The financial printing industry has collectively realized not a moment too soon that its business model going forward is not sustainable.
The way companies in this lucrative market niche do business is changing. Leaders in the business finally understand that future growth will be driven by advancing technology and automation.
This is a seemingly sudden development to an industry that to this point has been slow to change, adapt or alter anything in the way they do business.
I will attempt to explain this further by benefit of some personal insight.
After pulling 15 years as a pre-press technician/typesetter/desktop publishing commercial printing professional, I had an opportunity to crack the financial printing world as a document processor/typesetter.
Seeing how RR Donnelley, acknowledged as one of the leading, if not among the biggest three at the time commercial printers, was the employer courting my services for their financial business unit, I was naturally pretty eager to create a good first impression. I felt in my heart of hearts this would be a chance to work with the latest equipment and technology—state of the art!
I had enjoyed working for several commercial printers, newspapers and print shops before this time, but the prospect of being employed by (some estimations) the world’s biggest overall printer encompassing both commercial and financial segments, was an opportunity I didn’t want to let slide through my hands.
I had several rounds of interviews, computer operator tests (typing and general word processing skills in MS Word and WordPerfect (is it even still around?) and was finally made an offer and accepted.
First day on the job my jaw dropped.
My big-time new employer was using an antiquated, code-based typesetting system for producing their work.
Previously building grocery ads on Macs with full WYSIWYG at the ad agency I worked at just prior to accepting Donnelley’s offer, I was, shall we understatedly say, disappointed, that I would need to learn another code-based system (Compugraphic being the first). I didn’t pause with shock and dismay too long, however; I quickly set upon my way learning the system inside and out as quickly as I could—my survival there depended on my doing so.
Would I have accepted their offer if I had seen what hardware and software I’d be using?
Maybe, maybe not. I DID think back early on there, though, that it was a pretty slick withholding of information their interviewers perpetrated—not even letting me (or other candidates) see what systems we’d be working on, until you actually accepted the employment offer and were on the job.
Thus began my education into the mysterious world of financial printing.
A lot of the commercial side folks have heard of it, but haven’t really ever gotten their heads around it in the slightest to garner understanding of what it’s all about.
After working in financial printing for 15 years now, some days I still don’t get it. I usually say I’m in government work and it’s confidential: if I tell you, I have to kill you (joking of course, but still need to say I’m kidding for you weird interpreters out there).
But things are changing, none too soon and for the better of the leading service providers: Donnelley, Merrill Corporation and the collaborative-based client software upstart WebFilings.
Financial printers in a nutshell help get companies public and keep them there by performing compliance document filings with the Securities and Exchange Commission (SEC).
Until XBRL reporting (investor tool) was required, the printing side of Financial Printing produced great margins for the industry. With the advent of XBRL reporting by publicly-owned companies, the printing side of the business greatly diminished; everything is done online and via the web. Companies often post their filings with their press releases on their own web pages and their filings can also be found on sec.gov.
The “Inhouse” was the business model from which the build out of financial printing satellite offices was born. Inhouses are unique to financial printing. I should say “were” unique, that is, because up until the past few years, clients would come to financial printer facilities and work on their documents; now, not so much.
With the advent of the cloud and globalization, clients no longer are coming to these facilities in the numbers they once did, to say it kindly. Clients can work on their documents from anywhere—their homes, offices, what have you. It’s a mobile world we live in and financial printers are finally getting it.
WebFilings, out of Ames, IA, although Donnelley and Merrill would not admit this, has contributed to the demise of the lucrative financial printing phenomenon known as the Inhouse. WebFilings’ software allows clients to work on their own documents and file them with the SEC. For clients who choose this solution, there is no need to walk into a Donnelley or Merrill office and work their documents traditionally.
The traditional way was the way of the Inhouse. The Inhouse model featured facilities with banks of conference rooms that clients would populate–turning pages of their documents to smartly business-attired customer service representatives, who would deliver these pages with edits to be performed to on-site compositors and proofreaders or off-site staff, via electronic network delivery means.
Donnelley and Merrill have updated their typesetting systems over the years and maintain domestic and international presences of composition resources.
They still offer basically two types of composition service for their clients, too: fast (known by various names as ASAP (as soon as possible) and QTA (quick turn around) and not so fast, or “Overnight” levels of service.
