Anthony Thirlby is Global Smart Print Shop Consultant for Heidelberg, but he is also a very active influencer on Social Media. In this “Over the Skype” session, we get a chance to ask some of the questions that we believe are important in the understanding of the Heidelberg subscription model. Anthony Thirlby readily and openly answers a lot of questions, and also explain some of the market trends, that we find quite important. An exciting session that deserves your full attention the next forty minutes.
As with all our ‘Over the Skype’ interviews, quality is limited to bandwidth, web-cams, and ability to literally LIVE mix the conversations. However, it works, and with Over the Skype, we will bring you more than 20 exciting people, and angles on the industry as it is right now.
This is Morten from Inkish.TV and I know I promised that was no more over Skype, but when you have something that has worked out very well, there’s no reason to stop doing it, maybe not as intensively as we have done over the past two/three weeks. And one of my latest connections on LinkedIn is a very interesting gentleman Anthony Thirlby, who is both a consultant but also very much involved in Heidelberg and Heidelberg has on Inkish News been quite dominant in our reach the past couple of weeks to be honest, and I’m so happy that Anthony has accepted my invitation to have this session with me over Skype, so Anthony a very warm welcome here from Denmark to the U.K.
Thank you very much Morten, pleasure to be here.
So before we talk some of the things that we have agreed to talk about, can you just introduce yourself and a little bit about your background?
Yeah sure, so Anthony Thirlby, 44 years old believe it all not, obviously printing industry’s not been very kind to me over the years. Ex professional footballer, so like most people fell into printing at the age of 22 when it was decided that I had to work for a living when I was not deemed good enough anymore for professional sport. So my first venture into printing was as a part time delivery driver for a digital printing business in the center of England. And like most people who get into this industry, it got into my veins very quickly. Very fortunate at that age that the owner took a bit of a shine and liking to me, so within six weeks I was in the office. Within six months, I was a company director, and within 12 months I was trying to buy the business. So I’ve been lucky and fortunate to hold positions of president managing director since the sage of 24, that has taken me into the book market, into the transactional market, into commercial print, into packaging, into printer sale.
And then I suppose the last 10/12 years has been very much running a company up until 2015 January, called ESP Color in Swindon, and where we’ve started to produce some pretty groundbreaking stuff. Not that we realized it of course at that time because we were just looking after our own business and our customers’ requirements. And so from probably 2011/2012 I became quite close to Heidelberg as an organization, we were a worldwide demonstration site so we hosted over 100 parties to England and I was lucky enough to meet some fantastic customers and fantastic people, and when I decided the time was right to move on to a new venture in early 2015 I then started to work with Heidelberg very closely on how to bring the whole integration push to stop operating system to the market, but also for the enteral colleagues to understand what it is a customer requires, becoming more of a digitalized business.
So I’d say 60% of my job and role initially was helping Heidelberg bring that message to the market. And then trying to guide customers on their relevant journeys, because as we all know in the industry it’s very easy to buy technology. To deploy it and use to is something different, so over recent times that’s where my time has really been spent, in terms of actually trying to help Heidelberg customers and colleagues around the world. And then I’m lucky enough still to sit as a non executive director on a couple of businesses in the U.K. to make sure that my skillset is being developed, because for me it’s all about learning and that’s why I do the job I do.
What I like about your story and what I would like to dig into a little bit more before we move onto other things is that when you have been working so closely with Heidelberg for so many years as you just explained and you have the starting point was having your own printing company and having the knowledge both of what demands the customer has and what equipment is able to deliver, how important has that knowledge been in your opinion to lead the way to your Heidelberg position?
Well I always look at it in terms of the customer’s perspective, so if you look at equipment which is obviously a huge sense [inaudible 00:04:14] any does in terms of graphic art provider or print service providers, so Heidelberg wants to sell equipment of course in all the itinerary services. There’s no point creating this hugely productive output devices unless you understand what the customer’s onboarding and transition is from customer engagement to order process to a sell them a product or machine.
