Horizons Expand for Alternative Products
Increased demand for other products and services reveals an industry transition.
Though products and services other than forms, such as warehousing, document management, e-commerce and software, may not appear to be a major part of distributor sales—they ranked fifth in percentage and total sales among BFL&S's Top 100 Distributors—they are certainly a vital part of distributor business. So much so that without such products and services, many distributors believe their businesses would depreciate. The reason, they say, is because more clients are requesting sophisticated networking systems, thus diminishing the need for so many forms and increasing the demand for other products.
That is the reason Bellefontaine, Ohio-based RATH Information Systems has started promoting forms technology more than forms themselves. According to President Dean Horn, if it wasn't for the Internet and telephony systems he offers his clients, business would have decreased.
"We made the decision six years ago to offer a digital telecommunication system, which involves video conferencing and voice systems. We also installed computer systems, which helps with document management services," he said. "As a result, technology-related services now account for half of our business."
As Horn sees it, RATH needed to upgrade its offerings since most clients are now Internet- and DSL-connected. "A lot of people are exposed to this technology and it is the way they do business today," he said. Right now, he added, larger organizations utilize these services because their return on investment is great. "For a small- to mid-size company it is hard to justify a high-tech product like this until smaller packages are available," Horn added.
Currently RATH handles county government work with long-term service contracts, which incorporates its latest venture—document imaging, a software product that Horn said is in great demand.
Laguna Hills, California-based Altec is another company promoting high-tech software.
"We made a decision to offer paper-to-paperless solutions be-cause customers can maintain a competitive advantage by reducing the cost to process, store and deliver documents," said Mark Ford, president and CEO. "As technology costs continue to drop, electronic document management becomes more affordable to the mid-market business segment."
He added that the current state of the industry requires distributors to offer alternative products because of technical progress in Internet and e-mail communications. The desire for end-users to move to a more paperless environment is another reason to offer such products.
To answer this call, Altec now offers an output product, called doc-route. The product enables Altec to take any report or document and output it to recipients via e-mail, fax or FTP. "We transform data into HTML, XML, TIF, PDF, SCV, PCL, EFT and EDI," said Ford.
He explained that most companies begin deployment of this workflow technology in accounts payable departments to eliminate the paper processing bottlenecks experienced with vouchering vendor invoices.
And, in the wake of September 11 and subsequent anthrax scares, Ford reported that doc-route has gained plenty of attention from many other clients.
"A product like this reduces concerns that weren't really concerns in the past," said Ford. "It is something many clients are willing to invest in now."
For example, Ford said a hotel client was spending $100,000 a year on Federal Express by having remote offices send their invoices to the home office for approval. By partnering with Altec, the hotel now handles this electronically. "Not only is the process faster and safer, but the return investment for clients is very measurable and generally received in less than nine months," added Ford.
Similarly, Robert Troop, CEO of the Shamrock Companies, Westlake, Ohio, said his company has gained success by offering an open enrollment software package called AdvantServe. Currently targeted to major corporations, the software allows employees to jump online to change their benefits programs.
"This is something a lot of companies are looking for," said Troop. "It's sold through human resources departments and reduces processing times."
Aside from Software
Software is a hot ticket in the industry, fulfillment, but design and warehousing services also hold a viable position. In fact, Shamrock operates through seven profit centers, including a phone center, a forms systems area and data services. Through these centers, services such as online ordering and tracking, Web site hosting, database personalization and document management are conducted.
"It is so important to bundle services because it adds value to clients who, in today's economic environment, would rather outsource them to just one distributorship," said Troop.
Christopher McBride, vice president of Paper Express, Troy, Mich., concurred. "Customers are looking for ways to spend their money more wisely," he said. "That means distributors need to be willing to offer fulfillment and management-type services in addition to forms."
When asked how lucrative these services were for distributors, all agreed that business is very good. According to Horn, this is because the market for some services, such as software, has not matured.
"Not everyone has the expertise to offer modern technology, so we've been able to create a comfortable niche within it," said Horn. "Our success is due to a close relationship we have with a computer-savvy attorney. It took several thousands of dollars to invest in our new programs, and without partnering with him, we couldn't have implemented these changes."
Altec has also experienced strong profits since its product is in such high demand.
"We are experiencing a 250 percent to 300 percent growth rate with our doc-route software package which was acquired about a year ago," Ford said.
McBride also reported exceeding company expectations with the forms management program Paper Express provides for its clients. For all non-forms products, Paper Express reported more than $8.5 million in sales.
As for the future, there is no doubt that software, document management programs and other products and services will continue to grow.
Said McBride, "Over the next five years we will see an unbelievable growth pattern. With the economy in such a state of uncertainty, end-users will be more practical with their spending and we believe fulfillment services will continue to grow."
However, Horn noted that an increased need for value-added services will not cause paper-based systems to become obsolete.
"Some businesses will continue to use paper," said Horn. "However, for distributors to prosper, they need to be involved in other areas. If we hadn't implemented new technology, we would have shown a substantial decrease in business and our client base.
"There is a major transition occurring within the industry and there is no way distributors can avoid becoming a part of it," Horn concluded.
By Sharon R. Cole