership (TCO). A printer’s running costs are likely to eclipse any initial investment in the product. “TCO should probably be at or very near the top of key criteria for someone purchasing a print solution. Simply to consider cost of acquisition will often result in very expensive ongoing bills which clearly increase as volumes grow,” Xerox’ Govier states. Ross adds: “Effectively the price of the hardware is not the issue, it is how much the running costs should be and that means understanding how to calculate the cost per copy, and to include in there all consumables.” Vendors say they are trying to address the TCO issue by helping companies change their buying behaviour. “Running cost should be a very important part of the purchase decision,” says Kyocera’s Mita product manager Maki Nagao. “However, many people do not realise or accept that the running cost of printers can easily be three times the machine price,” she continues. “It is our challenge and opportunity to make end users aware of the importance of running costs so that they can make an informed decision and purchase the right device,” Nagao adds. The most common way for vendors to measure how much is being spent on running costs —such as toner, ink cartridges and paper — is cost per page, which is based on the recommended retail price of a branded ink or toner refill and the assumption that a page gets about 5% ink coverage. Cost per page, like any other TCO formulas, does not ensure that companies get the exact results, according to Abdulrahman Almoayed, printing solutions and services manager, Lexmark Middle East. “We can make calculations but we don’t guarantee that they are 100% accurate, although they will give an indication as to how much the cost for printing is using Lexmark products in comparison to the market and other manufacturers,” he explains. Indeed, in most cases, the 5% rule does not apply, as ink coverage per page is dynamic — and that means that the cost per page also varies. Nagao estimates that at 5% coverage, monochrome (or mono) laser pages could cost from about 0.5 US cents to 3.7 cents. Other documents that are more complex and require more coverage could raise that cost from 1.4 US cents to 11.8 US cents per page. The TCO also depends heavily on the type of printer a company goes for. The two main options are either an inkjet or a laser printer. The inkjet is less expensive to purchase than a laser but the cost of consumables, like ink cartridges, makes it more expensive to operate in the long run. “In terms of when you want to print lots of things though, then I would go for the laser for sure,” Lexmark’s Feuillet says. Brother’s Kumar agrees: “For large scale in-house printing the options available are laser technology based, high-speed printers.” In the UAE, IDC has seen shipments for colour laser printers last year grew by 38.4%, and expects the trend to continue. “Colour laser printers will stay hot for the foreseeable future,” affirms Naser Sha’sha’a, senior analyst, Office Automation Group, IDC CEMA. But as adoption of colour printing picks up, the risk for companies to escalate the operating costs of their printers runs high. For one, colour laser printouts have an even higher cost per page than mono laser documents, Nagao says. For example, a typical document that has coverage of 15% cyan, 14% magenta, 16% yellow and 7% black could cost from 15.1 cents to 50.9 cents. “The TCO of colour printers is higher than that of monochrome printers because of the higher initial cost of the machine as well as higher running costs,” she explains. In-house printing solutions can accommodate much of a company’s document output, but above 3,000 to 4,000 pages a month it is still advisable to have printing done on a traditional offset printing press. However, there are still a lot of factors a company needs to take into account when contracting its documents to be done on an offset press such as cost, time, security, storage of the printed items and distribution. “Often the content of the documents requiring production can hold some level of confidentiality and when these are being produced in the public domain a company risks these designs falling into the wrong hands,” Govier explains. “Turn around time is key, too often when the production responsibility resides with an outsourced provider the urgency can be lost. Production and cost of run are also two other key factors to be considered,” he says. Nagao also highlights the cost and inflexibility of outsourcing to an external printer as important factors. “Outsourcing is consta- ntly expensive. Not only is the customer paying for the use of the machine, the consumables and the service itself, they are also paying the mark-up of the print shop’s profit,” she says. “Outsourcing is also inflexible. Drawings are subject to frequent revisions and any last minute changes can cause problems when on-demand printing is not on-hand,” she ges on to add. Valjak claims the ‘scale of economy’ was the defining factor in taking the decision to outsource. “The moment you go into real significant volume, lets say 10,000 copies of something, this you are likely to give out to a professional printer, so it’s the scale of economy that kicks in,” he notes. “When looking into outsourcing the customer has to be clear about what to expect. What sort of quality to expect.,” he adds. “They need to specify very clearly how many copies, but also what is the quality like, get the proof for the print, sign off that proof and also insist on only settling an invoice on delivery of documents that match the proof of the output,” he goes on to say.||**||

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