Dissecting Digital Decisions

In the first installment of our Great Debate series, two industry leaders discuss what went into their decisions to buy—or not buy—a digital press.

When digital color printing burst upon the graphic arts world, a number of printers jumped into it, convinced they would find their fortunes. After all, "print-on-demand" was the latest catch phrase, and that was exactly what these presses were made for.

But after snapping them up, a lot of commercial printers discovered that they didn't have the appropriate workloads to keep their investments busy with profitable work.

In-plants, at the mercy of their parent organizations' budgets, were far more cautious. Many looked into the technology—represented most recognizably by Indigo, Xeikon and Heidelberg—and several purchased presses. Others decided that a digital press didn't fit their markets. But why?

To get a look at the factors behind these tough decisions, IPG tracked down the managers of two of the country's largest in-plants: Jack Mondin, of USAA, and Bob Tierney, of Allstate.

Each has over $15 million in his printing budget. Each conducted a careful study. Tierney bought an Indigo; Mondin did not. What was their reasoning? IPG brought them together to find out.

—Bob Neubauer

IPG: Why did you buy a digital press?

Tierney: Our main reason for the Indigo was obviously to answer the [need for] short-run, color turnaround. We did not buy the Indigo to allow us to get into new markets for personalization. We didn't say, 'O.K. Allstate, now we've got something, why don't you go out and see if we can find some work for it.' We bought it to [output] some of the short-run color, and be able to address some of the turnaround that we could not address in the offset world.

We also felt that the Indigo provided some capacity for some insourcing work. And we're doing it. We're actually insourcing with it. We've had full day production on insourcing work, just on the Indigo.

Our return on investment on it is about 18 months, and we're going to realize that without any problems. We started using the Indigo in August. We started measuring production on our DocuColor 40 in August also. On both of those pieces of equipment we're approaching roughly 20,000 sheets a month on each. So we're starting to really make those things productive.

IPG: How long are your print runs?

Tierney: The key for our run lengths, to make cost justification, is no more than 1,500 sheets. Once you go beyond 1,500, it's cheaper to make a plate.

IPG: Jack, have you considered buying a digital press?

Mondin: Yes, we did a study evaluation in late '96, and we got some key customers involved, but we were looking at it from another standpoint. We were looking at it...to do customization—every page different. That was one of our primary reasons for looking at it. Secondary was to find alternate ways for production, just like Bob is saying.

We found, after we got into it, two things: our systems are not put together so that a marketing function can pull the information that they want and take it directly to the press, so systems work had to be done.

The other thing that we found is that size format on those presses was a big limitation. We were going to have to redesign to make it fit. And when we did that, then something that was a short run in the offset world became a long run in the electronic world.

Tierney: I think some of the things that Jack's saying are very true. There are definitely size limitations. We're running two-up, 12x18˝. Most things are either 81⁄2x11˝ or smaller, but we felt we had enough work in that size range in short-run color that would justify [the Indigo].

The system aspect that Jack's indicating, we have found that dealing with the different software packages (i.e. Excel, Word, Photoshop) is one of the key challenges...with a digital color press. There's no question about it.

Mondin: I'm not speaking of the actual development of the piece, I'm speaking of the customer data and the way that would be pulled off of the mainframe. It is not being collected currently in a manner that is conducive for use in that customization effort that we wanted to do.

Tierney: If you're in a predominantly mainframe environment, which it sounds like you are, you're going to have some problems.

Mondin: We're migrating, but the main customer data is mainframe format.

IPG: Bob, what types of jobs do you print on your Indigo?

Tierney: We do the wide gamut of four-color, short-run, on-demand. On our Indigo and on our DocuColor 40 we're doing anything from business forms to presentation materials to small booklets—sales incentive types of things—to luggage tags and training materials. We're even doing proofs on the Indigo. We're using that as a proofing device for our designers.

IPG: Jack, do you print similar items?

Mondin: We've got training materials, but they are pretty conservative. They don't use a lot of color in their manuals. They're 98 percent black and white.

One of the [applications] that we had identified that I'd forgotten about, and Bob just hit on it, was proofing. We do a merchandising catalog three times a year. It's about 144 pages. Before they print a million of them, they do between 200 and 300 copies, and then those are disbursed among a select group of folks and they do one last proof. So that was [another application] that had been identified.

