Sept. 11, 2000

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Out Front With Back-End Links

Printing, publishing, and ad firms go online to automate internal processes

By Larry Greenemeier

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hile the Internet continues to transform the way media and entertainment companies deliver content, the industry's focus turns toward using IT and the Web to automate internal processes. According to the InformationWeek 500, media and entertainment companies are ahead of other industries in their use of the Web to automate processes and generate revenue opportunities--initiatives that depend on the IT department's ability to integrate Web initiatives with back-end database and fulfillment systems. Such integration streamlines workflow, cuts costs, and helps put content in customers' hands more quickly.

Printing companies in particular are ripe for IT improvement. One big area: online media asset management--most notably, using the Web to proof print and advertising copy. "Online media asset management is a major change in the print and advertisement industry that will enable companies to use the Web for proofing images and communicating with their printers in real time," says Dan Sullivan, VP of infrastructure services for Advo Inc., a $1.25 billion direct-mail marketing-services company in Windsor, Conn.

Media and entertainment companies also use the Web to more fully realize the value of their greatest resource--content. Publishers such as McGraw-Hill, Meredith, Primedia, and Reader's Digest are developing online portals that draw demographic information from their databases and use it to market to specific users. For example, McGraw-Hill has begun the transition from a traditional mainstream information service provider to a provider of industry-specific portals. The $3.99 billion New York company's construction-and aviation-industry portals, which have been operating for about a year, act as an online information resource for professionals in those industries. During the next year, McGraw-Hill will add more advanced personalization capabilities for its users.

As publishers continue to use the Web as an outlet for their publications, they also use the information they collect from their online subscribers as research for other online endeavors. The Reader's Digest Association, a $2.55 billion direct-marketing company in Pleasantville, N.Y., has a database of more than 100 million customer names, as well as enough magazine articles and graphics to fill about 300 terabytes of storage or 14 Storage Technology Corp. silos. "You can't personalize Web sites for individual users without access to demographic information that indicates what people are looking for," says VP and CIO Jeff Spar. "We select names from our database and offer them products that they need." (The demographic data that Reader's Digest collects from its customers, online and via regular mail, is distributed internally only when customer give the company permission.)

Other media and entertainment companies use IT to strengthen their core processes. Dow Jones, R.R. Donnelley & Sons, and Quad/Graphics, for example, invest in new hardware and software to eliminate legacy systems and develop E-business infrastructures that will ultimately reach out to mobile users--a relatively new phenomenon.

"Large printers have shied away from storing images themselves because it's expensive to build and maintain an IT infrastructure that can handle terabytes worth of images," says Raymond Prince, a senior technical consultant with the Graphic Arts Technical Foundation, a nonprofit organization that provides research and education for the printing, publishing, and graphic arts industries. According to Prince, the necessary hardware for such systems cost a minimum of $250,000, and companies typically must add another $200,000 to buy and implement the software needed for cataloging the images.

R.R. Donnelley & Sons, a $6 billion Chicago printing company, employs Web-enabled digital asset management to help its customers better meet their deadlines. The company's push to move parts of its business online meant giving its IT infrastructure a face-lift--replacing or upgrading 15,000 desktops and notebooks, 800 servers, 300 LANs, and its WAN in preparation for increased use of the Web to conduct business with its customers. The project took nearly two years to complete at a cost of about $90 million. The goal: to create a repository of images that printers and publishers can easily access online, rather than sending film back and forth.

Advo, whose direct-mail services include ShopWise product advertising circulars and Missing Child cards, implements online media asset management tools that will let employees interact more quickly and accurately with its customers, mainly publishers and ad agencies. Advo's online approach replaces the time-honored tradition of using overnight and express shipping services to send proofs to salespeople, who then hand-deliver or ship the materials to their clients.

Through the use of secure extranets, Advo customers can instead proof graphics and copy online, which improves the delivery process and helps them meet their deadlines for submitting approvals or corrections. Using the Web cuts the production cycle to 36 hours from as long as a week, and is expected to save Advo most of the $500,000 it typically spends each year on shipping services.

Advo's online offering lets its clients E-mail change requests directly to Advo's design staff; Advo salespeople are also automatically notified via E-mail of any correspondence so they can track the status of their accounts.

