At the recent 13th Annual Toner Printing Conference, sponsored by the Information Management Institute, a number of speakers presented analysis of the markets served by toner-based printing. The trend across almost all segments was clear — the number of pages is steadily declining and there is nothing on the horizon to indicate a change.
While this was certainly bad news, it's not new news to most of us — the decline has been slowly building for more than a decade — and the vast majority of printing executives are either considering or already developing strategies to counter the downturn.
The challenge for printing executives now is to avoid taking the slow, steady decline for granted and assuming that they have years, perhaps as much as another decade, to put these strategies into place. Recent research we've conducted at Madison Advisors indicates we may be approaching a turning point. Our "2009 Print Suppression Market Study" provided concrete evidence that leading users of toner-based printing are aggressively engaged in formal efforts to eliminate print in favor of electronic delivery. Big companies that spend millions on direct mail to send statements, bills, policies, contracts and other mandatory customer communications are establishing programs, budgets and strategies intended to radically reduce print expense in the next few years.
In planning business strategy, it's critical to avoid relying on mental models that may no longer be viable. Instead, we look for historical models that can help us understand how markets change and identify high-impact scenarios that can affect our industry.
One such scenario is called "the last piece." In 1988, the Internet was a small collection of university and government computers, and the World Wide Web did not exist. A few months later, in March of 1989, a little-known computer scientist at the CERN particle physics research facility in Geneva proposed a system that linked the Internet, hypertext and TCP into a "web" of interconnected documents. Two years later, in 1991, Tim Berners-Lee built the first website and the World Wide Web was born — with just one node. Two years after that a young student at the National Center for Supercomputing Applications (NCSA) released a software tool — the Mosaic browser — that allowed ordinary computer users to connect to the Internet in a simple, graphical way.
There were still well under 1,000 websites worldwide, but a few visionaries began aggressively developing new ways of presenting information and even doing business on the Internet. In 1997, Amazon.com conducted an IPO based on its Internet business model, and e-commerce became accessible to ordinary businesses. From 1989 to 1995, the World Wide Web grew slowly, but as leaders debugged the technologies, the rest of the business world took notice. By 1998, the World Wide Web had exploded with millions of websites and began to grow exponentially each year.
What happened? The development of sophisticated browsers and e-commerce were the last pieces of the puzzle. Once the basic underpinnings of Internet commerce were debugged, businesses everywhere began putting up websites, many of them offering products for sale. Major players, Internet service providers, large brick and mortar retailers, music companies, movie studios and others, were caught off-guard. Even the founder of Netscape, visionary Jim Clark, was still focused on developing interactive TV. What ensued was the greatest restructuring of business since the industrial revolution, and many old-line companies were severely challenged or failed.
What is the lesson we can learn? When the last pieces of a major change fall into place, when that magical "good enough" point is reached, the majority of the market will almost unanimously decide it's time to move. Market forces are aligned to support a transition sooner rather than later. We have a decade of slow growth in print suppression behind us, and major players are transforming their efforts to move customers online from experiment to policy.
When, not if, the majority decides to follow, it will radically alter the printing landscape, with sudden and unpredictable changes in volume. As a printing executive, you must prepare for this scenario and start now defining how your company will deliver value that can sustain your business. A long, slow transition for your printing business is not guaranteed. Don't be caught by surprise if the last piece falls into place.
TERRY FRAZIER [terryfrazier@madison-advisors.com] is a principal analyst with Madison Advisors, an advisory firm that specializes in print and electronic communications. He provides project-based advisory services designed to assist clients with business strategy and technology selection decisions. For more information on Madison Advisors, visit www.madisonadvisors.com.
