CUNNINGHAM GRAPHICS INT'L -- A Digital Prospectus

BY MARK SMITH

Trying to be all things to all people is generally recognized as a formula for disaster. However, putting a spin on this strategy has proven successful for Cunningham Graphics International (CGI). The Jersey City, NJ-based organization strives to be a one-stop shop for all the document management and communication needs of a tightly targeted market.

Through 18 operations spread across 12 cities and five countries, Cunningham Graphics serves the financial community with an emphasis on producing time-sensitive documents involved with investor communications, reveals Gordon Mays, executive vice president of marketing and sales.

The company's client base includes most of Wall Street's top investment firms, major insurance companies and many Fortune 500 companies. Its list of services include digital communications, document management, digital and offset (sheetfed and web) printing, as well as binding/finishing, fulfillment and mailing services.

Having engaged in a flurry of acquisition activity in the late 1990s, for a time CGI took on the appearance of being another industry consolidator. According to Mays, the true agenda behind these moves was to put the geographical and capability pieces in place to provide one-stop service.

The company itself became an acquisition target in the May/June 2000 time frame, and now is a division of Automatic Data Processing (ADP) in Roseland, NJ. Mays characterizes this move as a significant event in a very positive way. "Being part of ADP has made us an ever stronger force in the financial industry," he says. "It provides investment resources and technical expertise, as well as gives us strategic access to clients."

Outsourcing Services

ADP offers a broad spectrum of technology-driven outsourcing solutions through four business units—employer services, brokerage services, auto/truck dealer services and insurance claim services.

Scott Ades, chief administrative officer, says many people have a misconception about the market that Cunningham serves. "When you mention the financial market people tend to think of prospectuses and the like, which is one- and two-color work," he explains. "But around the total investor communications proposition, there is a tremendous amount of color work."

At Cunningham Graphics, color is just as likely to mean digital production. "The advances in color digital printing quality have been fantastic," Mays notes. "We now have clients that will accept digital, as well as offset, for very high-end work.

"If you look with a loupe you are going to see differences between offset and digital output, but I maintain that the typical end user isn't going to notice the difference. Still, there are pieces of which clients prefer be done offset. That's why we have three (soon to be four) six-color Heidelberg sheetfed presses equipped with aqueous coating and one MAN Roland just in our headquarters facility alone."

Most of the printer's work falls somewhere in the middle, combining digital and offset components, according to Mays. Preprinted shells, covers and inserts are printed in color via offset, with variable data and short runs produced digitally on-demand.

"Our main objective, certainly for the past 12 months, has been integrating digital printing into our workflow," adds Ned Hood, chief technology officer. "We sometimes make the decision about which jobs will go digital at the very last minute, as the jobs are ready to be imposed. The way we direct the work depends on the schedule and load in the plant."

Mays believes any quality compromise buyers may perceive in digital printing is outnumbered by its advantages. "There is a tremendous amount of offset printing out there that could be produced digitally and be more cost-effective, while providing the flexibility for versioning and variable data capabilities. Even high-end print buyers are starting to understand that they can get better response rates by using variable data than just trying to get the absolutely best-looking printed product."

Cunningham Graphics has been working with clients to convert some hybrid work to all-digital production, the company exec adds. One example was an offset-printed pocket folder into which digitally printed sheets where added. The piece was redesigned to be a customized and personalized, self-contained book printed digitally. "The daily volume requirements make it practical for the program to be managed in a digital workflow," Mays explains.

All-digital production also figures into the printer's client inventory management programs with just-in-time production, he says. In this case, initial press runs are run offset, but only in the exact quantity needed at that time. Instead of inventorying printed overruns, Cunningham archives an electronic version of the document and prints copies digitally to meet its clients' subsequent requirements. This approach reduces carrying costs and obsolescence, as well as allows for updating, Mays notes.

The distribute-then-print workflow also is enabled by digital production, Hood points out. "The concept hasn't taken off like the industry hoped, but it has worked for us in some instances," he says.

CGI made a big move into this arena at the end of 1999 by acquiring the five digital printing centers of The McGraw-Hill Construction Information Group. The sites are strategically located across the country, in major metropolitan markets. According to Hood, these centers simultaneously print time-sensitive construction bid information that is customized for specific regions and dropped in the mail for delivery the next day. Using distribute-then-print production helps ensure all recipients are on an equal footing to take advantage of this information, he adds.

The publications have four-color covers that are preprinted monthly via offset, with the monochrome insides printed on Xerox DocuTech 6180 production publisher systems. "Standardization of the software and print engines at these centers is what makes the process work," Hood says.

Global Connection

The organization has since found some client interest in using distribute-then-print production for international applications, as well. Chiefly, this involves producing the same documents in New York, London and Hong Kong, Hood says. "We are still gauging interest on a national basis, though. Customers don't see the need to do it, and they are comfortable working with a primary facility."