So, we rightly or wrongly became the most productive printer in the world, whatever that meant, but in terms of output across three different product classes, business and the team I work with we did have the best in class numbers. But the machinery was one part of a huge equation which went inside of that. So once we understood how to output to those levels, of course repeatability is the biggest success to any company. So, for us it was about product classification and most printers still believe they produce niche bespoke jobs after job after job. Of course, there is an element of that but once you understand about product rationalization and product classification, controlling the upstream activity of how we fed press and post press was the most important criteria for us.
Of course you’ve got to generate market demand, so you have to understand yourself process inside of that. So from my experience, because I’ve been lucky enough to work in finance, production, commercial and then lucky enough to run companies-
And even as a delivery guy, right?
Yeah, absolutely. Honestly for me it doesn’t matter who you are in terms of the collective understanding around you, and I was lucky to work with some very smart people over the years and continue to do so, but for me it was about not being a jack of all trades but understanding actually how to be the master of something. And I think price point has been a huge pressure point for printers to become more commoditized and industrialized over the years, but market price is market price. So, I think as long as you understand how to be proactive and not reactive I think the industry is always a fantastic place to be.
The reason I was asking this is because I was a little bit curious because I used to work, for example Cyrus almost 20 years ago. And when I started working in the production sales team, I was the only one that came with a background from the printing industry. And I was just wondering I guess that even though Heidelberg is print, I could imagine that on all levels you find people that don’t have the hands-on experience that you have and I was just wondering how important you find that in your success? Because to push technologies like push to stop, print to stop and you know the smart print things, all the things that you are posting really good articles and posts on, that in my opinion should kind of require some insights from how things are [inaudible 00:06:56]-
Yeah of course, absolutely and I think that’s where the colleagues have been fantastic over the years, I think if I’m honest at the early stages of the working relationship was with much with Stefan [inaudible 00:07:07] and how one at the time we were the relevant board directors. So my relationship had always been strong into the engineering side and RMD because we worked with the factory on several developments for the machines. Subsequently, over the years you get to meet lots of fantastic people from different countries, and Heidelberg people are fantastic because fundamentally they are passionate about what they do and what they provide for their customers, but I always try to be challenging to the right extreme, and the market in the last 15 years in terms of capital equipment and providers, whether it’s digital, inkjet or offset, forget all of that. I think the gap 10-15 years ago was significant between providers, I think now if you look at most relevant output devices there are of a standard which allows you to have a very successful business model.
So, bigger doesn’t mean better. Some of the most successful companies that I know in the world are actually small niche providers who have a fantastic return for themselves and their business. So the understanding for me and working with the colleagues is about that emotional journey. Sitting with your family at night when you’re about to spend €3million, when you’re looking at your children who go to school in private school, there’s so many emotional decisions involved in that. And yes of course output is hugely important to get your lowest operating costs per sheet. But not every provider of print needs to go on that full financial journey.
Of course, most do. You have to have a financial justification. But I think for me you always have 10-12 questions which unlocks the emotional context of what a customer is feeling. And you might have a very good a sales guy who doesn’t have production knowledge in terms of the leader of the business. And that’s why it’s always hugely important when you go through a buying process or a journey with a customer, that you have all the facets in business in that room to start off. Because, yes of course the production guy wants the easiest route to market. And generally, most statistically proven, the uptime of the Heidelberg machine its greater than the other machines. But of course, I think it’s into a financial return from the owner of the business. So it’s really important from my side to gain perspective and also context about what the customer is trying to do. Because the biggest and the best doesn’t necessarily mean it’s the right fit for that company.
Yeah, I understand that and I can also see that our conversation’s already taking the lead into the efficiency of what you produce and the output and the marketing and things like that, which is what I wanted to talk to you about.
I was just wondering, because I think that one of the challenges we have in the printing industry more like general thing, not specifically Heidelberg, is a tremendous O capacity in the market. So when we talk about for example the OEE on equipment and how efficiently to drive that machinery to deliver the sheets and the speed and the quality and the right consumers and all the things that is a part, for example of the hybrid subscription model. I’m just wondering, how important is the OEE when it comes to, you have been an owner or OE. How important is it when you look in that relation, so for example, the sensation of the equipment and to the O capacity in the market where some printing companies make have an incentive to sell a lower than the actual price just to gain cash for it?
