Enterprise Output and Customer Communications Expertise Outsourcing High-Volume Document Production: Making the Case and Maintaining Control A Madison Advisors White Paper November 2005 Copyright 2005 by Madison Advisors. Madison Advisors, Inc. All Rights Reserved. All other product names are trade and service marks of their respective companies. This publication and its contents are the property of Madison Advisors, Inc. No part of this publication may be reproduced or duplicated without the express written consent of Madison Advisors, Inc.
TABLE OF CONTENTS Executive Summary... 3 When to Outsource Document Production... 4 How Personix Makes a Difference...6 An Up-close Look at Personix... 7 Capabilities that Set Personix Apart...8 Document Composition and Design... 8 Web Client Control Interface... 8 Postage Cost Control... 10 Customer Examples...11 Telecommunications... 11 Financial Services... 12 Healthcare... 12 In Summary...13 About Madison Advisors...14 2
EXECUTIVE SUMMARY The decision of whether or not to use an outsourcer for document production is daunting. The process of finding the one that is right for your needs is an even bigger challenge. Unlike the experience of purchasing software for document production, when you purchase services from an outsourcer, your organization typically has minimal insight into production practices and overall quality. This unknown keeps many organizations from outsourcing mission-critical documents. There are many viable reasons for outsourcing, however, one of the most compelling being that service bureaus often make higher levels of investment in key quality and efficiency areas than organizations for which print production is not a core competency. For organizations interested in benefiting from these high levels of quality through outsourced services, the challenge becomes finding a service bureau that meets all of their requirements. One service bureau that makes this process easy on clients is Personix. Not only does Personix offer superior quality, it leads the industry in extending far more control over the process to its clients than is typically found in the outsourcing industry. Personix participated in Madison Advisors Best Practices Assessment (BPA), and commissioned Madison Advisors to create this white paper. During the course of our BPA, Madison Advisors has visited more than 60 organizations that focus on high-volume print and mail services. We have measured more than 600 data points within production print facilities and compared each facility against the scores of the entire group. Clearly, the services offered by each participant vary based on the requirements of their customers. Within the group, however, there is a clear delineation between those investing in new services to anticipate their customer s needs and those in a reactive mode, improving offerings only as pushed to do so by customers. Personix is in the innovators category. Personix gives customers direct control over processes, something that is elusive with most outsourcing providers. Through the use of innovative, Web-based tools, Personix provides mechanisms for customers to determine what marketing and regulatory messages appear on each statement and to see where each job is within the production facility. In addition, customers will be able to track the delivery of bills through the USPS, which allows customers to project in-home delivery dates and track payments. These tools remove the powerlessness that most companies feel when working with other service providers. The remainder of this paper reviews Personix s key strengths and differentiators. It includes a review of Personix s solutions and operations, as well as a discussion of customers currently benefiting from Personix s services. 3
WHEN TO OUTSOURCE DOCUMENT PRODUCTION The factors that feed into the decision to use an outsourcer or process documents internally are complex. For many companies, performing services internally gives them a better sense of quality and control. As the figure below demonstrates, however, our BPA Study has shown that external service providers score much higher than internal facilities across the breadth of measures related to operational efficiencies. These areas are key to their value proposition and receive significant investments, which can be amortized across multiple clients. In contrast, internal print shops frequently have mandates to minimize cost, which invariably causes them to sacrifice investments in quality. 5.0 4.5 4.0 Overall Average Internal External Score 3.5 3.0 2.5 2.0 Service Level Agreements Standards Processes and Procedures Equipment Utilization Capacity Utilization Quality Metrics Workflow Work Mix Figure 1 Operational Efficiency Sub-disciplines Internal v. External Providers A 2005 study by the Electronic Document Systems Foundation 1 discussed trends in document outsourcing. It noted that many executive management teams are continuing to look to outsource document production entirely from document composition to printing and mailing. In addition, increases in postage costs projected at 5 to 6 percent in 2006 will challenge firms to cut costs and look to major outsource providers such as Personix to provide solutions to avoid this increase. Madison Advisors has advocated a co-sourcing methodology to our clients for several years. In a co-sourcing arrangement, those portions of the workflow that require capabilities outside of the core capabilities of the internal facility are outsourced. 1 EDSf Document Communications Industry Trends: 2005 Survey Results 4
We see the value of both approaches in action at Personix where some customers outsource all aspects of production and others take advantage of specific capabilities in the Personix product suite to create custom solutions for their document needs. In either case, the Personix product suite enables customers to monitor document production as though it were an internal operation. 5
