Alleviating Publishing Pain Points At Their Source

Maximize the Value of Your Content

Alleviating Publishing Pain Points at Their Source

Options and tips for successfully addressing publishers’ need to balance the resource demands

of books with the investment needs of digital.

This whitepaper was completed on January 3, 2012.

Table of Contents

Strategic Shifts: Significant Challenges and Opportunities ….......................................... 1

Solutions for Surviving the Perfect Storm ……………………........................................................ 3

What Publishers Are Outsourcing and What They Look for, or Should Look for, in a Partner ………………............................................................……………......… 7

Conclusion: The Only Constant Is Change ……………................................................................. 9

*About the study

The study was conducted by Book Business magazine on behalf of SPi Global in November 2011. More than 150 publishers provided data on their biggest challenges, current outsourcing practices and budgets, as well as future outsourcing needs.

Alleviating Publishing Pain Points at Their Source 1

Strategic Shifts: Significant Challenges and Opportunities

The transformations that have taken place in the publishing industry over the past decade, let alone the past year or two, and the impact those changes are having on publishing companies worldwide are nearly impossible to summarize. A comment reported in Book Business magazine five years ago from Will Pesce—then-President and CEO of John Wiley & Sons—demonstrates the effects of what many analysts have called “the perfect storm” plaguing the industry: “Over the past five years, we have introduced more new business models than we had in the previous 193 years, in part because we are no longer limited by the physicality of books or journals.”

The perfect storm has gained momentum in the years since, and has carried with it the winds of change in, obviously, the increasing availability of online content (free and paid), eBooks, smartphones, tablets, apps, a historic economic recession, declining government, academic and library budgets, a drastically evolving retail landscape, and shifting consumer behavior towards book content. Illiteracy continues to plague the country as well as the industry, and the industry must continuously reckon with the force of technological change. However, as with most storms, breaks in the clouds have emerged, through which new opportunities have shined brightly. As Pesce said, “Our investments in technology are enabling us to make our must-have content available to our customers to use in their professional and personal lives with greater immediacy, utility, and flexibility than ever before.”

Dominique Raccah, Publisher and CEO of independent publisher Sourcebooks, said at the Book Industry Study Group’s 2009 Making Information Pay event that “the ‘content continuum’—the potential for expanding content and author brands into eBook, mobile and other digital content products—presents the largest opportunity I’ve seen in 22 years as a book publisher.”

Since then, this somewhat early optimistic outlook on e-content has spread like wildfire across much of the industry. Especially in segments such as the academic publishing market, where the price of print textbooks has increasingly become an issue of great consumer focus, the prospect of lower-cost digital solutions has presented both ample new competitive hurdles, as well as opportunities in providing custom textbooks, enhanced digital and data products, licensing, and more frequent updates, among others.

According to a new study* of 150-plus senior-level publishing executives (conducted by an outside party on behalf of SPi Global), the biggest growth opportunities in the industry are perceived to be in eBooks, digital content and delivery, as well as new titles.

Print continues to stand sturdy as the foundation of publishing behemoths as well as mid-size and smaller companies. However, the growth in eBooks and other digital content formats likewise continues to weigh heavier each year. Stalwarts, such as Scholastic, the world’s largest publisher and distributor of children’s books founded nearly a century ago, are undergoing unprecedented strategic

According to a new study of 150-plus senior-level publishing executives, the biggest growth opportunities in the industry are perceived to be in eBooks, digital content and delivery, as well as new titles.

Alleviating Publishing Pain Points at Their Source2

transformations. “The big strategic decision for Scholastic in 2011 was to drive forward with the transition to technology-enabled reading in our children’s consumer book business, estimating that one-third of Scholastic revenue will be digital by 2015,” said Richard Robinson, Chairman, President and CEO of Scholastic Inc., in a November 2011 article in Book Business.

Publishers have increasingly focused on and invested in growth opportunities in their respective markets and repeatedly reinvented their business models. New challenges have arisen. According to the study, the No. 1 challenge publishers face today is developing a strategy around the industry’s growth in eBook sales, which is the primary challenge by almost half (48%) of survey respondents.