Also, we do focus groups all over the country. We select the customers, bring them together, and if we're going to market a new product, we take the whole package to them—the marketing material, the program, everything. It's all preprinted in small quantities. They spend a couple of days evaluating it and then we make changes. That was another market for the use of this.

Tierney: The issue is, if you do [a job] just to run that press, if it costs more money doing it that way, you can't do it that way. You've got a job and you say, 'the Indigo's not running right now, let's put it on the Indigo.' No, that's not what you do. The consumables are still very, very expensive.

To me, that's one of the big issues that the industry is facing, because when we bring in equipment, we bring in equipment with the understanding...that that equipment is running at capacity. This type of equipment is not going to run at capacity for years on end. You've got to cost justify it on not having that run at capacity.

Mondin: One of the interesting [applications] that we thought about, and I really think it will work, is this: all the claims adjusters in the field are spending tremendous amounts of money on film and film processing. They're going to convert to digital cameras, but many times, for claims grievances, you have to put a paper copy in the file. We were thinking about using [a digital press] from a photographic standpoint because the quality was good enough. It would save literally hundreds of thousands of dollars a year.

IPG: Bob, you tested both Xeikon and Indigo presses. Why did you pick Indigo?

Tierney: The reason why we went with Indigo as opposed to Xeikon is in our operation we felt that the flexibility of sheetfed was much more conducive to us. The cutsheet and the flexibility in stocks was far more important to us. Xeikon has fewer capabilities on different stocks.

Mondin: We felt that the Indigo output was much higher quality than the Xeikon, strictly because of the liquid ink.

Tierney: Yeah, the liquid toner makes a big difference.

IPG: What could an in-plant do to justify a digital press?

Tierney: The issue of this whole audience-of-one type of printing, and the personalization...those applications today are well served in the laser print world. And to suggest to your corporation that you can improve on the quality of that black-and-white output is a huge mistake, because the majority of that output goes in the garbage anyway. And for you to want to produce something more expensive, you need exhaustive studies...to determine that, yes, color will sell this much more. So I'm against digital color equipment in the in-plant as opportunities for new markets.

Digital color has its place in the in-plant when an in-plant operation is producing a volume of short-run color, fast turnaround—with turnaround times that make no sense—and the company is buying—outsourcing—work that is being produced on those pieces of equipment in the commercial marketplace, which Allstate was doing.

IPG: Jack, are you sending out work that's being done on an Indigo or Xeikon press?

Mondin: I imagine we are. We identified a lot of things that we thought could probably go that way, but as I said, when we got into it, because of size format limitations, or because of a paper requirement...it didn't make sense to change existing applications.

Right now, the best thing in the world is highlight color for those kinds of applications. And if you do that right, then I think you've served yourself well with respect to adding some color to your documents. But it's absolutely not going to do you any good if you don't reengineer the form to use the highlight color.

IPG: Do you see yourselves ever reconsidering a digital press.

Mondin: Absolutely. We're going to add a Quickmaster DI this year. The paperwork's on my desk right now.

IPG: How about an Indigo or Xeikon?

Mondin: The only reason we would do that is for the one-to-one personalization.

IPG: Any other comments, Bob?

Tierney: One other advantage we found...the digital color press gives you an outstanding laboratory environment for dealing with digital files. I feel like just the amount of time that operators and associates are spending making the file goes through the press...all of that learning is just going to be an invaluable experience as the printing industry moves into the next decade. IPG

Quick Look

Allstate Print

Communications Center

Wheeling, Ill.

• Manager: Bob Tierney

• Total employees: 350

• Printing employees: 80

• Total budget: $80 million

• Printing budget: $8 million

USAA Publishing Services

San Antonio, Texas

• Manager: Jack Mondin

• Total employees: 257

• Printing employees: 66

• Total budget: $33 million

• Printing budget: $16.5 million

"Digital color has its place when an in-plant is producing short-run color, fast turnaround, and the company is buying work that is being produced on those pieces of equipment in the commercial marketplace."

—Bob Tierney

"Size format on those presses was a big limitation. We were going to have to redesign to make it fit. And when we did that, then something that was a short run in the offset world became a long run in the electronic world."

—Jack Mondin