I would suggest these two types of service offerings become just one. All work needs to be performed and completed as soon as possible for companies to remain competitive. This will take managers with the ability to accurately estimate delivery times and sales people who can offer pricing that suits this “as soon as we can” approach.
In order to accomplish this, customer service functions should be performed in call centers. Customer service presence on site is no longer necessary as it was during the height of the Inhouse business model days.
As Donnelley and Merrill compete into the future with WebFilings in terms of offering an entirely client-based service solution, the need for traditional financial printing customer service withers that much further.
I envision a financial printing world where Customer Service and Composition personnel morph into a hybrid of sorts—that is, people who can do both job functions: field customer calls from anywhere in the world, put work into a network of composition resources and perhaps even effect actual quick edits to pages leading up to daily SEC filing deadlines, as the wave of the future.
Change is constant. Commercial printing pre-press technicians have long worked with clients over the phone and in person, offering the best of both worlds—great customer service and quality typesetting/desktop publishing products.
The financial printing niche would be wise to revisit how the commercial printing world conducts its business in this respect (continue offering the outdated, outmoded, unnecessary customer service functions of the twentieth century at your own peril, financial printers).
But wait, I just heard there’s an Inhouse on the way…NOT!!!
Happy Birthday, Rhonda Jean! 🙂
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KC
Yes it is a changing world. I always wondered what would be of printing companies while people flock to the web. I hope you guys are still holding on and things are still steady.
hittingthesweetspot
Hi KC:
So nice of you stop by! I think financial printing is finally adapting to mobile and cloud-based technology. I also believe XBRL revenues have taken the place of some of the lost traditional printing revenues, and as these companies continue to adopt new technology rapidly, consolidate job functions and eliminate redundancies, they will have a successful future in the marketplace.
Tony
Well Bob, my “ahem” current employer is STILL using “an antiquated, code-based typesetting system for producing their work”…
Maybe they will outsource Customer Service to India along with much of Composition that is already there.
hittingthesweetspot
Those financial printing industry customer service professionals who survived the Lehman Bros. derailment have had a nice gravy train ride, but it’s over. Their wages are stagnant, but still very high based on ROI and their losses in rank due to attrition are not being back-filled, as companies have no requisitions to hire replacements, nor will they.
With clients coming in house going the way of the dinosaur, many CS veterans are dusting off their resumes, and wisely so. They are not attorneys, can not give legal advice and the processing of work they are relegated to doing now, can be performed at any number of consolidated, off-site locales, via computer network means.
If you could be a fly on the wall at upcoming financial printing executive management team meetings, I’d bet you dollars to doughnuts they are considering their options on how best to consolidate these relatively expensive labor resources, in the name of cost effectiveness.
Appreciate the comments, Tony, and thanks, as always, for reading.
Bob
XGP
Great post. I worked for a financial printer for twenty years and I would only argue with you on one key point. It was not XBRL that killed the in-house or the profit margins. It was slowly done by EDGAR, electronic proofs (i.e PDF), and e-mail. In-houses have been steadily declining over the last 7-10 several years and XBRL has only been mandated since 2009. XBRL has actually helped the printers because they were the only big players with the knowledge and resources able to handle the initial volume. However, they too are now overwhelmed by the amount of XBRL work coming in. They are ripe for the picking and Web Filings is doing some pretty good picking…
hittingthesweetspot
Agreed. EDGAR (Electronic Data Gathering, Analysis and Retrieval system for those not in the know) prompted a long, steady decline in printing revenues and XBRL has been finishing them off entirely in recent years. Although CEOs hoped that XBRL would replace most if not all lost printing revenues precipitated by the advent of EDGAR, I believe the jury is still out on whether that will eventually be the case. XBRL IS highly profitable, however, perhaps just not AS profitable as the traditional printing revenue margins financial printers once enjoyed.
WebFilings’ service offering is highly competitive and the remaining two traditional financial printers are playing catchup when it comes to providing a “do it themselves” software product for clients who wish to do just that.
It will be interesting to see how Donnelley and Merrill “answer the bell” to WebFilings’ continuous assault on their client rosters.
Appreciate the comments, Mark!
