Taking on the Data Center

Merging with the data center has helped in-plants improve their efficiency, increase their equipment arsenal and save their companies huge amounts of cash.

Too often, managers who have grown comfortable in their jobs adopt a seven-word philosophy to justify their passive attitudes toward change: "If it ain't broke, don't fix it."

Sadly, by ignoring opportunities for expansion and eschewing new responsibilities, such managers, though they may get away with it for a while, impede the growth—and survival—of their operations.

Conversely, managers who have embraced and even sought out new responsibilities have turned their in-plants into thriving departments.

One avenue for expansion that has been successfully explored by several in-plants is the merger of the in-plant with the company data center printing operation. Managers who have undertaken this process note that it is a logical move: electronic digital printing is already entering the in-plant, so why not merge with a department that has expertise in the area?

The MIS (managing information systems) people can help the in-plant select the proper digital equipment. Plus, the availability of their existing digital printing gear gives the in-plant a wider range of printing options, while reducing equipment redundancies within the company.

Even more important, however—and more attractive to the parent organization—are the cost savings. And they can be substantial.

"We're saving a million dollars a year right now by the merger," reports Robert Tierney, purchasing operations director at the Allstate Insurance Print Communications Center, in Wheeling, Ill. His offset and distribution operation teamed up with Allstate's output processing center on May 30 of last year. In addition to offset printing, he is also responsible for distribution—which includes mailing, shipping and inventory delivery—forms supply and management of the building.

A similar story is told by Ed Jowdy, head of Aetna's Enterprise Document Management subsidiary, in Windsor, Conn.

"We brought our costs down dramatically," he notes. "We're talking about $7 to $10 million cost reductions in fixed and variable expenses—and labor."

With savings like this, upper management is certain to keep these in-plants around for a long, long time.

Determine the Financial Gain

Undertaking such a merger is no easy task, however. It requires a lot of research. First and foremost, advises Tierney, determine if it makes financial sense for your in-plant to proceed with this merger. Those in financial services will find a great many advantages to merging, he says.

In Allstate's case, the seeds for the merger were planted when the lease on the data center's building was nearing its end. A team met to discuss options, one of which was to merge the output processing center with Tierney's operation. The team did a financial estimate, analyzed trends in electronic printing and, in the end, decided to move the output processing center into a 70,000-square-foot area in Tierney's 429,000-square-foot facility.

Tierney stresses that communication early in the process is crucial. Everyone must feel he or she is part of the decision so there will be no resentment.

"Managers can't make it happen. They need people to make it happen," he says.

Since the offset and electronic cultures were so different, Allstate organized employee social events, team meetings and management get-togethers to get people comfortable with each other. Lots of training was needed, too, so people of different backgrounds could get up to speed on the new equipment.

It's important, Tierney adds, not to limit employees to the areas that they have traditionally worked in.

"You've got to balance and blend the strong characteristics of your operation and pick up some of the strong characteristics of the other operation to make the entire [operation] good," he says. "Take advantage of the strengths. You take some of your seasoned leaders, regardless of their expertise, and you move them over [to the other area] because their leadership skills are [required] to help the total operation."

To make such a merger work, managers have to be willing to concede that their way is not always the right way.

"You've got to be very good at understanding and accepting that some things that others do may be better," he says. You must be open to learning how to do something a different way.

Give Up Power to Gain Strength

Additionally, you must be willing to give up some of your control if it's for the overall good of the organization. Carol Doffing, former director at Blue Cross and Blue Shield of Minnesota (BCBSM), maintains that if your sole intent is to gain more power, then you're consolidating for the wrong reason. Consolidation should bring about efficiency and the maximum utilization of the corporation's assets.

"Look at your company the way a consultant would," she advises. "Determine what departments have the best practices, the broadest knowledge, the clearest vision, and then determine the potential for process improvement. Be prepared, however, to propose to management that some of your employees move to other groups because they have a better practice than you do."

Doffing recently oversaw the merger of her company's offset, distributed printing and forms management groups. One of the biggest hurdles, she says, was getting everyone to think of the blending of technology and its effect on the organization.

"Unfortunately, too many times it becomes a turf war, and nobody wants to give up their turf," she says. "You need to look at the larger picture and come up with an enterprise-wide solution."

To accomplish this, Doffing put together a detailed plan—a document imaging strategy—that examined the document management process in detail to find out what benefits could be gained by merging operations. Because of the merger, Doffing is now responsible for the following areas:

• Operations, which includes the data center and the outgoing mail room.

• Service delivery, which includes service level management and application delivery teams.

• Business services, which covers training, communications, technical writing and quality improvement teams.

• Printing services, including offset, distributed printing and forms management.

• Client services, including the customer assistance center, disaster recovery and security.

• Central services, such as incoming mail, data entry, scanning and microfilm.

Because of these process-improvement efforts, Doffing believes BCBSM is more efficient now. Delivery services, for example, have been combined, eliminating redundancy, and cross training has enabled the company to utilize its assets more effectively.

Likewise at Allstate, the separate distribution and engineering departments of the offset operation and output processing center have been consolidated. With all printing functions under the same supervision, jobs can now be handled in a variety of ways.

"You've got a lot more options to answer customer requirements," explains Tierney.

Rush jobs that come in when the presses are busy can be printed digitally. Having this capability, he says, is crucial to the future of in-plants.

"The electronic world is affecting the in-plant with unprecedented change," Tierney declares. "If you're going to be a leader in the industry, if you're going to be successful in answering customer demands and saving your corporation money, you have to produce products in the most effective way you can. It is essential that you have every piece of hardware centralized to allow you to pick."

Focussing on Customer Service

That's the current scenario at Aetna's Enterprise Document Management subsidiary, as well—but it wasn't always that way. In 1992 the offset, finishing, copying, data center and warehouse areas were all separate. Ed Jowdy was asked by Aetna's chairman to look into reducing printing expenditures, while at the same time improving quality and service.

His solution was to consolidate these operations and introduce a market-driven focus that emphasized customer service. Now, a team of customer service reps, who understand both offset and digital printing, analyze the needs of customers and offer the appropriate solutions. When customers complain, their comments are used to improve the operation.

"Rather than 'the supplier speaks and the customer listens,' " Jowdy observes, "it's 'the customer speaks and the supplier listens.' "

Because of this customer focus, Jowdy says the print operation, once a cost center for the company, is now a profit center. The operation even takes in outside print jobs.

Enterprise Document Management is located primarily in a 140,000-square-foot facility. Among other equipment, Jowdy says the operation is currently experimenting with an Indigo electronic digital press.

As part of the effort to consolidate operations, Jowdy says 200 positions were eliminated. A number of those people were retrained and others took early retirement.

Jowdy advises other managers who are thinking about merging the in-plant with the data center printing operation to be aware that most employees will be defensive about the idea at first.

"Be very sensitive to turf," he says. "Be skilled in showing the people you're talking to that they won't lose."

by Bob Neubauer