Even though he has overall sales responsibility, Mays recognizes that digital printing is the future of the business. "Our digital sales are going to grow at a much faster rate than offset," he predicts. "That doesn't mean offset printing is dead. Its strengths still are longer runs and high-fidelity color."

However, digital printing's growth will not come without some effort, Mays concedes. "You can talk about variable data printing and one-to-one marketing, and at the concept level people understand it," he notes. "But when you get into the tactics of executing a program, it becomes much more challenging. You have to change some business rules in how you promote services to clients."

As chief technology officer, Hood says a big part of his job is educating CGI's production and salespeople on how to take advantage of digital capabilities. He also gets involved with customers' variable data programs. "The biggest obstacle we've run into in selling programs is the cost. Clients are used to paying direct mail prices of a few pennies a piece," Hood reveals. "For example, we produce full-color, variable data post cards that cost around 20 cents, versus the two to three cents clients are used to paying.

"While cost is a stumbling block today, I expect that to change in the next 24 months. We are just starting to scratch the surface of what can be done with creative, variable data projects," he continues.

One program the printer currently is handling involves the production of 100,000 post cards per month for a major rental car company. The color cards are personalized and feature targeted marketing messages that promote the rental service and offer special deals. Hood believes post cards are a popular format for variable data campaigns because they are easy to produce, minimize mailing costs and are effective.

Besides the cost issue, Mays says another obstacle that often must be overcome is the shortcomings in clients' existing list and document management activities. Customers need to know how to design for variable data, be able to manage document versions and have a database of the target audience that can be effectively segmented, he explains.

CGI also has to do some work to get the ball rolling, the sales and marketing exec admits. "Our salespeople now have enough education to identify an opportunity and get the client interested in discussing a program with us," he explains. "At that point, we need to bring in a product specialist who really understands variable printing."

Mays agrees with the common wisdom that selling variable data printing is a different proposition. "When you start putting together digital programs for clients, the audience you need to reach within an organization is much different than for offset printing," he points out. "You don't necessarily have to reach higher up the ladder, but you definitely need to broaden your contact base."

Sales Get a Boost

The printer's association with ADP has given a boost to its overall sales efforts, Mays asserts. "In terms of understanding the market and putting real, tactical game plans together to go after the opportunities, ADP's sales process is absolutely outstanding. Many of the steps we already took intuitively at CGI, but not as a formalized process. Adding that level of structure has enabled us to scale our sales force very quickly."

ADP runs its business based on three primary tenets, Ades reports. They are:

1.) Have product leadership.

2.) Provide world-class service and client satisfaction.

3.) Be an employer of choice.

"These are simple ideas, but executing is the challenge," the chief administrative officer says. "Those three tenets are our compass when we have decisions to make."

Part of providing world-class service entails acquiring the right equipment and deploying it effectively. With the exception of its all-digital, print-on-demand centers, CGI facilities typically house a mix of offset and digital printing equipment under one roof.

Getting Market Focused

"To me, having facilities that are just offset or digital is being product focused and not client/market focused," Mays says. "Also, since the majority of our work combines offset and digital production, having the capabilities under one roof just makes sense."

Until now, the organization's digital operations have been almost entirely Xerox houses, but not by specific intent, Hood reveals. "Xerox technology offers the quality and raw speed we need for cut-sheet printing," he explains. "Another big reason we've added so much of this equipment is because the DocuTech/DocuPrint engine gives us the flexibility to handle a wide range of stocks. This is a commercial printing site, so we get requests for a lot of different papers."

In addition to the model 6180s noted earlier, CGI's other monochrome Xerox devices include a number of DocuPrint 180s, a DocuPrint 4635, DocuPrint 65 and Document Centre 265. On the color side, it operates several Xerox DocuColor 2060s and 12s, as well as a DocuColor 100.

Currently, the odd-man-out piece of digital equipment at the headquarters facility is an Océ DemandStream 8090 web press. That's expected to change sooner rather than later, since the organization is actively evaluating its options in what Hood characterizes as the high-volume digital color system product category. The plan calls for this new system to be installed in the offset pressroom, rather than the separate department where the other digital presses are located.

"Our existing digital equipment is all in one enclosed area so we can control the operating environment and because some of our digital projects require heightened security," Hood explains. "For the new system, we are going to create a small area in the pressroom where we can control the environment, at least to some extent. I'm particularly concerned about paper dust."

Part of the intent behind this move is to create the right operating culture for such a machine, Hood says. "We want somebody with an offset background manning a high-volume digital color press to maximize production." Even though Hood himself came from an offset production background, all of CGI's current digital press operators are specialists in that arena.

It should come as no surprise that, like Mays, Hood believes digital output is the future. If quality and speed improvements are achieved as predicted, he expects to see digital systems broadly challenging offset within four or five years, or a generation or two of technology.

While the tools it uses may continue to change, both men expect CGI to remain a one-stop shop for the document needs of its target market. Along the way there are sure to be more strategic investments in the organization's digital portfolio, Mays reveals, and maybe even another company acquisition or two.