EFI is forging ahead with its technology-by-acquisition strategy. In recent years, the dynamic US-based pre-press vendor has collected some of the best and brightest – and Australians have played a significant role.
It is hard to believe that EFI was once known as 'the Fiery company'. Three years after being started by Scitex founder Efi Arazi, in 1989, EFI shipped its first Fiery colour RIP. Since then, the bulk of its product offerings, from pre-press to output, have been integrated into its portfolios from corporate pick-ups.
These include startups in the fields of web-to-print, MIS, RIP and proofing, file management and wide-format output. In web-to-print there has been Digital StoreFront and PrintSmith Site; in MIS there’s browser-based PrintSmith, Pace, Monarch and Radius; in file prep there’s Fiery and ColorProof XF, now integrated into Prinergy and Apogee; in production and output there’s wide-format Vutek, including the new GS5000, Rastek for display graphics and Jetrion for labels and packaging; and in file management there’s Alphagraph, Spanish ceramics print technology developer CretaPrint and Brazilian ERP powerhouse Metrics Sistemas.
Australian software developers figure strongly among EFI’s acquisitions. In October, EFI acquired Australian developer Metrix; last year it was Online Print Solutions (OPS); and in 2011 it was Prism.
EFI discussed its mergers and acquisitions strategy at its annual Connect user conference in Las Vegas at the start of this year. Chief executive Guy Gecht said the two drivers for any acquisition were to grow EFI's geographic reach and to add new applications.
The Prism and OPS acquisitions show both sides of this strategy. Prism helped EFI grow its share of the Australian MIS market above 50%, while OPS adds online ordering and cross-media, which will augment EFI's Digital StoreFront platform, says Gecht. "We used to be a US-centric company but we want to be global."
Several Australians are now part of the EFI mix. Rohan Holt brought in his Metrix imposition software. Kathy Mitchell is the face of Prism and its MIS products in Australia. Mike McGowan represents OPS and its web-to-print software. Nick Benkovich recently joined EFI after initially being the Australian distributor of Scenicsoft, and then moved up the ladder with the Creo (Preps) and Kodak (Prinergy) acquisitions. Laurence Snyder was the Australian chief executive of EFI pick-up Streamline, which brought PrintStream and its mailing and fulfilment strengths to EFI.
EFI chief financial officer Marc Olin tells ProPrint: "EFI identifies acquisition targets based on at least one of four criteria: will this help EFI offer new applications to customers; will this expand the functionality of existing products; would this acquisition help consolidate the fragmented market segments; and would this help EFI expand geographically? The three recent acquisitions in Australia and New Zealand not only meet one or more of these criteria, but the organisations are all great cultural fits with EFI and have many happy customers – two other requirements for all acquisition targets."
He says Metrix expands the company's MIS product offerings, specifically enhancing its imposition functionality and bridging the gap between pre-press and MIS and ERP. It also enhances third-party integration of EFI’s workflow and expands the company’s presence in the Asia-Pacific region. "We are still very early in the integration, but the Metrix products will be further integrated into our Pace and Monarch MIS products," he says.
OPS was acquired with the intention of expanding EFI’s web-to-print and cross-media marketing products, says Olin. “The web-to-print market was highly fragmented, and today EFI is a clear leader in this segment. Today we are on the path to integrating OPS and EFI Digital StoreFront into one product, while providing a seamless migration path from both products.”
Prism also helped expand the vendor’s regional presence and consolidated the highly fragmented MIS market. “The team is fully integrated, and while we are no longer accepting orders for Prism WIN MIS and Prism QTMS, we continue to support the existing customer while giving them an option to migrate towards one of EFI’s core MIS and ERP products.”
The imposition improver
Metrix founder and chief executive Rohan Holt is these days the director of EFI Metrix Products. His recent induction into EFI has been the culmination of a corporate narrative that’s a bit like the story of the sardine swallowed by the minnow swallowed by the salmon.
