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The Global Print Production Workflow Market: Enabling Fundamental Business Change in Graphic Arts

Posted on: Thursday, 1 September 2005, 03:00 CDT

Summary of Research from InfoTrends/CAP Ventures

As the print industry matures and print volumes are threatened by alternative media, print sendee providers must reexamine and reengineer their hasie business models and operations protocols to adapt to the changing business climate. For the savvy print service provider, revenue growth and increased profit will be dependent upon two critical factors: cost reduction via the introduction of new workflow efficiencies, and an expanded portfolio of higher-margin value-added services. Although better/faster/cheaper presses, digital printers, and pre-and postprinting devices will certainly play a significant role in advancing both of these objectives, it will be the software driving these devices, as well as other software solutions up and down the value chain, that will provide differentiation to tin- print service provider and the solutions vendor.

In the second half of 2004, InfoTrends/CAP Ventures undertook a study to size the global market for software and related services in 2003 by a variety of product categories and forecast the growth of this market through 2009. In addition to interviews with a large number of software and solutions vendors, the study included interviews with almost six hundred creative professionals, publishers, and print service providers in both the United States and Western Europe, and presented a detailed analysis of end users' attitudes, plans, and trends.

InfoTrends/CAP Ventures estimates that worldwide production worknow software solutions tracked in this study represented a $5.9 billion market in 2003. Print controllers and KIPs for digital devices accounted for the largest portion of this market at just slightly over $2 billion, accounting for 35.3% of the total (see Table 1). This is a large segment because there is a print controller or RIP in front of virtually every digital device, either configured as an embedded or standalone server.

Table 1

2003 Global Print Production Software Market

Production-class creative applications also composed a si/able segment. Although creative applications are generally lower cost, shrink-wrapped products, a market share of 25.2% is not surprising since this category can be found in almost every type of production workflow across multiple end-user segments. They would also be purchased by multiple stakeholders in the value chain (i.e., the document creator as well as the document manufacturer).

When we view this global market by geography, we see that almost half of the market is in North America, which is a $2.7 billion market. Western Europe accounts for almost one-third of the total, contributing over $2 billion. Clearly, these are the most mature markets for production software. Japan is a distant third, accounting for 10% of the market at just under $600 million.

Overall, InfoTrends/CAPV expects the global production workflow software market to demonstrate a compound annual growth rate (CAGR) of 8.3%, moving from $5.9 billion in 2003 to just over $8.8 billion in 2008.

But looking at the market as a whole does not tell the entire story, since some categories are more mature than others. It is not surprising that within this $6 billion production workflow software market, those categories that will grow the fastest are those that enable super efficiency and valueadded services. One example is e- business infrastructure, which we expect to grow at a compound annual growth rate or CAGR of 20% from 2003 to 2008. Other examples are variable-data design and production applications, projected to grow at a CAGR of 16% and digital-workflow automation, at a CAGR of 15%.

Table 2

Applications that Enable Super-Efficiency and New Services will Experience Greatest Growth

Table 3

2003 Global Print Production Software Market by Geography

A new product category, hybrid software, refers to software that drives both offset and digital print production from the same application. This category will grow at a very high rate, because it is starting from a very small base.

Our end-user survey showed a good level of awareness among the respondents regarding the importance of having a hybrid solution. Over 36% of respondents in the U.S. and Western Europe indicated purchase plans in the next 12-18 months or reported that they have already begun investigating such a solution. Additionally, conformance to standards such as PDF and JDF will help pave the way for the adoption of hybrid solutions.

Conclusion: The Super-Efficient Organization

Research from InfoTrends/CAP Ventures and industry trade organizations indicates a growing divide between those service providers who "get it" and are growing their businesses and those who see their businesses in decline. Those who "get it" understand that continued growth depends on a three-pronged approach:

* Expanding their business with new value-added services

* Increasing value- to their customers by understanding their customers' business issues and solving them

* Focusing on process automation and super efficiency to drive down production and business costs

Service providers must develop a well-thought-out strategy for achieving these goals and develop a plan for implementing that strategy. Implementation will include technology investments in print production workflow software, plus hardware and services.

While specific numbers on the size and projected growth of various software markets certainly provide important information for software and solutions vendors, it is important to recognize that they only define one component of the total opportunity. Vendors must consider software as part of a total product offering that may also include the hardware and services their customers require to succeed in the transformed print industry.

The preceding article was excerpted from InfoTrends/CAP Ventures multi-client study "The Global Print Production Workflow Market: Enabling Fundamental Business Change in Graphic Arts." For more information on the report, contact Alison Hipp at 781-616-2100.

Copyright Graphic Arts Technical Foundation Aug 2005

Source: GATFWORLD

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