Monday, September 28, 2009

CIOs Pare Their Suppliers

Information Officers Focus on Big Vendors With Wide Offerings

In a September 16, 2009 article in the WSJ author Jerry A. DiColo detailed

"Chief information officers--the executives charged with running corporate technology departments--are looking to reduce their number of suppliers to focus on large vendors with wider product offerings.

The Change reflects a growing push by companies on tight budgets to form partnerships with suppliers managing bigger swaths of information technology operations."

Sounds like MPS may help these CIOs achieve their goal of reducing vendors!

Details of the HP / Canon Alliance

Canon announced it will allow Hewlett Packard to sell most of its copier product line.

  • Expansion of 25 year relationship between Canon and Hewlett Packard
  • This is a one-way agreement, as Canon will not have access to HP devices
  • HP will sell Canon branded B/W and color copiers from segment 2 up through segment 6
  • Initially, HP will market the Canon brand, but then will switch to offering the Canon copiers with the HP name on them as soon as it develops HP JetDirect based print controllers for them
  • All current HP LaserJet and Color LaserJet devices are made by Canon
  • HP will also resell Canon’s imageWARE and MEAP solutions
  • Canon is looking gain back marketshare when it lost all IKON locations when IKON sold out to Ricoh, and when DANKA sold out to Konica Minolta in the U.S.
  • This is fifth time that HP has attempted to enter the office copier space
  • HP will use expanded product offering to grow its Managed Print Services program, “creating an integrated platform and brokering a network of service partners that will enable resellers to sell contractual print offerings"
  • "create new global business unit”, called Managed Enterprise Solutions, led by Bruce Dahlgren (former Lexmark executive) and headquartered in San Diego, CA
  • HP, which recently acquired IT services provider Electronic Data Systems (EDS), will use 500 certified EDS account managers to sell managed print services with this new expanded device offering to companies in the U.S. (EDS currently accounts for 20% of HP’s MPS sales)
  • While HP will do the billing for contracts that include Canon branded devices, HP will subcontract the service to either Canon branches or Canon dealers, based on customer request
  • Customers will contact HP to place service calls, and HP will then dispatch to Canon branch or dealer
  • HP claims to have 2000 customers under MPS contracts, including 450,000 devices and 18 billion pages per year.
  • HP claims to win 60% of all MPS bids it participates in.

Saturday, September 26, 2009

InfoTrends and Strategy Development Announce Development of Managed Print Services e-Learning Program

InfoTrends, the leading worldwide consulting firm for the digital imaging and document solutions industry, and Strategy Development, a management consultant and advanced sales training firm, announced the development of a new e-learning portal focused on Managed Print Services (MPS) Sales Training. The Web-based training program is designed to educate sales reps, sales management and principals on the requirements for a successful MPS strategy and sales execution plan around Managed Print Services. The portal offers a self-paced curriculum with guided audio and engaging interactive exercises that are available 24 hours a day - at an affordable price.

We have a great training program in partnership with the BTA ( and we believe that classroom training provides many benefits, not the least of which is the questioning, interaction with other students, and ability to work on real world scenarios in breakout groups. Nevertheless, we realize that there are situations where eLearning is a better option. It is a great supplement for new hires after the manager or initial sales specialist attends the more intense BTA classroom training. It is also a great approach as a refresher. Finally, it is a solid option for those that want to keep expenses low, eliminating the need for travel.

InfoTrends is the leading research firm in the imaging space, to include MPS. The Strategy Development Team is excited to enter this strategic alliance; we know InfoTrends research will only help to improve our industry leading sales training.

For information on the MPS Sales eLearning Training follow the link above or contact Tom Callinan:

Global Printer, Copier, MFP Market Sees 20 Percent Decline In First Half Of 2009

Office printing devices drove the overall decline in the global print market, with a 24.5 percent decrease in the first half of the year compared to the first half of 2008.

