ROI on CTP--To Buy or Not to Buy?
That is the (killer) question...
BY CHERYL A. ADAMS
"It's not really a matter of ROI, but RIB—remain in business," contends Maureen Richards, technical director of prepress at United Lithograph, in Somerville, MA. (She attributes the RIB acronym to an article she saw.) "There are a lot of efficiencies that can easily justify the ROI on CTP, but the ability to do a quick fix when customers want to make last-minute changes is what makes CTP so valuable. You're able to make those changes and still be on press within moments of deadline. CTP gives you optimum control of the prepress process."
Customers like to have optimum control (on their end) as well, which is one of the reasons they're so receptive to the technology. "If the process is easy and predictable," says Richards, "customers will come back."
While it's difficult to measure the value of intangible benefits such as ease and predictability, Richards believes they're important factors that must be considered when figuring the ROI for computer-to-plate.
"There are so many intangible benefits—reduced makeready time; digital proofing; no more registration chasing; no more color guessing; the ability to preview before burning metal; the ability to do quality assurance inside the RIPing process; the ability to better predict and control sheet behavior; its ability to send info remotely; and the system's ability to run around the clock, which increases capacity," explains Richards. "All of these add up to significant savings in time, labor and paper."
For example, Richards says United Lithograph cut its makeready time in half, which obviously saves time, but also saves up to 50 percent in paper costs on each job.
Despite the long list of intangible benefits of a direct-to-plate workflow, a printer can never lose sight of the financial tangible: the hefty investment being made. A printer must determine if the platesetter is worth the cost.
Most manufacturers of CTP systems will assist printers with their decisions by providing workflow studies and system comparisons between digital and conventional plates. These studies deliver an invaluable service a printer should consider.
However a printer decides to determine his ROI—using internal expertise, specially designed software programs or with the help of CTP vendors—the bottom-line question will always be: "If a CTP system costs X, and I have to pay X per month, how will I realize my ROI?"
Most printers approach this question very carefully. While the question may seem simple, the workflow studies and formulas for figuring out ROI can frighten any printer contemplating the technology.
The trick is to look hard—and be digitally prepared (have a digital workflow in place)—before making the leap.
"We didn't just jump into CTP," Richards explains. "We've been 99.9 percent digital for four to five years. We streamlined the entire prepress process to get an electronic ticket that we completely understood before going CTP. Once we knew our prepress was predictable, then we went direct-to-plate."
While not revealing the specific cost of the system, Richards does say United Lithograph expects a three-year ROI. With only 10 months of CTP experience under its belt, it may be too soon to tell, but Richards believes the commercial printer will easily meet that goal.
"If you have knowledge about the CTP system—and the passion to use it—you'll be successful," she concludes.
No Turning Back
H.C. Miller, a commercial printing operation in Milwaukee, jumped into computer-to-plate with both feet and didn't look back.
So say company execs who invested in CTP in June 1997 to help expand a product from its Green Bay facility to its Milwaukee plant.
Like most printers using conventional plates, H.C. Miller found stripping and imposing film to be a labor-intensive, time-consuming, registration-evasive process. General Manager Ron Demske says his prepress area had already made the transition to a digital workflow, so moving to CTP was "fairly easy after learning the ins and outs of working with electronic files."
After reviewing the various platesetters and performing a cost-benefit analysis between conventional platemaking and CTP, Demske says, "It didn't take long to figure out that CTP was the best option. I knew it would save us money and require fewer employees than conventional platemaking."
Reducing the labor force was one issue Demske considered in determining his ROI; training his prepress manager and two prepress technicians to become in-house service specialists was another, which is exactly what happened after a Printware system was purchased.
H.C. Miller has realized a multitude of benefits from CTP. Demske says platemaking costs are about half that of conventional, and there's 50 percent faster turnaround. Also, he's seeing better press utilization, which includes improved registration and throughput of paper.
In Search of a Better Deal
"Cost per plate, that's the bottom line. We went strictly on price in making our decision [to change CTP systems]," says Craig Yolitz, prepress director at The West Group, a publisher/printer located in Eagan, MN. "We're paying 50 percent less than our current CTP plates."
The West Group, which has been using CTP since 1993, started with a Krause LaserStar system, then added three Creo devices. Pleased with the performance of the platesetters but not the cost of the plates, Yolitz says the company switched gears in July and installed the first of four basysPrint CTcP (computer-to-conventional-plate) systems (distributed by Citiplate).