Yeah, of course I think it’s a very difficult conversation. I think if you look at the last 10 years and in general European and worldwide market what’s happened with price points and then you have raw material increases as we all know. I think OEE is a hugely important barometer of one element, as you said, complete machine neutralization. What you have to factor into that is what sales per hour or added value per hour you’re generating from that neutralization. Now, the reality is as we briefly spoke before we came onto the conversation is that you look at actually niche providers of print, of which generally let’s say €2.5/3million and below. The reality is with technology now is that this aesthetic beautiful printing, we look at multicolor, how that’s actually opened up another gamut, technology will always drive a price point of some description. Now, that’s probably one of the worst aspects of our industry is that we give the technology straight back into the marketplace.
Yeah, always. But the reality is over the years it’s one barometer. You have two others, operating sheets per hour which is total manned hours by impressions, it’s more important because that shows how you deploy the manned hours. And of course, transitional time or [inaudible 00:11:30] the old school way of calling it, that sellable product, the first sellable, is a true battleground for printers. As queues become lower and run lengths become shorter, the hold activity before press defines OEE. Not every printer can line up section after section after section to utilize push to stop. However, I would say the vast majority of print providers would love to have that capability and output.
So as I say, you have different levels of step requirement within that neutralization conversation. You have the other technology benefit of what’s happened with inline press controllers and actually the homemade ready process. The whole change of equipment, the ROI can be less than 12 months. But again, you’re talking about huge capital outlays upfront.
One of the provisions of subscription as we talked about was giving the customer a choice of output. Of course, Heidelberg wanted to create a framework and an ecosystem around their printer and obviously go on a journey together. Because one of the things that scares, again, providers of print right now in terms of machinery purchasing, not a lot of people can have a huge balance sheet mishap, let’s call it that. So in terms of our asset and residual values of what machinery-
Not even Heidelberg, right?
Well it’s a battleground for everybody Morten, you know. This is the thing is everybody wants to be at the forefront of technology, but obviously the financial exposure to that is huge on both sides of the fence. And I think that’s the whole thing about OEE, is that you have to create a definition of what is deemed as a benchmark. Whether it’s right, wrong or indifferent, I think when Heidelberg bought us though, of course it showed 20 flyers a day, seven days a week, 365 days a year for calculation. Probably less that 2% of the worldwide printing industry runs on that capacity model.
But again, it’s a definition. And whether we like it or not, printers are competitive people. And I think sometimes the competition can be detrimental to an organization because you have three types of businesses. You have what I call niche family providers who want to have a nice lifestyle, nice income. Own a building, own the machinery, can see their way through most battlegrounds, even the current pandemic shows what robust business models they are at that size. The five and 15 are in a transition, do they become surely an offset provider, a hybrid, a transactional, a DM or marketing agency. And then we generally get into 15 million plus you have to have an industrialization of a certain product range. So Heidelberg is fantastic in that top range because it does have unquestionable output capability, and also residual values are obviously there after five to seven years, but this battleground of the five to 15 and €1-5million organizations is really where there’s a lot of options for people.
So the whole argumentation about push to stop, smart print shop, OEE is there’s a differential of actually how Heidelberg can actually take their relevant customers on the right operating costs journey. And as I say, you cannot be all things to all people. I think every organization understands that, whether it’s a print or a graphic equipment provider. So I think over the years it’s a part of the infrastructure of a differential to the market of a statement of intent of how the machine can produce. But of course machine capability is only one part of the equation.
