Editor’s note: This article draws on market research conducted for InfiNet, an application service provider to the newspaper industry, and participants specifically requested that they not be identified.

Participants included several large media groups as well as some individual newspapers. For more information and a white paper on newspaper IT trends, visit www.summitmediapartners.com.

To reduce the cost of computer systems, software and support, media groups are requiring more standardization of software and services across their newspapers and are increasingly using centralized hosting to deliver them.

In conversations with chief technology officers of half a dozen media groups recently, I found that different groups are taking different approaches. However, almost all of them were either currently implementing or investigating some sort of shared services model.

An online survey of newspaper information technology managers also confirmed widespread agreement that standardized newspaper software applications would result in more effective use of IT dollars and that newspaper groups will continue to consolidate IT operations into centralized data centers.

“We’re in the process of studying; should we have a shared services center? A common payroll, HR and purchasing center?” said one group manager who did not want to be identified. “I think the money saving is centralizing services, not just servers. If I just bring all the servers in one data center, I might save a little bit of money, but in the long run, nothing. But if I centralize big printers, phone rooms and a group that paginates the pages, a lock box and credit card processing, then I can save.”

“[Our company] has been on a strong trend of centralization and we will continue that,” said another media group CTO. “We’ve done circulation, retail advertising and we’re starting to do classified. We have our first centralized classified advertising paper running. We are acting as an ASP (application service provider) — ‘centralization’ is just what you call it when you do it yourself.”

Mitigating risk

This CTO continued, “We’ve got a private point-to-point or frame relay network. We’ve had good service. We can do a backup VPN (virtual private network) connection quickly if we need too. It just works.”

To protect against the inevitable system or network failure, he said, his newspaper also has contingency plans. It keeps that which is necessary for pagination close to the paper. The CTO said he has the database tables needed to paginate classifieds replicated at his paper and that he doesn’t trust the Internet.

“We use VPN if it’s tolerable for a system to be down for a few hours,” he added. “For example, a circulation system going down for a few hours in a small market is not too bad. Also I can put the data up on an FTP server.”

He said, however, that he has no intention of centralizing editorial systems.

Newspapers are very cautious about moving core production functions like editorial and pagination outside of their individual newspapers. Several groups have corporate hosting for their Internet sites, sometimes via separate companies where they maintain an ownership interest.

Human resources and financial services are also being centrally hosted or outsourced at the corporate level. A survey of newspaper IT executives showed strong support for the potential of outsourcing IT functions, combined with a belief that outsourcing “business-critical” IT is probably not worth the risk.

Centralization vs. local autonomy

The savings from centralizing services depends upon first reducing the variety of systems in use to reduce the variety of skills needed for support. A company with a smaller set of applications to support from a centralized location can invest in a higher level of skill development in the support staff.

One barrier to centralization is the desire to maintain significant local control in the selection of the computers and software they use. One newspaper group’s chief information officer said his group is moving toward standardized systems, but the issue of corporate vs. local choice in the matter of system selection is an issue.

“We’ve never done a lot of mandating of how things are done. We’ve had extreme local control so it’s a special challenge for us,” he said. “We want standards that are not so stringent as to leave them no leeway. The markets are not all the same. They need to make some decisions for flexibility.”

In contrast, another group’s CIO said, “We faced that a couple of years ago. We used to believe in ‘responsible autonomy,’ but now we say, ‘hey, we’ve got to act like a corporation.’”

Tom Arnold is a partner of Summit Media Partners LLC, a management consulting firm serving media companies. He has worked with newspapers across America in the areas of process improvement, cross-functional teams, activity-based costing, cost of quality,…operational measurements and computer systems. Send comments and queries to tarnold@smpllc.com or visit www.summitmediapartners.com.