Imaging Industry Information

Visit new blog site for a new post: Center for Business Innovation Profile: Meet the New Breed of Dealer, Not the Same as the Old Breed of Dealer

2010-12-09T09:01:00.000-08:00

Click the link to visit the new blog site location for the following post:

Center for Business Innovation Profile: Meet the New Breed of Dealer, Not the Same as the Old Breed of Dealer

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We've moved!

2010-11-02T09:32:00.000-07:00

Thank you for following Imaging Industry Information, Strategy Development's blog.

Today, Strategy Development launched a new website, at a new address and incorporated the blog.

Please sign up to follow us at our new location: www.strategydevelopment.com/blog.

New Strategy Development website: http://www.strategydevelopment.com/

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We hope to see you soon!

Strategy Development Schedules Award Winning BTA MPS Back Office and Sales Training Classes for December in Philadelphia

2010-10-19T10:57:00.000-07:00

We are conducting our award winning BTA Managed Print Services (MPS) Operations and Service Workshop on December 8, concurrently with BTA MPS Sales Workshop on December 8-9, in Philadelphia. These courses meet the training requirements of the Kyocera Certified MPS Dealer Program.

BTA MPS Sales workshop teaches sales leaders (dealership principals, sales managers, vice presidents of sales, and print specialists) a systematic and proven methodology to establish and maintain a profitable MPS program. Uncover new revenue streams, significantly increase the quantity of captured prints, lock in customers, enable differentiation from competitors, and, ultimately, sell more hardware.

Tom Callinan and Ed Carroll will lead this course. Topics covered in the workshop include: understanding the print space (the opportunity, IT's involvement, the sales approach and target markets); getting the appointment; presenting a value proposition; how to conduct an assessment; developing a strategy and tactics; how to build a print management proposal that sells; pricing a print management contract; how to expand the opportunity after the sale; and preparing for quarterly business reviews.

Become your customer’s "single source" for optimizing printed pages and the hardware used to produce them. Your customer enjoys eliminating the need to deal with multiple vendors and invoices, leveraging the benefits of a holistic view of their entire document output fleet, saving time and money, while improving efficiencies.

Jackson Jordan of Advantage Business Systems attended this class in New Orleans last week and said, “Great workshop! Straight forward, easy to understand approach to MPS. They give you the tools needed to implement a profitable MPS program. Thank you Strategy Development!”

Mike Woodard of Strategy Development created and instructs BTA MPS Operations and Service workshop, a course designed to jump-start your understanding of how to set up and manage all operational and service aspects of a MPS agreement. MPS is a go-to-market strategy that allows companies a robust and profitable relationship with your customers that generates a recurring revenue stream. Learn what you need to know for after the contract is signed that results in the added complexity to your back-office operations and to your service department.

Matt Mawby of Professional Business Systems said, “As a copier guy, this gave me an excellent service perspective on MPS. It was great to see the positive impact MPS brings to our service and operations."

Ron Fuhrman of Liberty Business Systems, had this to say, "This workshop helps to alleviate the angst of starting a successful MPS program and brought the project down to a simplistic, manageable process. The process, pricing and implementation ideas are well thought out."

The instructors have not been taught the material; they developed it, and lived it firsthand. When not in the classroom, they are consulting for clients, so the content is always in proper alignment with current and impending trends.

Click here for links to more information on the course, instructors, and to register for class.

Sales Education Focus

2010-10-17T17:29:00.000-07:00

Sales education can help your sales force achieve greater success. To be successful in our industry or any industry, our salespeople need to be more than just subject matter experts on products and services. Whether they are just learning basics or getting back to them, a good foundation is a pre-requisite to success in sales. Without the proper balance of training, your sales people are at risk of failing on the job. Sales people who don’t know the fundamentals of selling are more likely to burnout, get frustrated, lose confidence, quit or worst – you fire them.

Going into the 4^th quarter and on into 2011 there will be those that only “think about” improving sales effectiveness, those will be the companies that lose ground vs. those that act upon it. Companies that hunker down and cut investments in their sales teams’ effectiveness will watch the tail lights shrink in the distance of those competitors continuing to invest and improve.

2011 Sales Organization Goals

1. Increase sales professional revenue productivity

a. Increase sales revenues

b. Increase market share and share of wallet

c. Improve customer retention

d. Increase sales effectiveness

2. Reduce sales turnover

3. Improve access to key information

4. Revise or implement sales process

5. Improve margins

6. Decrease expenses

Surely companies will need to control expenses and wring out excesses (if any remain); but the answer, as with all aspect of a successful life, is balance. Initiating programs to increase your sales teams’ productivity and effectiveness is needed now more than ever. If you have recently evaluated and invested in your sales people’s education then you’re ahead of the game. But there is still plenty of room for improvement ahead. Recognize that whatever you have done until now has been enough to get you to here, but likely will not be enough to get you to there: there being where you want and need to be in twelve months.

There are many areas to measure when reflecting on how sales forces perform specific selling task during the sales cycle to educate the prospect, align solutions to needs, and win the business. Year over year, companies invest in sales training to teach sales executives the ability to understand the customers buying cycle.

A question many companies ask me when discussing sales education needs is the following “If I understand how my customers buy, can I sell with less effort?”

My research this past year shows that we at Strategy Development see some level of advantage attained in reducing the number of calls to close a deal through better understanding of buying trends. The real advantage though, is seen in the outcome of those sales opportunities. We see that sales executive win rates by companies who excel, or are adequate in this area are 12% higher than those companies that need improvement.

Taking the time to really understand how customers buy from you or a competitor seems to be well worth the investment. Buying processes can morph dramatically based on the changes in a customer’s industry. Take for example, the fact that some computer firms who generated a noticeable percentage of their revenues from financial institutions, they saw sales from those clients decrease in 2008 because of the subprime loans. Or consider the impact on pharmaceutical and health insurance firms with universal health care. If clients businesses change dramatically, the firms selling to them will see major changes in how they buy.

More than ever, there is a real payoff in acquiring marketplace knowledge (business acumen) about the customers upon whom your teams are calling. Figures from a recent CSO Insights survey show that if sales reps have been trained in marketplace knowledge (business acumen) and are willing to take the time to research accounts and apply what they’ve been taught (to speak about a customer’s industry), we will be able to impact their productivity through quota achievement and impact their ability to achieve income goals which directly ties into the ability for companies to retain personnel and reduce turnover. Companies focused on these areas of sales education see development in confidence for sales in analyzing customer needs and positioning products and services within the context of a buyer’s financial drivers and strategies. Armed with better business acumen, they demonstrate financial literacy in sales situations; engage in more strategic discussions with prospects, and open doors at higher buying levels. When sales training initiatives target marketplace knowledge (business acumen), sales personnel become better in offering products and services within the context of a customer’s real business needs. They become trusted partners as they develop long-term customer partnerships.

Strategy Development is a management consulting and advanced sales training firm with a focus to helping companies in the imaging space. Strategy Development advises companies on how to defend existing markets, assess entries into new ones, develop growth strategies, control costs and profitably invest resources. For more information on our strategic sales skills workshop and sales coaching consulting please contact me at ramos@strategydevelopment.org

When the Going Gets Tough, Somehow or Other Perry Corporation Gets Growing

2010-10-14T14:01:00.000-07:00

By Scott Cullen

Forget the doom and gloom and crying about the economy. You’re not going to see any of that at Perry Corporation in Lima, Ohio. No sir, Perry Corporation is rocking and rolling from every conceivable angle. Consider that its traditional MFP and service business is up about six percent over last year. How many dealerships in this day and age can lay claim to that? Meanwhile, the solutions division, which mainly sells archiving and workflow software is up 64 percent over last year. The goal was to grow this segment of the business by 50 percent, so things are even better than expected. And speaking of better than expected, managed print is up 321 percent, well above the 200 percent that was budgeted.

Perry Corporation services a wide variety of customers although they concentrate on certain verticals, notably education, healthcare, manufacturing, and local government.

Why do customers choose Perry Corporation?

“A lot of different reasons, but primarily because we have the cash reserves to fund them internally so there is no third party leasing company or bank involved, which gives us a ton of flexibility,” says Barry Clark, president. “We make it real simple for them. It’s a one-page contract, not 27 pages of terms and conditions. It’s just a simple, easy to understand, straightforward concept that we sell.”

It’s a new business environment and Clark concedes that customer expectations are changing, especially when it comes to dealerships like Perry Corporation who do more than just move boxes.

“If you’re still a box company, customer expectations have pretty much been the same, ‘I want a great price and great response times, etc., etc., etc.,’” he says. “As you broaden your product offerings, the bar keeps getting raised higher and higher.”

That higher bar means that with more complex product offerings, Perry has had to raise the level of competence and skill sets among its employees to better support their customer base.

“When you’re supporting someone’s network infrastructure for example, if that goes down it’s a lot more damaging to a client then when their MFP on the third floor is not working,” he explains. “Not only is a higher degree of care required because you’re getting into more mission critical areas of the organization, but they also looking to get the most out of what you’re providing them. The other big thing is adoption, they all want help in getting their employees to adopt the new technology.”

While some of those competencies and skill sets are home grown, Clark isn’t shy about searching elsewhere to acquire them, including strategic acquisitions that complement their core business.

Perry Corporation has acquired three companies in the past five years, including an IT firm.

“We’re diversifying more and more so we’re not dependent on one revenue stream for our growth,” explains Clark. “That was the reason for the IT acquisition.”

The acquisition of an IT company was a smooth move for an office technology company, particularly one that traditionally connects devices to a customer’s network and is responsible for supporting them as well. What Clark found was a company that designs, implements, and supports the IT infrastructure.

“It made sense to me since that’s a piece of the pie we want to provide,” says Clark. “There’s a lot of synergies and then again there’s not a lot in a sense. For example, in the IT world, the sales cycle is much longer. The due diligence, the surveying, whatever you want to call it, is much longer. Everything is longer and you might win a big deal and it might take you six months to complete the install. There’s really no lease expiration dates on an IT infrastructure.”

Besides the differences from a structural standpoint, there’s a whole different culture in place from a personnel perspective as well and that’s another reason why an IT acquisition fit the bill.

“When you try to meld a copier rep with an IT rep they have different objectives and goals,” notes Clark. “The way we’ve gotten around that is assign a highly specialized team that’s led by the VP of the copier division and VP of the IT division to big name accounts because that’s a more long-view strategy to approach those accounts compared to, ‘they have a lease coming due in three weeks, let’s see if we can go in and talk to them about their IT infrastructure.’

Having an IT element helps sets Perry Corporation apart from its competitors although the big boys like HP and Xerox now have that capability too.

“Ironically, we did that two years before they did,” says Clark.

With all the transitions that have taken place in the office technology business over the past 20 years—analog to digital, connectivity, solutions, MPS—which was the toughest for Perry Corporation?

“I think they’ve all been fairly difficult,” reflects Clark. “I’d be hard pressed to say one was harder than the other because with each one you have to develop a new business model and people have to get out of the box they were in.”

One of the plusses for Clark with any transition, including the most recent into managed print services is he has what he calls a ‘forward-thinking management team and forward-thinking employees.” That’s something not every legacy office technology dealership possesses. He also hasn’t been shy about going out and bringing in extra help, like Strategy Development, to help with not only the transition to MPS, but in identifying acquisition target to grow the business.

Strategy Development has also assisted Perry Corp. in putting management and sales operations processes in place to grow equipment revenue. Clark sought their expertise about a year and a half ago as hardware sales began declining.

“We were fortunate,” says Clark, “I know some dealers who lost, 20, 30, 40 points of percent of revenue. We didn’t decline that much, but we said, ‘most of our folks had never sold in a recession so let’s make sure there’s not a better way we can do this and Strategy Development showed us. It’s a lot of stuff we already knew and were already doing, but they were able to tie it together for us so it made more sense and became more of an executable strategy.”

Without giving away the store, one of the things Perry Corporation did was realign their individual sales territories. That was based on a Strategy Development MIF (Machines In Field) study and the notion that a rep needs a certain percentage of his territory to be existing customers to make a reasonable living and reduce turnover.

“It also helped us identify those reps that needed more help,” explains Clark.

MPS had been on Perry Corporation’s radar screen for some time, but they began taking it seriously in 2006. The acquisition of the IT company was not only part of their acquisition strategy, but their MPS strategy too. MPS is now Perry Corporation’s most profitable area.

“We’re up more than 300 percent from last year, but the net income is phenomenal,” beams Clark.

It’s not like moving into managed print was a walk in the park for Clark. He firmly believes it’s something that needs to be totally supported and communicated from the top down.