Close behind are the challenges of marketing (print books, eBooks, or both) (45%), and eBook conversion/streamlining internal processes for output to multiple platforms (39%).

What Is Your Company’s Biggest Challenge?**

7%

Others

30%

Negative effects of the economy/budget cuts among customers

17%

Staffing internally to adapt to industry shifts

25%

Cutting costs

23%

Finding the right eBook conversion partners

39%eBook conversion, streamlining internal processes for output to multiple platforms

45%Marketing (print books, eBooks or both)

35%Balancing the resource demands of the print business with investment in digital

48%Developing a strategy around the industry’s growth in eBook sales

29%Adapting to shifts in the book retail landscape

** These results were from a study conducted by Book Business Magazine on behalf of SPi Global in November 2011.


The underlying implications of such exigency have permeated the farthest corners within virtually every publishing company. From publishers to editors, manufacturing and production managers to the more recently developed posts in digital strategy and implementation, no executive is left unaffected.

According to the survey, individual companies’ primary challenges in evolving successfully amidst the Sturm und Drang of the industry, include:

• balancing the resource demands of print books with investment in digital;

• staying on top of the digital landscape, and all of the various new formats and players in the field;

• eBook conversion, streamlining internal processes for output to multiple platforms;

• finding the right eBook conversion partners; and

• staffing internally to adapt to industry shifts.

These challenges and their discernible solutions are virtually inseparable from every strategic decision made with an eye toward a future whereby book publishers can continue to provide the world with invaluable content, in any format, while remaining sustainable.

Solutions for Surviving the Perfect Storm

In what could be considered the heart of the economic recession, news headlines were fraught with stories of restructuring, cost-cutting, and painful layoffs. Those executives fortunate enough to keep their jobs during this national crisis were faced with seemingly insurmountable new hurdles: Doing the work of several key positions folded into one. Time became far beyond a luxury, and navigating the swiftly evolving technological landscape around them became their greatest need and biggest challenge.

The e-reader market began to fully erupt, and the “era of eBooks” has arrived. In the course of several years, dozens of e-readers emerged onto the market, often with proprietary content formats, leaving publishers with many choices to make, and a seemingly unmanageable array of formats to navigate and for which to prepare content.

Processes developed over decades upon decades for manufacturing print books were difficult and costly to transform, if new processes could even be designed for maximum results and efficiency.

Three possible solutions have surfaced, presenting publishers with choices for how to successfully respond to the new demands of the marketplace and the current economic environment in which they are operating:

A. Hire staff and build a new internal infrastructure.

B. Hire a consultant to guide publishers in their evolution.

C. Hire a strategic partner.

A. Hiring Staff and Building a New Internal Infrastructure

Some ambitious publishers quickly invested heavily in developing new internal infrastructures and training or hiring staff to help implement this behemoth initiative. The pros to such a decision include maintaining control over the processes, and being able to customize and improve as the new infrastructure is put into place. Ideally, the publisher would then own its system and could spread the costs of the project over the new projects launched companywide for many years.

The e-reader market began to fully erupt, and the

“era of eBooks” has arrived.


However, in addition to investing significant upfront capital to acquire leading-edge technology and maintain it over time, such projects are almost always a significant drain on time and staff resources, from shopping for such solutions, implementing a plan, educating staff, troubleshooting during the implementation process, etc.

“It’s purely a resource issue,” says Anne Spencer, Vice President of Design and Production for Jones and Bartlett Learning in Boston, about her company’s decision to outsource e-publishing services versus trying to handle them in-house. “We can’t hire more people to scale up to the extent we must. Furthermore, many of the skills are relatively easy to ‘commoditize,’ to free up in-house resources for more higher-level tasks.”

“The costs are somewhat compelling as well [to try to manage processes in-house], but they get significantly nullified or reduced by initial ramp-up tasks, document preparation, quality assurance, and ongoing vigilance on our part to ensure product integrity,” she adds.

It is not unheard of, unfortunately, for publishers to invest in a technology solution only to experience difficulties, as well as significant additional, unanticipated costs in integrating those technologies effectively and efficiently with their current hardware, systems, and processes. Projects have even been abandoned mid-implementation, leaving the publisher with an ineffective infrastructure—back at square one—and a big dent on their P&L.