Some great information for you to use in your FY2010 planning. With units declining how do you increase your market share and find other sources of revenue--like MPS.;jsessionid=KFQSF1LOTLXB1QE1GHOSKH4ATMY32JVN?cid=CRNFeed

Thursday, September 24, 2009

Culture: A Key Ingredient to Success

The consulting team at Strategy Development works with scores of dealers and resellers throughout North America. One frequent question I get when speaking at a conference is “what makes a company successful.” I could spend a year of articles on this subject—and you would want to start with having a solid business plan—but even with that plan you need a positive culture.

Whether you plan for it or it happens by happenstance you have a company culture. If the principals or senior management of the company have well defined goals and communicate the goals clearly and consistently at every level of the organization you can almost bet that you will have a goal oriented culture. If you set individual goals with a slight stretch and perfectly aligned with the company goals then provide generous rewards for achievement, you will develop a culture of accomplishment and reward.

Fun is an important aspect of culture; at least I think it is and I can tell you that every successful company we work with designs fun into their culture. Do you create an environment of fun at work?

I made an important qualification above that I hope you picked-up on; goals need to be aligned. That is another key aspect of having a winning culture. If the company’s goal is to grow 20% this year—and yes, many MPS companies are growing by far more than 20% even in this environment—and your sales force can earn a great living simply managing their base of accounts you have a disconnect. Your sales force is the engine and if they aren’t paid to grow it will not happen. You will consistently miss your goals and your culture will not be goal oriented. You are allowing a culture you would never desire to creep into your company because of lack of planning, alignment, and communication.

So great companies do not hesitate to move the goal line as long as everybody on the team understands why the goal line needs to be moved. Great companies then give outsized rewards to those that are able to achieve the more difficult goals and they make sure that everybody has fun in the process.

I have seen nothing but bad things happen when culture is left to happenstance. Employees get rewarded for behavior that can actually be detrimental to the company’s goals and because of lack of planning and lack of communication “management” becomes the reason for all things bad. Without planning and communication departments do what is best for their own fiefdom and a culture of “all out for me” develops, impairing a company’s ability to grow or achieve reasonable profits.

One of our very successful clients had a quarterly trip for those sales professionals that significantly exceeded quota. It was a short trip—a long weekend in Sonoma—for the sales professional and significant other. Five of the company’s top achievers earned the trip. When they arrived at the airport they found out that the flight was delayed for five hours due to mechanical issues. Clearly, the trip in itself was an indication of the reward culture at this company but I think what happened next will highlight the focus to culture even more. The principal of the company chartered a private jet for almost $15,000 to take his reps to Sonoma.

The principal was telling me about how great the trip was and just mentioned this event casually. My response was, “Wow that must have been expensive.” He rejoined, “Yes, but I was faced with having my top five reps remember the trip by the five hours they wasted in the airport or a great time in Sonoma and I didn’t want them to be talking about being stuck in the airport for the next three months.” The point is not to charter jets for your trips; the point is to focus on how your actions create a company culture. It is a key ingredient to success.

Sunday, September 20, 2009

Attention Copier Dealers: You’re Not Dying, But I would Adapt

In the mid 90’s industry research firms were “screaming” that if you didn’t own the network you would be out of the copier business. Their mantra was “Whoever owns the network will own the output.” Boy were they wrong.

You have always been able to find a researcher that predicted the demise of the copier dealer. Digital was the end of the dealer, but it resulted in growth. Production was going to put the dealer out of business as direct operations were the only business that could afford to support and sell production. Dealers sold thousands of production units and increased their top and bottom lines. Software was going to be too complex for the dealer; the dealer developed software applications the manufacturers then adapted.

Now yet another research firm is “screaming” that the copier dealer is headed for death: Adapt or Die is his message. Is he accurate—not really but he worked in the marketing department of printer companies so we’ll give him a rookie buy. Will there really be 50% fewer copier companies in five years? Yes, Strategy Development has been saying that for two years so our writings may be the research subject, but it has nothing to do with MPS and everything to do with a 40% decline in units sold over the five year period starting in 2007. See the blog post on this site from March, 2009 titled “Sea Change For the Copier Dealer.”