“You can’t just hand it off to a lieutenant and say ‘go make this happen,’” he says. “The executive team of the Perry Corporation was behind it 100 percent day in and day out. The second piece was we found the right person to run it. We didn’t think we could take one of our MFP sales managers and quickly get where we wanted to be, so we went out and found some new talent.”

A lot of the success is because Perry Corporation begins with the MPS message at C-level.

“When you start at the C-level, they get interested pretty quickly,” says Clark. “If you could throw around numbers like 25-30 percent savings over what they’re paying today, you can make a pretty compelling argument about the fact that you can reduce their costs without them having to buy anything—at least up front.”

Perry Corporation won’t pursue the engagement if they can’t get to that C-level person.

“We need their buy in, we need them to open the door, we need them to corral the troops to get the information we need to make a good presentation back to them,” says Clark. “We spend a lot of time and money on training how to get to a C-level person.”

Outside help from the likes of Strategy Development has provided Perry Corporation with strategies for reaching C-level executives as well as guidance on compensation plans. Without turning this into an advertorial for Strategy Development, it’s been a big help.

“We would certainly have taken much longer to get where we are today if we had not consulted with them two years ago,” reports Clark. “They’ve seen enough MPS accounts and have enough clients that do MPS, and have been for some time, they can steer you and you don’t have to do so much trial and error.”

Meanwhile, Clark expects MPS to continue to be the company’s fastest growing book of business.

“In the next five years we’d like to have 25 percent of our total revenue coming from MPS contracts.”

Now that his MPS business is booming, what does Clark know now that he wishes he knew when he started?

“I wished we would have started earlier,” he laughs.

Scott Cullen has been covering the office equipment industry since 1986. Scott is Publisher/Editorial Director for Imaging Solutions Reseller; Editorial Director/Managing Editor for OfficeSOLUTIONS and OfficeDEALER; Editor for PC Solutions; and a contributing writer and Editor for Independent Dealer, OFDA, Mercer Business, ENX, BERTL’s iTchat, Repro Report.

How Do We Help Our Sales Force Become More Effective?

2010-10-13T07:25:00.000-07:00

I recently read a great article in B to B Magazine titled “Been there sold that.” It wasn’t that a single sentence of the article was new information—as a member of a consulting and advanced training firm that spends a lot of our time helping technology companies improve their sales effectiveness we have great visibility into the sales practice—but the fact that the article focused on selling to CMOs and the advice from these CMOs to sales professionals was the exact same that we provide adds credibility to what we see:

• The number one frustration of the CMO was that the sales professional did not know their company

This is a common issue we find in our industry as well, with sales professionals at all levels of success. They simply do not take the time to get to know their customers and prospects. Decades ago all sales professionals were taught to engage in conversations on pain areas with the prospect but that was before the internet, and the plethora of information available to research. Take the time to understand your customer and prospect and how your offering will help them achieve their goals. The article, which is focused on the CMO, does quote an IDC survey of senior technology buyers that states sales professionals are “somewhat prepared” or “not prepared” 54% of the time. So more than half the time the sale is dead before it starts.

• Not listening during the sales presentation

This issue manifests itself in many forms. We see sales professional giving value propositions as a presentation rather than as a talking point, where the prospect spends at least 50% of the time talking. It is also common for the sales professional to speak about the benefits to their offering areas where the prospect has already said they adopted what the sales professional is selling—the sales professional doesn’t adjust.

• Buyers are looking for a sales professional that provide value and understand the customer’s need and the general environment of the vertical

The bottom line here is that buyers aren’t looking to get pitched; they are looking for sales professionals that understand their business and their problems and that can demonstrate how their product or service can help the buyer address their pain points.

• Buyers try to minimize meetings with sales people

A person in a position of authority is constantly asked for meetings, both internally and externally. If an senior manager or executive cannot manage their calendar they will absolutely fail, so getting a meeting is difficult. The number one approach to getting on that meeting is through networking. Build and leverage your network.

• Have relevant material available

Case studies specific to the industry you are calling on are critical.

• Going above the buyer in the organizational structure

I’ll simply take the sentence directly out of the article to demonstrate a point we try to emphasize all the time in our training. We learned this from two perspectives: The SD team are all former senior managers and executives, and we have been involved in a significant quantity of large complex sales. “Often the CEO is the approver, not the buyer. If you usurp the buying organization, they you have made enemies of the actual buyer.”

I also think the article does a great job in summarizing the points so I’ll simply give credit where credit is due and use the words of Mark Wilson, VP-corporate marketing at Sybase, Inc, “The most effective salespeople understand what our company does. They come in with an idea of how they can solve our problem. They are good at listening, and they continue to evolve how they can solve our problem in the meeting. They have a number of case studies, and they pick them intelligently for companies that face the same problems that map to ours.”

David Ramos developed a strategic sales skills workshop and I have to say his program is right on the money. It was developed using his significant experience in working with sales professionals in the technology industry but it is clear that there is nothing unique in our industry: sales professionals simply need an opportunity to learn how to sell in a complex environment. You can contact David to get information on his program at ramos@strategydevelopment.org

BTA MPS Training Classes Scheduled for November in San Francisco for Operations & Service and Sales Professionals

2010-10-05T06:43:00.000-07:00

Strategy Development is conducting the award winning BTA Managed Print Services (MPS) Operations and Service Workshop on November 3, concurrently with BTA MPS Sales Workshop on November 3-4, at the San Francisco Airport Marriott Courtyard. These courses meet the training requirements of the Kyocera Certified MPS Dealer Program.

Mike Woodard of Strategy Development created and instructs BTA MPS Operations and Service workshop, a course designed to jump-start your understanding of how to set up and manage all operational and service aspects of a MPS agreement. MPS is a go-to-market strategy that allows companies a robust and profitable relationship with your customers that generates a recurring revenue stream. Learn what you need to know for after the contract is signed that results in the added complexity to your back-office operations and to your service department.

Matt Mawby of Professional Business Systems said, “As a copier guy, this gave me an excellent service perspective on MPS. It was great to see the positive impact MPS brings to our service and operations."

Ron Fuhrman of Liberty Business Systems, had this to say, "This workshop helps to alleviate the angst of starting a successful MPS program and brought the project down to a simplistic, manageable process. The process, pricing and implementation ideas are well thought out."

BTA MPS Sales workshop teaches sales leaders (dealership principals, sales managers, vice presidents of sales, and print specialists) a systematic and proven methodology to establish and maintain a profitable MPS program. Uncover new revenue streams, significantly increase the quantity of captured prints, lock in customers, enable differentiation from competitors, and, ultimately, sell more hardware.

Industry veterans, Tom Callinan and Ed Carroll, will lead this course. Topics covered in the workshop include: understanding the print space (the opportunity, IT's involvement, the sales approach and target markets); getting the appointment; presenting a value proposition; how to conduct an assessment; developing a strategy and tactics; how to build a print management proposal that sells; pricing a print management contract; how to expand the opportunity after the sale; and preparing for quarterly business reviews.

Become your customer’s "single source" for optimizing printed pages and the hardware used to produce them. Your customer enjoys eliminating the need to deal with multiple vendors and invoices, leveraging the benefits of a holistic view of their entire document output fleet, saving time and money, while improving efficiencies.

Jerry Ehrhardt of TLC Office Systems recently attended this class and said, “This is a good training class with educational substance. The instructors were very informative and knowledgeable. It has provided me a process I can implement with ease.”

Rich Fryman of ABS Business Products commented, “Tom and Ed didn’t waste time on worthless information. They were able to recognize that some information was good to have however did not need to go over it, which saved time to cover and stay on the ‘nuts and bolts’ of the class.”

The instructors have not been taught the material; they developed it, and lived it firsthand. When not in the classroom, they are consulting for clients, so the content is always in proper alignment with current and impending trends.

For more information on the course, instructors, or to register for class, please click here for BTA MPS Operations and Service workshop or click here for BTA MPS Sales workshop.

Does your MPS program focus on CPP or TCO?

2010-09-27T07:00:00.000-07:00

What’s the difference? It depends on who you ask.

In recent months there have been a number of blog postings focused on the subject of TCO (total cost of ownership) for MPS opportunities. In most cases the author’s belief is focusing on TCO, and not on CPP, is the best way to distinguish yourself from your competition. Most articles will compared the components of both CPP and TCO, and some will suggest that CPP programs only focus on supplies, parts and service and TCO focuses on all the true costs of managing the fleet: Items like paper, IT support, network cost, etc.

The articles/post/presentations usually conclude with, those who focus on TCO are looking at the whole picture and are perceived more favorably as business consultants/advisors, differentiating them from the competition, therefore ultimately winning more lucrative MPS opportunities.

In theory I would agree that the broader your viewpoint, i.e. assessment and review, the more positive you should be perceived by the prospects you are focused on ,and in doing so, you might increase your chances for signing more MPS agreements. The problem I have with most of the postings is that the basis of comparison is very short-sighted when it comes to what is included in a CPP and too broad when you focus on their definition of TCO.

If you are looking at a transactional CPP (device basis), it will most likely include only supplies, service and parts, and the comparison would be accurate. But, if you take this basis and compare it to costs related to managing a fleet of devices, it is not an accurate assessment. You are comparing apples to oranges.

For those who are familiar with the Strategy Development’s MPS model, as clients or through our workshops, you know that the focus of the assessment in an MPS opportunity is identifying and quantifying all expenses directly attributed to the managing of the fleet of devices that you will assume when the prospect moves forward with your proposal. It is fleet based, it captures toner usage, service expense, parts, acquisition costs, maintenance, inventory carrying costs, obsolescence, and IT support. It focuses on capturing all expenses related to the services you will assume when the contract is signed.

In turn you convert the sum of these expenses to a CPP, so your prospect has a clear understanding as to the cost of producing a document in their organization. In fact you are capturing the TCO (minus paper). You do not focus on expenses that are not impacted through the implementation of this outsource agreement. For example, paper and network costs are two expenses that are consistently mentioned as costs that should be included in the TCO. I disagree with this belief.

The reason paper is not included is pretty straight forward. It is difficult to monitor or control, it is a commodity that adds very little, if any, value to the agreement, and it is not going away. In fact more of it may disappear before it ever gets into the printing device, making pilferage a real challenge to control, so why would you want to include it?

Including the costs of the network might not be as straight forward as paper. Even though printers drain network resources (Information Week says that 55% of network traffic is attributed to printers) the reasons you should not include it in your analysis are 1) you are not assuming the responsibility for the network, 2) the infrastructure and cost are not going away at the time a MPS program is implemented, 3) attempting to capture something that is not going away and you are not assuming responsibility for, will add significant time to your sales cycle and possibly decrease your chances of getting the deal. Yes, it might distinguish you from the competition but will this distinction secure the opportunity and will the prospect provide their costs for this knowing that you are not taking over this responsibility? I think not.

In summary, if you follow the Strategy Development model and identify and propose your opportunity on a fleet based, blended CPP you are in fact providing your prospect with an analysis of all the services and expenses you are assuming (i.e. costs directly associated with managing the fleet of printers). What more do you need? This is a TCO for the services you will provide. Why would you see a need to take it further?

Strategy Development Launches Strategic Selling Course

2010-09-21T14:25:00.000-07:00

Web-Based or Onsite Training for Beginning and Intermediate Sales Professionals

Strategy Development is launching a strategic selling course designed for beginning and intermediate sales professionals. This course is available as an eight-week webinar series, with the first term starting Monday, October 25, 2010, or as an on-site, two-day workshop.

The most successful sales professionals possess solid skills in every aspect of the sales process. Undoubtedly, each individual on your sales team has strengths in certain areas. Formal education in a repeatable sales process will take them to new levels. This strategic selling training will reduce turnover and facilitate an increase in sales, including not only traditional hardware, but color, software and services.

The program is a comprehensive workshop in sales fundamentals that will develop and improve abilities for new account penetration, as well as selling more products and services into current accounts. Attendees will learn time and territory management; business acumen and decision maker motivations; prospecting; questioning and listening skills; initial sales call and presentation skills, proposal writing fundamentals, proficiency in negotiation, account planning and customer retention; as well as about maintaining the relationship.

Click here for a brief overview video of the class.

David Ramos, a sales operations consultant with Strategy Development, developed the curriculum and will lead the educational experience. David has over 15 years of experience in sales, sales management, and sales training development in the imaging industry. David was a top producing business development manager in both the U.S. and Mexico whose experience spans selling leading edge technologies, strategic marketing, and key account management.

In a pilot class, Rob Sloan, Vice President of Sales at OASYS, Inc. said, “My sales team and I came away feeling that the time was well spent. Some of the areas we found most beneficial were prospecting techniques, managed print services, presentation skills, and color opportunities and applications in today’s marketplace. The content was relevant to our industry today and provided information that my reps could use in the field right away. We look forward to your next visit.”