By the end of September, Advo plans to offer online applications that will let clients create their own advertisements using templates containing stock art and text files.

Managing digital assets is also important at Reader's Digest. "In order to operate within the proper cycle times, we have to have good control of our editorial content and graphics," Spar says. "Reader's Digest printing partners are beginning to demand use of the Web in exchanging images." Reader's Digest also uses the Internet and a Lotus Notes-based magazine editorial tracking system to manage workflow between editors and graphic artists worldwide. Reader's Digest editors in Europe, for example, can find content in the company's central database and pull the editorial and graphics they need to translate and use in local publications.

Technology preparations for implementing online asset management aren't quick and easy. "The multiplicity of standards in the print industry makes the task of moving to the Web complicated," says Gary Sutula, R.R. Donnelley's VP and CIO. "Specifying print jobs is extremely complex." As the Web becomes an increasingly pervasive tool in the industry, printers will have to develop standards not only for file size and format, but for online workflow as well. "As the number of titles explodes, workflow becomes increasingly important for helping publishers and printers manage it all," Sutula says.

Quad/Graphics in July launched a two-year, $600 million growth program that calls for the Pewaukee, Wis., printer to expand existing facilities and add new press, binder, and Web offset equipment. Because of an extension of Quad/Graphics' existing relationship with the National Geographic Society, the $1.7 billion printing and distribution company plans to invest $70 million in new press and finishing equipment for its Martinsburg, W.Va., plant and hire more than 700 employees, nearly doubling the plant's staff within two years. Quad/Graphics will produce 9 million copies of National Geographic magazine monthly, primarily from the Martinsburg facility. The new equipment includes two online offset presses with Quad/Graphic's Color Control System and an in-line system that maintains consistent color throughout an entire print run, even across multiple presses in multiple plants.

Quad/Graphics leverages the Web to streamline its business processes and decrease costs. Although the company hasn't determined how much money it expects to save through its growing reliance on the Internet, customers will notice the difference. Rather than having to contact a Quad/Graphics customer-service representative every time they need press-scheduling information or to calculate job costs, they'll be able to use the Web to handle such mundane tasks, says Steve Jaeger, Quad/Graphics' VP of management systems.

In May, the printer launched QG.com, a business-to-business E-commerce portal that gives Quad/Graphics' customers access to online, real-time print-production information at the printer's locations worldwide. Although clients can access QG.com to notify the printer when they require an increase in their print orders, it's less an E-commerce site than an information resource.

R.R. Donnelley, which plans to roll out an enterprise resource planning implementation in November to integrate customer service, pricing, and management of its manufacturing equipment's capacity, intends to build E-commerce portals to help its customers manage and monitor the jobs R.R. Donnelley processes for them. Such automation and integration is crucial for Donnelley, which has, for example, customers in the telecommunications industry that need new phone books printed every 90 days.

While R.R. Donnelley's Sutula wouldn't disclose his company's IT budget, he says it's grown so much, he's looking to hire new people rather than outsource projects. While hiring full-time, permanent staff is a luxury, Sutula prefers to keep jobs in-house, where he and his staff can stay involved in areas of the business, such as Web-site development, that are constantly evolving.

"Our money is moving from our print factories to investments in IT--particularly the Web," he says. "We want to be able to accommodate media companies like Martha Stewart that are diversifying beyond print to include the Web in everything they do." Marthastewart.com, for example, features a "to do today" link that offers information on topics ranging from salad recipes to stain removal. The link's title alone puts pressure on a content provider, promising site visitors access to information that's continuously updated. Since the majority of the content R.R. Donnelley works with is in digital form, the company is the logical choice for making that content available to online properties such as Marthastewart.com. Because Marthastewart.com exists in the open-all-night world of the Internet, R.R. Donnelley must ensure its systems operate 24 hours a day, seven days a week.

One manifestation of the shifting dollar flow is the formation of the company's online services group, Red Rover Digital, which builds Web sites for customers in a variety of industries, including media and retail. R.R. Donnelley's Image Merchant is an online application that centrally stores customer content for self-service access. Rather than locking up customer images in its own enterprise systems, where customers wouldn't be able to access them, Image Merchant provides round-the-clock availability for customers looking to reuse content and images that R.R. Donnelley stores for them.