Should the copier dealer be concerned with the manufacturers, MPS programs, and “Hybrid” dealer (I have to admit I hate that term….it is a ubiquitous as “solution,” and covers everything from cars to energy sources to plants…..I think my Golden Doodle is a hybrid…can’t we just call them MPS providers)? Let’s take the MPS programs first: They add almost no value for a medium to large dealer with a true focus on MPS. You can read my former blog post on that subject. As for manufacturers, they will focus on enterprise level accounts—not the domain of the normal dealer. So unless you regularly call on MetLife, Citi, Home Depot, or FedEx I would not worry too much about the manufacturers.

How about the VAR or reseller? For these companies MPS is a totally different business model so they have a real uphill battle. Some have entered MPS successfully but most have not entered and others are piddling, maybe with one of those aforementioned MPS programs. Call me a homer but my money is on the copier dealer dominating MPS and I’d even give odds.

I’m not speaking out of ignorance. In our consulting practice, Strategy Development works with VARs, resellers, manufacturers, research firms, and dealers; so I see from the front line what is occurring with MPS.

“HP (is) entering (the copier space) with highly competitive A4 based MFPs.” Yo, 2004 is calling and they want their history back. The HP 4345 MFP was launched in November, 2004 and skyrocketed to the top of the Segment 4 MFP placement charts….working down the charts since then. But it is 2009 so how about Sharp’s highly successful Frontier line of A4 products or every other copier vendors introductions in this space. Yes, HP sent shock waves through the industry but that’s ancient history.

“Big dealers will struggle with (MPS) due to the inertia in their organizations and resistance to change.” How do you think big dealers got big? Because they have strong management and good finances; they see revenue generating opportunities and they are able to invest the time and resources to be successful in these areas. Big dealers will successfully sell MPS. I believe they will be the dominant MPS companies, san a few pure MPS providers that have momentum today.

Every time a research firm has cried wolf the copier community has responded with investment and success. MPS will be no different. Yes, adding new capabilities will require some change but to call it a business model change for the copier dealer is grossly exaggerating the facts. We heard this same “fire” scream with digital, production, and color products. Look at the components of an MPS agreement: equipment, supplies, service, and parts. Sure, we all want to be “solutions providers” but in reality software is a small part of our business. Heck, in the last business I ran $50 million of $1.4 billion was software, representing 3.5% or revenue. Even with a laser focus in 2010 I don’t think you’ll find software to represent more than 10% of your business so let’s talk about reality.

There are more devices in an MPS engagement so you need the operations and service processes to handle that complexity. You’ll need to get service trained but it isn’t anywhere near as difficult as copier training. You’ll need to establish a relationship with a distributor—like Ingram Micro or Tech Data—for your OEM supplies and your printers, and with a compatible company, like West Point Products, for your cartridges. And you will need a different sales approach and relationship management approach. So you will need to adjust your business model….and if you call an adjustment a change I am fine with the sensationalized description…but I would frame it as an adjustment.

Strategy Development can help you make the adjustment. Partnering with the BTA (who has transformed over the years from NOMDA….and is now the leading association for companies in the MPS space) we offer the MPS Operations and Service Workshop and the MPS Sales Workshop to help you adjust your model. So in the end I guess I agree with part of the sensationalism—adopt MPS as a strategy…it is not as scary as some would have you believe.

Join one of our Linkedin groups: Print Management, Copier Service Management, or MPS Executive Management and while you are at it add yourself as a follower on this blog.

MPS Programs: Where’s the Value

I don’t hear much from the channel regarding MPS programs but the manufacturers seem to be spending an inordinate amount of time promoting their programs. Read my post below titled: MPS, Growth Strategy or Harbinger of a Smaller Pie to gain some insight into a possible reason.

If you were a low market share printer OEM and you see the dynamic market shifts detailed in that blog post wouldn’t you come out with an MPS program? Your survival could depend on successfully positioning yourself as an MPS solution. If you are a copier OEM don’t you want your channel to replace those printers with your brand of A4 or print products?