HOW PERSONIX MAKES A DIFFERENCE In our BPA Study, we found Personix to be unique among the sites we have visited in terms of the breadth of its offerings. These offerings are fully integrated into the everyday operation of its production facilities rather than single-customer specials that don t fit into the whole operation. The majority of the technology and process decisions made by Personix appear to be driven 100 percent by package integrity and accountability throughout the process. One of the special features that Personix offers its customers is card personalization, which includes financial cards (e.g., VISA and MasterCard ), health care subscriber cards, phone cards, ID and membership cards, and key tags with special data on them. While not all customers require a plastic card as a part of their deliverable, they all benefit from the discipline it introduces into the production workflow. The security certification requirements associated with financial card production have led Personix to develop work processes that guarantee 100 percent of every job goes out correctly. This includes barcodes on every printed page so that inserted items can be tracked to the item level. This level of automation includes reprint capability to ensure that even those documents damaged in the production process are recreated and mailed. Few service bureaus or internal operations provide this level of tracking as the investment is difficult to justify for a simple print facility. Personix employees are encouraged to stop production on a job when a quality issue is noted so that it is not exacerbated. Shop management s focus on quality and accountability makes this a positive, rather than punitive, experience for the employee. The culture of the production sites fosters a team attitude toward successful completion of each job. It s difficult to assess an organization s culture in our BPA study, but at Personix we certainly noticed a greater sense of team than we have seen at other internal or external facilities. The typical management-vs.- workers mentality was not present in the formal or informal interactions we witnessed. The net benefit to Personix customers is that everyone is working toward the same goal of ultimate customer satisfaction. Personix has invested in both print technology and employee training to create a defect-free production process. Personix purchased both monochrome and color digital printing systems to increase capacity and service capabilities. In addition, Personix provided training on lean manufacturing processes to employees for improved quality and process control. 6
AN UP-CLOSE LOOK AT PERSONIX This section provides an overview of Personix. Headquarters Stafford, TX Public Company? Wholly owned business unit of Fiserv Employees 1100+ Revenues Private Company Overview Product Focus Key Strengths Areas of Caution Personix began as a plastic card personalization company more than 25 years ago and expanded its core business into document personalization in the mid-1990s. It is currently a wholly owned business unit of FISERV, Inc., and personalizes more than 875 million document images and 125million cards per year. Personix delivers leading solutions for card, print/mail, and electronic document delivery needs. Personix employs the latest software and hardware technologies to generate custom personalized documents, including consolidated statements, transaction confirmations, benefits explanations, checks, tax documents, etc. Personix enables clients to control document content, view documents, monitor jobs, etc., via the Web to conserve time and cost. First-class document composition, data formatting, and preprocessing capabilities Extensive client access and control of all aspects of their projects 100 percent reconciliation of all jobs Lean manufacturing training Limited full-color, high-volume transactional capabilities Constrained production capacity at month-end and quarter-end 7
CAPABILITIES THAT SET PERSONIX APART Personix provides complete end-to-end capabilities for a wide range of document production needs. These capabilities are highlighted below and their practical application is discussed in the Customer Examples section below. DOCUMENT COMPOSITION AND DESIGN Personix provides state-of-the-art document composition and design services to its customers. A dedicated project manager works with each customer to ensure documents are designed to meet requirements. Personix s capabilities for document composition and design are extensive, ranging from complex brokerage statements to welcome packets for new telephone users. The internal developers implement the document design, incorporating the automation marks necessary to track each document as it moves throughout the production process. Developers are able to add customized client logos and dynamic color pie charts. As appropriate to each type of document, messaging (or variable text) areas are included so that the client can take advantage of targeted marketing programs in each production run. Once development in complete, clients review document proofs online. WEB CLIENT CONTROL INTERFACE Personix has developed a portal that allows customers access to aspects of production that usually require developer involvement at other facilities. The portal, called the Web Client Control Center (or WC 3 ), provides a set of tools that allow the client to remain closely linked to the document production process, even though its being conducted by an outsourcer. Prior to a document run, clients can use WC 3 to specify text messages or physical inserts to be included with specific documents. A range of selection criteria can be used to allow specific targeting of messages and inserts to subsets of the customer base (e.g., account range, value of holdings, date of a transaction, etc.) The WC 3 system also allows clients to see the status of a job as it moves through production, including when printing began, how much has been inserted, and when all packages will be mailed. A brief overview of the functions available through WC 3 includes: Messaging & Inserting Control allows targeted marketing campaigns using text messages and images (e.g., logos) on documents or physical inserts in the envelope. Document white space and envelope contents are managed to provide one-to-one marketing without increasing cost. 8
