More and more, Gartner clients
have been asking about outsourcing their document workflows every year for the
last three years. We find that enterprises and government agencies are increasingly
engaging strategic document outsourcing (SDO) providers as a means to cut their
fixed and overhead costs, avoid capital expenditures, improve business
processes, ensure compliance with complex regulations and enhance customer communications.
I'd like to share with you a high-level view of our recent SDO forecast for
North America. While every company is different, I know from experience that both
providers and users benefit from understanding whether a market is growing and
why.
Gartner defines business
process outsourcing (BPO) as the delegation of an IT-enabled business process
to a third party that owns, administers and manages the process. SDO cuts
across BPO segments, such as enterprise services, customer management, supply
management and operations segments. SDO focuses on the printed and electronic
publication of customer communications, including content creation, incoming
document processing, multi-media presentation and archiving.
Typically, the outsourced
documents are generated by ERP systems, CRM and content management databases,
publishing systems used to create print and electronic output, and inbound
communications from customers, prospective customers and vendors. The purpose
of these communications may be marketing, sales, informational or
transactional.
Gartner's SDO forecast covers
the four document life cycle categories: inbound services, in-process
management services, outbound services and repository services. We project revenue
growth in the North American market will grow at a 4% compound annual growth
rate (CAGR) from 2010 through 2015. Overall revenue grew from $16.8 billion in
2009 to $17.2 billion in 2010 and is projected to grow to $20.8 billion by
2015. No doubt, you are not alone in considering document outsourcing.
Clients frequently ask about "inbound
services," the segment often known as "scan, capture and extract." We project
this segment will experience strong growth over the forecast period, beginning
with a 5% revenue increase from 2010 to 2011 and averaging 6.5% revenue growth
through 2015. This growth is spurred on by end users' need for completely
automated workflows, competitive price pressures over the longer term and the
SDO providers' ability to supplement inbound services revenue with other
value-added SDO services.
In-process management services
will experience a 2.9% increase in 2011. Growth in this segment is driven by
print supply chain management, which will grow mainly because large
organizations have lost the expertise necessary to purchase marketing materials
and other printed matter and not because organizations are printing more.
One of the "traditional" document
outsourcing categories, "outbound services" will be essentially flat with only
a 1.9% revenue increase in 2011. Transaction publishing, which is primarily
paper-based invoices, statements, checks, policies and other similar items,
remains a drag on the category with a flat 1.6% CAGR through 2015. Transaction
documents are migrating from higher revenue paper documents to electronic
presentation, reducing their revenue, albeit at a slow pace.
Interestingly, our research found that providers have been able to sustain and even
grow revenue (in one case, by more than 30% from 2009) by bringing on new
customers that formerly insourced document printing and mailing. Altogether,
the new mail volume basically offsets the amount lost to electronic communications
and householding and other techniques that buyers are using to cut the number
of mailings and the associated (and growing) postage costs. SDO providers see
the multi-media publishing segment as having significant revenue potential.
Multi-media publishing incorporates all of the marketing materials and related
campaigns, whether in print or electronic form, or, ideally, in both.
Archiving services involve storing
end users' documents and other materials in physical and/or electronic format,
as well as subsequent retrieval when needed. Cost containment, reduction of
primary on-site storage capacity associated with archiving and e-discovery are
the primary drivers for outsourcing the archive function. This segment is
forecast to grow 2% in 2011 and 4% in 2012.
Given the fact economic
conditions on the whole are not improving substantially, companies like yours continually
look for ways to cut costs and improve document workflows. As you can see from
the forecast, the strategic document outsourcing market is a buyer's market. Now
is the time for cost-conscious buyer to engage providers with document process
improvement expertise, especially outsourcing of the internal scanning and
high-volume transaction printing processes that are not one of your true core
competencies.
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PETE BASILIERE is
the research director at Gartner in the Technology and Service Provider
organization, providing research and advice on production printing systems and
applications, strategic document outsourcing (SDO) and 3D printing, including
best practices, market strategies and technology trends. For the full report,
visit www.gartner.com.