But “program” is a broad description. Compatible companies, such as West Point Products, have programs. But they don’t sell equipment. The compatible companies’ programs consist of some combination of remote monitoring, financial schedules, presentations, sales training, and—most important for them—quality compatible cartridges with strong logistic support.

Then you have manufacturers’ programs (Qualification, I am not referring to normal vendor programs offered, such as HP’s OCPC program or any copier vendors authorized dealer “Schedule A”—which provides great benefits such as special pricing to companies selling the products. I am referring specifically to wrapped MPS programs). I’ll use Xerox as an example since they have a broad offering of programs. At one end of the continuum Xerox’s PagePack is simply a bundled equipment sale and PagePack FM is a monitoring and management program that does not includes supplies, service or equipment. Between the two you have PagePack NX and NX-T, which provide supplies (NX-T) and supplies and service (NX) for “certain” HP printers.

But I don’t think anybody is fooled: The main purpose of any manufacturer’s MPS program is to sell more of their equipment; they aren’t trying to be benevolent to the channel.

One aspect of all of the programs is remote monitoring software. This software has become so associated with MPS that some people define the software as MPS software. I’d tell you that remote monitoring software is no more MPS software than your management software. I mean, even if you captured a meter read or a service alert how do you bill the contract or dispatch the service call without management software?

Unfortunately, the inaccurate belief that remote monitoring software is the foundation of MPS seems to have set many programs off in the wrong direction. Providing this software on some type of ASP basis or meter charge became the primary value proposition. It was a leaky foundation two years ago and the foundation has cracked now that remote monitoring software can be purchased for about ten cents per month per device directly from the software company.

I find copier dealers are well equipped to put together their own “program.” You are simply putting together some vendors. If you are serious about MPS you will want to have direct relationships and control. It seems that the only programs with any traction in the BTA channel are those from cartridge companies, such as the aforementioned West Point Products. Cartridges are the largest cost in an MPS program and every MPS provider needs a relationship with a cartridge vendor, so it only makes sense that these vendors have traction.

But even in these instances I believe the MPS provider is choosing the cartridge company based on the quality and value of their product and distribution and “taking” any free aspects of the program that the vendor offers. If the cartridge company will throw in remote monitoring—and the MPS provider has not yet invested in the software—they’ll use the cartridge vendor’s software.

Besides being designed to sell their product, vendor programs are also constrained by limitations. What happens when your vendor only supports “certain HP products” and your customer has a mixture of HP—some supported and some not—as well as Lexmark and Dell printers? Tell the customer you can only put half of their printers on a contract? Or do you have half the printers on the vendor’s program and half on your own program? Maybe you go with two different vendor programs for a single customer—installing two remote monitoring applications on their network? What motivation would you have to allow any vendor to simply monitor your customer’s fleet—particularly if they sell MPS direct? And, you’re going to pay them to gather information on your customer?

One—in my mind total deal killers—constraint in some of the programs is that the printer has to be attached to the network. Newsflash, half of the printers in an office—and I am not even giving inkjets consideration, just laser—but half of them are locally connected. Then again if you only support certain printers and only connected printers I guess the prospect is expected to buy your printers to supplement?

Then you have program components. Maybe your vendor selected technologically inferior remote monitoring software and you’ll have it installed in 10 customer locations before you determine the product is weak. Now you have to deinstall the vendor’s software and install the software you selected after thorough investigation of the technology, disrupting your customer relationship. Maybe your vendor provides “sales training” or “consulting” from a totally unqualified trainer and you spend a year following his (her) direction before you figure out it doesn’t work. Don’t you want to do your own research on your trainer’s skills and experience before you spend a lot of money to launch a program?

There are minor benefits to some of the vendor programs. Some of the copier OEMs provide quota credit for compatible cartridges purchased through their program. That has potential to result in rebates so if they are competitively priced and have good logistics (like next day white box delivery) it could be financially beneficial. Other vendors offer both compatible and OEM cartridges at a good value, but this again is more a cartridge play than a program.