Kelly McDonald of Advanced Office Systems had this to say, “It was very, very, very beneficial. One of my main reluctances to pipeline management and territory management was lack of education. I entered all of my potential prospects/leads and it is great to see how much potential revenue I have coming in over the next year. I hope I can attend more of your workshops soon! I think Advanced Office Systems will now become Advanced AWESOME Systems.”

Strategy Development also offers a three-month training & coaching experience for your sales team. The program begins with individual and team assessments and goal setting. It incorporates instructor led training, coaching, self-study, and application assignments that address the unique strengths and challenges of the team.

Online and on-site each has its’ advantages. Reps can learn in one-hour weekly intervals that require no travel or time out of the field. Alternatively, experience the interactivity of breakout groups, exercises, and role-plays along with the top-notch presentations in a two-day on-site class. Custom classes can also be designed for your specific needs based upon subject matter and duration.

For more information, or to register please reach out to David at ramos@strategydevelopment.org.

Scarcity of Empties Causes Big Problems For Remanufacturers

2010-09-20T09:16:00.000-07:00

By Charles Brewer

For the remanufacturing industry, a reliable supply of high-quality, empty cartridges is essential. Simply put: without a good source of empties, there can be no “remanufacturing.” For a variety of reasons, however, the supply of empties is drying up. The situation is serious and has already resulted in spot shortages and price increases. And it’s bound to only get worse.

All the complicated physics and chemistry involved in electrophotographic printing make remanufacturing toner cartridges technically challenging. Precision toners must be matched and qualified with various components like imaging drums and fusing units to get a reconditioned cartridge to work properly. If the toners and components don’t work flawlessly every time, it will be glaringly apparent in the output--especially if it’s a color job.

While the stuff that goes into a refurb cartridge is critical to its performance, the most precious raw material is the empty cartridge itself. The best empties are OEM cartridges that are used once, properly repackaged when depleted, and then returned for remanufacturing. Because these so-called “virgin empties”--or “virgin cores”-- have never been remanufactured, they retain the characteristics of a brand new cartridge. After remanufacturing, cores begin to deteriorate and parts no longer line up like they did originally so remanufacturers always try to use virgin cores. If not, there can be problems. The risk of toner leakage increases, for example, and the tolerances are less precise making it more difficult for components to perform properly.

Recent gains in market share by the remanufacturing industry has played a big part in the draining of the empties pool. The recession sent customers looking for less expensive consumables, and many turned to remans as an alternative to expensive OEM products. Sales of new OEM cartridges plunged, which reduced the number of empties entering the pool. Demand for remans was further fueled by ill-timed price increases by virtually all OEMs in late 2007 and early 2008. Then, various OEMs encountered logistical problems that led to OEM cartridge shortages, which further limited the number of new empties entering the supply of cores. The net result was that demand for remanufactured cartridges exploded just as the availability of empties dropped because OEMs were having an assortment of difficulties selling new cartridges.

Beyond the growing popularity of remanufactured cartridges, there are other factors at play limiting empties availability. For years, empties brokers kept remanufacturers supplied with virgin cores but that business has been encroached upon. Since the middle of the decade, OEMs and large remanufactures have successfully established their own large-scale collection programs and increasingly they’ve marginalized brokers. Supplies vendors--OEM and non-OEM alike--have have been able to woo the brokers‘ suppliers especially those in the channels. They’ve done a pretty good job “closing the loop” on spent cartridges, and while they are still far from 100%, the number of exhausted inkjet and toner cartridges being reclaimed by individual OEMs and remanufacturers is growing. Millions of cores that were once available to the remanufacturing industry at large through brokers are now being captured and retained for the exclusive use of only a few large companies.

OEMs have always put a lot of time and energy into collecting empty cores to keep them out of the hands of their archrivals, the remanufacturers. Every empty they collect is potentially one fewer remanufactured cartridge an OEM has to sell against. Because of the terms of their contracts, copier OEMs always had an advantage and could leverage their dealer channels and service technicians to get back empties. Because printers are sold outright, however, it wasn’t as easy for printer OEMs to get their empties back. For years, HP had collection rates of less than 50%, although I’m sure that has changed. HP has grown increasingly active in collections. It has partnered with Staples, for example, to collect empties at the office superstore’s retail outlets. The OEM also has opened separate inkjet and toner cartridge facilities to process millions of empties so the plastics can be recycled.

Thanks to its Prebate program, Lexmark has been perhaps the printer OEM most successful at getting its empties back. The firm has achieved return rates in excess of 80%. Through the program, which is now known as “Use and Return,” if a customer agrees to return the empty at the time of purchase, Lexmark provides a discounted price on certain replacement cartridges. Using a “shrink wrap” agreement commonly featured on software packaging, opening the box and using the cartridge creates a binding legal contract guaranteeing Lexmark gets its empty back.

Not only are the end users legally bound to return their Prebate cartridges, for years Lexmark contended that the deal extended its rights as a patent holder. The company claimed the Prebate contract under U.S. Patent law meant remanufacturing Prebate cartridges violated Lexmark’s intellectual property. Although remanufacturers scrupled with Lexmark’s interpretation of patent law, most were unwilling to risk a lawsuit so Lexmark retained the majority of the cartridge market for machines using Prebate replacement cartridges. Then, after years of legal wrangling, a U.S. federal district court determined in 2008 that the Prebate contract did not extend Lexmark’s patent rights, although the court indicated that the agreement satisfied the requirements of a binding contract. The firm says its Use and Return program is very popular with customers and they continue to honor the contract and return their empties.

As I mentioned earlier, large remanufacturers are also collecting empties by the millions. Take, for example, Clover Technologies. According to Golden Gate Capital, a private-equity group that purchased the remanufacturer in April, Clover has annual revenue in excess of $450 million. It is the largest remanufacturer in North America, perhaps in the world. Clover is a supplier of private-label products to wholesalers, distributors, and retailers and is believed to be a key vendor to office superstores including Staples and Office Depot. The relationships with the various channels provide Clover with the opportunity to collect a lot of empties. The company says it collects over 60 million spent cartridges each year and claims to be the industry’s “largest collector and remanufacturer of empty cartridges.”

In addition to collection programs run by OEM and non-OEM supplies vendors, U.S. patent law is also restricting the supply of cores in this country for remanufacturing. Under what is referred to as the “repair doctrine,” a cartridge can be repaired--or remanufactured--without violating any patents. This concept was worked out in the U.S. courts in the 1990s and it’s what keeps the remanufacturing industry out of legal troubles. Over the past eight years or so, however, the courts have added a wrinkle to the doctrine. They’ve ruled that the patent holder rights are only exhausted if the first sale of a product occurs within the U.S. If instead a cartridge is first sold outside of the country and is later remanufactured and sold in the U.S., the remanufacturer and its distributors have then violated any patents originally covering the cartridge. Strange but true!

Because case law has significantly changed the concept of patent right exhaustion after the first sale, the supply of empties that can be remanufactured and sold in the U.S. has been dramatically reduced. The change means that no empties can be imported and remanufactured for sale in the U.S. OEMs are vigilantly monitoring third-party supplies vendors to make sure none of them refill empties first purchased overseas and resell them in the U.S. Epson has already successfully sued a number of remanufacturers and their distributors for doing just that with empty Epson ink cartridges that were sold abroad. In August, Lexmark filed suit against 24 companies for selling or remanufacturing toner cartridges first sold outside of the country and imported for sale in the U.S.

The scarcity of empty cores has had an adverse impact on the remanufacturing industry. Supply and demand has driven core prices into the stratosphere. Depending on the SKU, some cores can cost 300 X what they cost several years ago--if you can get the core at all. Sensing growing desperation, some unscrupulous firms with injection-molding capabilities are offering “new plastic,” which are empty clone cores that trample on OEM IP and are direct knock-offs of the original cartridge.

It remains to be seen how the dire empties situation be resolved. For sure, it will force empties-starved firm to outsource production. So more small remanufacturers in the U.S. will change business models and become distributors, a trend that has been ongoing for years. In addition, big players will need to invest in their own programs and cozy up to firms in the channels that have access to empties. I would expect that more large remanufacturers will gobble up brokers, another trend that has been ongoing. And you can bet there will be more lawsuits--and plenty of them. Beyond those givens, it’s interesting to speculate. Could empties become so valuable that OEMs allow some cores to flow to a select few that are willing to pay a premium? Will the cost differential between legitimately remanufactured cartridges and OEM supplies close? If so, what happens to the remanufacturers’ value proposition? Or will the price of all consumables continue to rise? Only time will tell!

Charles Brewer is the President of Actionable Intelligence, a market research firm based outside of Boston, MA that follows the digital imaging hardware and consumables industry. Brewer previously served as Managing Editor for Lyra Research, a company which collaborates with imaging industry decision-makers worldwide, enabling clients to strengthen their market position and achieve profitable growth, where he wrote and managed a monthly newsletter.

David Factor, Former OKI Channel Manager, Named Director of Business Development

2010-09-07T10:43:00.000-07:00

We are pleased to announce that David Factor has joined the firm as Director of Business Development. In this role, David will lead the growth efforts at Strategy Development.

Factor has an extensive background in the imaging industry having spent 18 years at Oki Data Americas, most recently as National Sales Director. In this role, Factor developed business plans and strategies to enter the MFP business in 2004 and provided executive sales leadership for development of OKI’s managed print services strategy. Factor held numerous positions of increasing responsibility at OKI including district sales manager and national sales manager of the fax division prior to his role as national sales director.

“David Factor is well respected in the BTA and VAR channels having a long history of helping the dealer/reseller channel grow,” said Tom Callinan, managing principal of Strategy Development. “David knows the channel, understands how to help dealers/resellers grow revenue and profitability, and will be a significant asset in helping Strategy Development reach the many companies that have reached out to us for our consulting and training expertise. I am excited to have David join the firm as Director of Business Development.”

“I am thrilled to be joining the strongest team of consultants in the imaging business,” commented David Factor. “Having been exposed to the Strategy Development team members in the past, I know there is no better group at growing top and bottom line business results and their position as the industry leading MPS consultancy, the most notable growth strategy in years, is exciting. I also look forward to seeing many of my old dealer friends from the OKI days.”

David can be contacted at (908) 336-8147or factor@strategydevelopment.org.

BTA MPS Sales and BTA Sales Management Training Classes Scheduled for October in New Orleans

2010-08-31T03:55:00.000-07:00

Strategy Development is conducting the award winning BTA Managed Print Services (MPS) Sales Workshop on October 11-12, followed by the BTA Sales Management Workshop on October 13-14, in New Orleans, LA at the JW Marriott.

BTA MPS Sales workshop teaches sales leaders (dealership principals, sales managers, vice presidents of sales, and print specialists) a systematic and proven methodology to establish and maintain a profitable MPS program. Uncover new revenue streams, significantly increase the quantity of captured prints, lock in customers, enable differentiation from competitors, and, ultimately, sell more hardware. Tom Callinan and Ed Carroll, will lead this course. Topics covered in the workshop include: understanding the print space (the opportunity, IT's involvement, the sales approach and target markets); getting the appointment; presenting a value proposition; how to conduct an assessment; developing a strategy and tactics; how to build a print management proposal that sells; pricing a print management contract; how to expand the opportunity after the sale; and preparing for quarterly business reviews.

Become your customer’s "single source" for optimizing printed pages and the hardware used to produce them. Your customer enjoys eliminating the need to deal with multiple vendors and invoices, leveraging the benefits of a holistic view of their entire document output fleet, saving time and money, while improving efficiencies.

Jerry Ehrhardt of TLC Office Systems recently attended this class and said, “This is a good training class with educational substance. The instructors were very informative and knowledgeable. It has provided me a process I can implement with ease.”

Rich Fryman of ABS Business Products commented, “Tom and Ed didn’t waste time on worthless information. They were able to recognize that some information was good to have however did not need to go over it, which saved time to cover and stay on the ‘nuts and bolts’ of the class.”

BTA Sales Management Workshop, led by Ed Carroll, is two full days of how to improve sales effectiveness, reduce turnover and drive market share gains. Regardless of if, you are a new sales manager or have been managing for decades, this course provides a framework, process and tools to develop and refine your approach. The combination of a classroom setting for the theory and interactive breakout sessions to learn how to implement these tactics is a proven recipe for success.

Learn how to build effective sales teams, on boarding and training, designing individual development plans, territory design and management, account planning and penetration, quality field time, effective forecasting, as well as MPS and equipment pipeline growth.

Ron Rasberry of Advanced Office Systems said, "There are very few industry-specific workshops available today that focus on sales management. Perhaps this is because there are very few trainers and consultants around who have weathered the storm of change that our industry continually goes through. The Strategy Development team 'gets it.' They know what the 21st-century model dealership, sales manager, and strategic industry directions look like. More importantly, they are able to deliver this knowledge along with specific measurable performance standards that I believe every independent dealership can implement and expect to see improved business results."

