Digital transformation is a constant pursuit by many companies, as they seek to leverage technology to digitize communications and interactions. Most want to move more clients to purely digital letters and statements, but the need for print and mail still exists. So, what’s the real impact of digital transformation on in-plant operations? Will you really save the money you think you will?
On this episode of Ask the Experts, Chris Kropac, President of PCI Group, shared why digital transformation initiatives lead customers to take a hard look at their in-plant print operations.
“Going digital for companies involves communicating with your customers the way they want. You don’t want to abandon hard copy mail for digital altogether. You need a combination of both,” Chris said.
While many consumers want digital-only correspondence, many still appreciate the hard copy. The best way for companies to understand the volume of each is by asking customers about their preferences. “Many still want a hard copy but will pay electronically, or others want a digital statement but choose to pay via the mail,” Chris added.
The main difference between the two is the interaction. Consumers receive hundreds of emails every day that they ignore or delete. With mail, the receiver has to touch it and interact with it. They may not open or respond to it, but it’s a physical scenario.
With in-plant operations and digital transformation, Chris said, “The trend is, what’s your core product? For example, an insurance company, are they better at printing and inserting or providing service to their customers?”
The reality is that it’s very expensive to run a transactional direct mail facility. The equipment and technology require constant updating, meaning an in-plant is a cost center, not an ROI vehicle. In-plants want to cut expenses, but that’s rarely possible in these areas. For example, presses are $1.5 million while integrity inserters are $1 million, and you have to have at least two of each. Then there are the other costs—network, servers, firewall, labor, compliance, and more.
Some organizations are consolidating in-plants, going from a few to only one. They still want control over mail, but with a single location, that puts business continuity in jeopardy. “They are condensing because they don’t have the volume for two locations because they are sending out more digital work. They still have the same guidelines and requirements,” Chris explained.
So, what’s the actual savings for digital transformation on in-plants? Not much. Chris offered this example. “If you’re printing a million pieces of mail a month at the cost of $1 and then move 25% to electronic, you’ll save on materials and postage, but you’ll still have the same costs on overhead, people, equipment, and infrastructure. Now that 750,000 costs your $1.50 per piece.”
There are some savings but nothing that will get numbers to the expectations of a company. “It’s a fallacy that when you send stuff digitally, you save a ton of money. You save some, but costs go up,” Chris said.