Proof/Audit provides a tool to test and view changes to document prior to releasing them to production. Job Tracking delivers the status of each job as it moves through the facility. Doc Info offers a way to determine when a document was mailed to a customer. This feature includes document-level data mining, custom reports, and viewing of production results, and it can be integrated into the client s CRM system. Inventory Control provides a view of the client s materials stored at Personix locations, and shows usage of individual items over time. Special Handling provides a means to divert specific documents so that they can be dealt with differently from the main job. This includes holding the documents, shipping by a different carrier, and any other special requests. Metrics Dashboard provides management and production personnel a view of factory performance (OT Delivery, defects per million, performance to standard cost) 9
POSTAGE COST CONTROL In any transactional print operation, 60 to 80 percent of the annual budget is spent on postage. This fact is often overlooked by executive management trying to drive costs out of the statement production process and by print shop managers. For many internal operations, insufficient attention is paid to maximizing the materials placed in each envelope, despite the fact that postage rates continue to increase. The USPS provides per-ounce pricing for first-class mail. To maximize the investment in postage, each envelope should be as close to a full ounce breakpoint as possible, without going to the next weight class. Personix uses a white space management methodology in its document composition process to get as much information as possible onto the smallest number of sheets of paper. Each insert is weighed as it is received. This weight is then used to calculate the number of optional inserts that can be placed in an envelope without going over the limit. White space and weight management go hand in hand to maximize the materials that go into an envelope without pushing it to the next rate. Internal operations also often suffer from an insufficient daily envelope volume to achieve significant postal discounts. Discounts are offered based on a variety of factors including Zip Code accuracy and saturation. If too few envelopes go to a specific Zip Code in any processing cycle, the maximum discount may not be available for that set of mail. One solution is to use commercial pre-sort houses that commingle the mail from multiple customers and sort it by Zip Code before delivery to the USPS. The revenue models for these companies are fairly complex and include a handling fee and any additional postage that may need to be paid in addition to that already metered onto the envelope. Only through careful analysis of their invoices can it be determined if a discount is actually being achieved. Personix operates a postal presort capability within its facility. It is able to commingle the output from all customers to obtain the highest level of discounts for all customers. And customers can clearly see the savings they are receiving. Personix s agreement with the USPS also allows it to mix different envelope sizes in the same tray to help meet the Zip Code saturation levels expected by the Post Office. This commingling process has an added value in security, as plastic cards and checks are distributed throughout the mail run rather than being concentrated in a few heavy trays, which can easily be identified and stolen during transport. 10
CUSTOMER EXAMPLES To better understand how Personix s capabilities can be used to solve specific customer problems, we looked at a number of existing clients and the solutions developed specifically for them. TELECOMMUNICATIONS Personix provides unique fulfillment services for a leading telecommunications company with traditional local and long distance, wireless, Internet, and directory services. The first service is data management for document composition. Individual data streams are merged together from different record-keeping systems into one customer mail-set. The data streams can include hundreds of data files that need to be sorted by product type and householded during the composition phase. Householding consolidates all of the products a customer may have into a single statement, thereby reducing the client s postage charges. Fulfillment services include customer calling cards, key-chain tags, and customized welcome kits that are composed from table-driven text modules with verbiage for specific products. The data files call for the use of one of many modules to create a unique document for each customer, based on the services to which they subscribe. The text modules are composed into a highly customized welcome kit. In addition, Personix can hold a customer package for up to three days so that it can be matched with other services the same customer has ordered. With this sophisticated householding service, the client presents a single face to customers for its various product lines. For this client, Personix performs the composition, calling card and key-chain tag production, and document printing. During the insertion process, the calling cards and keychain tags are matched to the appropriate document. A complete verification of the job is completed prior to releasing it for mailing. 11
