Carl Lewis: Welcome to the Connected Enterprise Podcast. I’m Carl Lewis, your host from Vision33, and my guest is Florian Zimniak from SAP PRESS. Welcome, Florian. Please tell us about yourself and your work at SAP PRESS.
Florian Zimniak: Thank you for having me, Carl. I'm the managing director at SAP PRESS’s US offices in Boston. We publish books and ebooks about SAP-related topics, IT, computing, desktop publishing, and other technology. We offer a subscription service for readers and have a background as a traditional book publisher in Germany, where our company is headquartered. Here in the US, we focus exclusively on our in-print SAP PRESS, which is a cooperation between SAP and our company, Rheinwerk Publishing. SAP PRESS has been in the US since 2006, and I came in 2010. It's been exciting to see our industry come up with new product formats in electronic publishing.
Carl Lewis: I'm always interested in people’s perspectives from different industries because we talk about industry trends like automation, AI, IOT, machine learning, etc. What are people talking about, and do you think the pandemic has affected the choices people are making and how they're looking at the world?
Florian Zimniak: It's been a weird year. We usually get input from customers and authors at conferences. Since there haven’t been any, we’ve just been working on our books. We see moderate interest in what SAP calls intelligent technologies, like automation. We're too early in the cycle for these technologies to be widely adopted. Many customers are interested in what vendors like SAP offer in those fields, but we don’t know when the industry will be ready to go large scale. That’s what everyone's trying to figure out.
Carl Lewis: You feel like there's more talk than action regarding putting these new technologies to work? Are people just experimenting?
Florian Zimniak: What I find interesting about technologies that enter a hype cycle is how the talk peaks and everyone thinks they're missing out if they join in. And then things start to disappear. This is well established in Gartner's hype cycle. Often, these technologies don't see a big bang – they seep into business practices slowly. For example, many small instances of adoption versus large projects, especially in machine learning and IOT. There’s a narrow scope being trialed for those projects. People are discovering what's possible, the use cases, the investments, the knowledge required, where to get it, etc. We're still at an early stage.
Carl Lewis: Do you think the pandemic has affected how companies are approaching and adopting these technologies?
Florian Zimniak: It's hard to tell. Many companies are saying, "We're not sure where this is going." It’s not the time for big investments in experimental tech. Many people are working from home. Some might be working less because they have fewer projects. Maybe some work a few hours and educate themselves on these technologies. But there are two paths. One is learning and kickstarting your imagination on what you could do with various tools, and the other is putting them into projects and implementing them.
Carl Lewis: You’ve said book sales to organizations have declined, but book sales to individuals are steady. That could be individuals thinking, "This is a great opportunity for me to keep up with the technology." What kind of impact do you see? How has the pandemic affected SAP PRESS’s work and annual sales?
Florian Zimniak: The most notable impact is that we've been working from home for six months. We’ve also seen an acceleration in ebook adoption. Ebooks have risen for seven or eight years, and they make up the majority of our business. The ratio between ebook and print is 70/30, and print – mainly retail sales – was hit. Or, like at Amazon, books were deprioritized and not shipped as fast as items considered necessary for people to survive at home.
This could be another big push toward ebooks. Long term, that means printing books is still a viable option because the unit cost goes up – not exponentially, but significantly – if your print runs get smaller.
Another effect was no conferences this year. Conferences are significant author-acquisition tools and a way to present our program to our audience. Customers can browse at these events, and we see good traffic at our booth. They’re expensive, though. And the immediate ROI is a little unsure. What we sell at conferences is rarely enough to make back the expenses. But we're spending less on marketing. We'll see what the long-term effect is. And last, we see less spending from the corporate side, which is a concern because that’s lost revenue. We see less willingness for long-term commitments to our subscription program, where you can subscribe for up to a year. Customers are choosing shorter subscription cycles.
Carl Lewis: What kind of feedback do you hear regarding your customers' challenges as they make these technology changes?
Florian Zimniak: One of the first challenges is use cases/ROI models. Technology conversations are driven by IT pros, who then pitch a case to C-level management for spending approval. We must understand better what we’re supposed to do with these technologies. It's not enough to hear, “This is the intelligent enterprise. This is the future. Don't miss out.” We need to know why we should be spending money and how to make it back. And IT has been a problem for a long time; it continues specifically with technologies not directly tied into specific applications.
Another issue that’s been prevalent in SAP projects for decades is change management. Software business applications touch your daily work a lot. And as a user, regardless of your corporate level, you don't want to change. You're not necessarily interested in learning new tools. You want to conceptualize new products. You want to find new customers, but you're not necessarily interested in the tool at first. Getting users onboard has been a problem in the SAP realm for a long time. It’s a challenge with every new technology.
Carl Lewis: What’s the next big thing on the horizon for publishing? You said ebooks are a big part of the business. How will you deal with that? What's on the horizon because of that shift?
Florian Zimniak: We've had ePUB standards like the XML dialect used for book or text products for years. As an industry, publishers still aren’t utilizing ebooks to their full potential. If you think about multimedia applications, ebooks are still primarily texts. There are very few publishers who work with video.
I think that’s where new products could come up. In publishing, you have large publishers with a lot of R&D budget for stuff like this. Then there are small, independent publishers who work under tight margins. Most of their revenue gets absorbed by the distributors, the platforms that sell, or the retailers.
And these companies have a hard time innovating and finding solutions that break their processes or require them to work in formats they don't know how to produce yet, like video versus text. I'm interested to see if ebooks are fully developed or if there's more to come. One aspect the epublishing industry as a whole – and small, independent publishers in particular – needs to catch up with is production automation to make the process more efficient and cost-effective. And then utilize content in various forms. Electronic content has – theoretically, at least – the advantage of being usable in multiple ways. You can sell it as a book, sell it as chapters, sell it via distributors, etc.
