Changing the companies he heads up is Vaughan’s speciality – and his professional raison d’être. An IT specialist, his last permanent role was a four-year stint as chief executive of Synstar, which specialised in computer maintenance and counted 70 of the FTSE 100 firms among its clients. However, it was initially loss-making and he describes the job as similar to his role at Communisis. “It was taking a straightforward offering like computer maintenance and adding little bits that are higher-margin.” Under
Vaughan’s leadership, the firm’s share price quadrupled to £1 and it was sold to Hewlett-Packard.
On coming back to work early last year, Vaughan then fell out with his next employer over change – or lack of it. He walked out of software firm Misys Banking Systems after just 19 days, when the firm decided that it did not want the revamp that he had been hired to implement. “I thought the best thing to do was to say ‘this is wrong for both of us’,” he says.
And Vaughan, who replaced David Jones at the head of the £260m print and DM group last October, is not shying away from bold changes at Communisis. When he published full-year results at the end of February, Vaughan announced a revamp of Communisis’ print management strategy whereby the group will focus on high-margin value-added services.
It’s all part of a plan to grab a slice of clients’ marketing budget beyond production. Vaughan estimates that 10% of that spend goes on production, while the rest is spent on other parts of the marketing process. He says: “But that’s the 10% that’s had margins squeezed absolutely down to nothing, or very little. Margin’s what we’re after. Having the print capability is what gets us on the radar. What we need to do now is to add extra services on the side to improve the margin.”
Extra offerings
Those extra services include money-spinning non-print offerings such as digital asset management and consultancy on subjects such as how best to use envelopes under Pricing in Proportion, response handling for direct mail campaigns, software consultancy and streamlining areas of the marketing process. He says that in those services, “it turns out that we’ve got rather more capability there than I’d expected. It’s all a bit top secret”.
Vaughan is working, though, to improve other areas of the company. While he says that his first impression of Communisis was one of a firm with an excellent customer list in financial services and retail, he says that he found “that the company could be tightened up and have a bit more ‘oomph’ injected into it”. Basic business processes needed to be “tightened up”, he says, such as collecting money from clients, detailed account planning and conducting full reviews of bids in order to properly analyse the firm’s competition.
And these are the things that all print businesses should focus on, he argues. “The industry needs to get smarter,” Vaughan says. “If you haven’t got an offering that includes technology and expertise, the margins are tiny. If you’re going to build up capabilities, it needs to be in value-added services.”
Communisis’ added-value and technological offering has brought it some success since Vaughan’s arrival.
Last month, a four-year, £20m print management contract for the Department for the Environment, Food and Rural Affairs was announced. The deal, which started this month, covers print and point-of-sale material as well as some creative services and digital asset management, and also opens up Communisis’ services to other government departments.
Production at the firm’s Liverpool mail site, which has been built to service the company’s £250m, 10-year statement printing deal with HSBC, has also kicked off this month. Billing work for Centrica, the owner of British Gas, will move to Liverpool later in the year as part of a seven-year, £196m contract.
According to Vaughan, it is the biggest transactional mail facility in Europe, and will have around 40% more capacity to fill even after HSBC and Centrica are up and running. With the amalgamation of the firm’s Altrincham direct mail site into Leeds, Communisis has the biggest DM site in Europe in its arsenal. It also claims almost 100% market share in the cheque printing arena and a strong presence in the business forms and security print market.
But for the future, Vaughan’s focus will be on a change to making profits, and getting inside customers’ firms, rather than just big print sales. “You need to work smarter and have the technology and consultancy skills that go around print,” he says. “Then you can have a conversation with a customer about how to improve his business process. That’s a value-based conversation, and it’s not about price. That’s where you need to get.”
STEVE VAUGHAN: FIVE FACTS
• He left his last job, as chief executive of Misys Banking Systems, after
just 19 days
• He has climbed three-quarters of the ‘Munros’, the 284 Scottish mountains over 3,000ft
• He is a successful amateur gardener and has won a medal from the Royal Horticultural Society for growing daffodils
• Early in his career, he worked on the first computerisation of murder enquiries and later designed air traffic control systems
• Before joining Misys, he spent a year travelling and visited Uzbekistan, Libya, Mali and Papua New Guinea among others
Communisis chief looks beyond print to solve the problem of tight margins
Im very interested in how you make change happen in companies how you take a company thats got an established way of doing things and do something different, says Steve Vaughan. With that, his stall in his six-month-old role as chief executive of Communisis is set out.