Yeah, that is the reason as we also spoke about before we turned on the recording was also the fact that if you have all the best intentions and you have all the best products in the market, but it’s a difficult conversation to have. Because I think regardless of the sizes of printing companies, I think that a lot of printing companies in the world have been driven by the output. So they look at the sheets and compare it to what they have and the speed of them, and full cost models is often, I was once in a prevention with, I think it was I was [inaudible 00:15:07] and it was very funny because it was like a press team and we were introduced to the assembly halls and it was my first time to see an assembly hall, I was just like, “Wow.” That was just amazing, right? And then you get into the demo room and you see the flying plate changes and you see how fast a machine can turn pages. And I was just like, “Wow.” And then I got into a presentation where there was a banker saying how effective you can turn two machines into one machine. You know the way it works, right? And I think if you look at that, that is an old school way of selling, I don’t think they use things like that, I don’t think you do that now.
But I’m just trying to say that the printers, because Heidelberg is on the top of having a good idea and presentation of new business models to the market. That is not the same that everybody understands from the beginning. So there is also a learning process and communications and that is extremely important in my career.
Well I think it’s an educational process, whether anybody likes the statement or not, it’s still a biggest provider of printing equipment into the market in its relevant space. I think the organization will be the first to admit the whole push to stop and integration and digitalization from the customer’s perspective was really a huge success in [inaudible 00:16:29]. So of course you went from normally a product would define how you brought things to market to, the whole organization was basically captured on the back foot initially about what push to stop meant. Because the biggest thing we’re not dealing with in terms of whether it’s Heidelberg or [inaudible 00:16:44] Roland or Indigo, the demograph of people who run machinery is not getting any younger. So the whole education process about [inaudible 00:16:55] and interfaces and actually how you interact and AI and all the things that people use in terms of the relevant terminology or buzzwords. We have a significant problem coming our way as an industry in the next five years if we not stat to combat about attracting young blood into this organizational mindset.
Because we can have the best equipment in the world with the best technology and the quickest make rates and the highest output, but if you’re not actually making an attractive market to come into then we have a serious problem. So I think in terms of the shaping of using statistics and data to drive decisions, I think if you look at the analytical profiling of different demographs coming through in America and Asia you see these young mid 20 year olds coming out of education in The States who have a completely different economic overview of print. To them the brand is one thing but all they care about is economic recovery and software. So that’s a completely different sales approach there compared to somebody who’s had ink in their veins for 35 years.
Of course, the majority of the industry still needs to be brought onto board for technology, because as we were discussing briefly before, you have this subjectivity that we’re all the best quality provider of print in the world without any qualification of them. And I think the reality is from a Heidelberg perspective is some fantastic products, some fantastic ideas, some of which have been hugely successful. The next point for the whole organization to keep this way moving forward in terms of leading the market and giving the customers what they requires, is to softly introduce that more to sort of, I don’t like the word consultative approach but in terms of actually understanding, what is the customer trying to do. And it’s not about the first machine you sell that you’re trying to sell now, it’s about what’s happening over the next five to seven years.
As I say, from an overhead structure, breakeven points, what’s your true ROI. If you’re going to consolidate machinery from two to one that’s fine, don’t sell too many units in the first stage and still create the same capacity. Because, I’m a firm believer that capacity should work for you not against you. And one of the biggest things I’ve found over the years is when we went through a three year recycle of machines. All I cared about was operating cost and fixed cost. Once I understood what the breakeven point was, it was my job to create a business model to go to market with. I think it’s very much the same, obviously on a much large scale for Heidelberg is, all the relevant product portfolios that’s in there is now becoming more analytical and software driven. Guys who have been selling machines 25/30 years need time to understand what that means.
Because even in my 20 years of being in the industry, you have to be a hugely skilled operator to make a printing press print. I’m not being disrespectful to that skill but the skills required now are still an element of course of that, but it’s more about actually how do you bring the ingredients to the table to make the cake every time from the machine. So, that’s a-
But that is exactly what I was asking about, because let’s say that regardless of how you finance the machine and regardless of how efficient you operate it, if you can’t have, and I spoke to Dr. [inaudible 00:19:54] also in a brief conversation some weeks ago, and as we spoke about it even though the neutralization of modern offset printing equipment is maybe in the 20s or 30%, even on the maximum, they still are able to pay the bills. And that is why I’m trying to understand the relationship between OEE and neutralization and also the O capacity in the market. Because if you look at the market right now, it’s probably hit quite hard by the pandemic of all the circumstances. And when you have a supply and demand that is under pressure, that often leads to lower prices, right?
