Digital Printing and the In-plant

Shedding light on today’s current state of in-plants in the U.S. and the utilization of digital printing is a new PRIMIR 2016 study by IDC titled, “Digital Printing Technology’s Influence on the U.S. In-Plant Printing Market.”

Chart 1

An in-plant is a centralized, staffed printing department within an organization, whose primary business is not related to printing and/or publishing. As of 2015, there were slightly fewer than 20,000 in-plant printing sites in the U.S. (See chart 1.) About 75% of these were graphic arts oriented, with the remainder devoted to transactional functions, such as statements, policies, forms, bills and marketing collateral.

Government entities and insurance firms use some of the largest known in-plant sites in the country. An in-plant site corresponds to a physical location or center. The number of in-plant sites has been in slow decline, dropping an average of 1-2% per year. This downward trend is expected to continue as organizations consolidate and review their spending on printing services.

Over the past decade, the adoption of digital printing, along with cloud and analytics technologies, has altered the in-plant printing industry by changing their investment patterns, business models and the types of services they offer. The new 2016 PRIMIR study, “Digital Printing Technology’s Influence on the U.S. In-Plant Printing Market,” examines how digital production printing technology has, and will, continue to be utilized in the next five years.

Value Over Revenue

As most in-plants are cost centers, not revenue-driven departments, the term “value” is more appropriate than “revenue” to describe the dollar amounts that in-plants generate from their printing-related services. In 2015, in-plants’ value reached more than $13 billion. Although the 2005-2010 period saw an average yearly decline of 3.6%, over the past five years the in-plant market has bounced back.

According to the PRIMIR study findings, the movements toward color digital printing and value-added services have been key growth drivers within the graphic arts in-plant segment. However, this growth was blunted by a decline in the number of sites and the erosion of black-and-white digital print volume. Taken together with the accelerating proliferation of electronic media, print suppression and outsourcing, the in-plant print value was flat with an average yearly growth rate of -0.7%.

Within the graphic arts in-plant segment the future outlook is positive as value in this segment is expected to slightly increase to $11 billion by 2020 (1.3% average yearly growth rate). Conversely, this modest growth will be offset by a decline in the transactional segment, resulting in a flat market value in the next five years.

Breakdown of Services

Chart 2

Digital printing technology has a long history in the in-plant market. Today, digital printing accounts for almost two-thirds of the in-plant’s value, while offset printing represents only 15%. (See chart 2.) The widespread adoption of wide-format printing has expanded into more than 70% of the in-plants surveyed for this study, representing about 7% of in-plants’ value. As traditional printing volumes declined, wide-format printing helped in-plants meet their financial obligations.

In-plants with existing investments in digital printing are highly interested in upgrading to newer technology. Digital color cut-sheet devices top the wish list for upgrades, followed by wide-format printers. Ranked low on the list of investments are continuous-feed devices, probably due to the preponderance of graphic arts in-plants in the survey sample. However, in interviews with transactional in-plants, a growing interest is shown in continuous-feed color digital printing, particularly continuous-feed inkjet.

Most in-plant operations are not set up to make a profit and typically report to a larger department within the parent organization. In the study survey, 35% of in-plants report to administration, auxiliary services and corporate shared services. The remaining respondents report to various departments from operations to other line-of-business functions. In the transactional segment, many in-plants in insurance and financial services fall under (or have dotted line reporting to) the IT department.

Justifying New Technology

Such reporting structures represent challenges when seeking to justify new investments, with in-plants bound to specific budgets and new investments subject to review by the overseeing department. Justification for new technology or services can be quite involved in large organizations. Customer demand, benefit-cost analysis, existing workload/capacity and skill set requirements are among the top considerations for new investments. In-plants often have difficulty gauging customer interest in new services. To help solve this problem, in-plants are starting to use online survey tools as a quick way to assess customer satisfaction and interest in potential new services.

To remain relevant, in-plants must develop skills in production management, promotion and customer acquisition. In-plants need to be more proactive in discovering new opportunities, beyond traditional print, that embrace non-print media (email, Web and mobile) to diversify offerings and improve their relevance within the parent organization.

Focusing on services that optimize digital printing and mailing workflows and enable cross-media communication can reduce outsourcing and help develop insourcing opportunities. Expertise in IT, database management and application development are increasingly important as production workflow becomes more integrated and cloud driven. In-plants also will need to develop or acquire excellence in marketing to promote their services both internally and externally. Resilience, creativity and solid business management skills are also essential to maintain the ongoing health of in-plant operations.

Lastly, and just as for any business operation, customer satisfaction is imperative. Therefore, in-plants must listen to the voice of the customer to understand changing needs, identify new opportunities, and learn how to respond to those needs and deliver more value.

In-plants have faced some tough times during the past 10 years but appear to remain resilient. One of the toughest challenges is maintaining relevance in an environment faced with threats from outsourcing and electronic media. To overcome these challenges and thrive, in-plants must transform their business by capitalizing on key growth opportunities, while continuing to focus on operational efficiency and customer satisfaction. By focusing on these fundamental strategies, in-plants will continue to represent a solid market segment in the coming five years.