For the company that wants to dabble in MPS a program could be an option. So if you aren’t going to commit to MPS but you want to be able to take the occasional contract when it falls on your desk a program is an option. Understand the constraints so you understand specifically what you can sell and partner with a vendor. But in this situation the vendor is essentially the MPS provider and you providing them access to your customers. Therefore, I would be very cautious of the contract that I sign. Does it have non-compete language and will your customer data remain yours or will the vendor have rights as well once they are on their program.

For those that are serious about developing an MPS strategy, put together your own program. I recommend you work with vendors that provide you some level of co-op or MDF rather than trying to provide you with a package. Look at the core competency of the vendor. Cartridge companies’ core competency is reverse engineering and manufacturing. Copier and printer companies’ core competency is manufacturing and distribution. Distributors’ core competency is logistics. And software companies develop code. If they really want you to buy more of their products then ask them to provide some funds so that you can select your own remote meter program or training company. After all, your core competency is selling and servicing your customers.

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Thursday, September 10, 2009

MPS: Growth Strategy or Harbinger of a Smaller Pie

My opinion is both, depending on your current position and how well you leverage the MPS opportunity. To understand my feelings I will share my thoughts.

Fewer printers and copiers are being sold year on year. Gartner recently reported that worldwide combined printer, copier and MFP shipments totaled 51.3 million units, a 20.2 percent decline in shipments from the first half of 2008. Office printing devices drove the overall decline in the global print market, with a 24.5 percent decrease in the first half of the year compared to the first half of 2008.

Add to this year on year unit decline the facts that A4 units are replacing A3 units, at a lower average unit selling price and, like all maturing technology, average unit selling price across all segments is declining and you wonder where the growth is. The simple answer is that there is no growth; in fact, the overall market is shrinking.

Keep in perspective that there is nothing new in an MPS sale, which includes toner, parts and service (together “aftermarket”), equipment, and software. Moreover, one of the long-term goals of MPS is to reduce the quantity of devices used by a company. What does this mean? It means that the industry players—those that depend on an already shrinking revenue pool—are going to deliberately accelerate that revenue decline.

So far it sounds like death by a thousand cuts so why would anybody want to jump into MPS? Because for the short term, it is a growth strategy for those that properly deploy a strategy.

Printer Manufacturer Perspective

Every printer manufacturer is touting an MPS strategy. Why would you push a strategy that is going to result in fewer devices sold when you are a manufacturer? Simple, because you expect to take market share from the other printer companies—you intend on gaining share. So in short, the device loss is going to come out of your competitors’ backside.

MPS is clearly an inflection point in how devices, parts, and toner get sold and we’ll get to that shortly. The real question is will a printer manufacturer with low market share—when laser printers have been in the market for over 20 years—suddenly be able to leverage MPS to transform themselves into an industry player or is it simply a drowning man grasping for a thin read? Time will tell….but history usually repeats itself.

Let’s use HP as an example, who by all accounts has a 50%+ market share. I don’t care what industry you are in 50% market share is a dominating position. HP used their technical expertise—manufacturing super reliable printers that easily connected to the network—along with a “razor / razor blade” strategy to earn this dominance. One way to grow market share is to change the definition of the market so you motivate your team to penetrate adjacencies, and HP has accomplished this with their MFD products—directly targeting the copier space as a growth strategy.

But HP, in my opinion, has a bigger issue than pure market share and that issue relates to their razor blade strategy. Low priced, highly reliable, easily connected products provided HP with the ability to distribute through mass market players like CDW and PC Mall, as well as value added resellers (VAR) and dealers. The end user then purchased their HP cartridges through distribution points like their office supply company or HP direct. Sure, rechargers have approximately 30% of the mono market and 7% of the color market, but this seems to have been an acceptable level to HP, who constantly introduced new models; it took the rechargers a year or so to get enough empty cartridges to manufacturer in quantity.

Two sea changes are occurring today. First, and the point of this article, copier dealers, VARs, and other players are selling MPS agreements. Just four years ago HP, as well as the other printer manufacturers, but HP is the 800 pound gorilla, only had to deal with cartridge resellers and some private label products in super stores. Selling HP or compatible (remanufactured) cartridges was not a focus for the vast majority of copier dealers and the MPS VAR did not exist. Today, hundreds—rapidly headed toward thousands—of MPS providers are selling contracts that primarily use remanufactured cartridges in their contracts. Second, end users are holding onto their printers for a longer period of time so remanufactured cartridges are available for most products.

