Sharing operational data and information does not come easily for publishing companies. Seeking detailed information about technology spending for a series of investor presentations, I concluded that this information doesn’t exist. Many other industries benefit from benchmarking data that enables business improvement but, as an industry, publishing seems uninterested in this philosophy of continuous improvement. Based on my experience, this view has not changed even as the industry migrates from legacy-based technology and operating environments (where “fixed” models rule) to one where flexibility drives everything from content packages to cloud-based applications.
While the Association of American Publishers (AAP) has long collected high-level sales and operating data, this effort is of marginal value if a business is truly committed to benchmarking and measuring their performance across a set of key performance measures. The AAP numbers do have value, but they lack the specificity and detail needed for true and close comparisons of operating data that can drive performance improvement.
I was retained on an inventory optimization project for a very large trade publisher. Over the course of the project, we knew we could improve cash flow and inventory levels but we had no idea whether our solution was better or worse than solutions employed by the publisher’s competitors. So I reached out to as many finance executives as I could to offer a benchmarking opportunity whereby all participating publishers would share their inventory data. I contacted more than twenty publishers and only three were interested in participating.
Shouldn’t We Be Smarter?
Business operations are being impacted by technology and the resultant rapid transformation of operations by digital technology specifically represents an ever-increasing reality. The transformative effect of digitization is only just beginning to be felt and will continue to create either opportunities or catastrophes for all businesses for the next decade. The publishing and media business is not immune to these forces and must make investments in new technology solutions to remain competitive.
The level of technology spending across the publishing business is impossible to estimate unequivocally. I’ve done the research and no viable source exists for this type of information and data. This is true in the aggregate, and when it comes to technology spending for staffing, maintenance (legacy and new), development, outsourcing costs, and so on, it becomes virtually impossible to quantify. As a result, all technology vendors selling into the publishing market do so with minimal knowledge of spending levels, making business case definitions and detailed analysis difficult. In the absence of comparative data, executives are unable to compare their technology spending with those of their competitive peers to better manage their business operations.
As a CEO, one of my goals is often finding budget money for new product investment when the spending tasks are frequently zero sum. If I understand that my technology spending is skewed to supporting expensive, inflexible (legacy) technology and I can see my competitors improving their spending in these areas via a benchmarking study, then I am going to place pressure on my IT staff for strategic plans and alternatives rather than tactical plans that support the status quo. Historically, executive leadership in the publishing industry has not recognized the opportunity technology offers to enable new business models and operational improvement; thus, management has not required better planning or re-thought the hiring practices across their IT functions.
Digital Transformation Will Drive Technology Change
Certain large global publishers are consolidating their technology operations around specific ERP solutions. For example, Wolters Kluwer and John Wiley recently selected SAP to replace multiple legacy solutions across the breadth of their businesses. That said, most publishers (including some of the largest global publishers) are supported by old technical infrastructures in which they’ve methodically underinvested over time. But even publishers who invested heavily in large ERP solutions (such as SAP) in the mid-1990s have recently recognized the need to reconsider their technology requirements. The larger strategic driver for this emerging philosophical change is digital transformation, which is redefining the role of technology in shaping a business’s fortunes and purpose.
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