Melanie Boyes of Blue Technologies commented, “I know I will double my productivity, activity and pipeline growth within eighteen months, if not sooner.”

Tom and Ed have not been taught the material; they developed it, and lived it firsthand. When not in the classroom, they are consulting for clients, so the content is always in proper alignment with current and impending trends.

For more information on the course, instructors, or to register for class, please click here for BTA MPS Sales Workshop or click here for BTA Sales Management. As a special note, BTA members may use their $250 coupons if booked on or before Friday, Sept. 24, 2010.

Frank Gaspari Looks to Separate FlexPrint from the MPS Clutter

2010-08-30T09:49:00.000-07:00

By Scott Cullen

Frank Gaspari, CEO of FlexPrint, a national provider of document management and managed print solutions, is a straight shooter. Ask him a question and he doesn’t mince words. If you’re a copier dealer, copier manufacturer, or an MPS provider with a thin skin, you might want to stop right here and find something else to do because if you continue reading, Gaspari may say something that will ruffle your feathers.

There’s no denying Gaspari’s a successful entrepreneur and FlexPrint has enjoyed 700 percent year-over-year growth since its founding in 2005. No wonder the company was recently ranked by Inc. magazine as the 423rd fastest growing company in the nation. Prior to FlexPrint, Gaspari founded Column Office Equipment in Chicago in the early ‘90s. That company also made it onto the Inc. 500 before being acquired by Global Imaging Systems in 1999. Next up for Gaspari was a print management company, Image Manufacturing, which was also acquired by Global Imaging Systems.

Although FlexPrint started as a managed print services company, it does so much more than that. Strategically that makes a lot of sense because Gaspari is not a fan of the term, ‘managed print services’. We’ll give him an opportunity to explain an opinion, which borders on heresy in the document management world, later. In addition to its home base in Phoenix, Arizona, FlexPrint has more than 100 employees, offices in Los Angeles and Chicago, and supports hundreds of customers in 45 markets across the country.

How’s business?

Gaspari: Awesome, we’re growing, man. Business through the first six months is up a little over 40 percent compared to last year.

Who are your customers?

Gaspari: We have more than 300 customers coast to coast in every vertical industry. We focus on best in class companies with 200 to 30,000 employees, a lot of devices, and multiple locations. We’re not interested in doing business with the doctor’s office next door or ABC company that has five copiers and 10 printers. That’s not our business model. We want to engage with people where we can make a measurable impact and that’s typically an organization with a lot of devices and multiple locations, and who need a consultant to help manage this piece of the business.

Why do customers like doing business with Flexprint?

Gaspari: They choose us for our value proposition and our people.

When you say, ‘value proposition,’ what do you mean by that?

Gaspari: It’s different for every client. We’re not a managed print services company. We’re not a copier company. We’re what the customer’s pain and need dictates. We do a good job of analyzing what’s going on within their organization, understanding their business, and understanding what they need. We don’t have a cookie-cutter type of business model. I think some clients are more in tune with cost savings, so we can help customers there. Some are looking for process improvement, so we can help there. Some are focused on green initiatives and we can help them there. Some are interested in eliminating unnecessary discretionary printing, and we can help them there. And some of our customers are interested in all those things.

Who are your competitors?

Gaspari: We have all sorts of competitors. To be honest with you, there’s a clutter of me-too companies. There’s a clutter of people that want to simply move devices and a clutter of people that want to get into the space. A lot of the people who are getting into the space are grossly uneducated and they’re just diving into it because they’re being told that’s what they have to do. There are the copier people who are figuring out how to get into this space and some big VARs getting into this space. We’re not perfect, but I think we’re a few steps ahead of the clutter. And I put most in the clutter. That’s who we deal with every day.

What did you learn from your experience as an office equipment dealer that was helpful when starting FlexPrint?

Gaspari: What I learned was no matter how you spin it, copiers are a commodity and everybody sells the relationship and the service, and it’s all about price. What I saw happening before starting FlexPrint was printers popping up all over the place, and that gave me an opportunity to present a managed print program. What I learned from those two things is that you truly have to do what you say you’re going to do. You have to take a consultative approach and that means you don’t have any distractions as it relates to equipment, manufacturer relationships, quotas, any of that “stuff” that’s going to drive you to a decision that isn’t customer focused.

You don’t like to use the term managed print. Is that because it’s a buzz word that everybody’s using or is it too limiting?

Gaspari: Both of those reasons. It puts us in the bucket with everybody else. When we started, we were a managed print services company, but we don’t want to be in that bucket now because we do so much more than everyone else.

What is the biggest challenge of doing what you do, especially since you’re doing so much more than managed print?

Gaspari: As managed print continues to grow and become a bigger and bigger industry, separating ourselves on the initial phone call and the initial meeting from the clutter. It’s very difficult to do over the phone. Five years ago when we started no one was talking about this and it was a lot easier to get a meeting. Today, everyone is talking about it, they’re doing this, this, and this, and they’re stealing from somebody’s Website and this is the value proposition and the customer is like, ‘I’ve heard ten of these pitches, I’m not interested.’

Our biggest challenge is continuing to reinvent ourselves and bring measurable new value propositions to our customers to stay ahead of the clutter. Not just from a marketing perspective, but from a measurable, tangible results driven base to the customer. When you say, ‘What do we do for our customers?’ We do a lot of things. I would tell you that part of my job, which is completely different from what it was when I was with a copier company, is strategizing the space and looking at what else I can do to add more value to my customers. That’s a big deal because I have to stay ahead of the clutter. I have to bring them more value, measurable value, and that’s a challenge. One person I really depend onto assist me in this area is Tom Callinan of Strategy Development. Tom is a great resource for me and I seek his advice on many major decisions.

Tell me a little more about the environmental component you bring to the table?

Gaspari: The reality is it’s not a marketing line on a brochure or something we just talk about with no measurable deliverable for the customer. We’ve been talking about the green impact for the last three years. Number one is educating the customer about the amount of waste that goes into this part of their business as it relates to sustainability. Some customers don’t care. For some customers a green initiative is saving money. To educate them we have to show them how we can drive results. ‘If you’re interested in having a more sustainable, greener environment, this is what it means and here’s how we can deliver that for you.’ That continues to change and evolve as new technology comes to the table.

A lot has to do with paper reduction. Part of that value proposition, which is an oxymoron for a company that gets paid whenever you print, is eliminating print volume within our customers if they’re interested. Some don’t care about eliminating print, like a law firm because they’re billing back for everything. But some customers with a lot of discretionary printing are interested in a measurable program that eliminates printing year over year.

Where did the concept for going off in this all encompassing direction and starting Flexprint come from?

Gaspari: Before I started this I took a little time off to analyze my previous businesses and what I wanted to do. It came from two things; I looked at the market place and I knew that my biggest competition would be the status quo. I left Chicago to start this 2,000 miles away in Arizona—new people, new market, and there was no one else doing this—but I realized there was a huge opportunity for the right type of company.

Back then it was an aggressive company, forward thinking—one that would engage with a company like us. Part of it was, I saw the opportunity with my years of experience in this space and I knew it would be a lot harder from the perspective, it’s not a commodity, it’s not something you’re used to doing now, so you’re going to have to beat it home real hard, but as long as you have the right business model and value proposition, it could be done.

The other thing, aside from being a profitable business model, which as an entrepreneur you have to have, the other thing is the customer experience in this space is a great thing. Because of what we do and the relationship you have with them is not always bliss, but for the most part it’s a great relationship. It’s like selling a yacht; they love you versus selling a bunch of copiers or toner or whatever the hell you’re doing because you do a great service for them. In a company like us that prides ourselves in doing what we say we’re going to do, that was important to me. After 16 years of owning two companies, it wasn’t just about the money. I really wanted to do something that I enjoy doing every day.

How do you see your business growing over the next three to five years?

Gaspari: I recently hired a President and COO that freed up my time and now my focus is on really driving the business. It’s going to be difficult, but I believe with our real strong back end in 30-36 months from now we’ll be twice the size in revenue.

Beyond that any other thoughts on how Flexprint will change during the next 30-36 months?

Gaspari: We’ll definitely change. If we don’t, we’re not going to double our sales. We’ll add more components to our value proposition and probably get further away from managed print services, not that we won’t be associated with it. We’ve got to be because there are more people searching that [online], but our challenge is finding real measurable ways to add more value in the document output space within the client’s infrastructure. That will be the biggest change.

Scott Cullen has been covering the office equipment industry since 1986. Scott is Publisher/Editorial Director for Imaging Solutions Reseller; Editorial Director/Managing Editor for OfficeSOLUTIONS and OfficeDEALER; Editor for PC Solutions; and a contributing writer and Editor for Independent Dealer, OFDA, Mercer Business, ENX, BERTL’s iTchat, Repro Report.

An SOS from AOS Raises the Performance of its Service Operation to the Next Level

2010-08-25T13:12:00.000-07:00

By Scott Cullen

Ask any office equipment dealer what sets them apart from competitors or why customers like doing business with them and service will inevitably be one of the first things mentioned. Having an efficient service operation is critical to the success of every office technology dealership, including American Office Solutions (AOS) in Clarklake, Michigan.

Founded in 1969, AOS serves Lansing, Jackson, Adrian, and the surrounding areas and has a reputation for placing customers first. True, that’s something most dealerships claim to do too, but AOS consistently delivers on that promise.

“When AOS makes a commitment, whether it’s price of new equipment, service or a solution, we live up to that commitment,” says AOS President & CEO Ted McEldowney. “There are no surprises, no hidden costs, no fees. We do what we say we’re going to do for the price agreed upon.”

The company offers the obligatory selection of office technology with its primary vendors Sharp and HP. Understanding that an office technology dealership can’t survive on hardware alone, AOS also offers an array of services and is a HP certified printer servicing dealership.

As important as service is to AOS, and as good a job as AOS was doing, it was clear to McEldowney that it could do much better. They didn’t have written procedures for technicians to follow, nor did they have performance guidelines for technicians, both important for creating a top-notch service organization.

“The biggest obstacle was confirming the daily actions and job descriptions of our service staff from the delivery person to the service manager to make sure that the quality of service was at the highest standard possible,” explains McEldowney.

The writing was clearly on the wall that improvements were in order based on the data AOS was getting back from BEI Services, a provider of copier and service department benchmarking solutions.

“As we reviewed some of the reports from our ERP as well as NEXTGEN, Lacrosse, and MWAi, we found we didn’t know which reports were important to us and our goal of improving service for our clients as well as the profitability of our service operation,” recalls McEldowney.

Once these issues were confirmed in black and white, McEldowney realized he needed outside help to get his service operation back on track. He turned to Strategy Development who came in and showed AOS which measurable reports to use and assisted them in creating a total call procedure, which when followed correctly greatly improved the quality of service. In addition, Strategy Development helped define technician job responsibilities as well as implement a formal performance management process focusing on continuous improvement.

“They made it very easy by creating an action plan for us to follow,” adds McEldowney. "The plan includes all the reports and documentation to support that decision with a description of how all this information should flow together daily, weekly, monthly, quarterly, and annually.”

Sharing information and progress with service techs was also instrumental in moving things in the right direction.

“We worked with dispatch and the service techs by showing them the reports we were getting from NEXTGEN and BEI so they were aware of how their time was being accounted for,” says McEldowney. “Once we showed our techs what reports we were going to use to measure their performance, the improvements began immediately and every tech is still moving their numbers in the right direction.”

For McEldowney the most helpful recommendation he received was to focus on the total call procedure. Part of that involved sending AOS’s service manager into the field to follow techs on random calls.

“Our service manager was in the office because our ownership thought that’s where he needed to be,” notes McEldowney. “We were wrong. With our service manager in the field two days a week, he gets an opportunity to hear directly from our clients what they really think about our service.”

That feedback isn’t always positive, but McEldowney says it is better knowing than not knowing.

“Now we can fix things,” he says.

Implementing these changes was a cultural change for techs and for the most part the reaction was positive.

“We have a great group of techs and all have recognized that there are going to be changes, and fortunately some of the immediate changes showed improvements right away, so it wasn’t hard to get them to buy into our improved service department plan.”

That’s not to say it wasn’t a challenge. The biggest was making techs aware of how valuable their time is.

“The culture change has gone really well because everyone has bought into the new culture, from our delivery person, to our facilities manager, to our field technicians, to dispatch, and most important, our service manager,” says McEldowney.

Updating the dealership’s other managers—sales and administration—on the progress of the service department has also helped so when good things happen, it’s recognized within the entire company, which makes the service team feel even better about the job they’re doing.

Customers found this new approach to service positive as well.