FINANCIAL SERVICES Personix produces over 40 applications for AIM Investments from its recordkeeping systems. These include statements, confirmations, checks, and letters, including all transaction documents for retirement accounts. In addition, Personix provides e-presentment services and special mailings. Personix has produced more than 30 million pages and 12 million packages per year for AIM for the last three years. AIM uses the full range of Personix services including data processing, composition, printing, insertion, presorting and mailing. Personix also provides electronic document delivery services to AIM enabling their investors and brokers to view output electronically. AIM utilizes several of Personix WC 3 modules to gain a insight into the production process and control production of individual documents. The Message & Insert and Special Handling modules allow targeted communication all the way down to the transaction level and document-level control over pre- and postprocessing of all the output. In addition, AIM uses the Proof/Audit to verify the document layout prior to production and the Inventory Control and Job Tracking modules to monitor jobs in production. HEALTHCARE A claims processing company that serves national accounts for various Blue Cross / Blue Shield plans selected Personix to print healthcare provider checks and patient Explanation of Benefits (EOBs), and make them available via the Web. When the company s old service provider learned that Personix had been awarded its business, that company shortened the transition handoff cycle from six months to four months. In response, Personix built a rapid response unit of developers from its Houston and Indianapolis plants, which developed the customer s applications in two and a half months, including the conversion of 300 million images from the old provider s Web archive. Personix s quick response to changing customer requirements, while maintaining quality, is testament to the adaptability of the organization. Since the go-live date two years ago, Personix has achieved in excess of 99.9 percent on-time delivery for this client. In Q1 of 2004 alone, Personix produced 2.5 million checks, 45 million EOB images, and 11.7 million mail pieces error-free and on time. 12
IN SUMMARY With all of the concerns associated with outsourcing document production services, finding a vendor that can assuage these concerns while providing excellent customer service at a competitive price point is a real challenge. Through its internal procedures and company culture, Personix takes a holistic approach to minimizing customer concerns and maximizing productivity. The result is a smoother process from startup to operation and through enhancements and expansions to a client s services. Personix has an innovative position in the document outsourcing market. Personix continues to grow with new production centers, new printing systems and additional software for production cycle management. Personix is an outsource or co-source partner for both document production and digital document delivery. And Personix has embraced lean manufacturing techniques on the production floor. Personix s WC 3 Web tools provide industry-leading solutions to clients. The ability to manage marketing campaigns directly via the Web, rather than waiting for resources at the outsourcer, allows for changes on the client s schedule. Personix s weight and white-space management programs, and in-house postal pre-sort are all geared toward saving customers money in the postage fees. And the focus on 100 percent validation of all jobs before they leave the facility provides a consistent level of quality not present with other providers. Given the number of production print sites that Madison Advisors has visited in our BPA Study, we are pleased to report that Personix s combination of technological capabilities and dedication to customer service continues to achieve the highest level of ranking versus its peers in the industry. The amount of real-time information it makes available to customers about the status of the production process shows the confidence Personix has in its ability to meet customer demands repeatedly. It also fosters an open dialogue between vendor and client that makes problem resolution a cooperative, rather than combative, process. This level of communication ultimately makes for a greater sense of control remaining in the hands of the client. 13
ABOUT MADISON ADVISORS Madison Advisors exists to advance the print and electronic communications objectives of Fortune 1000 companies. Madison Advisors specializes in offering context-specific guidance for a range of content delivery strategies, particularly those addressing enterprise output technologies and customer communications. Madison Advisors offers services and expertise primarily through short-term, highimpact consulting services. With no-nonsense, quick engagements (measurable in days or weeks, not months), Madison Advisors directly helps our clients achieve very hard and specific return on investment (ROI) related to their print and electronic communications initiatives. Madison Advisors analysts are dedicated to technology and market research that is delivered through short-term project engagements as well as articles, publications, and presentations. We specialize in customer communication technologies including enterprise output management, content management, customer relationship management, e-billing, and infrastructure technology. For more information about Madison Advisors, visit our web site www.madison- Advisors.com. 14