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The Way We Were Is Why We Are – Segment One

By Bill Spencer

Writer’s Note: This undoubtedly biased overview of the development of an industry is based on personal recollections. It does not claim to be 100 percent accurate. Please forgive me for any inaccuracies.

When I empty my mailbox today, I will undoubtedly find that almost all the items of mail will have been printed by a computer-driven, high-speed non-impact printer. We tend to take this for granted, but it was not always so. It may be interesting, instructive and occasionally even amusing to look back and see where this mass of computer-generated correspondence, or high volume transaction output, has its roots.

What is a good starting point? Well, you can’t have computer-generated correspondence if you haven’t got a computer, so if we go back to the first computer and the first computer printer, Univac dates back to the early 1950s, and originally its printed output was done offline by the UNIPRINTER, which resembled an overgrown typewriter with an attached tape drive. It printed 600 lines per minute with 130 characters per line.

So at that time, what was happening with the main categories which today constitute computer generated print?

Bank statements

Most people with a bank account had a “pass-book.” Most people were paid in cash, took their savings to the bank where a bank clerk counted the money, recorded the amount in the pass-book and in a ledger and “stamped” the pass-book to record the deposit. Withdrawals worked the same way in reverse.

In the 1970s with computerization of account keeping, and with the explosion in personal credit, came a dramatically increased requirement for transaction printing. Looking back from today when putting a round of coffees on a credit card is commonplace to a time when most employees were paid in cash, and most small transactions were paid for in cash, it is easy to underestimate the effect of this boom in personal credit.

Consumer credit

As an example of the contrast, consider this: In 1961 I bought a motor scooter (Lambretta TV175 for aficionados of Italian engineering). Having just left school and having insufficient cash, I bought it using “Hire Purchase.” I paid the shop a 25 percent deposit and signed a contract---my father guaranteed it---and they gave me a booklet with 12 coupons and carbon duplicates. The payment amounts and dates were handwritten on the coupons. Each month I went to the shop and paid an installment in cash; not until I had made all the payments did I get title to the Scooter. The contract for the purchase was a 10-page pre-printed document with three-fourth of the clauses laboriously ruled out in pen and initialed. Diners Club had started in the United States in 1950, though individual retailers had issued their own cards, usable only at their store, before this. Each store would have its own billing department and a typing pool. However, with Diners Club cards which could be used at many retailers, a central billing facility was needed. The following year, 1951, Franklin National Bank of New York issued the first bank credit card and the move away from cash transactions had begun!

The first Australian credit card, “BankCard,” was launched in 1974 by a consortium of nine Australian banks. It was to last for 32 years until the penetration of Visa and Mastercard and the disadvantage of being restricted to Australia/New Zealand brought about its demise in 2006. 

Billing

There was less of this. Most transactions were cash. Even for basic services.  When I was a child, electricity and gas were often supplied on a “cash” basis. You fed coins into a meter, effectively paying in advance for the gas or electricity you were using.

Telecommunications

Along with the growing affluence of the 70s and 80s came both increased numbers of phones and increased use of the phone. No longer were they just for emergencies.

Solicitation

Charities found it worth while to solicit donations by mail rather than by rattling tins in the High Street, and personalized loyalty plans began to replace the “stamps” and “coupons” previously used to reward shoppers.

Customer communications

In 1970, customer communications relied on typing pools! Various ways of improving efficiency were developed: form letters where only the variable details were typed in, the IBM Selectric typewriter could type the constant material and pause for the typist to type in the variables. In a later version the typist typed the variable data to a tape which then controlled the typewriter. 

Marketing campaigns relied on pre-printed generic advertising material – accompanying letters were of the “Dear Customer” style. Marketing staff involved in such campaigns were schooled in the techniques of publishing and conventional type setting and printing.

The Technology
A number of technical developments needed to happen to bring together these disparate print requirements to form the high-volume industry we see today.  

Although we know that technical development is always a continuous process, with hindsight some dates and events seem to stand out as significant.

Many writers in the computer industry have described 1969 as a watershed year in several respects. In one year we have the antitrust decision which led to IBM unbundling its hardware and software, the first relational databases and (arguably) the invention of the laser printer. The laser printer, called EARS, was developed at the Xerox Palo Alto Research Center beginning in 1969 and completed in November 1971. Xerox Engineer Gary Starkweather adapted Xerox copier technology adding a laser beam to it to come up with the laser printer. However, the Xerox 9700 was not released commercially until 1977 and in 1976, IBM released the 3800 continuous laser printer, and some IBM literature appears to claim this as the first laser printer. Either way we have both sheet fed and continuous laser printers available, and the distinction established between mainframe driven and “stand alone” laser printing systems.

All of these developments were to have a profound impact on computer print output and the industries which utilized it.