Dave Morris, Co-founder and Publisher of New Year Publishing in Danville, California, says his company faced challenges with modifying its current workflows and formats. “Our existing resources were not up to speed on how to modify our existing .indd files into ePub and .Mobi, since they were not originally designed with those outputs in mind. They basically required a restart of the designs,” he said, leading to his company’s decision to seek help with the transition.

For those who are successful in implementation, they face other risks. By the time many publishers (those who can afford to even attempt such momentous initiatives) can shop for, design, and implement new processes and costly new infrastructures, new devices and platforms are likely to be rapidly transforming market. This requires additional new processes and, often, technology.

B. Hiring a Consultant

Consultants are a staple in most industries, and, especially during periods of significant change, their expertise can be a valuable asset to companies seeking guidance. Consultants often have an objective view of multiple, similar projects that have been implemented, and may know the pain points in selecting partners and implementing new infrastructures, as well as best practices for training and hiring new staff.

ON HER COMPANY’S DECISION TO OuTSOuRCE E-PuBLISHING SERVICES

“It’s purely a resource issue. We can’t hire more people to scale up to the extent we must. Furthermore, many of the skills are relatively easy to ‘commoditize,’ to free up in-house resources for more higher-level tasks.”Anne Spencer Vice President of Design and Production Jones and Bartlett Learning


Among the primary challenges that can occur in working with consultants is that consultants also can be costly, as can their suggestions for solutions to your company’s hurdles and strategic goals. Another is that, while their expertise may be significant, every publishing company is unique in its processes, its business objectives, its resources, and its internal structure. A consultant’s expertise is limited, in that sense, to the projects on which he or she has done and the companies with which he or she has worked.

Another consideration is that consultants are usually working on more than one project at a time, and your company can be subject to the consultant’s schedule and other commitments. Because publishing is such a time-sensitive business, and capital investments accrue each day that new processes cannot yet be implemented effectively, working with consultants may not be the best option when speed-to-market and costs are a concern.

Related to this, consultants often are constantly seeking new business and working to complete projects, and may not necessarily be spending the time to stay up-to-date on new technologies or forge long-term relationships with clients.

To gain maximum return on their investments, publishers who instead source work to vendors should consider (and put to task) their vendors as partners who can serve them in a consultative manner.

C. Hiring a Strategic Partner

Vendors offering solutions such as digital conversion and other e-publishing services, among others, will, almost without fail, tell you that this option is the most cost-effective and sustainable long-term solution for quality product development and distribution, as well as strategic growth. This is a sound business proposition.

The result of the perfect storm for many publishers has been to batten down the hatches to survive—in other words, to focus on their core competencies: finding, working with and developing spectacular authors and content. Anything and everything is being evaluated—with a number of publishers deciding to outsource non-core functions. For example, publishers have increasingly outsourced distribution and fulfillment (including the ground-breaking decision in 2011 by HarperCollins to have RR Donnelley handle fulfillment of all HarperCollins’ new releases, and of its Zondervan division’s frontlist and backlist titles).

“Internal staff should be reserved for key tasks and processes that are core to the publisher’s business. If a process or task can be better done by a vendor, or done for less with no loss of quality, these are very low risk items to outsource,” agrees John Wheeler, Vice President, Strategy and Emerging Technologies, for SPi Global—which provides publishing, ePublishing and digital solutions, among other services, to the publishing industry.

“Non-traditional areas like e-publishing and conversions are two areas where most publishers lag behind the vendor community as far as process and technologies are concerned, and in most cases these are areas where the publisher cannot add value beyond the vendor’s when it comes to execution.”

Cost-management has been an increasing concern, with promises of the post-recession rebound wavering and uncertain, as well as the impact of eBooks and other digital content on traditionally print-centric businesses. Investment decisions are made increasingly carefully and cautiously.

Lower costs, says Morris, is one of the biggest benefits in working with an outside partner. “It’s a lot cheaper, and they work on a set fee basis after reviewing the project.”

Price will always play a factor,” says Wheeler. “As publishers are getting squeezed by the economy, they try to save money when negotiating with their partners.”

Other substantial benefits of partnering with a third-party provider include access to leading-edge technologies and staff expertise.


