Printer Turns Service Apps into New Business

FRAMINGHAM (07/27/2000) - The Standard Register Co., a Dayton, Ohio-based paper forms manufacturer, is hoping to skirt obsolescence by changing into an electronic business.

On June 6, the $48 million company spun off part of its information technology group into an independent application service provider called SmartWorks.com Inc.

Since 1995, industry's migration to electronic documents and the Internet have helped erode corporate use of paper forms by 4% to 6% per year, according to Norman McLeon, an industry analyst at Cap Ventures Inc. in Vienna, Va.

SmartWorks is aimed at companies that spend more than $100 million per year on printing. At the heart of the venture's service offerings is a set of what were proprietary software-based print-management tools known as SmartWorks that Standard Register developed in-house and has been furnishing to its own customers for the past five years.

Standard Register's customers include Sprint Corp. and Boston-based Liberty Mutual Insurance Cos., which use the tools for tasks such as tracking real-time document use to decide whether to keep forms on hand in warehouses or instead print them on demand.

The tools, which have been enhanced several times since their debut in 1995, are now available on a single Web site to customers of Standard Register and its competitors. These customers can procure and manage a wide range of printed and digital documents online.

Debbie Claybaker manages forms, graphics and print services at Sprint, which spends $5 million per year on printing. She said that Sprint switched from using Moore Corp. in Toronto as its supplier to Standard Register because of its Internet-based print-management services.

"[Moore] had their own tools, but there were disconnects," Claybaker said. For example, buyers weren't able to browse an electronic catalog and then place an order with the same software application, she said.

Placing Bets

Analysts characterized the transition as a bold move, especially in the old-line printing business.

"Large printing companies have always bundled all of the costs of servicing an account with what they charge for delivering the product," McLeon explained.

By selling print management services as a separate product from the forms themselves, Standard Register is also betting it can hang on to its printing business by being the lowest-cost producer of forms, he said.

Other big printing companies treat their print management applications more as customer service enhancers than as a way to generate new revenue, McLeon said.

Standard Register's chief operating officer, Peter Dorsman, projected that the new SmartWorks.com unit will ring up $10 million in revenue in its first year.

Executives said that creating a separate dot-com company - complete with a different management team and new offices - was critical for SmartWorks.com to gain credibility as a neutral service provider open to all suppliers.

"Essentially, we transferred what was the electronic-commerce organization of about 70 people at Standard, and they became SmartWorks.com employees," said Jeff Allen, the firm's vice president of sales and marketing and former director of e-commerce at Standard Register.

The spin-off also helped foster a culture of innovation that Standard Register lacked. "The nature of the software business is that you have to bring out release after release after release," said Dorsman. "In the traditional forms business, some of the products we sell have been around for 30 or 40 years. The whole notion of enhancing them isn't particularly important or necessary."

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