The gospel according to EFI is very persuasive. Its supplier conference was an opportunity for the host company to revel in its achievements, to spread the word among employees, to shore up the loyalty of customers, and maybe even to convert the odd bystander, such as representatives of the trade media.
ProPrint was a special guest at the US company’s annual customer event, Connect. Hundreds of EFI employees, partners and customers gathered at The Wynn in Las Vegas for a few days of speeches, seminars, training sessions and plenty of networking.
[Photos: Aussies in Las Vegas]
EFI brought a few secret weapons to the conference. Chief executive Guy Gecht is a magnetic presenter. In his keynote speech, he tempered his zealous passion for the brand with honesty about market challenges and a good dash of humour, all wrapped up in a Silicon Valley swagger.
EFI’s staff and many of its customers seemed enamoured with their supplier. Its merger and acquisition (M&A) strategy seems sure-footed and prescient of the changing marketplace. Its financial position is there for all to see – it is in rude health while so many vendors struggle with a rapidly evolving industry. The company is incredibly bullish about its product portfolio, its customer successes, its growth strategy and its financial position. The enthusiasm is catching.
EFI even brought some star appeal to Connect thanks to special guest Benny Landa. A little of the inventor’s magic dust brushed off on EFI, a company that some associate more with buying in innovation through acquisitions, rather than having its own lightbulb moments.
You can’t accuse EFI of failing on the former account. The US firm, once known mostly as ‘the Fiery company’, has grown beyond the ubiquitous front end through a decade of M&A activity in inkjet and software (see below). The cash-rich company continues to spend big to buy market share and adopt new technology.
Its M&A spree for “workflow optimisation” software is particularly relevant to Australians; the US giant has been doing plenty to expand its footprint in our humble little nation over the past two years.
EFI now claims more than 50% market share of the Australian MIS market. EFI’s portfolio comprises entry-level tool PrintSmith, mid-range product Pace, high-end system Monarch and packaging and label tool Radius, but it is fair to say none were major players in Australia. EFI’s buyout of Prism in late 2011 gave it a serious foothold in Australia. The takeover didn’t go exactly to plan, with many local Prism users resistant of the idea of being moved across to one of EFI’s equivalent systems as soon as possible.
But the vendor is keen to put those early setbacks behind it and move ahead. EFI’s general manager of Productivity Software, Marc Olin, says: “Our challenge now is to get over the noise of what happened with Prism and say ‘We understand you weren’t pleased with what we did there, but here is the reasons why, look at these advantages you can get with this integrated workflow that Prism could never have provided.’
“Lets move on and take advantage of the opportunity that exists. I think you will see announcements over the next six months where some of those Prism clients are taking the leap to make that switch.”
Prism users aren’t the only local customers now inside the EFI fold. The company’s most recent acquisition target was UK-based MIS developer Technique. Its users include some of the biggest web offset printers in this country: PMP, Franklin Web and AIW Printing. Most recently, IPMG, parent company of Offset Alpine, Hannanprint and Inprint, decided to switch to Technique.
In an oblique reference to IPMG, EFI chief executive Guy Gecht told the audience at Connect: “We lost a big deal to Technique in Australia. We hated that we had lost and we bought them.”
If Prism and Technique were both ways to buy market share in Australia, its other local acquisition was all about technology. Web-to-print software provider Online Print Solutions was developed here. The founder, Mark McGowan, is an Australian, as are many of its key personnel. They brought a distinctly Australian charm to the big American feel of EFI Connect.
OPS offers a range of typical web-to-print functionality. But the component that made EFI sit up and listen was its cross-media offering. OPS users can schedule campaigns that span printed direct mail, personalised URLs, email marketing and text messages. It is clearly a winning combination, and customers have included Salmat and the world’s biggest printer, RR Donnelley. EFI will integrate OPS with its Digital StoreFront system over the next 18 months.