“This is funny because it’s rare that a client contacts us directly to tell us how well our service techs did repairing a copier/MFP,” says McEldowney. “Since implementing these new strategies, we’ve had more than 10 clients in the past six weeks take time out of their day to contact us via e-mail, phone, or at a business meeting and tell us about their experience with our service. To us that’s a great start.”

The expectation is that this will increase AOS’s level of support on every call, which will then translate into a longer business relationship.

With a whole new attitude and approach to service, AOS is well prepared for future success and truly set themselves apart from competitors from a service perspective.

“We now have more tools to measure performance, spot trends, and make good decisions based on what we see happening through our daily report activity,” states McEldowney. “We pride ourselves on these improvements and it’s our plan to make sure we use all the tools to the fullest. In addition, the timing for AOS was perfect because we were able to implement many of these service tasks, goals, procedures, and measures as we continue to improve our MPS strategy.”

Scott Cullen has been covering the office equipment industry since 1986. Scott is Publisher/Editorial Director for Imaging Solutions Reseller; Editorial Director/Managing Editor for OfficeSOLUTIONS and OfficeDEALER; Editor for PC Solutions; and a contributing writer and Editor for Independent Dealer, OFDA, Mercer Business, ENX, BERTL’s iTchat, Repro Report.

From Printer Cartridge Recharger to MPS Provider

2010-08-24T09:57:00.000-07:00

By Scott Cullen

Why rock the boat when you’ve got a nice printer cartridge recharger business going for you? That’s a question we just had to ask Frank Topinka, president of Page After Page in Shrewsbury, Mass. after taking his successful recharger company and transforming it into a successful provider of managed print services.

What initially set Page After Page apart in the greater Boston market as a recharger was its ability to provide an ever-expanding customer base with desktop delivery. That worked extremely well, especially when the big boxes began stocking compatible cartridges.

Now Topinka is not one of those guys to bury his head in the sand. He could see the winds of change blowing even while his business was growing. A little something called print management was looming on the horizon along with the realization that this concept might eventually threaten his customer base. The solution was a new strategic direction.

“When industries mature you have to look at what the OEMs are doing and we were seeing Xerox, HP, and Lexmark do print management deals at the enterprise level,” explains Topinka. “It was clear to me they would eventually bring it down to this level of the market.”

The boat was now rocking as the company embarked on what turned out to be a significant cultural change. “People aren’t used to change and we had to change our strategy and direction and get all of our people on board for doing something different than what we were doing before,” recalls Topinka. “We were still in the same business and selling the same product, but the whole method changed dramatically, which means that sales could no longer go out and sell a service of repairs at a price, toner at a price, and supplies at a price. Now we needed a consultative approach, we needed to build relationships and all the things that went with it.”

The transition at Page After Page began about five years ago with the company developing new sales strategies and ramping up its back-office customer support. Learning how to assess the customer’s print environment, producing documentation to show customers how Page After Page could help them in the long term, and presenting proposals were wildly different from the way the company had been conducting business as a recharger.

Being an early adopter had its challenges. “Nobody was doing it,” says Topinka. “Now everybody’s talking about it although I would guess not many are doing it in the way that’s defined by Strategy Development.”

Acknowledging that Page After Page services thousands of laser printers monthly and half of those are five years or older, Topinka’s transition strategy evolved from the organizational change of phase one into phase two with a printer refresh program. That meant moving into printer sales. To do that effectively Topinka started training his staff on printer specs and pricing and partnered with a leasing company.

During this training period, Page After Page learned a thing or two about multifunctional products and how to sell them as well. They also formed partnerships with third parties and connected with print service consultants and leasing companies to ramp up their knowledge and connections in this area.

Here’s where Strategy Development comes in, helping Page After Page develop a program that encompasses a thorough print assessment, printer strategy techniques, and a cost-per-page calculator that extends a minimum monthly page count to a single invoice for all of their services.

Topinka believes in giving credit where credit is due and he credits Strategy Development with helping him initialize his MPS program.

“Without their training we wouldn’t have been able to get this off the ground,” he says.

He also learned about MPS by attending industry forums and events like ITEX and watching what the copier manufacturers were doing even though at the time it was mostly all talk and little action.

Was the recharger background helpful in making the transition to managed print?

“You don’t need to be making your own stuff to be in print management,” responds Topinka. “Obviously, we started as a remanufacturer before I even knew what this business was. I had a background in manufacturing and I came in and refined the remanufacturing process and upgraded our production environment and some of our costs went way down and our quality went way up, so we still deliver that particular component in our print management, but we don’t talk about it. It’s allowed us to have favorable pricing when we need it, but that’s about it.”

Moving into managed print was an eye opening experience as Topinka and his team discovered the joys and pitfalls of longer sales cycles and the challenge of penetrating new accounts. Because Page After Page was one of the first in the market to offer MPS, they had to contend with a lot of suspicion from customers and hear time and time again, ‘I’m not going to a cost per page program’, even though Topinka’s sales reps were explaining in detail all the costs and the savings.

“We still had success in attracting some new business that way,” states Topinka. “Our first big customer came through—a big print management deal worth about $20,000 a month—and they’ve been with us for four years now.”

Fast forward to today and Topinka concedes business has been soft for the past 18 months although it seems to be picking up of late. What’s easier now is taking the MPS message to customers. Even though business has been soft, Page After Page has not lost a single print management customer during this period. That’s the good news. However, the biggest culprit of the soft market has been the economy.

“Without a soft economy we wouldn’t have had any problems at all,” says Topinka. “It caused everything to change. Other than that we’d be doing pretty well.”

Topinka has found direct mail an effective method for reaching new customers. That often involves a premium that warms up the prospect so Page After Page calls the customer remembers them. The latest premium is a remote-controlled $150+ toy car from HP Power Tools with the prospect’s name and the Page After Page and HP logos on it. The only thing that isn’t included is the remote. To receive that, the customer must schedule a meeting with Page After Page to talk about print management. After the first 10 days of the promotion, 14 appointments were scheduled.

“It’s the hottest thing we’ve done so far,” beams Topinka.

Currently, 40 percent of Page After Page’s business is straight print management deals and Topinka would like to see that grow to 80 percent in the next three to five years.

“The way that’s going to happen is by continuing to do the things we’re doing, attracting new customers into the program and by converting existing customers where we can. Many of our existing customers have looked at it, liked it, but haven’t changed because they don’t have any pain, so they just stay with the program they’re on now. I don’t know if they’re ever going to change because they still get all the benefits without the cost per page. They like the transactional model. I’m okay with that as long as I don’t have a competitor come in and take them away from me.”

Customers tend to go with Page After Page because of their reputation.

“We’ve been doing it a long time,” says Topinka. “We have a very good service component and we leverage that. Our response time is under four hours and we have a high rate of first-time repair, in the ‘90s.”

Topinka also credits a sophisticated print management presentation.

“Our value proposition is well structured and thought through,” he notes. “Prospects see value in how we present and our assessment tools, findings, and proposals are all very intriguing. We also do desktop delivery. That’s difficult and unique and not many dealers do it or can do it, but that’s our normal model.”

If Topinka what he knows now when he first started down the print management path he says it would be a better understanding of how to improve margins.

“Trading up the contract through quarterly reviews, adding value, we didn’t really understand that; we do now,” he says.

Scott Cullen has been covering the office equipment industry since 1986. Scott is Publisher/Editorial Director for Imaging Solutions Reseller; Editorial Director/Managing Editor for OfficeSOLUTIONS and OfficeDEALER; Editor for PC Solutions; and a contributing writer and Editor for Independent Dealer, OFDA, Mercer Business, ENX, BERTL’s iTchat, Repro Report.

Want an Award: Send a Check

2010-08-19T05:39:00.000-07:00

If you are a manager and have attended any event using your e-mail address and title you probably found yourself on a SPAM e-mail list. If that be the case I am sure you have been notified of the great honor of being nominated for the Who’s Who of (prestigious name). I remember the first time I received this exciting e-mail: I quickly clicked through to complete my biographical information for the listing, and just as quickly discovered the $50 “listing fee.” Wow, I looked around to make certain nobody saw me click through to what was now obviously a scam. I didn’t want to look foolish.

How many people do you think actually complete that information and pay the $50? I’ll admit, I’ve read of that great honor bestowed on numerous individuals I have seen speaking at events. When I read the notation in their biography I immediately lose a level of respect for the person before I even listen to them speak. Are they so insecure that they think paying $50 for an “award” provides them with credibility?

It isn’t difficult to understand the scam: Send out 1,000 e-mails per day, have 20 managers actually pay the listing fee and you earn a cool $1,000 per day. Over a 240 day business year you earn $240,000 and the required investment to set-up this business? A slick looking website ($2,000), an e-mail distribution account ($200), and a list of managers ($5000). For a small investment of $7,200 these scammers collect $240,000 per year. Maybe they should buy twice as many e-mail addresses!

There have been numerous opportunities in the imaging business to buy an award. Now there is one more—for a mere $900 per month you can be named one of the top 100 service dealers in the country, or is it the world? For those predisposed to taking other’s money without providing tangible value it is a great….shall we say scheme, in that 100 companies paying $900 per month is an astonishing $1,080,000 per year, without doing a stitch of work other then selling these unsuspecting business people on the value of the award. You might even sell some of the “top 100” companies some consulting services: Imagine you get some of those “top 100” to pay you a fee to come in and train their sales force on how to market the recently acquired designation! Cha-Ching.

How could you possibly designate a company as top in anything without reviewing the entire pool of candidates? If you wanted to determine the top 100 universities wouldn’t you need to evaluate all qualified universities against a clearly defined set of criteria? Doesn’t the company certifying the top 100 universities need to be independent? If that certifying company was paid only by the universities that earned a spot on the top 100 list would there be any credibility in the list?

You could be a top 100 service company; you could be a Who’s Who, you could “earn” a degree from an unaccredited diploma mill “university,” but wouldn’t you rather spend your hard earned dollars on some marketing that will truly bring you respect? Over the last 25 years I have witnessed the imaging industry transform from the Wild West into a group of highly professional business operators. There is no need to resurrect the evils of the past with paid for awards.

What I have learned is that some dealerships are thirsting for a reputable industry player to certify that they have a quality customer service organization. Clearly service, including back office operations, is a determinant in selecting a vendor. As the only industry player with experience in all aspects of a dealership operation I take it as a challenge to support this need.

You can bet SD will never take your money with any type of scheme that can pretend to designate you as one of the top 100 organizations in the industry, since it would be impractical to think we can evaluate every dealership (and what if two dealerships in the same market were both stellar…is there any legitimacy in saying one is top 100 because they paid us first when the other might actually be superior) but we certainly have the skill set to know what good looks like. Look for an announcement in the not too distant future on how we’ll quench that thirst with legitimacy.

Poll: Managed Print Services – Are you on board?

2010-08-18T12:03:00.000-07:00

To keep your finger on the pulse of what your peers are thinking and doing, Strategy Development will be conducting monthly surveys, on hot topics in the imaging industry. Results will be published in our monthly newsletter: sddigest. Not registered for our newsletter? Click here to send me an email with your contact details.

Please take two minutes (literally!) to participate in this poll: Managed Print Services - Are you on board?

Launch Poll

Introducing ClearView, a tool to properly price and position MPS opportunities

2010-08-17T08:48:00.000-07:00

Strategy Development has worked with a leading software developer to translate their knowledge and insight of proper pricing of managed print services (MPS) engagements into a comprehensive Excel-based pricing tool: ClearView. ClearView is user-friendly and easily blends expenditures for mixed fleets, related consumables, and services into a single cost-per-page (CPP). The blended CPP can enable a customer to reduce costs and/or allow print providers to improve margins.

ClearView turns data into intelligence in order to calculate a current CPP, as well as what a blended CPP would be in a variety of potential scenarios. The tool enables comparisons of MPS transactions from simple outsourcing, to redeployment, consolidation or refresh of devices, as well as comparing total cost of ownership to the prospect’s/customer’s current cost. Additionally, ClearView provides the ability to contrast costs from period to period to assist in conducting quarterly account reviews, a process developed by Strategy Development for the MPS space.

ClearView is being made available to Strategy Development’s consulting clients and participants in the BTA MPS Workshops, which were developed and are instructed by Strategy Development consultants. If you are current consulting customer or have attended a BTA MPS Sales or BTA Operations & Service training workshop in the past twelve months, click here to register for the training webinar which will take place on Wednesday, September 1, 2010 at 11am EST/8 PST.

Introducing WebEd: A monthly educational webinar series

2010-08-16T07:45:00.000-07:00

This month Strategy Development is launching WebEd, a free educational webinar series to provide monthly training for sales, operations, and service professionals.