Because you want to utilize and, you know the deal. I’m just trying to get, because if you look at for example I wrote an article about the hyper subscription issue, you maybe know. And one of the things that I was a little bit, to be honest worried about from market perspective, was the fact that when David [inaudible 00:21:03] was talking in the presentation about variable cost, as far as I could see from the numbers we have seen, it’s basically that you have a base cost that covered a certain element of your machine. Which essentially means that you have an operational cost in your printing company, and you just mentioned that operational cost is important. And you will have a baseline that you have to pay regardless of how much you produce, right? I mean isn’t that [crosstalk 00:21:28]-
And just to put some context around that, the base number is agreed between the customer and the organization is one that shows their breakeven point through the year. So it’s not a fictitious number, there’s a huge amount of analytics that goes in behind that, both from a financial and modeling and production perspective. The last thing you want to do is put a huge cash pressure onto a business, as you say, that has these peaks and troughs through the trading year away from the pandemic situation.
So does that mean, just the clarify, that for example let’s say that you have an average of let’s say 2million sheets per month. And one month you have 1million and the next you have 3million, then you have a variable within that time frame? Or how does it work?
No, you have a base. So if that was the case and we’re using that as an example, then you would say maybe it would go to 1.8 and 2million is the base level.
Of course, the reality is you want the customer to be successful, to grow with the opportunity that they create.
Oh yeah of course, I never questioned that part of it. It’s more like, the reason why I have been questioning is more the fact that the way it has been communicated has been way more than it’s a variable cost. And I don’t know if you disagree, but in my vocabulary and I’m sorry I’m not English so I might be wrong on that one, but in my vocabulary variable cost means that it’s variable within a quite big span than having a baseline.
No, I think if you look at it in terms of, the easiest way to explain it is there’s a fix base cost from an overhead structural perspective. The variable cost and all of that becomes on terms of growing pages, or printing compression through the machine. So the organizational cost base around that is, as I say, one of the things that was very interesting for the organization to go through and I think it helped dramatically understand the buyer decision process is the huge about of variable financial models are available to the same customer demograph. Because you have lifestyle businesses, you have corporate infrastructures, there’s a huge variable.
So, one of the frustrating things for the company initially when it was brought to market was that it would believe there was financial models that would be quite easy to replicate into the client base. But of course you then go from region to region where you have different financial restrictions and opportunities, so I think that ironically has helped the organization 10 fold in understanding the buying process on a conventional of subscription method. But subscription isn’t what you deem as a true variable model were there is a zero to 10 ratio. There’s a five, and what you’re hoping is that four might only have once or twice a year, but the seven or eights are going to happen seven or eight months of the year.
So the real value in the subscription model is basically that Heidelberg with the consultancy, with the software, optimizing the consumables to the highest performance output. Is basically that if you can grow together and the printer can save money because it becomes more and more efficient so he can have a high profit. And the variable part is basically that you offer that as part of your service agreement with them, so eventually if there’s a growth from the baseline, that’s where it’s really become there. Is that how it works?
In all sense and purposes, yes.
So I think the thing is about that, it’s great. The other thing around that as well Morten, is when you look at the biggest headache in terms of worldwide about procurement of capital equipment, unfortunately we’ve turned into an industry of have and have nots. The guys that have invested have kept their businesses moving forward, the guys that have not have no real idea of how they get back onto that technology drive.
So subscription was also a possibility for people to get back into the technology curve, but then keep themselves relevant between five and seven years and keeping, you know it’s a hugely changing industry. That’s what I find amazing about it, is that just when you believe you’ve got the newest thing in the market, the next thing comes along. And of course, we bring that straight into the client base and I think the thing for Heidelberg with subscription is, it’s all about giving customer choice. Conventional purchasing equipment, as you know from as you were saying from the Xerox past as well, is that one size does not fit all. And I think we could all be very chastised in the business models of the years, that pre named organization worked for had many different ways of getting you to try the new software that you never knew about for three years. And I think the other side of that is, this is about making sure you give customers choice but also as I said earlier about the operators, in terms of we need the next profile of demograph the come through. People don’t want to be held by a conventional purchase on a big piece of equipment anymore. So I think like through anything, you learn from what customers tell you but also you understand that there’s a market requirement there that people want to have choice about how they procure and run their companies.
