Suppliers of MIS and workflow products have been pairing up at a frenetic pace. They say there’s strength in numbers, which is one reason why the number of players in our industry keeps going down. Putting aside the sharp decrease due to company closures, the population of printers is getting smaller as companies merge with their competitors, and hence suppliers are following suit. 

Let’s start with a few examples. Leading the charge has been EFI. In early 2011, it acquired PrintStream, before buying Prism later in the year. It went on to acquire Online Print Solutions in October 2012 then purchased MIS provider Technique in November to round out
the acquisition spree.

HP got it on the action near Christmas 2011 with the buyout of German MIS developer Hiflex, which was a prominent part of HP’s offering at the following Drupa. In mid-2012, Ricoh mounted a charge on the web-to-print market with its buyout of PTI Marketing Technologies.

Acquisitions are not the only way to go: partnerships are a popular option. Early in 2012, Tharstern integrated online DTP software Chili Publisher into its Primo MIS and called it e4print Pro, an extended version of its web-to-print module. In June, Optimus teamed with Pitney Bowes to provide a workflow system for transactional printers, by integrating its Dash MIS into Pitney Bowes’ DFWorks software. 

One of the most common software integrations in Australia is between Prism MIS and Prinergy workflow; this was further cemented as parent companies EFI and Kodak formalised a partnership in July 2012. The list goes on. 

What does this mean for printers? At first blush, fewer vendors of MIS products means fewer MIS products, which would curtail printers’ depth of choice in what has always been a highly individualised product area. But is that such a bad thing? Do printers really need a wide choice of software business solutions?

In Australia, EFI’s purchase of Prism raised hackles as many printers were firmly entrenched in Prism’s WIN systems – at great expense. EFI announced that Prism would be wound down and rolled into EFI’s MIS range, which spans Monarch, Pace, PrintSmith and Radius. Many Prism users, including some of the country’s largest print operations, had spent hundreds of thousands of dollars developing custom web-to-print, MIS and workflow solutions, and had to rethink their strategies. 

In response to the negative feedback from local printers, EFI rethought its plans and extended the timeline for phasing out Prism components. It means printers will see the benefit of their valuable IP for longer. 

Shopping spree

EFI has had plenty of opportunities to perfect its acquisition strategy lately. It took a different tack with its most recent takeover, of UK-owned Technique. General manager of software products Marc Olin highlighted the fact that EFI had taken the slightly unusual decision to continue to market the Technique MIS rather than encouraging Technique customers to move to one of the existing EFI products.

“It’s our intention to continue to support, develop and sell the Technique MIS to new customers, rather than what we usually do, which is immediately put the software in maintenance mode and stop selling it,” he said at the time.

The buyouts of Prism, OPS and Technique have not reduced EFI’s appetite for acquisitions in this space, added Olin. “There are certainly a lot more opportunities out there because there has not been as much consolidation on the software side as there has among printers. There are too many vendors serving the industry to be efficient.”

Australia may only be a small market but it has proved of particular interest to EFI. Both Prism and OPS were originally Australian companies, and EFI says Technique’s Australian user base was a driver for the buyout. 

Olin said Technique has some traction with larger print groups in this country. Technique users include some of the biggest web printers in Australia: PMP, Franklin Web, AIW Printing and IPMG. Olin said the acquisition would further EFI’s global diversification by boosting its market share in Europe, South Africa, Australia and New Zealand.

MIS land grab

Consolidation offers suppliers the best shot of maintaining or growing market share in a shrinking market.

EFI’s manager for South-East Asia, Anthony Parnemann, agrees. “In some ways, the vendors to the print industry reflect the industry they are supplying to: print company mergers, buyouts and closures. There is also the added imperative of companies seeking to establish themselves as the market leader in a crowded marketplace.”

Quote & Print managing director Shanti Kumar says: “There will be consolidation for sure. We’re seeing smaller vendors fall off because they don’t have a large user base to give them the annual maintenance to survive. 

“Unless they start investing now in going to the cloud, you’ll find that will be a major shift.”

Tresta Keegan, managing director of Tharsten ANZ, says: “In my opinion there are different motivators for each situation. EFI obviously grows their market through acquisition.

“Any MIS vendor is constantly running the race to offer new innovations in their solutions, where the visible differences of products are understood more clearly by a print industry that is becoming more savvy,” she adds.

The cost of R&D to keep the product ahead of the competition is a big issue. It is a headache for smaller operators, and can become a solid reason to sell to a larger vendor.

Optimus managing director Nicola Bisset says: “I believe the trend for mergers between MIS and workflow vendors is being driven by much higher market expectations for all types of commercial software in the past five years. Print service providers who invest in MIS systems, research and evaluate much more carefully than ever before and are not prepared to compromise on the functionality they demand.