This is of “primary and key importance,” says Ratan Datta, SPi Global’s Executive Vice President, Operations. For example, he says, “SPi itself symbolizes ‘Solutions, People, Innovation.’ [We have a] dedicated technology team, a process re-engineering team and an Innovation Lab, working on process improvement, automation and cutting-edge technological solutions. This becomes one of the many key differentiators, not only between in-house efforts and outsourcing, but between various vendors with which publishers can choose to partner.”

As technologies change (especially at their current pace), vendors provide publishers with access to those new technologies, without the requirement of additional capital investment—and potentially the loss suffered from having invested in costly and now-obsolete technology.

“A partner who stays up-to-date with the latest technology trends will be worth their weight in gold because they can provide new direction for a company. Publishers are all looking to go online and maximize their presence in the digital world. They’re not sure of the roadmap, to get where they want to go. A partner can certainly help create that roadmap and provide new ideas, which the publishers may not have envisioned,” Datta adds.

“A strong partner is looking to develop a relationship, which will move past the end of the current job,” notes Datta, addressing the benefit of vendor-partners that function as an extension of your in-house team. One-off jobs are not usually what outside vendors are in business for—so your success (and continued work with them) is their success. “A good vendor doesn’t simply perform a service; they will provide innovative ideas to further grow a business,” he says.

Reflective of that, as well as of the premise of serving as an extension of your internal team, is the goal of many outsource partners to help publishers set up or improve their internal processes. This also can be a benefit in terms of combating staff turnover at a publishing company. If a publisher invests significantly to build the expertise of one or a few key staff members, and any of those staff members leave, the expertise leaves with them; not so when dealing with an outsource partner, whose whole team is dedicated to expertise in specified areas.

“The goal of any partner is to provide leadership in operational excellence and ease the burden on publishers of today. From pointing out bottlenecks to advising on a new technology, it’s up to the partner to add as much value as they can – all these while providing a competitive price and top-notch quality,” says Datta.

As technologies change, vendors provide publishers with access to those new technologies, without the requirement of additional capital investment—and potentially the loss suffered from having invested in costly and now-obsolete technology.


ePublishing and Digital Solution

Publishing Solutions

Content Platforms and Technologies

Others

Marketing Services Support

Content Enrichment

Customer Support Services

24%

15%58%

21%

8%

5%

20%

Another related benefit is scalability, notes Wheeler. “Service providers, by the very nature of working with a number of publishers across the industry, are able to bring a wealth of best practices to the table along with the organizational muscle and resiliency to get the biggest jobs done,” he says.

What Publishers Are Outsourcing and What They Look for, or Should Look for, in a Partner

Coinciding with what publishers have reported as their greatest challenges today—developing successful strategies around the growth in eBook sales, and eBook conversion/streamlining internal processes for output to multiple platforms—the largest area that publishers outsource is ePublishing and Digital Solutions (58% of respondents), according to the SPi Global study.

Which Services Do You Outsource?**

The highest percentage of publishers by far (40% of respondents) are looking for ePublishing and Digital Solutions partners, followed by general publishing solutions (13%) and content platforms and technologies (13%). Almost a third of publishers indicated that their outsourcing budget will grow next year, with 35% reporting that it will remain the same.

While many publishers report that one of the biggest benefits of working with a third-party partner is cost savings, cost takes a back seat when it comes to publishers’ top priorities when searching for a partner. Product quality ranks at the top of the list, with 93% of respondents to the survey indicating this as highest priority. Cost of services ranks next (91%), followed by retaining control over content (87%) and customer service (86%). Other factors of significant priority are: ability to leverage a partner’s technology and expertise (79%), speed to market (76%) and improving current processes (75%).




What Are Your Priorities When Looking For A Partner?**

“While most publishers claim quality to be the highest concern, time-to-market and price rank very high as well,” says Wheeler. “The uncertainty and confusion around the push into ‘e’ from ‘p’ (electronic from print) further muddies the waters, since processes, procedures and technologies are not mature enough for the key metrics required to manage the cost/quality/time triad.”

Still, “Quality is always most important,” continues Wheeler. “If you do the job at a lower cost, but the quality is compromised, the brand will suffer.”