But that’s of course true. I was just wondering, one thing is that if you look at at, I always see like six different numbers. I think they were calculated pretty much the same, five year contract and approximately calculated scrap value of 24/25% something like that. And the reason I’m asking you this is because, if you look at the subscription model compared to a regular purchase when you might normally have a depreciation time of maybe seven to 10 years. The total cost of ownership, will probably be a little bit higher on the subscription model.
Yeah, I think if you’re looking at going back to your 25% as a market output average of OEE, I think you would normally be looking at a 10 year depreciation or maybe even 12 years off the books for people, 10 years for 20% of [inaudible 00:27:03] residual. Now, unfortunately, I came from a U.K. market which decided to get give all of its capacity straight back to the customer in 2008/2009. So I know from personal experience that we had to completely realign depreciation back to five years to zero. Now I think moving this forward, that question of TCO, if you do the TCO calculation for the whole marketplace, of course a huge percentage will never make sense in doing a subscription as an offering. If you’ve got a consolidation of maybe three machines into one or two into one, then of course the consolidation period changes about how you treat your residual.
Of course, yeah of course.
And now what you want to do within that process of evaluation is get the customers that you want to grow with. So if we’re looking at a customer that does 20million compressions a year, just as a crude figure, now that’s a seven year plus 25% bloom at the end. If we’re thinking of the 35million, of course you’d want to the residual to be at five years, 24/25% to the marketplace.
I understand that.
I don’t think you can do a convention model against TCO because subscription is not for everybody, it’s for a certain type of organization that wants you to go on a certain path in terms of how they want to invest. But also partner with somebody that can give them the output and the requirements they need.
I totally agree, and that is also when I say that I do like the subscription model and do like the way that you are presenting is, especially the way that you talk it because it becomes a little bit more clear to me. Is the fact that when you are in a decreasing market, that basically means that either to grow with market or you need to consolidate from the market to the customers who subscribe to this market because that is where the advantages come from.
And one of the things, just before turned the camera a common friend Jacob [inaudible 00:28:48] from Denmark, working with the smart EI. As we spoke about that is, sometimes it’s like, how can we an industry, and not talking about Heidelberg specifically here, but how can we as an industry teach or inspire printing companies to sell higher value products, how to work on increased margins, how to have added value printing and how to grow more customers, how even to complete. I guess that, if you wouldn’t mind to take customers from that up to date printer in [inaudible 00:29:20] and come away here, I take that you would like to take someone-
I think there’s a few things, I think competition is fantastic because it makes sure that you keep driving forward. I think we can lose sight sometimes, especially having been lucky enough to grow companies in different spaces before. Until you’ve defined what it is you are, you general will not succeed. The biggest opportunity I see for most printing companies is the silly opportunity to define what they want to be. I think it is virtually impossible to be all things to all people. It really is an impossible thing.
So the mantra of being, I can’t remember the name right now, but it was like full service printing company-
Yeah, but in the mid 2010s we all turned into market and services providers. And then we turned into online agencies. First and foremost, if you’re going to buy a piece of equipment from a company like Heidelberg, then printing is generally a huge cost structure inside of your business. I think understanding client requirements, client capability, I think fortunately or unfortunately, depending on which argumentation you want to take, quality is generally a define given now in the marketplace in terms of whether it’s on a [inaudible 00:30:31]. Yes you of course can qualify that quality in terms of actually reporting structures and factual data company machines.
But the reality is, customers need to be guiding themselves about how to deploy that technology correctly. So you’re absolutely right, consolidation of cost based control is hugely important for any sized business. And you do still have huge opportunity in the relevant marketplace, and I think even if you look at what’s happening in the online print market through the pandemic. There’s obviously been a big shift in requirement there. You make no mistake that the buying behavior of that hugely successful space of the last 10 years will chance dramatically. And it’s the same when you get a huge consolidation of gang sheets. I was always fascinated by how the online guys scaled so quickly. Fantastic walking around Jason, were very smart people.