The series kicks off with two webinars: In the service track on August 24, Manage a Service P&L — How to Read, Interpret and React and, in the sales track, MPS Assessments – Know when to hold ‘em, know when to fold ‘em on August 25.

Manage a Service P&L — How to Read, Interpret and React
With a precise understanding, the service income statement (P&L) will provide a service manager with the information needed to make sound business decisions and realize 52% plus returns. Comprehension of how managed print services (MPS) business affects the P&L adds a layer of complexity that requires specific knowledge. This level of understanding can only be realized with the proper education of how to interpret, act, and communicate within the organization.

Date: Tuesday, August 24
Time: 11am EST/8am PST
Duration: 45 minutes
Speaker: Mike Woodard
Click Here for More Information and to Register

MPS Assessments… know when to hold ‘em, know when to fold ‘em
The assessment is the step in the sales cycle where you capture the information to justify the financial aspect of the MPS business case. Learn the in’s and out’s of performing assessments; when to walk away from a perceived opportunity; overcomplicating the process; to map or not; about gaining all of the critical information to justify a contract; as well as the perils of not having an champion or an agreement on pain. Avoid the many pitfalls that will help enable you to capture a large recurring revenue stream. Having knowledge of what NOT to do is as important as learning what you need to do well.

Date: Wednesday, August 25
Time: 11am EST/8am PST
Duration: 45 minutes
Speaker: Ed Carroll
Click Here for More Information and to Register

Hope to see you there!

Never Listen to Anybody Worse Off Than You

2010-08-16T06:06:00.000-07:00

Words of wisdom I learned from the great sales trainer Tom Hopkins when I attended his three day boot camp in the 1980s. I was in my twenties and new to the outside sales game, but they are words I have lived by throughout my business career, and not simply as a sales professional. The words are so simple and logical, yet have such profound implications.

Would you take medical advice from the guy who failed high school biology and works at the tire store installing your new tires? Would you listen to the doctor who thought you could install your own tires with two crowbars? Would you invest your money with the middle age guy living with his parents who doesn’t have enough capital to make his car payment and is close to filing personal bankruptcy?

At that sales training seminar back in the 80’s those words were profound, yet the meaning was also clear. The three examples I gave above could easily be identified because you would be standing in front of the person and wonder why this guy in the tire store uniform was giving you medical advice.

Now let’s fast forward twenty years. That tire changer, who flunked high school biology, has a blog titled “DeathoftheDoctor” and espouses his opinion on medical issues. He never really says anything with any substance, rather he just attacks anybody else that does and uses pithy phrases to indicate they are fools. Eventually, those “fools” begin to disappear from the blog since they didn’t sign-up to get berated and the only posters left are the real fool, your high school biology failure, and a small group of other flunkies who agree with this unqualified guy giving out medical advice.

The internet, self promotion, and lack of substance have elevated this guy—mostly in his mind because let’s face it he still goes to the tire shop each day—into some type of cult guru.

That 45 year old “investment guru” who attended two different obscure colleges over eight years, yet never graduated, also has his blog, “FailedInvestor.” This guru claims to have invented the hybrid investment approach—a long/short hedge enhanced with options. He claims it is the phase 3 of the modern approach to investing. He has all types of fancy charts and phrases and he too loves to attack others. You hear things like the large investment banks are stuck in the past and don’t understand his strategy and he was first to do this or that, but without much examination you can easily see that he simply changes terms and puts out press releases. His obsession with self promotion—a characteristic of all of these cyber world experts—even attracts some fools to invest in his fund. But in the end all is lost.

The point of this post goes directly back to the words of Tom Hopkins but links those words with the world we live in today. A blog, postings on LinkedIn or Facebook, giving a presentation at a show, or a press release doesn’t make you an expert. Education and experience are what makes an expert. Spend some time to get to know the specific experience of those you seek for advice and you will save a great deal of money and time.

For U.S. Remanufacturers, MPS Is Both A Blessing And A Curse

2010-08-12T00:53:00.000-07:00

by Charles Brewer

It’s increasingly difficult to make money marketing remanufactured toner cartridges in the United States. Remanufacturing cartridges that perform well consistently has always been a challenge and that challenge has been compounded significantly with the introduction of new imaging technology, particularly color. Finding vital supplies has also become an issue. The supply of empty cores--the remanufacturing industry’s life blood--has been drying up for the past few years and the price of empties has skyrocketed. And most importantly, years of fierce competition led by large companies both foreign and domestic has resulted in severe price compression and razor thin margins.

Medium-sized remanufacturers in the U.S. have been hit the hardest. Many mid-sized players were established at a time when they could cover the majority of the market producing only a handful of cartridges. Now, remanufacturers must offer dozens of different SKUs to supply today’s diverse installed base. Many mid-sized firms, however, lack the capacity to produce such a wide array of cartridges. These firms now must outsource the majority--if not all--of their production. This has caused a fundamental shift in the industry, and many companies have changed their business models from that of a producer to a distributor. Outsourcing can be expensive and being profitable while selling cartridges from a third party is a difficult proposition especially when selling monochrome SKUs, which have become increasingly commoditized.

Those mid-sized companies that continue to produce cartridges in-house also find it difficult to turn a profit. Often they lack the economies of scale needed to negotiate lower raw material prices with suppliers so their costs are high compared to the big guys. The smaller firms get little respect from empties brokers and must pay top dollar for the most popular cores--if they can get them at all. Suffice it to say that for those firms that have been able to continue to produce their own products, the overhead has grown to a point where they find it hard to operate profitably.

Managed print services seemed to offer remanufacturers relief from some of their most vexing problems. First and foremost, MPS was seen as a way to add value to commoditized products. Just like it does for hardware vendors, MPS held the promise of improved margins by providing remanufacturers with a way to wrap valuable services around their consumables. It could also give mid-sized firms a vehicle to differentiate themselves as a service provider in the marketplace. Depending on how they shaped their MPS services, remanufacturers could reap added benefits like having some say as to the type of equipment their clients would employ, which would limit the range of SKUs the remanufacturer had to provide. And, it would allow the remanufacturer the ability to collect precious empties--a service that the clients would also value.

The remanufacturing industry as a whole became aware of print management solutions about five years ago. Initially, interest was strong, but remanufacturers recognized they faced a number of hurdles if they were to offer MPS packages. They lacked technology, for example, to monitor their clients’ machines even for the most basic MPS offering. And they had to move from the transactional sale associated with selling cartridges to the solution sale required for an MPS contract. Remanufacturers also faced logistical changes as they moved from providing some fixed number cartridges to supplying customers with cartridges as needed.

As the industry continued to demonstrate a desire to offer MPS, various companies have come forward to support remanufacturers. Technology to monitor printer fleets, for example, has been increasingly available from firms like PrintTracker, PrintFleet, and others. Likewise, various companies have stepped up to help remanufacturers successfully transition from transaction sales to marketing MPS solutions. There are now scores of seminars and workshops aimed at helping smaller remanufacturers launch and manage MPS programs.

Despite all the support and interest, however, it’s not clear that MPS will be the panacea the mid-sized remanufacturers have been looking for. In fact, it’s quite likely they will not be able to offer a profitable managed print service.

It’s difficult for a company that markets supplies exclusively to offer a real managed print program. For clients to realize the full benefits of MPS, there needs to be some degree of fleet optimization, and optimizing a printer fleet requires swapping out hardware. While this may include physically moving devices within an organization and taking some off-line, often it requires deploying new hardware. There are some remanufacturers that are also VARs and they succeed in the MPS market. But those companies that only sell cartridges ultimately will find it impossible to compete with the MPS contracts that dealers and VARs can offer.

Another big challenge that mid-sized firms face are the expenses associated with MPS. It can be costly to acquire the equipment and software required to support monitoring technology. There are companies that will host the services, but outsourcing can get expensive especially for a small company. Remanufacturers also face new cash flow issues. Rather than collecting full payment at or near the time of delivery as they had when they sold cartridges, companies may have to wait months for MPS payments to come in before they can cover their costs. Moreover, often companies must stock up their customers’ supplies closets with inventory and that cache of cartridges may not yield any cash for months.

Some mid-sized firms are learning that rather than offering a new path to profits, MPS really represents new threats. First, large remanufacturers are increasingly active in the space and can undercut the mid-sized players. And, rather than losing one sale, losing an MPS bid means the customer is lost until the contract is up, which is typically between three and five years. Remanufacturers also have to do battle with new competitors as more and more companies offer some type of MPS solution. OEMs are providing new supports to their channel partners, which further strengthen the value proposition of those competing with the remanufacturers.

I don’t want to suggest that MPS is all doom and gloom for remanufacturers. It can open new doors and some new opportunities are emerging. Independent dealers, for example, are increasingly aware of the improved margins remanufactured cartridges can offer them compared to OEM, which is expanding the market for remans. But MPS is not good news for everyone in the industry and it will put further pressure on many remanufacturers doing business in the United States.

With over 12 years of experience, Charles Brewer is an independent consultant for the digital imaging industry. He is a contributing editor to Lyra Research's Hard Copy Supplies Journal published, which he managed from 2005 until 2009. Brewer has authored numerous articles, reports, and white papers on hardware as well as toners, inks, and media and has worked with various OEMS and third-party supplies vendors.

The Death of MPS

2010-08-11T10:21:00.000-07:00

As the preeminent MPS consulting firm you probably wonder how this title made it onto Strategy Development’s blog. Does Strategy Development really think that MPS will die? The answer to that question is the same as the answer to a few others: Will CPP leasing die? Will digital products die? Will color output devices die? Of course the answer to all of these questions, including the death of MPS, is a resounding “No,” not in the foreseeable future.

So then why “The Death of MPS?” What I do expect to die are individuals (not physically just in discussion), companies, anybody, viewing MPS as some discreet business. I cannot wait to stop getting e-mails touting the latest show on MPS; the latest study on MPS; the latest definition of MPS; the latest MPS sliced bread.

Cost per page, or in the day cost-per-copy, was going to change the business forever; a business model shift and not simply a new approach to leasing. It did change the business in that it built in great switching cost and protected aftermarket. It also had a slight change on the business in the requirement to capture meters and the elimination of large aftermarket sales teams. But it was an evolutionary change and not a revolutionary change. Sure the software providers needed to catch up, but they did, and the dealer/reseller needed to transition their supply reps to meter collectors and supply shippers, and they did, but it wasn’t much of a blip on the screen with the benefit of hindsight.

Then digital was going to forever change the business. Remember the research firms saying, “if you don’t own the network you won’t sell copiers/printers?” A significant business model shift that would leave many copier companies in the dust and out of business: Well that never happened. Digital did have an effect that we are feeling now, printer and copiers go head-to-head, but it was a long change that provided a lot of opportunity to adapt. Owning the network never had an effect on acquiring output devices, and the dealer/reseller developed the skills to sell and maintain digital products and to leverage the professional services that could be sold with, or after, the installation of the device connected to the network.

Then color and production—take your choice: Dealers couldn’t afford to sell and maintain these devices. They were the bailiwick of the OEM with their hordes of cash and ability to deploy sophisticates sales professionals and support teams to support the products. Sorry, wrong again. Dealers adapted and successfully sold color and production, tweaking their business model as they went along.

And now MPS: Some would leave you to believe that MPS was some new and exciting space. I sold my first real MPS agreement in 2002—eight years ago—only we called it fleet management and it was inside of a facilities management (FM) agreement. To be fair our FM team was selling fleet management for years before that, I simply was involved in this transaction because it was a multi-million dollar contract and the customer wanted a full equipment refresh built into the agreement, with the equipment being refreshed over the multi-year agreement. In other words it had Balance Sheet risk so it needed executive engagement. I was also involved in numerous transactions in the enterprise space where the customer wanted to optimize and standardize their output fleet and use professional services, like advanced capture and routing, fax servers, variable data printing, web submission, and document management, to improve their workflow. Today you call these transactions MPS.

For most dealers/resellers MPS is a new go-to-market strategy and it does require changes in the business model, but those changes are becoming a lot clearer today. Early adapters dealt with remote monitoring software that was unpredictable at best. Today’s entrants find software that works well and improves every day. Early adapters worked with leading leasing companies to define contracts; today’s entrants benefit by having contracts that are well written for MPS. Early adapters had vision or faith, or maybe both, that MPS was a real revenue stream where they could make a profit. Today’s entrants have numerous examples of companies in the space growing rapidly and earning nice margins.

The success factors, from a high level perspective, of MPS are also clearly defined: Have a business plan, make an investment in the MPS business, use dedicated sales professionals, use a services led approach, employee quarterly business reviews, be hardware independent, and invest in sales, service and back office operations training. That’s not to say that companies aren’t adapting a MPS strategy at different times or only in portions. You have early and successful adapters, like FlexPrint, and you have many dealers/resellers who say they are in MPS because it is what they feel they need to say, but they really aren’t. The same was true of CPP, color, production, digital, and professional services. I remember Leslie in NYC (acquired by Danka) being the poster child for color back in the day.