Watch for segment two of this series in next week’s OutputLinks eNews.

By Bill Spencer

The advent of the Xerox 9700 as a successful, standalone electronic-printing subsystem had allowed the decoupling of the printing process from the data-processing intense processes of maintaining transaction records. In later years, DataWare and Barr (among others) would produce Channel emulation cards allowing high speed continuous printers, such as those from IBM and Siemens Nixdorf (now part of Océ), to form part of similar printing subsystems.

Demand driven

The rapid growth in the need for high volume transaction printing (HVTO), driven by the equally rapid business growth of the banks, credit card companies, phone companies, home shopping industry, etc., saw a competition for resources, both financial and human, which prompted many organizations to consider outsourcing the transaction printing functions.

What sort of companies were in a position to take advantage of the business opportunity this offered?

The Check and Security Printers

In Australia, as in many countries, the check printing industry was well placed technically to absorb this sort of business. Many banks had long outsourced their check printing requirements---the specialized equipment required, the need to deal with printing trade unions, the raw material storage requirements---which all made a poor fit with day-to-day banking activities. The check printing industry in the United States (Americans use more checks than anyone else) was somewhat different; customers there purchased their check direct from the printer, whereas in most western countries, the banks purchased check books from the printer on behalf of the bank customer. As a result, check printers outside of the United States were used to receiving data from banks daily and producing what are in reality large numbers of personalized documents.

In many cases, the banks used punched cards, or punched paper tape as the reorder medium, and before long this was replaced with magnetic tape. Those check printers who had utilized the MICR capable version of the Xerox 9700 had equipment in place well suited to transaction printing, those who used highly specialized check printing equipment such as that supplied by CheckTronic or Troy somewhat less so. However, technically, most check printers were well placed and many became successful transaction printers.

However, many were less successful in making the transition to promotional printing. Check Printing is characterized by long term supply contracts with the customer as no bank wants to change its check printer every month on the one hand and by regular daily production requirements on the other. This is still broadly true for statement printing, but promotional printing requires dealing with a different scenario, one calling for a more flexible approach.

Business forms printers

Business forms printers were also well placed to take on this additional work. They already had the equipment to produce the stock, and were well used to the requirements for storing and handling paper etc. Many were already large international companies with considerable DP expertise from their own internal commercial activities. Moore Business Forms comes readily to mind as an example.  

The Mailers

Both check printers and business forms printers were well placed to produce documents, but the expertise in getting them into the mail stream lay with another group, the mailers. Initially, these companies were set up to sort and distribute pre printed un-personalized material for distribution either through the mail or by “walkers.” Addressing the items for delivery was about the only printing done. Sometimes the addressing was done by affixing computer printed labels by hand, sometimes small head ink jet printers were used to address the items as part of the wrapping process. Typically, these companies employed large numbers of casual workers who could be utilized as required. Lots of hand work was involved. The business process involved bidding for individual bulk distributions as well as some ongoing delivery contracts. This was very competitive---particularly the bidding for individual bulk distributions---and the mailers ran businesses that were “lean and mean.” They had the skills to extract margins from the postage/hand-delivery costs and were knowledgeable about bulk mail discounts, mail manifests, aggregation, etc. Salmat (formed in Australia in 1979 by Phillip Salter and Peter Mattick and listed on the ASX in 2002) was originally a letterbox distribution company.

The Startups

There were of course some opportunistic start-up companies formed specifically to bid for a  major contract. Obviously, these required substantial initial investment, and so were usually backed by successful companies. An Australian example which springs to mind is HPA (Hermes Precisa Australia – which in 2007 merged with Salmat’s BPO division ), often thought to have been formed to bid for the Telstra (major phone company in Australia) bill printing contract when this was initially outsourced.

In addition to these well resourced companies, a number of smaller organizations came into existence. A typical such company might negotiate the purchase of a Xerox printer with a large “Click Charge” component in the price and a basic folder/inserter, and set out to build a market niche for itself. The owners of these businesses often had considerable technical expertise – were themselves computer programmers or engineers, and were capable of devising ways of achieving better than average results from their equipment. In many cases, they sought out the more difficult jobs and looked for premium prices. With limited production capacity, they were often attracted more to the promotional area than to printing transaction documents.

The Post Offices

Many national postal organizations also decided to enter the document printing area. In some cases for straightforward commercial reasons, in others cases with the intentions of “encouraging innovation,” “understanding the industry,” “providing a benchmark,” etc. Some of these became very commercially significant, notably the Dutch and Italian Post Offices, and in this region Australia Post and China Post. The involvement of the Post Offices has considerable significance for future transnational developments.