You can mix it up. You could conceive new products from various parts, pieces, or chapters from various books. But your data must be in a well-defined shape, and many publishers aren't there yet. They’re stuck in proprietary formats they can’t efficiently convert into an XML structure that allows them to do innovative things with their content. That's where the industry must pick up speed.
Carl Lewis: How do you do most of your business communication now that you’re working from home? Has it changed? Have new things come to the surface since you've been home?
Florian Zimniak: Definitely. We're doing our meetings on video platforms. As a manager, I wasn’t a fan of working from home. I like the office environment. I like walking up to someone to discuss an issue on the spot. So, I'm surprised how well it works. Phones seem to be on the way out, but that was the case before the pandemic. There’s a huge difference in phone usage between my generation and people who enter the workplace today. I think phones are still useful, but today's workforce wants email, Slack chat tools, Zoom, etc. You mentioned social media is important for your work. For us, it’s more of an initial contacting tool or a way to assess what thought-leader status an author prospect has. There’s not much business communication throughout projects.
Carl Lewis: My company is discontinuing our IP phone system to use Teams soon.
Florian Zimniak: Yes.
Carl Lewis: Twenty-nine of our locations. That’s a huge shift. And the pandemic has only escalated that change.
Florian Zimniak: Right. I see several things that might change forever. I renewed our office lease in January for seven years, but now no one's going to the office. The same for an IT infrastructure – we have a server rack at our office where our application-filing service runs. Is this still state-of-the-art? It probably wasn't when the pandemic started, but it's even less today. We’re only seeing the beginning of the changes the pandemic will cause.
Carl Lewis: I agree with you about being in the office. I like real-time conversations. We called it ‘management by walking around.’ It’s not the same when you’re home!
Florian Zimniak: That kind of management doesn't have the best reputation anyway. Maybe now – finally – managers will understand that employees never enjoyed it.
Carl Lewis: That's possible. What do you think about companies that deploy technologies with third parties? You have consultants out there with SAP PRESS materials that are essential for them. When they engage with customers to deploy these new technologies, what’s the biggest challenge they face working together?
Florian Zimniak: From a customer perspective, reliability and cost transparency are the biggest issues. Our company created an experience for implementing software. There's a lot of enthusiasm if you speak to salespeople. With the actual implementation, schedules become busier. No one has as much time to take care of your every need. That’s an issue consulting companies could improve.
Our company is about 20 years old, and I've seen 18. We've always been hesitant to employ outside resources. For a publisher, this was weird in the 2000s because it's expensive to develop your technology needs in-house. But for us, it was important to rely on people with the same goals. It’s worked out okay. We've had projects that took too long or were too expensive, but we could always influence where we were going from the top down. That type of control is what many companies struggle with when they work with outside consultants – you can’t control the course your project runs.
Carl Lewis: Do you use a lot of proprietary software?
Florian Zimniak: The most important pieces are proprietary. We have a product database/ERP system. It’s maybe too much, but some aspects came out of the box. We’ve also customized it heavily, and we pay the price. Now, we must decide the next step. What’s the future of this implementation? Are we ripping it out and replacing the whole thing? Are we trying to reform it? It would be easier if we’d chosen a more standard product. Everything we have regarding ebook creation and delivery is homegrown. Or we worked with book producers who’d educated themselves in electronic publishing. But yes, most of the business-critical software these days is homegrown.
Carl Lewis: You said everything is on-premises. Are you considering a cloud implementation?
Florian Zimniak: For some pieces, yes. It might be basic infrastructure pieces, like where our files are stored and where our backups run. For the rest, we’ll see. The proprietary pieces of software like ebook creation, ebook delivery, and our e-commerce platform we’ll keep inside for the foreseeable future.
Carl Lewis: Have you automated your business relationships with customers and distributors?
Florian Zimniak: Yes, the pieces I just mentioned. We have a smooth process of manuscript submission by the author. The author writes a manuscript in Word status rule that everyone knows how to use and has access to. Then, when we're done writing and editing in Word, things go automated. Conversion tools move it out of Word into the XML structure you need for ebooks. From there, we generate the various ebook formats we offer, including PDF, ePUB, and Mobi for Kindle devices. That’s automated. And finally, delivering the ebooks to customers who order them on the website is automated.
Another one is email marketing. We’ve invested heavily in that. We're still finding new possibilities and opportunities for automated workflows – how to recommend books that might be relevant to customers, keep customers engaged, and share free content from various platforms. We’ve spent a significant part of our marketing budget on this, and it works well so far.
Carl Lewis: That's good. I get a few emails from you occasionally, and, as I'm sure you know, I went through my own publishing experience with your company. It was smooth. Please tell Emily Nichols hello from me.
Florian Zimniak: Will do.
Carl Lewis: She was an incredible help. The style template took time to get the hang of, but it was a huge help.
Florian Zimniak: That’s the first step in the automation process: Tell us what you want your book to look like in the language of our style sheets. Then, everyone is on the same page. Yes, it takes time for our office to get used to. There’s always resistance. But it makes the project experience for authors more comfortable and allows us to publish a book within four months. That’s pretty fast.
Carl Lewis: We had several pieces of the book, and some were more frustrated than others, but it all came together with Emily's help. She was patient and understanding. Well, thank you for joining us, Florian. The publishing industry gives this conversation a unique perspective because you publish books about SAP’s technology. I hope we can publish another one if SAP keeps moving with SAP Business One.
Florian Zimniak: Thank you, Carl. It was a pleasure.
Carl Lewis: And to everyone out there, please stay connected.