“This means a greater pressure on R&D departments to produce compelling, relevant and sector-specific software solutions at the right price point in much quicker time scales. For some companies with limited resources and ideas, they could get squeezed out as a consequence. The other side to that trend is that successful software solutions provided by smaller vendors will always be attractive targets for a potential merger, which is certainly not new in our industry.”

EFI’s Parnemann explain it from a large vendor’s viewpoint. “The advantage for the vendors is that it gives rapid access
to good staff and technology, and also expands the customer base to bring economies of scale. Trying to build an organisation and technology from the ground up can take a long time. 

The high cost of R&D, the push for market share and a route to expand are  all drivers. And Parnemann points out another one: “An advantage often not immediately obvious is the need to acquire smaller great technology companies before they are bought
by competitors.”

A smaller player making waves in this sector is US-based Hybrid Software (see box, overleaf). Mark Hermesdorf, vice-president of sales, says: “Software vendors strive to provide not only for their existing customers with advancements in the products they are using but also to market to potential new customers. Vendors that merge with others in a different market benefit from being able to cross into these customer bases. This is generally the best advantage for vendors that merge.”

Looking for ideas

Bruce Peddlesden, managing director of On Demand in Melbourne, sees vendor consolidation as an ongoing search for ideas. “The big boys are all out looking for bright ideas. The bigger a company gets, the less nimble it becomes, so that’s why EFI is buying other people, because they’ve got good ideas. With EFI’s marketing and money, they can drive those ideas to market a lot quicker. The little guys can come up with something very quickly; that’s when the big boys want it, and then they take it to another level. People put an MIS in to tell them how much it’s costing to print a sheet, how to cut their costs and make online solutions more cost effective. A big part in what is happening is the requirement to have very specific online solutions. We create our own because we’ve got a lot of varying components,” adds Peddlesden.

The rapid rise of ‘cloud’ solutions is rewriting the rulebook in this sector. Quote & Print’s Shanti Kumar agrees that the online environment undergoing rapid changes. It could present a steep learning curve for some printers. “There will be a major movement for conservative printers who will one day have to let go and have their costs and their customers’ information in a safe third-party location away from their office. I’m keen to see how many of them will handle that.”

Don’t lose sight

But in the rush to consolidate and grow, have some MIS vendors lost sight of the real reason for it all – their customers?

Tharstern’s Keegan says suppliers must be aware that some printers will re-examine their relationship with their MIS vendor.

“On one level, the typical effect of competition between vendors will have a positive impact on the solutions and services on offer. On another level, it has forced an evaluation for some printing companies where their incumbent MIS will have to be replaced in the near future. That situation is only going to result in a positive outcome if the alternative solution can take the printer further and where the cost of change will equate to business improvement – more with less, or more with the same and better bottom line profits.”

Theo Pettaras, managing director of Digitalpress in Sydney, has been on a long journey to find the right solution for his company. There was, in the end, no single provider of MIS offerings, but a mix
of hand-picked components that added up to a full solution. The company felt some pain along the way, says Pettaras.

“Last year, we spent $70,000 on an MIS that was deemed unusable for us. They just refused to listen to what our needs and wants are. So we rented a local product, but that didn’t work for us either. Then we came across another local company that was able to write and customise it for us so it was cloud-based: and that’s the secret, it’s all in the cloud. We’ve incorporated an MIS that will allow us to plug into another solution we have that is servicing a B2B and B2C situation. That’s also cloud based. 

“The final part of the solution was accounting software that is also cloud-based. So the three of them talk to each other seamlessly,” adds Pettaras.

“You don’t have any guarantees with these vendors. It should always be buyer beware. One size doesn’t fit all. We’re at the mercy of these software companies, but we can’t build our business around an MIS. The MIS vendors have to understand the needs of print businesses.”

Price pressure

Speaking as another small printer, Scott McGill, factory supervisor at Huxbury in Sydney’s south, says that the big picture issues around consolidation among major MIS providers is of little importance to the company. What matters is the price. 

“Truthfully, it doesn’t mean much to us at all. We’re a pretty small operation, a family business. We went for Tharsten because it was best suited to the other software we use in the business. They [other MIS vendors] were all considered, but they didn’t suit the way we run the business. Cost is always a factor, and they were mostly out of our range.”

Because MIS and workflow software is entrenched inside many companies, supliers have clients by the short and curlies. If a merger is badly managed, the only real power a small printer has is to vote with their feet. And that’s easier said than done.

McGill adds: “You’d hope they wouldn’t just leave you in the lurch, and if they did sell they sold to the right company that was going to take care of their customers. Once you’re locked in to a software system, you’re really locked in, and if they’re going to rock the boat and cheese people off, then no matter what the cost, people will still find a way to go to someone else. But that’s a cost
many can’t take on.” 

Case study: Hybrid Software

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