We no longer talk about the risk of using a CPP model in our sales approach nor do we view it as a creative marketing approach. We no longer advertise that our products are digital or talk about the analog to digital transformation. We no longer look at production and color devices and wonder if we’ll ever be able to sell and support the devices. Think about this for less than a second: If you didn’t use CPP, didn’t sell digital devices, color, or production what would you be? Not a lot of debate needed as it is an easy answer, basically out of business.

An MPS contract can include imaging and printing devices, support and supply of those devices, software applications related to documents, and consulting services. What does that sound like to you? If you’re reading this blog, and not lost in cyberspace, my guess is it sound like your business? Am I on the mark? So the longer you take to really get into MPS the greater proportion of your customers that will be signing MPS agreements with a competitor. If you competitor is good at MPS it will only be a matter of a few quarters after they get into your account that you are totally displaced. Therefore, MPS becomes both your growth approach and your survival.

This post is really focused on the dealer /reseller. For the OEM MPS can have a significant effect on their business. If all of the dealers / resellers suddenly become hardware agnostic—they simply sell and support what is best for the end users—it could accelerate the winners and the losers in the OEM space. There is also the issue of compatible supplies and InfoTrends has done a good job of quantifying the possible effect on a OEMs revenue stream in this area. The bottom line is that day is coming so the OEMs need to develop a model that makes their products the best choice for deployment inside of an MPS agreement. Maybe we’ll make that the topic of a later post.

A Dedicated Staff = MPS Success at GFI Digital

2010-08-03T02:52:00.000-07:00

By Scott Cullen

St. Louis has the Cardinals, Rams, and the Blues, but one of the most successful teams in the market by far can be found at GFI Digital, an independent office technology dealership that’s grown into a $50-million business in 11 years.

The GFI Digital team covers a good portion of Missouri along with western Illinois, and has emerged as a leader and trend setter in the markets it serves. Customers have high expectations as well they should from their office technology provider, and if it weren’t for the dealership’s commitment towards providing solutions, top-notch customer service and support, it’s unlikely GFI Digital would be enjoying the success they do today. Whatever they’re doing, they’re doing right, from the top of the 150 personnel organization to the bottom and everyone in between.

Dealerships across the country may still be crying the blues as the economy stumbles and fumbles along, but at GFI Digital, business is up 22 percent this year. How can that be?

Mark Kehoe, vice president print management and one of GFI’s owners, and a man of few words depending on what you’re asking him, simply responds, “Work.”

Okay, can you elaborate on that, please?

“We’re protecting the base and pumping for net new business,” he adds. “The economy has opened up accounts that we normally wouldn’t get a chance at because they were happy with their current vendor. Now the higher ups are asking them to shop it a little bit and it’s creating opportunities.”

GFI Digital does well in what Kehoe describes as B-size and larger accounts. They tend to shy away from the smaller accounts with Kehoe stating, “We don’t need the practice.”

Asked why customers like doing business with GFI Digital, Kehoe cites reliable, prompt, excellent service. We’ve heard that line before and it’s an easy claim to make but a difficult one to put in practice. GFI Digital seems to be nailing it though and their reputation for service seems to precede them.

“St. Louis is a big ‘show me’ state, and once you start getting traction in these accounts and you’re doing business with this person, that other person is going to look at you,” explains Kehoe.

GFI Digital has plenty of competition although its most serious competitors tend to be other independent dealers and IKON. As far as direct branches, there aren’t that many to compete with and what’s there Kehoe describes as “weak.”

Five years ago the company made a strategic decision to move into managed print. It was a smart decision even though Kehoe realizes their initial approach to it was skewed.

“We were doing it the wrong way by selling equipment into the accounts,” states Kehoe. “And we were doing it with our general sales staff.”

Although GFI Digital enjoyed some success selling managed print the first four years, they could have done better. The big turnaround came last November when they assembled a dedicated sales staff focused exclusively on MPS.

Kehoe acknowledges the challenges of selling MPS, lamenting the longer sales cycles and the danger of getting bogged down with customers who are not going to make a decision, leaving the dealer holding the bag after doing a lot of work for nothing. That’s still a danger, but GFI Digital has learned from its mistakes.

“We’ve gotten a lot better at identifying where we need to focus,” says Kehoe. “If it’s not a go, they’re not wasting their time doing a bunch of work for someone who’s not making a decision.”
Transitioning its MPS approach from an equipment first mentality was a smart move.

“That wasn’t the right way to do it,” notes Kehoe. “First you pick up the maintenance contract and then you get the equipment, so it’s a totally different mindset.”

In Kehoe’s estimation, there’s no big secret in identifying an MPS candidate—it’s an organization with 40 machines or 100,000 minimum clicks.

“Our dedicated MPS staff is focused on the higher end customer.”

Along the road to MPS success, GFI Digital has had to deal with certain misconceptions among Kehoe’s prospects and customer base. He mentions customers who were at one time quoted a nickel a copy, telling GFI Digital reps, ‘We looked at that, we’re fine with what we’re doing.’

“We tell them, ‘keep an open mind; we have a new approach to MPS and it has nothing to do with selling hardware and no, you’re not going to be paying a nickel a print,’” says Kehoe.

That message is breaking down the misconceptions and GFI Digital is now billing $194,000 a month for services. And new MPS business just keeps rolling in. They just picked up a new $25,000 a month account and another big account is pending.

No wonder Kehoe says, “Our MPS business is growing dramatically.” Plus he expects the MPS portion of the business to reach $8 million annually in three years.

What makes Kehoe so confident?

“Because we have a three-year plan,” he responds. “Our plan is to add $15,000 a month in additional billings.”

The biggest obstacle to hitting those numbers is losing focus. Kehoe doesn’t expect that to happen now that he has a dedicated sales staff.

“It’s really not that hard if you focus on true MPS and only MPS and you’ve got six reps and all you’re looking for is $15,000 additional billings per month,” emphasizes Kehoe. “If you get off the focus of what you’re supposed to be doing—driving printer service—you’re not going to reach it. If you’re not focused on true MPS and MPS accounts, dedicated MPS, you’ll never get there.”

Identifying the decision maker for an MPS engagement is always critical and Kehoe identifies C-level executives as prime targets, but he does offer a word of caution before going there.

“You’ve got to be careful with the CFO or CIO because all of a sudden you’re alienating the director of IT so you have to quickly bring them into the fold, explaining to them, ‘No, we’re going to make you look good, not make you look bad in this process.’”

He adds that sometimes the CIO is too high, so then the focus should be on the director of IT or the person responsible for the organization’s help desk.

Kehoe has found that it’s not difficult finding the proper person to speak with, but the hardest part is simply getting in front of them. No big revelation there.

“Once you get in front of them, 70 percent of the time you’re going to at least get something moving forward,” he says.

GFI Digital wasn’t afraid to ask for help in developing its MPS strategy. Kehoe reveals that Strategy Development has helped them formulate the direction they should be going with MPS along with a compensation plan for the dedicated reps even though the compensation for GFI Digital’s higher end reps is higher on the salary side than what Strategy Development’s model shows.

Kehoe concedes that doing it right in the MPS world requires a financial investment to get things moving in the right direction.

“At the end of the first year we’re probably going to lose $63,000, but by the second year we’ll be making $1 million, and then it goes crazy from there,” reports Kehoe.

Asked if he has any words of wisdom for dealers who haven’t taken the plunge into MPS, Kehoe doesn’t hesitate, “ Don’t do it unless you’re going to commit to it, hire a dedicated staff, and then manage to a plan and stick with the plan. If you don’t, don’t even get involved with it because you’ll get frustrated quick.”

Scott Cullen has been covering the office equipment industry since 1986. Scott is Publisher/Editorial Director for Imaging Solutions Reseller; Editorial Director/Managing Editor for OfficeSOLUTIONS and OfficeDEALER; Editor for PC Solutions; and a contributing writer and Editor for Independent Dealer, OFDA, Mercer Business, ENX, BERTL’s iTchat, Repro Report.

Oklahoma Office Systems: Successfully Selling MPS from the Top Down

2010-07-21T12:42:00.000-07:00

By Scott Cullen

Business is doing just fine thank you at Oklahoma Office Systems, Inc. (OOSI) in Oklahoma City. Established in 1981, OOSI has established a reputation for meeting the challenges of the ever-changing office equipment landscape head on. They’ve been successful at transitioning customers to digital technology, connecting customer’s devices, and providing value-added services such as managed print long before it became an industry buzz word.

OOSI has experimented with different approaches to managed print during the past seven years and Principal Ron Carr reveals the best thing he ever did was create a separate division to focus on MPS.

“There are a few dealers that have converted their teams, but it’s difficult especially for those with longevity,” says Carr. “When it’s a separate focus and totally driven in that direction, it doesn’t allow them to back up and say, ‘You want to buy a copier, I’ll just sell you a copier.’”

Carr concedes last year was flat on the MPS side of the organization largely because of internal changes within the division, specifically the departure of a key person in the MPS division. The economy hasn’t helped, but things are on the upswing and Carr reports OOSI is running fairly close to what they’ve budgeted as growth for the current fiscal year thanks in part to increased hardware sales. He expects the MPS business to follow suit now that he’s hired a new person to manage the MPS division. This new hire will work closely with sales and marketing reps doing audits and making a case for MPS with customers in the Oklahoma City market. He’s looking to fill a similar position in OOSI’s Tulsa office.

“We’re going to be focusing on different companies and different size accounts than in the past,” says Carr. That means not just big customers and verticals like medical, but midsize companies too.

The personnel within OOSI’s MPS division aren’t from the copier industry and target new business rather than OOSI’s existing customer base. They assist OOSI hardware sales reps on calls, but none have existing relationships within the company’s current customer base.

“We haven’t taken anybody in the past seven years who was a current employee and said, ‘now you’re going to do it,’” says Carr. Despite that strategy OOSI still has a couple of veteran reps who embraced the MPS concept early on and have been successful.

It’s not easy streaking along at the head of the technology curve and there’s bound to be some bumps along the way. For example, if Carr knew seven years ago what he knows now, he would have taken a broader approach to MPS and focused less on hardware at the beginning.

“I wouldn’t have walked away from business because it wasn’t a certain profit margin,” states Carr. “The way the compensation plan was created and developed had our reps paying more attention to the hardware instead of focusing on the service aspect.”

What influenced OOSI to get into the MPS game so early on? Carr attributes it to his membership in the Copier Dealers Association, BTA, and industry events where that issue was a topic of discussion even though few dealers dared enter that fray at the time.

“It was something we needed to look at,” says Carr.

Amazingly, though, it wasn’t difficult presenting the concept to customers.

“It wasn’t a challenge other than the fact that people were hearing about it for the first time so it was a new, innovative approach,” explains Carr. “We did very well in the beginning because there was no competition.”

Seven years later OOSI has plenty of competition. “Everybody is trying to move into MPS even though many aren’t sure the best way to do it,” says Carr.

He’s also seeing more RFPs with an MPS component that obviously weren’t there seven years ago.

“That’s bringing in a whole different realm of competition whether they’ve done it before or not,” laments Carr. “My fear is if they don’t understand it and don’t have a good grasp of what the real cost is to do a true managed print services engagement, it’s going to be just like the copier side of the business and margins will start dropping and they’ll be giving services away.”

In the meantime, OOSI can only control what they can control and that’s their reputation as a hardware and services provider.

“We’re marketing ourselves as the MPS innovator,” says Carr. “We were first in this market therefore we’ve had seven years experience.”

OOSI is also an HP Elite reseller and that adds some credibility too, particularly with IT.

The biggest challenge to selling MPS in Carr’s estimation is reaching the appropriate decision maker, which in many instances is a C-level executive.

“Most of the copier people in my market and most in this industry are at a purchasing or office manager level, and it’s very difficult to get from there to a CFO or CEO,” says Carr. “Managed print must be driven from the top down.”

OOSI is doing just that. Other dealers focus on IT, but that’s not the OOSI approach even though IT often participates in OOSI’s meetings with C-level executives.

“We’ve taken the CEO, CFO approach with print management and IT people are coming in and buying into this and we get very positive feedback,” notes Carr.

With all the copier/MFP manufacturers touting MPS, we wondered if OOSI has received any help from their manufacturer.

“We haven’t asked for any help because we’ve been doing it longer than they have,” responds Carr. “For them to come in and tell us how to do it, it’s kind of like them researching themselves about how to go about doing it.”

