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The MIS-sion for market share 2011s – Print21 magazine feature

Monday, 02 April 2012
By Print21

The past 12 months have seen an enormous amount of flux in most sectors of the global printing market, perhaps none more so than the increasingly crucial print Management Information Systems (MIS) sector which has seen a disproportionate number of acquisitions and consolidations. Leon Spencer reports.

Last year bore witness to the acquisition of Germany’s Hiflex Software by electronics and printing giant HP, while US-based EFI went on an MIS spending spree, buying up Alphagraph—also German—in December, PrintStream in February, and Australian MIS provider Prism Group in August.

EFI’s 2011 shopping list of MIS providers complemented its already impressive swag of print software companies including Pace, which was acquired in 2008, Radius, bought in 2010, joining PrintSmith and Monarch.

Individually, these MIS companies specialise in particular sectors of the market —Monarch for larger single and multi-plant operations, Pace for the mid-market range of printers, PrintSmith for on-demand and copy-shop requirements and Radius for labels and packaging. Taken as a whole, however, it is clear that EFI is making moves to cover the entire printing industry’s MIS requirements from end-to-end.

Now with HP welcoming Hiflex into the fold, and many other small, independent providers refusing the advances of other big players in favour of sticking to their well carved-out niches in the industry, it appears the global market will be subject to a David and Goliath battle for market share among the printing industry’s MIS providers.

MIS is vital for the evolution of the printing industry. Without MIS software in place, the increasingly popular and profitable web-to-print sector of the industry would not be able to operate, and with print automation becoming more and more commonplace, the software side of print operations has become crucial. With the ultimate goal of lights-out printing firmly in the sights of many of the big industry players, sophisticated and comprehen­sive MIS software support looks set to take its place as the cornerstone that will allow print providers of all sizes to take the next step into the technological future of the industry.

The Australian printing landscape, as in many other markets, is populated with countless small, independent MIS designers catering to small and medium-sized printing businesses. These smaller players are set in stark relief when compared to the MIS offerings by industry giants like HP, EFI and Kodak, each of whom offer MIS services with their machinery.

If EFI’s intention to corner every sector of the market can be considered representative of the other big boys’ strategy, the smaller industry players could be forgiven for wondering how this trend will impact on their future.

When big is best

For EFI, the decision to snap up a few existing MIS companies was prompted by the simple desire to be number one in the market—good business practice for any large, publicly-listed company. It just so happened that it was more time-effective for the company to buy established MIS brands than to develop its own from scratch. Along the way, it picked up a wealth of MIS know-how and plenty of pre-existing customers too, automatically expanding its customer-base.

“If we went off to headhunt those [MIS] people, and tried to create an infrastructure it would take a long time to do,” says EFI’s regional manager for SE Asia, Anthony Parnemann. “We do want to be number one in every market we operate in—that’s our corporate goal. While we don’t want to do it just by buying things, we do want the people and the products,” he says.

It is this philosophy that proved the deciding factor behind the company’s move to purchase what was Australia’s largest independent MIS provider, Prism. Once the acquisition was complete, not only could EFI list yet another batch of MIS services to its growing MIS offering, it was also able to instantly list a small legion of new customers to its books.

“Prism is a powerful system that covered all market areas,” says Parnemann. “It had a very big customer base in Australia and we’re currently getting more customers than we can transition into the new technology.”

Parnemann believes that the printing side of the graphic arts industry has evolved and consolidated over recent years, and now MIS is following suit. He perceives that certain sectors of the market that have been slow to adopt software systems are developing into possible MIS consumers.

“One area left now is the prepress side, and we’re now starting to close that gap, which will create a seamless flow all the way through from end to end,” he says.

Another major driving force behind EFI’s series of acquisitions is the belief that the MIS market is simply too crowded by disparate and underdeveloped independents —a scenario the company intends to use to its advantage in customer lead generation.

“Philosophically, EFI believes there are too many software providers in the market space, and they’re just not all going to survive,” says Parnemann. “We’re not buying the non-performing companies, we just think there’s too many people in the market and we think it’s going to get smaller.”

A place for everyone

Contrary to EFI’s belief that the MIS market is over-populated with a glut of small MIS providers, many independent players are counting on their smaller size and specialis­ation to keep them in good stead despite the manoeuvres of the heavyweights.

One of the advantages of being small or independent in the MIS industry is that a provider can remain agile and respond to market requirements quickly and efficiently. Although plenty of specialist printers have chosen to simply develop their own MIS software to suit their specific needs, often a small MIS provider will have the facilities to jump in and provide a solution.

Nicola Bisset (pictured) from UK-based MIS provider, Optimus, says she relishes the fact that her company has remained independent despite continual advances from large companies, because it allows the business to adapt quickly to develop­ments in the industry along with its customers’ specific needs.

“We can turn on a sixpence, because we are independent,” says Bisset. “I like to change things and shake things up and do it very quickly. Why would you ever want to give that away by not being independent?”

Optimus may not be a small company but it is privately-owned and, according to Bisset, because it does not have to answer to shareholders it can take chances that other big players cannot.

“We have to adapt to the changes in the industry, and we also have to have a crystal ball,” Bisset says. “There are certain things we have to speculatively develop, and we never, ever stand still.”

This is a strategy echoed locally by Australia’s largest independent MIS provider, Quote & Print, a company that has been able to tailor its software modules to specific regional requirements.

Just last year, when Australia’s carbon tax proposal passed into legislation, Quote & Print immediately set to work amending its carbon footprint module to include the extra expense the carbon tax would add to a printing business’s operation.

Quote & Print CEO, Shanti Kumar, says that if Australian printing businesses eventually decide to pass on the added production costs caused by the carbon tax to their customers, they will need a system in place to monitor, track and report on those expenses.

“The cost of electricity is going to go up between 10 and 30 per cent,” says Kumar (pictured). “The printer today, with the margins they keep, can’t absorb it, they will have to pass it on because that’s a cost of manufacture. They must be able to track that and show that [to their customers].”

From Kumar’s point of view, if Quote & Print had been owned by a large international company, it would not have been able to make such region-
specific adaptive changes to the software within the time-frame needed for it to be effective in the marketplace.

“If you work for a large corporation, you get the hierarchy and the politics,” he says. “They would only pay attention to the bigger markets, not the smaller markets, and Australia’s a small market.”

And the winner is…

The big printing industry players have been partnering with independent MIS providers for years to deliver reliable software support for many of their products and services. However, with more than a few international companies snapping up those independent providers, that model may change dramatically.

Most MIS providers agree that the Australian market is still undersupplied when it comes to MIS, with around half of all small and medium printing businesses still to pick up a substantial MIS service.

Certainly, Phil Rutherford of Hexicom Software, who heads up one of Australia’s only cloud-based MIS services, ePrint, believes that the local industry is a large and populous enough market for everybody to share. He does, however, concede that this year’s big acquisitions will lead to some competition.

“EFI are probably going to force their systems on to their customers who’ve bought their products, by acquiring other [MIS] survivors out there,” says Rutherford (pictured), “but it certainly doesn’t worry us. It’s a gigantic market.”

Even if the future of MIS in Australia is still uncertain at this stage, what is clear is that both sides are sticking to their guns. Australia’s own software wunderkind, Rohan Holt, owner and designer of Metrix imposition software, says that this is only just beginning.

“It’s an interesting time for Australian printers,” says Holt, who is now based in the US. “There are a couple of years for this yet to go. When you’ve got the likes of HP acquiring these things, we will see much more of that. Once the ball gets rolling you can’t stop it. When you see HP take it on, the ground beneath your feet starts rumbling.”

Let the battle begin.

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