Print and advertising companies are also beginning to leverage years of information gathering on the Web. Last November, for example, Reader's Digest teamed with its Good Catalog Co. subsidiary and StarTek Inc., a customer-service and fulfillment company, to launch Gifts.com, an online retail site offering more than 600 items, ranging from power ties to puppy treats. Gifts.com is part of Reader's Digest's strategy to expand its core content and marketing business to interact directly with the company's readers and customers. Whereas the Web was initially a medium through which Reader's Digest employees could communicate, "it's now becoming a channel for connecting directly to our customers," Spar says.

The creation of Internet sites such as Gifts.com is one of the main ways Reader's Digest plans double its revenue to $5 billion by 2004, according to Spar. As a result, IT has become the hub of a companywide redesign initiated by chairman and CEO Thomas Ryder more than two years ago. Ryder's plan is to re-engineer the company to create savings and improve business processes. "Since we're a database marketing company, so much of our processes rely on information technology," Spar says. "IT has become a part of the change plan, rather than simply being used for maintenance and operations." The Internet is fast replacing regular mail as the primary method of communication between Reader's Digest and its customers. While the company shapes its plans for the future, online marketing figures to continue to supplant more traditional business practices.

Personalization, whether of Web sites or direct mail, is an emerging area within digital printing. The Internet creates opportunities for publishers and direct marketers to gather a wealth of information about their readers and subscribers online, says the Graphic Arts Technical Foundation's Prince. "Add to this information some sophisticated database software, and you know exactly what your readers like, want, and are willing to pay for," he says.

McGraw-Hill is developing a wireless component for BusinessWeek Online, one of its most popular titles. In its pilot phase, the wireless project will offer an online, subscription-based information service to users of wireless devices, although the specific types of information and device compatibility haven't been finalized.

"The wireless-based BusinessWeek service offers customers of BusinessWeek Online an opportunity to get updates and other supplemental information on a more personalized basis," says Peter Watkins, executive VP and chief technology officer at McGraw-Hill. The delivery of large volumes of graphics and specially formatted BusinessWeek text will depend on the ability of hardware and software vendors to develop wireless devices and protocols that support such content.

"We're just now identifying which products will be successful and plan to partner with a number of providers on the application and delivery sides," says Gordon Long, VP of technology partnerships for McGraw-Hill. AT&T, for example, delivers internal wireless communications for McGraw-Hill and is a candidate to deliver wireless to customers. "In the past, our content has been available through intermediaries like Reuters," Long says. "We're now looking to provide information directly to our readers through portals." Long says McGraw-Hill's experience as a publisher serving those industries is what distinguishes his company's portals from competitors'.

Meredith, a $1.10 billion publisher of 22 subscription titles and 100 special-interest publications in Des Moines, Iowa, develops its Web strategy one publication at a time. The company's flagship site, BHGlive.com, for its Better Homes and Gardens magazine, features content from the print publication as well as an online kitchen arranger, how-to encyclopedia, and garden planner applications. Other titles, such as Ladies Home Journal and Family Money, have recently begun to see growth on the Web.

Meredith's IT staff moved in March from being an independent department to part of the company's Interactive and Integrated Marketing Group. As a result, VP and CIO Bill Crowell increasingly finds himself called upon to support the company's overall business strategies.

The IT department was folded into the marketing group to better exploit its ability to follow through on business strategy, Crowell says. Crowell's IT team works alongside Meredith's interactive media, integrated media, and consumer database operations groups to find new ways to cut costs and generate revenue. One of the group's first projects was working with online advertisers such as Home Depot Inc. and Kraft Foods Inc. to create advertising inserts and print publications targeting those companies' customers.

The move came just in time. "We'll see an increase in strategic initiatives that depend on IT," Crowell says. "This puts us a lot closer to the business and provides a growing demand for our services."

Illustration by Jeffrey Fisher
Photo of Sullivan and Woods by Chriss Wade
Photo of Long and Watkins by Diane Collins

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