Consolidation

During the 1990s, many companies prospered, some grew too fast and became overextended, and by the start of the new century the industry was ready for a shakeout. Since 2000, we have seen considerable consolidation. Many of the smaller start-up companies have been swallowed up by the larger. In Australia, and I suspect in many countries, the descendants of the “mailers” have largely survived and prospered and so have the security printers. We now have the concept of the “full service bureau” providing much more than personalized printing services.

Before we look at what the future will demand of these organizations let’s look at where the software we have been using came from. Look for Segment Three in next week’s edition.

The Way We Were Is Why We Are – Segment Three

Just Add Software

By Bill Spencer

So, by the late 1980s, we had demand for document printing services, and we had non-impact printing equipment capable of printing the documents and an easy means of transferring the data from the commercial processing computer systems to the printing systems---magnetic tape.  

The output from the commercial process was often a line printer file of some sort. And when you’re dealing with mainframe commercial programs, say, customer billing data, the golden rule is “if it’s working don’t mess with it.” Accordingly, many of the fledgling service bureaus were expected to cope with input data in the form of lineprinter files for an impact printer---sometimes with the printer controls stripped out. Sometimes a “flat file” would be provided. Very rarely would the customer-data processing department be prepared to create a print file suitable for the service bureau. Thus, some processing of the file would be necessary in order to be able to print it.

Basic capability

With the Xerox 9700 and later printers from Xerox, enough tools were provided to allow users to manipulate data and create “forms” which could be stored on the printer systems and merged with data at run time. With the high-speed continuous printers, only mainframe tools were initially available. To overcome the limitations of these tools, many of the early bureaus wrote specific software to handle each job, using whatever language their technical staff were familiar with. Soon, however, commercial packages were available, which reduced the technical skills required and speeded up the time to develop each now print job.

The capabilities of these packages reflected, to a great extent, the background of the developers, the closeness of their relationship with a particular printer vendor and the needs of their initial customers. From the very beginning, the varying features we see in today’s software offerings were present, although in embryonic form.

Early offerings

Let’s concentrate on PC packages. We can divide them into “WYSIWYG” and “Procedural.” 

“WYSIWYG” attempted to emulate forms design packages such as Pagemaker or Quark. These were attractive to users from a conventional printing or forms design background. Use of such software made it easier to work more closely with the creative staff involved in promotional document design. In their simplest form, such packages often did little more than graphically position variable data on a fixed form. However, in response to the needs of their customers, they soon began to develop features such as variable salutations, casing, genderising, etc. Many were specifically aimed initially at the Xerox environment. XL Print, founded in 1986, was a good early Australian example of this type of software.

“Procedural” packages set out to provide a simplified programming environment specialized to facilitate the transformations required for printing. They were attractive to users from a mainframe data processing background. Typically, they would provide for a data file and data record description, a procedural section with commands specifying what data was to be printed where, and a flow control function to allow the data record structure to be related to the print pages. This sort of software was initially more suited to transaction printing than the WYSIWYG software. The typical data file for, say, a phone bill, is hierarchical in nature and requires a flow function for correct processing. PReS from PrintSoft  (founded in Australia in 1989) was a good early example of this style of software.

Both PrintSoft and XL print are both still in business today.

Tagged or untagged input

We could also classify early software packages on the basis of whether they required a “tagged” file format as input, as opposed to “pure” data. Prior to the widespread acceptance of standard tagged file formats, such as XML, the formats developed by software providers (or service bureaus) were proprietary. Although this placed a barrier in the way of initial winning of business, it also acted as a tie between the customer and the service bureau once established. Hermes Precisa Australia developed such a tagged file processing system which became quite well-established among a relatively small number of users in Australia and the Asia Pacific region. In the early ‘90s, CEFAS in France developed a multi-staged approach in which tags were first inserted, then interpreted by various drivers depending on the output PDF required. This was Unix software, as I remember, but I have not come across it recently. Searching on the net just produces lots of references to a Fisheries Research Institute!

Spooled or direct to printer

A further division of software products could be made on the basis of whether the data was converted to print spool files or formatted for printing dynamically and sent directly to the printer. There were good and bad points for both approaches. Producing a spool file lessened the chance that the formatting process would fail to keep up with the printer speed; this was a serious issue when processors were much slower than now. Dynamic formatting allowed printing to start as soon as the data file was available. The storage required for large print spool file could also be a valid issue back when storage was expensive; now the low cost of storage has removed this as an issue. Depending on the PDL, reprinting individual documents or pages from a spool file could also be an issue. This often led to a strategy of reprinting by creating a reprint spool file from the original data. With IPDS of course, the dialogue with the printer required that complete implementations were dynamic. The alternative of producing AFP files and dynamically converting them to IPDS was an attractive alternative to many developers.

So, where from here? Find out in next week’s final segment of this series.

The Way We Were Is Why We Are – Segment Four

By Bill Spencer

Editor's Note: This undoubtedly biased overview of the development of an industry is based on personal recollections. It does not claim to be 100 percent accurate. Please forgive me for any inaccuracies.