His original company, Holt Software, a start-up in his native Wollongong, was the incubator of Superimpose, an imposition planning software product he pitched to complement American Preps from ScenicSoft. In 1999, ScenicSoft then bought his company and brought him to Seattle to develop its UpFront product.
Holt returned to Australia in 2002 and founded Outback Software the following year. That spun off LithoTechnics, the company under which he developed Metrix, an automated calculation device for impositions that frees users from databases of static templates and the pain of manually imposing pages.
Also in 2003, Canadian outfit Creo acquired ScenicSoft and enhanced UpFront with early JDF capabilities. In 2005, Kodak bought Creo and UpFront became a Kodak product. In 2009, Metrix (LithoTechnics) became an EFI business partner and its imposition software was integrated with EFI's MIS portfolio. The partnership proved a fertile staging post for Metrix’s acquisition as an EFI product.
Holt has now moved back to the US with his young family. Speaking to ProPrint from his Seattle office, Holt recalled the difficulty in attracting EFI’s interest. The vendor initially had no interest in Metrix, and in 2008 Holt clinched a reseller agreement for his imposition software with MIS developer Pace. Soon after, EFI bought Pace, which drew Metrix onto EFI’s radar, resulting in an EFI-Metrix partnership the following year and then the subsequent buyout.
Holt is upbeat about EFI’s acquisition of Metrix. “What we bring to the mix is unique. EFI have these MIS products that are good at data collection, estimating and costing, payroll, inventory control and so on. But without imposition, there’s a huge missing piece. This is a critical place to optimise and make money for your workflow. Today, most MIS products have no consideration of ganging. I’m not talking about high-end ganging like Whirlwind Print and Worldwide Online, I’m talking about just three different products on the same press sheet. You’ve just saved two make-readies and two sets of plates, and you’ve potentially doubled your profit margin for the week in one job.
“We’ve been there for EFI as a third-party partner while they’ve been busy with these MIS roll-ups. But they’re now looking at the next step – of completing the end-to-end workflow and Metrix is a critical piece in that flow. We will connect the MISs to the pre-press systems. We’ve done it a little bit as a partner, but now we can go a lot further.”
Holt says Metrix will still be sold as a standalone product, as around half its customers do not have a commercial MIS. Some printers, like CMYKhub, have built their own MIS, he says, and Metrix is a critical component for such custom systems.
The Metrix product will become available as a fully integrated optimisation engine for Pace and Monarch. For example, there will be Metrix modules within the MIS that will not be immediately identified as Metrix. “Let’s say you have a Pace MIS and you get an order for a DL 52-page job. Metrix will help you split that into three 16-page or four-page signatures, or it might be two 24pps and a four-page. It will do this without you having to open Metrix.”
Holt says Metrix’s current list of third-party resellers and end-users will not be affected by the EFI buyout, although some of Metrix’s technical partners that are now competitive MIS developers will be reviewed.
Holt's days of seeking seed money or the proverbial white knight may now be over, but he knows how difficult it is for Australian software entrepreneurs to access capital. As the pioneer of two software companies at different times in his career, he recalls the first time was very difficult. “I was from the printing industry and, if you read a book called The E-Myth, I had an entrepreneurial seizure. I’d never owned a computer before, so I taught myself to write software. Funding would have been a lot of help back in the 1990s.”
The W2P genie
OPS opened new market segments for EFI when it bought the Sydney-based web-to-print developer in 2012, according to EFI’s Mark Olin, with key OPS features integrated into EFI’s Digital StoreFront platform and into its MIS software. OPS was also to be integrated into Fiery digital front ends, allowing OPS customers to connect to a range of Fiery-driven printers such as Xerox, Ricoh, Canon and Konica Minolta.
OPS business development manager James Valbuena says OPS’s scalable solution allows subsequent integration of modules for online variable data printing and cross-media marketing.