M&A in its DNA
Acquisitions are so integral to the company’s personality that chief executive Guy Gecht even gave guests a step-by-step overview of EFI’s M&A process.
The temptation to wax lyrical about EFI is in no small part down to Gecht himself. The audience were clearly swept up in his theory of the ever-moving ‘Window of Opportunity’ and how EFI is working so it doesn’t fall behind.
“What does EFI do?” Gecht asked the packed seminar hall. “We innovate and we acquire.”
In terms of innovation, the company invests 20% of its revenue in R&D, said Gecht. EFI has one team of developers in Silicon Valley and another in Bangalore, India, enabling virtually 24/7 R&D on its software portfolio.
A man who knows a thing or two about M&A is Benny Landa, who founded Indigo and sold it off to HP. The special guest gave the Connect audience insight into some of the more unexpected innovation coming out of Landa Labs. The technology in use in Landa’s nano presses could also fuel new developments in pharmaceuticals, green energy, pyrotechnics, LED screens and even hair dye. Riffing on his famous quote about the rise of digital print, Landa said: “Everything that can go digital will go digital… and hair colour is no exception.”
As well as Prism, Technique and OPS, EFI’s other acquisitions have been many and plentiful (see box, previous page). In the past 12 months, it has taken over companies in Australia, Brazil, Spain, the UK and even a one-man company in France. “We used to be a US-centric company but we want to be global. We get a lot of people contacting us to be acquired. We are one of the few companies in the industry that is growing,” said Gecht.
The inkjet story
It is easy to get swept up in the hyperbole. There’s no doubt that EFI has become a major player in Australia, especially in MIS. But EFI is also expanding its portfolio in inkjet printing.
One of the most interesting acquisitions was Cretaprint. EFI acquired the Spanish ceramic tile printing company in early 2012. EFI’s chief technology officer, Ghilad Dziesietnik, used his Cretaprint seminar at Connect to take the audience though the ins and outs of this most unusual application for inkjet. Ceramics might seem an offbeat segment, but Dziesietnik claimed the sector was showing “the fastest adoption rate of any industry of converting from analogue to digital”.
“It is faster than CTP. It is phenomenal,” added Dziesietnik.
It is a weird and wonderful technology. Pigments are printed onto tiles before they are superheated in a kiln. One of the most unusual aspects of ceramic tile printing is the fact that it doesn’t use CMYK. “The colours before and after the kiln are completely different”, said Dziesietnik.
This makes colour management a trial. When EFI entered the sector, the company was confident of applying Fiery colour management to this age-old manufacturing sector. “When we told them, ‘Give me a monitor and a file and we will print an inkjet proof and it will look the same as the tile’, they didn’t believe us.”
Yet EFI has since devised an abstract model to provide colour management.
Ceramic printing is new. EFI’s presence in inkjet is not. The company has been in inkjet since it acquired Vutek in 2005. Listening to its inkjet experts talk up the company’s achievement during Connect was impressive. But what about Australia?
It is fair to say that Vutek and Jetrion have gained more traction in their home market of the US and in Europe than they have here. Gecht admitted to ProPrint that Australia had been less of a focus
for EFI’s inkjet. But with its eyes now on Asia Pacific and an increasing workforce in Australia (admittedly in workflow), he expects that to change. After everything else EFI has achieved in the past two years, it’s not too hard to believe him.
One-on-one: Marc Olin
The general manager of EFI’s Productivity Software division spoke to ProPrint about the company’s plans for Australia.
EFI has bought a number of Australian MIS vendors. What next?
Our key initiative in Australia is rolling out our core products to new customers. We signed two large Pace deals at the end of the year in Australia. The next step is to sell Pace, Monarch and Radius into the market.
What does the Prism buyout give you in Australia?
We are retraining Prism people to sell [Pace, Monarch, Radius and Print Smith] in Australia. It gives us a salesforce and people supporting clients.
Are you focusing on completely new customers or existing Prism users?