Already a high-volume user of Citiplate plates on its (pre-CTP) projection-platemaking systems, The West Group prints mostly small runs that average 5,000 impressions. Using some 600,000 plates each year, Yolitz is rightfully concerned with the cost of plates.
"basysPrint is going to save us $1.1 million a year on plate costs alone," says Yolitz. "That easily justifies the cost of the equipment."
Can't beat the simplicity of this printer's ROI calculation.
Beating its estimated ROI by nearly a year, The John D. Lucas Printing Co., of Baltimore, recently upgraded its Screen (USA) system, which it installed in July 1996.
Since installing the technology, General Manager Barry Heyman says the company has realized "enormous savings," especially in labor reductions in the prepress department and reduced press make-readies, both cut nearly in half.
And that was just with the original installation. Lucas is now using an upgraded system.
"We're four times faster with the new system—four times the storage, four times the speed," says Heyman. "We get a lot more work out with a lot less people."
A major advantage of this system is that a printer only has to RIP one time, Heyman contends. If a customer needs to make a correction while on-press, a plate takes only 15 minutes and, within a half hour, the job is back on-press.
"We can go in and make a line change, without having to reRIP the whole piece. Just correct the line. It's an incredible time savings," explains Heyman, who cites, for example, that press sheet approvals, which used to take up to an hour, are now done in less than five minutes.
Furthermore, Heyman says he's seen substantial savings due to the system's ability to do multiple tasking, which allows several jobs to be worked on at once.
Extremely pleased with its new platesetting system, Lucas reports its ROI experience is as near a textbook example as any ROI experience could be.
Heyman says the decision to go CTP was made after the company completely investigated the costs involved in every aspect of its commercial printing operation, as well as the savings that would be made by going computer-to-plate.
"We brought in consultants and researched all the major CTP systems," he explains. "Screen had the best one to fit our specific needs."
According to Heyman, ROI on the first system was estimated to be about three years. However, since the payback occurred in under two years, Lucas was able to upgrade earlier this year. Since an ROI was done on the first system, Heyman says a second ROI wasn't really necessary. After all, the first computer-to-plate system had already proven itself.
Just to be safe, Heyman says the company took another look at all the new CTP products on the market to see if there was anything better being offered. Company executives decided to stay with Screen equipment.
While thrilled with the speed and efficiency of CTP, Heyman says the best thing about the computer-to-plate technology is the quality product it produces.
"Just about every customer we have mentions quality," he explains. "And that's a major part of the value—what you give the customer. The customer doesn't care how you get there, but we're able to get there quicker with a better product. And that's what it's all about."
Risk vs. Value
Determining the return on investment (ROI) on a big-ticket technology like CTP can be a scary ordeal for any printer. When the investment involves hundreds of thousands, even millions, of dollars, printers need a reliable gauge to measure the value—and risk—of their investment.
That tool is ROI, and learning how to use it correctly isn't as difficult as it may seem, according to Efrem Lieber, Presstek's director of sales and marketing, and a "guru" in calculating ROI on CTP.
"An ROI scares some people. They think it takes an accountant or an MBA to do it right. Nonsense!" exclaims Lieber. "There are really only two measures that make sense in calculating value—total cost to print and time to print.
"A printer worth his salt knows the costs of each area of his operation," Lieber continues. "If CTP suppliers can show you the elimination of steps in that operation, it isn't difficult to subtract the cost of those steps. The key is to include the total cost of the production process, including prepress, plate preparation, operating overhead, materials and labor expenses right up to the first usable press sheet."
For example, Lieber cites the printer that may reject the entire CTP process because the digital plates may be more expensive than conventional ones. As a result, he misses out on the advantages of reduced makeready, more stable press runs, lower labor costs and other benefits of CTP.
One of those benefits is increased productivity (and ultimately profitability), which is an intangible, but critical, factor in determining the second measurement of ROI: time to print.
"The CTP investment is an expensive one, but it may be one of the easiest routes to improved productivity and profits," says Lieber. "Eliminating process steps reduces the time it takes to print a job, which results in increased productivity in the operation." So the direct result is an increased work capacity.
"The more the equipment is used, the more a printer sees increased capacity to produce work using the same investment. So he gets the double benefit of using that increased capacity to produce more work, which generates more revenue and profit," he concludes. "You can't ask for a better combination than that."