Dan Collier
Great post Bob! Only a small segment of the population understands what financial printers were. In fact, they all helped contribute to the degradation of their niche with renaming themselves (Shareholder communications, document solutions. empowering information), their key roles (CSRs became Project Coordinators or Deal Managers), and their expertise (instead of revolutionizing and investing in future technologies to enhance service, they outsourced to lessen cost of their service). I spent more than the last 30 years in the industry. I worked my way up from the shop floor running a press to the boardroom running strategic initiatives and developing leadership. Talk about an uphill battle.
I introduced the notion of a web-based service portal almost a decade ago. Suggested online content collaboration years before cloud technology. Recommended reduction in real estate footprint, elimination of costly “Inhouse” model and investment is client-driven tools that allowed 100% transparency and 24/7 service capabilities.
The resistance to change was debilitating. And now, those who scoffed and refused to consider evolving, are panicking with every client defection to Webfilings and other emerging service providers.
I am no longer in the business. However, my experiences over the years allow me to help other organizations learn from the constantly repeated mistakes of these dinosaurs. Someday, we will find fossilized in catacombs of every metropolitan financial district, artifacts like Bates stampers, Inhouse run sheets and “QTA” folders!!
Thanks, Dan
hittingthesweetspot
Hi Dan,
You make great points regarding how financial printers re-branded themselves and their internal role players’ titles (without any success I might add).
Savvy veterans of the business understand attempts at referring to yourself as something else in the name of more effective marketing–to change the names of customer service reps to “project coordinators” or “deal managers,” and compositors, typesetters and proofreaders to “document processors,” without actually ever obtaining recognized and accredited certifications, never addressed their steadfast refusal to consider anything but outsourcing labor as soon as they could, to eliminate jobs and preserve margins.
Their service offerings remained staid, lacked flexibility and were unchanging through the years (look at how I’m talking about them in the past tense, too!).
They relied on perceived “service” that no one else could provide.
Their attitudes made them ripe to be broadsided by companies with actual software solutions; their struggles with XBRL implementation have burned many a client.
Your recognition of their refusal to adapt to changing business climates (read anticipating, researching and SETTING trends rather than reacting to them) is spot on.
Thanks for the more-than-interesting, insightful comments, Dan. I appreciate them, and also, your demonstrating quite vividly there is life beyond financial printing.
~Bob
Jaye
Bob, at your best here on this post, insights are spot on. I might also add the other nail in the coffin for the industry, including and very well maybe led by the attorneys and bankers hours/fees on IPOs and “in-house” deals. Those folks took a minor beating in the market dips in the 80s, then 90s, but the glory hole IPO madness of the dot.com era and all that mystery value went up in a “cloud” of smoke and with it the real end of Financial Printers glory days of “in-house” IPO working & filing sessions. Where compliance and regulatory documentation keeps the wheels churning, there ain’t more leaves of gold falling from IPO trees.
Cheers my friend!
hittingthesweetspot
Jaye!
As one of my most esteemed early mentors in the biz, and also a good friend, so nice to see you stop by here at hittingthesweetspot! Thanks for the kind words. In my view, this post would not have been complete without benefit of the insight your comments illuminate.
Great points regarding how although compliance and regulatory documentation are the industry’s “meat and potatoes,” surely the go-go IPO days that precipitated vast financial printer facility build-outs based on the “Inhouse” client business model, have long since peaked!
In its short life, this post and subsequent comments thread have proven to be among hittingthesweetspot‘s most popular entries.
Thanks for helping the comments section take on a most interesting life of its own, Jaye!
Tracey
this is the wave of the future…
http://www.dpsicorp.com
hittingthesweetspot by Bob Skelley
How so more than any other cloud-based offering, Tracey?
cavegirlmba
Can you imagine my disappointment when I found out that “financial printing” helped companies to go public? For the first part of your article, I had harbored illusions I had finally found someone who was able to print money (with code or not, wouldn’t care).
hittingthesweetspot by Bob Skelley
Haha! Now that would be no small thong, I mean, feat, would it! We will share this inside joke cavegirl (unless they visit you). Feel free to post a link here.
cavegirlmba
Very sweet of you 😉
If anyone visits me and wants to know about our inside joke on printing money I will deny everything (but of course everything we type on the internet is recorded anyway).