But you then get to a buying point of above €1000 and people want to deal with people. And then you have high paginations that don’t become so cost effective when you gang. So I think small to medium sized providers will always have a huge place in our industry because of that service levels and the overnight turnarounds that they can give, and that personal feel. So for us, it’s about understanding what we need to try and do. When we get into the big industrial guys, I do believe that it’s an unchallenged place for Heidelberg, when you want to do the big numbers.
The battlegrounds, as I said, is the 1million to 15million types of organizations who have huge choice and we have to make sure that we’re fit for purpose, relevant and the reason why you pay a premium is because you get a premium service and support. Because as you say Morten, sorry, is that most people will never need to produce about a 25/30% OEE, but they will want to.
And my point was that if that is the exit and that is the target to achieve and that is the printing companies you want to achieve, I think the communication should be directed to those kinds of companies. Because when you have, and I don’t mind it I’m just saying, when you have six KPIs presented and you see a waste and neutralization and OEE and things like that, maybe some of these companies, maybe they don’t think that you’re talking to them. I spoke to a guy from Central America a couple of weeks ago, and he said that some of the printers in Latin America was a little bit upset with, I don’t think it was only with Heidelberg I think it was in general with euro at the moment, [inaudible 00:32:49] that was the backbone of a lot of hardware vendors in the past.
They maybe felt a little bit abandoned and pushed to the digital, and I was just thinking when you say about that, the hotspot that you’re looking for, I remember that for example [inaudible 00:33:03] Orlanda was talking about hotspot between toner based equipment versus offset, where there was hotspot where Orlanda and enography should be the thing. But isn’t it a fact that when you’re targeting a €1million to €5million turnover company, isn’t that also the hotspot that for example interjet are looking for now? [crosstalk 00:33:25].
Yeah, it is and it isn’t. I think it’s about mindset, and conviction of belief. I think when you’re generally in the smaller organizations, obviously the transaction time in your company is normally around 60/65% so the physical, doing the rotation and bringing it through. One of the things always makes Heidelberg is when I show this statistic, because generally it’s 55% before we actually print a sheet on press, of the total life cycle in an organization. And I think if you look at digitalization or digital print or drive turner or Landall, whatever phrase you want to use. If you have a fully deployed integrated workflow, the cost effectiveness of an offset machine will still not be beaten by the vast majority of devices below 100 sheets.
I totally agree with you, because if you also look at the online printers today, even for the very small print works, gang printers, still way more efficient way of producing things.
Yeah. And I think it takes a long time before it will actually convert to that, but-
I think, to go back to your point though, this is about small building blocks of Heidelberg being the partner of choice for customers moving forward of all sizes. I think sometimes yes, we had a business doing 90million impressions on a printing press, it is fantastic. I’d rather it had been 9million and charged 10 times the amount of the amount of print, that was the reality of a business model in that space.
On the flip side, our customers need to know what’s the right application process. There’s a lot of noise in the market, whether it’s inkjet or dry toner. I started in digital print with six [inaudible 00:34:55], so I know exactly where that base works. But the reality is, I think it’s about having the most relevant output device for what your client requirements are, but understanding the true breakeven point of technology. I’ve listened to it over the years from all the providers, and I never believe a word that comes out of an RND person’s mouth about breakeven. All right? And I don’t mean that disrespectfully-
I’m just smiling because it’s always nice to talk to people like you, lot of direct opinions, right?
Because they create fantastic outputs, but the business model reflects about what the breakeven is. And of course you get into product rationalization, you’re never going to do a perfect bound book of 50 copies on an offset device. You’re always going to do that digitally because you have pre allocated book sets. But the argumentation of inkjet and dry toner and offset. I’ve been hearing that digital was the future of 20 years, I love digital prints. I’ve had all the providers over the years. Then inkjet was going to be. Inkjet is fantastic for transactional, direct mail and books. Fantastic. But when you get into general commercial and packaging work, there is still a huge gap between what cost effectiveness offset produces and the other technologies. Fact.