“Product quality will be the primary criterion since this will play a major role in enabling customers to retain and enhance their customer base and market share, despite the negative effects of the economy and budget cuts. The objective would be to provide the best quality and in a cost-effective way,” stresses Datta.

Seeking vendors that have a track record of quality clients and projects, therefore, is recommended. Publishers also would be wise to evaluate a potential partners’ direct experience within the publishing industry. “We find that a number of vendors have little publishing experience, but lots of programmers, developers and willing hands who lack the context of publishing experience,” says Jones and Bartlett Learning’s Spencer.

Seeking vendors that have a track record of quality clients and projects, therefore, is recommended. Publishers also would be wise to evaluate a potential partners’ direct experience within the publishing industry.

Product quality

Cost of services

Control over content

Customer service

Ability to leverage partner’s technology and expertise

Speed to market

Process improvement

93%

91%

87%

86%

79%

76%

75%


Datta suggests publishers look for a partner with “a global reputation, experience, as well as market information.”

With another major benefit of working with third-party partners being access to the latest technology, and knowledge of best practices and cutting-edge processes, publishers should seek partners that have in-house technological development teams, who may also specialize in workflow solutions, understand their clients’ objectives, and help develop better processes.

“Publishers are looking for their vendor partners to move from ‘What’ organizations, meaning ‘what do you want us to do’, to ‘How’ and ‘Why’ organizations. These are vendor organizations asking the questions of publishers about ‘how are you doing this’ and ‘why are you doing this’,” shares Wheeler. “The gap is widening between vendor partners. Publishers are looking far beyond competitive pricing, which is a basic expectation today. They are expecting vendors to understand their business and processes and look for continuous improvement to processes and content.”

“Even though the times are changing, the publisher’s goal is to acquire and validate content and to work with the consumer to understand the best way to offer content . Smart publishers partner with vendors that can support these key roles and help them in the manufacture and distribution of the final product,” adds Datta. “To be sure, the publisher needs to have a handle on emerging trends and technologies, but should use that as a gauge to choose the right vendor partners rather than to attempt to perform functions that are better done by others.”

Along those lines, publishers also should seek partners who have “expertise and ability to offer a complete gamut of services,” and who have significant “capabilities and infrastructure available,” says Datta.

The primary means by which publishers can ensure a successful relationship with vendor partners—in addition to doing the preliminary research into a potential vendor’s credentials and relevant expertise—is to be explicit about their goals and expectations from the vendor, to ensure that the vendor truly will function as a partner in achieving the desired goals. Reliable vendors have ample incentive to perform as expected or better than expected in such relationships in order to maintain a long-term relationship and utilize the vendors’ assets, including technological prowess and accessibility, expertise, and manpower.

Conclusion: The Only Constant Is Change

In today’s publishing marketplace, the only thing publishers can rely on is constant change. Strategic decisions must be made to enable publishing companies to maximize their strengths and core competencies.

The challenge of keeping up with new technology and content output options is fluid and fast. By the time a publishing company hires a knowledgeable team or trains staff, and invests in and implements new technologies for new internal departments responsible for pursuing emerging opportunities, current technologies may already be obsolete.

In order to avoid the publishing equivalent of swimming upstream, the publishers’ best option is to find a strategic partner—a partner who not only provides leading-edge knowledge of developing technologies, but also a roadmap for the future.

About SPi Global

SPi Global partners with companies to maximize the value of their content online and offline. With escalating costs of production and printing, changing customer preferences, and the need to adapt, SPi Global enables organizations to exploit and invest in new media technology. With a complete suite of digital, publishing, content enrichment, marketing and customer support services, we help companies gain a competitive advantage through our unique and innovative solutions.

For over 30 years, SPi Global has been helping leading publishers, not-for-profit organizations, information providers, and Fortune 1000 companies increase their revenues, reduce costs, improve time-to-market, and automate operations. With over 500 clients and 7,000 content specialists, no job is too large for us.

For more information on how SPi Global can help you maximize your content online and offline, please contact:

Jamie Israel Director of Marketing, Content Solutions M 732 662 8345 [email protected]

www.spi-global.com

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Alleviating Publishing Pain Points At Their Source

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