So what does the future hold for the industry? If it is to continue to grow, where is the additional volume to come from? What are the threats?

Threats

With the dawning of universal online access, through the internet some obvious threats loom in areas which currently generate lots of transaction print volume. In some areas, legal restrictions will slow the penetration of electronic documents, but print volume reductions are inevitable in many areas including for example banking and phone bills.

Banking

Some months ago I began using Internet Banking. Like many Australians of my age I have several bank accounts, a business account, a superannuation account, a day-to-day check account, etc. I can now view online all the details of my transactions on all these accounts. I still get printed statements, but one day my bank is going to offer me an incentive to stop these, or more likely charge me a penalty if I want them to continue.

Phone Bills

The phone company I use offers in line billing and direct debit of the total against a credit card – if I do this my 5 page detailed phone bill becomes a single line on my credit card statement.

So, consolidation of billing onto credit card accounts, along with on line access to accounts is going to nibble away at print volumes.

Opportunities

The largest area of opportunity would seem to lie in harvesting the large volume of print generated by small computer systems and currently printed on a variety of low speed laser and inkjet systems. This would seem to be a “win-win” opportunity with benefits for both the originator and the printer, (when you do the arithmetic, such documents are expensive to print and mail) but it is far from easy to exploit. There are a number of reasons for this.

• Document sources vary widely, from ad hoc documents produced at the branches of large and sophisticated companies, to invoices produced from desktop accounting packages such as MYOB, or Quick Books, to the various notices sent to the membership of the local golf club.
• What is the appropriate business model? A company specific solution developed by a service bureau? A generic solution developed by a software house and sold to service bureaus? A generic solution developed by a software house and sold to document generators? An internet-based solution developed and offered by a major player – perhaps a hosted solution, log onto “Accounts on the net” and your invoices will be printed and mailed for you and your books updated automatically!
• Will Microsoft add a “Print and Mail at Microsoft” function to Word?
• How do you exploit the potential to add value by attaching promotional material to the transactional documents?

The changing environment

As always, the changing environment presents both a threat and an opportunity. The increased awareness of global warming with the concomitant need to save energy and chop down fewer trees is likely to encourage a reduction in printed material.

Increased globalization is causing increases in the volume of international mail. It will become increasingly unacceptable to fly large volumes of computer generated mails around the world, so hybrid mail solutions will become increasingly attractive. In response to increasing transport costs, National Postal Offices may switch from fixed universal charges to regional postal rates in order to encourage more localized printing and mailing – Brazil has done this already. This in turn will present opportunities to those organizations nimble enough to develop the regional structures or alliances to exploit the new situation.

One solution which is provided by Digital Post in Brazil provides consulting and document redesign services to clients and then distributes the print requirement to associated regional service bureaus, maximizing regional postal discounts.

Will print organizations position themselves as “Green Mailers”? One digital print company in Australia already advertises that it is “solar powered”.

What new opportunities will be presented by the way in which internet ordering and global production is changing the logistical picture worldwide? Ten years ago ordering something from China involved a lot of heartache and bulk shipping. Now it is possible to order a single customised set of golf clubs to be delivered to your door virtually anywhere in the world (except perhaps China). The sort of shipping documentation this requires to work efficiently is making new demands on print facilities in the warehousing/shipping industries.

Will the BRIC ( Brazil, Russia, India, China) countries with a lot of volume growth in transactions ahead of them as their middle class increases in size and affluence, repeat the pattern we have seen, or will they jump straight to online billing and pre paid phones

Conclusion

There are interesting times ahead! Whatever we may predict and try to plan for, there is always the possibility of a “Black Swan” event just around the corner, and by their nature they are not predictable.

About the Author

William “Bill” Spencer is a 30 year veteran of the printing and marketing industries. Spencer qualified as an Industrial Engineer in England before moving to Australia in 1974. In 1976 he joined the Security Printing division of Leigh Mardon as production manager and was closely involved in the early implementation of computer driven cheque production. Spencer joined CPE Australia (Cheque Printers & Encoders) in 1981 working in the R&D department until 1989. In 1991, he became a Director PrintSoft. His early time at PrintSoft based at their global headquarters in Melbourne, Australia, saw Spencer establish most of the overseas presence of the PrintSoft organization, including the master distributors in the UK, Europe and the United States. Spencer took on various sales and marketing roles at PrintSoft over the subsequent years. Finally, he facilitated the due diligence and sale of PrintSoft to Australia Post in 2005. Bill finished his days at PrintSoft as Group Manager of Operations before retiring in mid-2007. He now spends his days freelancing on industry projects while enjoying Melbourne’s bayside lifestyle with Heather, his lovely wife of 41 years.

 Bill Spencer enjoying retirement.