HP has a strong drive for market share; they are aggressive and smart and that is why they are so dominant. The other printer vendors sense there is an opportunity with the sea change of MPS. We will see if other printer manufacturers are able to take advantage of this inflection point or if HP will respond and retain their dominance.

Copier Manufacturer Perspective

No difference here—all copier manufacturers are pushing MPS. I think they have more to gain than the print manufacturer in that they have the opportunity to capture highly profitable new services revenue. So while HP is defending their turf—and the likes of Lexmark, Muratec, OKI, and Samsung are trying to take that market share—the copier manufacturer, through either their direct branch or dealer channel, can gain profitable aftermarket revenue. And they need it because year on year equipment placements are dropping rapidly!

So here is the short term gain: HP’s and the likes of CDW’s loss is the MPS delivering company’s gain. There are other winners too, like cartridge remanufacturers and distributors who supply MPS companies. We’ll cover the deliverable growth aspect in the next section but copier companies believe that they can replace that fleet of HP, Lexmark and other brand printers over the long term with their own products, while developing profitable service revenue over the short term.

I don’t think you are going to see any magic occur with this strategy: Copier manufacturers with low market share aren’t going to displace the top tier players with an MPS strategy. The channel is fairly set at this late stage of maturity so all the manufacturers can do is execute well through their branches and provide the consulting and training their dealer channel will need. They also need to provide them with a solid A4 product line of MFDs and printers.

The provider—MPS companies

Here is where the tremendous growth is near and medium term; the actual company that is on the street selling and delivering on MPS. The growth is coming out of other channels—it is not industry growth. Let’s just take an example:

ABC Imaging, a Sharp, Konica Minolta (KMBS), and HP dealer convinces Smith and Fried, a law firm, to place their 160 HP printers on an MPS agreement. Previously, Smith and Fried bought their printers from CDW with care packs and bought their cartridges and maintenance kits through Staples with their office supplies. ABC gets a contract for $15,000 to supply and service the 160 printers. So far Staples has lost the toner and maintenance kit business. ABC is going to use compatible cartridges so HP also lost some business with cartridges immediately and care packs over the near term. Time will tell if the printers are replaced with HP, Konica Minolta, or Sharp; the dealer will probably select the best product for the application. At that point CDW will have lost the business, and possibly additional HP loss.

Let’s assume Smith and Fried was spending $15,000 per month through Staples before they signed the agreement with ABC. MPS “grew” by $15,000 but other players lost the same $15,000. As ABC optimizes the fleet the revenue will continue to be reduced; there will be less capital expenditure on devices. As more players enter MPS the high early adapter margins available today will fall, as will revenue.

There could be others that gain revenue. KMBS offers revenue credit toward quota and rebates if their dealers buy their compatible cartridges through KMBS. If the dealer decides to take advantage of this program KMBS is able to recognize revenue and a small GP on the cartridges they buy at a lower price from a remanufacturing company (KMBS is simply an example…..other copier manufacturers have similar programs). KMBS also gains market intelligence. The OEMs’ direct organization also have the opportunity to grow revenue with an MPS strategy since servicing and supplying competitors’ printers is all net new business for the directs, at a loss to others.

The only absolute growth in MPS is at the provider level. Four years ago I used to tell audiences to get into MPS now because in two years everybody will be doing it. Well, it is four years later and I gave up saying that…..I guess I was more enthusiastic than the average dealer or reseller. What I would tell you is that if you get into MPS today—really get into it with a business plan and focus—you are still an early adapter. The revenue and profit opportunities are great. But in the long term we will all be fighting over a smaller pie so don’t hesitate…..get your outsized slice today!

Strategy Development is a consulting and training firm that can help you get more than your share of the MPS space. Whether you are a manufacturer, distributor, or reseller we’ll help you achieve success (

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