Both. We have some brand new ones but also talking to existing Prism clients who want to make the transition to the new products.
Is it right to say the Prism buyout was about market share and OPS was about new technology?
Yes, exactly. Not to say OPS doesn’t have a nice client base, but it wasn’t nearly as big a company as Prism from a revenue or client standpoint.
The acquisitions were for different reasons, but both were Australian – is this more than just a coincidence?
We don’t like to do a market small. The key thing about being in a geographic market is that you have to have the core infrastructure there. We wanted to be the biggest in Australia and have the opportunity to service Prism clients and Technique clients and cross-sell Prism clients onto new platforms. OPS was more of a coincidence.
Is it accurate that EFI has a 50% market share of MIS in Australia?
That is my best estimate, although that is from a revenue perspective not an install perspective, because we have the bigger clients. There are a number of smaller players that have more installs. We do have PrintSmith in all of the Kwik Kopy locations. Prism is in the Snap locations.
Would you consider MIS acquisitions at that smaller end of the market?
Sure, but I think the MIS providers that are left are probably very small in terms of their revenue base so they wouldn’t be our highest priorities right now. It takes just as much effort to acquire a
$2 million company as a $10 million one.
With Prism, there was some outcry about your plans to transition printers over to an EFI system. With Technique, you are planning to continue marketing Technique rather than try to shift customers over to an EFI product. Why is this?
Each [acquisition strategy] is a different situation on a case-by-case basis. The Technique technology was much more modern than the Prism technology. Technique was growing rapidly, which Prism was not. That being said, we learn from every acquisition on how to better communicate with clients. Certainly we could have done a better job at the start with the Prism clients. I don’t think we will do that badly again, even in a similar scenario to what we did with Prism.
Local Prism users reacted quite strongly to EFI’s plans. Was that different than you were used to?
I think there is more of a sense of ownership of the MIS investment on the part of Australian printers than there has been among US printers. They can be a little bit more passionate about their feelings than US printers. Our challenge now is to get over the noise of what happened with Prism and say, ‘We understand you weren’t pleased with what we did there, but here are the reasons why. Look at these advantages you can get with this integrated workflow that Prism could never have provided.’
Timeline: M&A
Over the course of a decade, EFI has grown from a US-centric group to a global force by way of its many and varied acquisitions
October 2003: Printcafe
EFI’s first acquisition in the MIS and workflow space. General manager of EFI Productivity Software Marc Olin joined in this transaction.
April 2005: Vutek
The buyout of this US-based wide-format manufacturer took EFI into the inkjet printing space.
September 2006: Jetrion
EFI entered the digital label printing space with the acquisition of this manufacturer from ink maker Flint Group.
July 2008: Pace Systems
This acquisition gave EFI a major share of the MIS market in the US, where at the time there were around 500 installs of the ePace product.
December 2008: Rastek
EFI took over Silicon Valley-based Raster Printers in 2008 and brought it into
its inkjet suite along with Vutek.
April 2010: Radius
This takeover target added an MIS for the packaging and labels market. Radius was headquartered in the US but had much of its workforce in the UK.
February 2011: PrintStream
EFI bought out Streamline, the developer of the PrintStream MIS, to target the mailing and fulfilment sector.
July 2011: Prism
The acquisition of this Australia-based developer gave EFI a major stake of the MIS market in this country.
November 2011: Alphagraph
German-owned Alphagraph offered a number of MIS products for the printing industry, including Prinance, Printy and Primus.
January 2012: Cretaprint
The deal for this Spain-based manufacturer opened up a whole new market: ceramics printing.
April 2012: Metrics
EFI became the largest supplier of MIS in Latin America following this deal for the Brazil-based firm.
September 2012: Online Print Solutions
This Australian web-to-print developer was acquired to add cross-media tools to the EFI portfolio.
November 2012: Technique
This acquisition gave EFI a number of top-tier local web and gravure customers, including PMP, Franklin Web and AIW Printing.
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