But, Anthony, I can’t disagree with you on that of course. But that just reverts to some things I’ve just spoke about before as well, is that let’s say that regardless of technology and regardless of how you sell it, basically. It comes back to the fact that we as an industry need to figure out how to get more business, more high value business. Do you think that, not trying to have a leading question but it is a leading question, is Heidelberg, also because if you go to [inaudible 00:36:41] for example and HP for example, I think that the majority of their booth is basically application showing, folding card turns and stunning photo books, stunning whatever kind of print sample. Because it drives ideas for printers to go home and produce these kinds of things. And I think that, with all due respect for Heidelberg and all hardware manufactures for that matter, it’s been way more about how fast they are and way more about how big the machines are and how productive they are.
Listen Morten, I totally agree. I think when you get into idea of generation, the Indigo brand has been fantastic. I was lucky enough to work for one of the biggest providers of that in the U.K. one of the larges suites of Indigo’s and I was lucky to go to Israel and do Dscoop and all those things. As a marketing vehicle about producing print it’s fantastic.
If you look at the POD market in terms of what it did in children’s books as an example, fantastic. The reality is, their argumentation of all the new product releases that they’re done now is all about efficiency. So I think there’s no perfect sword in terms of actually what you bring to market, I totally agree. I think generating references around printed matter is a fantastic thing to do when you’re a huge digital provider, because you can do just the one copy. I saw the interview you done and obviously these last few weeks. That space is fantastic. The reality is, for Heidelberg to stop into generating short run transactional or volume more catered products, is a slightly different sales model to come to market with.
Yeah, in a general offset market I don’t see too many new products coming through that don’t need to be digitized.
I think you misunderstand me or I haven’t phrased myself correctly, this is probably the last one because we’ve been talking for a long time as well. But I was more thinking that, how do you think we as an industry could help printers to understand how to grow the business, how to increase revenue, how to be more profitable? Also, so they will have a very certain return on investment, even for subscription models-
Absolutely, as ironic as it sounds and I don’t mean this to sound derogatory to anybody. I think in ensuring that everybody understands the true breakeven operating costs of their business from a technology investment perspectives from three to five years is hugely important. I think the onboarding process of how you interact with your client base and how you generate sales opportunities and what products you want to see. Again, definition. That’s the thing that we lack sometimes. Clarity, definition and execution is what most organizations still require in this day.
What I love about printers is that they’re not shy on telling you that, they don’t claim to know everything, they do want assistance. But we’re moving into this unknown world for a lot of people in terms of actually trusting software to generate revenue for your organization. When you buy a big piece of lump of metal, you can gear it, you can feel it, you can feel it’s tangible. When you have people on [inaudible 00:39:31] program and it’s a lot less tangible and it’s very difficult to quality.
So I think for us, you talked about BI and analytics, is making it easier to understand about what an organization needs to do, because if you’re spending less time on running the company inside, you can actually look at what the opportunities are in moving forward. And despite how horrific this pandemic has been, I’ve always wanted to believe there’s a huge opportunity out of diversity.
And I think coming out of the back of this, we’ll see some new print service providers finding a really fantastic place in the market for themselves. But back to working with Heidelberg in terms of how they provide a confidence platform, transparency and assistance is everything. And I think if we can help customers focus on where the growth opportunities are, or the cost reductions are for them, then of course this industry will always keep moving forward. We’re still the fifth largest industry in the world, so it’s not all bad news. But you’re right, customers need to understand that it’s still a sales process into a digitized world and the conventional way of buying print is changing. The online guys have shown the way on that, but I think we still have a significant journey to learn as an industry about how we actually engage in the next type of print buyers.
Anthony Thirlby, it’s been a pleasure talking to you here for the past 40 minutes. I appreciate your time, so thank you very much for spending time here with me and hopefully a lot of people that would like to see what we are talking about. So thank you very much.
My absolute pleasure, Morten. Thank you very much.