“This allows the printer to open up new revenue streams as their online presence grows. Another point a printer should look at when purchasing a web-to-print solution is its ability to integrate with other third-party systems, such as MIS and workflow solutions. Double handling can often be made obsolete when an integrated workflow is put in place.”
The MIS winner
New Zealand MIS pioneer Prism Software, which nowadays goes under the name of EFI Prism Products, was acquired by EFI in 2011. At the time it had more than 7,000 users of its flagship WIN MIS across 10 countries.
The MIS developer has had a working relationship with Metrix for years and WIN and Metrix have been demonstrated together at trade shows.
Under the terms of the EFI buyout of Prism, WIN was no longer sold to new customers, although EFI Prism Australia has continued to support existing users of the software, which include Salmat, Snap and Blue Star.
EFI's Olin said at the time: “They have built a very impressive list of clients in Australia, New Zealand, Europe, South Africa and North America, and we welcome those clients to our large global client base."
The case for remaining independent
Not all Australian print software kingpins have sold their businesses to large overseas pre-press vendors. Veteran proofware guru Peter Skarpetis, who blazed the trail with his Serendipity Software company in the 1990s, makes the case for remaining independent.
He admits that securing seed capital in Australia is hard. But Skarpetis says the decision to hang back from the chase for US funding is a lifestyle choice; he prefers to view the Pacific from the Australian side, close to family and friends. He also says his independent stance is grounded in sound business principles and the desire of being his own boss. “What I do is still fun,” he tells ProPrint, “but as I get older, maybe I’ll consider [selling] it.”
Serendipity’s keystone software product, BlackMagic, intrigued pundits when an early iteration was demonstrated at PacPrint 1996 as a solution to replace PostScript files in proofing. But it was not until a few years later, when HP released its HP2000 printer, a 600dpi device that quadrupled the number of dots that could be laid on the image, that halftone RIPing and proofing began to take the industry by storm.
With an impressive marketing footprint for a company its size, Serendipity has equipment manufacturers and distributors spanning the Americas, Europe, Asia and the Middle East. Skarpetis says this proven global network means Serendipity can continue to prosper on its own, particularly as it has now shifted its focus to the lucrative signage and packaging markets, with less emphasis on commercial sheetfed.
The BlackMagic maestro makes it clear he is not criticising EFI or other companies on the acquisition trail, nor the companies they acquire. “There are times when big companies like EFI buy companies for legitimate reasons to develop something that would take them years to develop and that they need to incorporate into their product.”
Nik Hampton and Ben Day, co-directors of Brisbane-based MIS and web-to-print software developer Pirion Systems, are currently enjoying the fruits of 100% equity since they repatriated Blue Star’s stake in their company in 2010.
Pirion was founded by the code writers in 1999. Its early achievements included a PostScript driver for VDP, which led to a partnership in 2002 with Pirie Printers in Canberra. The deal enabled Pirion to develop content management tools for a growing client list and led to a joint venture with Blue Star that lasted several years.
Hampton and Day believe regaining full equity in Pirion has driven the company’s success, although Hampton does not rule out ever being acquired by a global pre-press giant. “We’ve knocked on doors but we’re not chasing anyone,” he tells ProPrint.
Hampton and Day much prefer their new status as an independent developer with a direct client base and reselling partners such as Canon and EEMS. Hampton believes that client ideas – which he considers the lifeblood of software development – are eroded when a company becomes part of a much larger entity. “The client’s voice becomes a little smaller as a result,” he says.
The only downside of independence is the constant search for funding. That said, a stand-alone like Pirion reaps the benefits of one-to-one client feedback. That has helped enormously in enhancing its PrinterFace FS suite, a web-to-print ordering system that handles everything from digital print submission to templated ordering of products such as business cards, stationery and letterheads, as well as online cataloguing enabling printers to move clients from their desktops to publication.
Hampton believes global vendors with deep pockets generally have the foresight not to transform their acquisitions too radically, so that being integrated into EFI or a similar outfit “can be a positive experience” for the acquisition and its customers.
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