Manufacturer’s direct branches have been the bane of many a dealer’s existence of late, but Carr isn’t concerned from an MPS perspective. “The manufacturers are going to have more of a challenge than the independent dealer because we have more choices of products to bring into it,” says Carr. “If I’m a Ricoh branch my only solution is typically Ricoh.”

OOSI has received guidance from Strategy Development in refining its MPS initiatives. Meanwhile, Carr has high hopes for the future and wouldn’t be surprised if within the next three to five years 70-75 percent of OOSI’s business involves some type of MPS engagement.

“We would love it to be 100 percent,” says Carr. “At some point our objective is to convert every one of our employees to this particular selling philosophy.”

Finally, Carr offers advice to dealers who have not yet taken the plunge into MPS.

“In the long run, if you’re going to be a viable company you need to transition into this arena,” he says. “This industry is really changing. As we know, the A4 product is starting to replace a lot of A3 products. So revenues are starting to go down if they haven’t already and they’re going to continue to drive in that direction as we go from selling a $7,000 machine to a $2,000 machine that does the same thing.”

Scott Cullen has been covering the office equipment industry since 1986. Scott is Publisher/Editorial Director for Imaging Solutions Reseller; Editorial Director/Managing Editor for OfficeSOLUTIONS and OfficeDEALER; Editor for PC Solutions; and a contributing writer and Editor for Independent Dealer, OFDA, Mercer Business, ENX, BERTL’s iTchat, Repro Report.

It’s Time to Grow Your Equipment Revenue

2010-06-28T06:28:00.000-07:00

You survived a tough economic environment; let’s hope the toughest you’ll need to endure in your career. You made the necessary expense cuts and hopefully, you’ve optimized your service operations so you are experiencing returns greater than 52% (if not contact Mike Woodard at Strategy Development) and invested in an MPS program. Stay that course: keep driving down expenses, improving service returns, and growing your MPS program. But add to this growth in your equipment revenue line.

I am not suggesting you take the 1980’s approach and add a tremendous amount of sales headcount to sell equipment. That is an absolute losing proposition. What I am suggesting is that the extremely difficult economy of late 2008 and the entire 2009 has crippled some of your weaker competitors. Those that were too highly leveraged going into the “Great Recession” had to make expense reductions beyond the logical; they weren’t focused on reducing their general and administrative expenses (G&A) with improvements in workflow or automation—they were chopping heads to survive. Same goes for service, they didn’t have the benefit of a Mike Woodard helping them to improve their service returns with logical productivity improvements, recall ratio declines, and parts improvements, they were slashing and burning service payroll. When the unsuccessful sales professional quit—their lack of success probably partially due to poor territory design—they were not replaced to save the expense.

These companies will eventually sellout, and acquiring them is one solid strategy to grow your business. Frankly, they are selling for pennies on the dollar compared to four or five years ago. 5X EBITDA is a thing of the past—a small upfront fee and earn out is today’s benchmark. If you are not talking to the small local competitors you should start immediately.

You’ve read my posts and articles that there are fewer copier units sold year on year in the industry, but that doesn’t mean you need to sell fewer. Focus on market share gains that exceed the industry unit decline ratio. You have competitors that are impaired and will experience unit sales far below the industry decline—they cut too deep in the recession.

How do you achieve this growth? A well structured sales operations approach is the foundation. Start with territory design that uses machines in field (MIF) upgrade value. Without this information you don’t know if your reps are stars or flameouts. You also cannot be certain that your MIF is covered by a sales professional. After you have your territories structured on MIF add in the accounts in your territory that you don’t have as customers but want, and make certain you only add a quantity that can be managed by your reps. If you have six sales professionals it is not logical to add 10,000 accounts for them to target—they can never get to them and will therefore choose which ones to go after on their own. I would rather choose the accounts where I want my reps focused.

Next make certain your sales manager is focused on developing the employees and helping them to drive business into your current accounts and target accounts. Does MPS come into play? MPS can certainly help you sell more equipment but the assumption is that you are deploying MPS as your primary growth strategy; we are talking here about using your territory reps to grow your business as well.

If you want a blueprint to implement a sound sales operations approach attend BTA Sales Management Workshop, or if you are a Konica Minolta dealer the KMBS Sales Management training, both developed and instructed by Strategy Development.

Understanding the Language of Sales

2010-06-10T05:45:00.000-07:00

Business acumen, a critical area when selling in complex environments, with complex in this situation defined as multiple decision makers that can span functional areas within your prospect. This article is not about business acumen but I bring up the concept because I am going to be quoting CFO Magazine in this post and you might wonder if I spend my time searching for data; the answer is “No,” I read CFO along with Information Week, CRN, Fortune, Wall Street Journal, and other publications that provide me the insights I need to understand what is occurring in business, technology, and the economy. From past posts you know I stay informed on the imaging industry from reading reports from InfoTrends and publically available data from IDC and Gartner, as well as the day-to-day interaction I have with the scores of Strategy Development’s clients, the Strategy Development team of consultants, and industry players.

In the March issue of CFO (www.cfo.com/technology), David McCann wrote an article titled “A Sense of Agreement, how to bridge the finance-IT perception gap.” You should take the time to read the entire article since it is relevant to anybody selling into IT, whether as a member of the professional services, MPS/MS, or IT team at your dealer/reseller. One of the most profound statements was made by William Miller, CFO of a Nationwide Insurance subsidiary that manages the technology operations for the insurance company. “While the accounting profession is hundreds of years old, ….with a long heritage of very mature, well understood metrics, IT is in comparative infancy ‘still struggling to figure out basic norms and how to measure things with consistency.’” Miller also gives credence to IT’s common view of finance, “Too focused on cost, risk adverse in the extreme, and unwilling or unable to see the potential for a technology initiative to transform the company.”

Another CFO, Don Doherty, states that tightening the budget at MI Windows and Doors, a $200 million manufacturer has—in his opinion—improved the performance of their IT team. Doherty goes on to quote examples, including renegotiating service contracts: Great news for all of the MPS/MS providers in the market!

You’ve probably read some of my other posts in this blog on CFO-CIO alignment or reporting, and the May issue of CFO (I am on a long flight as I write this so I am catching up on my reading!) there is a box titled “Who’s The Boss? in the article “An Action Plan for IT.” Similar to the data found in Information Week’s annual survey, according to Gartner, the CIO reports to the CFO only 25% of the time. 38% of the time they report to the CEO and 19% to the COO; therefore, at least 57% of the time the CIO reports to the top operational officer (18% to other, which could include the Board).

Reading articles like this provides you great insight when you get into that meeting with both the CIO and CFO. You will gain a better understanding of reporting structures, executive interaction, key motivators of different functional leaders, all leading to more robust business discussions about your product or service. As Strategy Development teaches in our training, you need to be able to “speak the language” of those that you want to help acquire your product or service, and when there are multiple decision makers you need to be bilingual!

MPSA Board would Benefit from a Service Perspective

2010-06-03T09:10:00.000-07:00

The ability to market and sell managed print services (MPS) is clearly important; but it is the service operations that holds the key to a successful and ongoing MPS program.

Are you a member of the MPSA?

If so, our own Mike Woodard has been nominated to run for the Managed Print Services Association board. Please take a moment to vote for Mike.

Please hurry! Your vote must be in by June 11th.

BIO

Mike Woodard, a service consultant with Strategy Development, has 30+ years experience in all aspects of field service operations and service strategy development. Mike developed and leads a Service Management University workshop, which was part of the reason that Strategy Development was recently recognized with a leadership award for education & training from the MPSA. When he is not training MPS providers, Mike is a service consultant for Strategy Development, leading client engagements to a high quality, efficient, and productive service operations.

Throughout his career, Mike has led the implementations for a wide variety of strategic service initiatives that resulted in increased customer satisfaction, improved employee retention and morale, and a specific record of accomplishment including a 25% improvement in service productivity resulting in a 5-point increase in service profitability. Mike has developed and implemented strategic service initiatives aimed at enhancing the customer experience, advancing market differentiation, and improving service productivity:

• National service compensation program and career path
• International service recognition program
• Service specific performance management and appraisal process
• Customer feedback process
• Aftermarket pricing
• Technical support center deployment including help desk
• Call center dispatch automation
• National field service mobile wireless communication solution
• Service route optimization
• Remote equipment communication
• Knowledge management
• Customer retention

Mike has been responsible for operational leadership, P&L management and strategic direction of a $1.2B field service operation throughout the US and Canada. He was accountable for the quality of field service delivery provided by 5,000-field service professionals involved in 20,000 customer-facing events per day.
Mike is a recognized team player and consensus builder and has championed multiple Six Sigma projects, has extensive merger experience, and has served on corporate compensation and human resources review boards.

Companies & Titles

Strategy Development – 2 years
Service Consultant

IKON Office Solutions - 20 years
National VP, Field Service Strategy
National VP, Field Services
National VP, Field Service Operations
Regional VP, Field Services
Marketplace VP, Field Services

Xerox Corporation - 18 years
District Service Manager
Region Service Financial Planning & Analysis Manager
Region Quality Assurance Manager
Field Service Manager
Field Service Technician

Owner, Xerox Agency

On a personal note, Mike attended the University of Colorado and San Diego City College with a focus on Business Management. He also served with the United States Marine Corps, is a Vietnam Veteran, and a recipient of the Navy Achievement Medal.

Why CIOs Are Last Among Equals

2010-06-03T07:45:00.000-07:00

A fairly sensational title but not one that I penned; The Wall Street Journal, on May, 24, 2010, published an article under this title with the subtitle: Their perceived shortcomings are often real.

The title of the article wasn’t a surprise to me as the Strategy Development team has to spend time with most of our clients, and in all of our training programs, educating participants that the CIO is an executive of the company, just like the CFO or senior vice president of sales and marketing. Part of the confusion comes from “consultants” and “trainers” that are simply unqualified to be speaking about complex sales like MPS out speaking to dealers/resellers, and as the article subtitle indicates part of the confusion comes from the CIOs themselves.

The article’s authors—all academics—seem to lead an IT Leadership Program at Santa Clara University so they have deep insight, having exposure to hundreds of IT managers getting educated on leadership. Below are the skills they say are lacking in CIOs:

• Leadership
• Strategic Thinking
• Synthesis Skills—ability to pull together all the available information to solve a business problem or achieve a business goal
• Communication Skills
• Influence Skills
• Relationship Skills

The first three bullets would make it difficult for a CIO to sell a large scale strategic project to the rest of the senior team; a requirement in Corporate America. The last three bullets may provide barriers in smaller projects, like MPS, and are areas that your sales team needs to be able to overcome to close the sale and help the company realize the benefits of MPS.

To be effective in sales you need to understand the sales cycle and your prospect. The team at Strategy Development understands complex sales and takes the time to define the sales process in every space where we train and consult. If you truly want to be successful in MPS contact Strategy Development.

Thoughts from the ELFA

2010-05-29T12:52:00.000-07:00

I recently read an ELFA presentation (Equipment Leasing and Finance Association) titled, “As the drum turns….The World of used Copiers.” Can you picture 300 – 400 leasing company representatives in a large room listening to this stimulating presentation? The world of used copiers—where was I for this one!

IDC’s research was referenced throughout the presentation—and along with InfoTrends and Gartner—I consider IDC a reputable research firm. Clearly the point of the presentation was to highlight changes in the used copier space. That aspect of the presentation was eye opening for me simply from the perspective that used color MFDs from the same vintage as mono MFDs actually sell for less on the used market.

The presentation had numerous examples but I’ll simply take one that is representative: A Canon iR5570 with a list price of $17,100 had a “remarketer sale price” of $1,350, or 8% of the original equipment price (OEP) and a Canon iRC5870U, with a list price of $19,100 had a remarketer sale price of $300, 2% of OEP. With the lower lease approval rate driving increased rental of lease end devices I assume the remarketer sale price will continue to decrease, forcing leasing rates higher since residual value is part of the equation to determine lease rate.

Increasing lease rates won’t be any fun for those companies that still rely 100% on the “bigger better faster same price” model of moving your year on year aftermarket price increases over to the funding side of the lease to sell a new box and take care of the buyout, reducing your aftermarket revenue and generating a commission for a rep. But for those companies that still work on this zero sum game the good news is that according to IDC, as reported by the ELFA in this presentation, average unit sales prices (AUSP) have dropped precipitously. That drop will allow you to continue to fund the buyout of the swap and maintain the “bigger better faster new price” suicide march [not the point of this post but think about it….you are selling a MFD at a lower price than you did four years earlier, reducing the aftermarket rate to below what the current placement started at four years earlier (and far below the current rate with three years of compounded increases) and probably paying your sales rep the same amount as you did four years ago to place the other unit since it probably has about the same amount of “GP” in the deal….how’s that work financially?).

Just how big is that AUSP decrease? Let’s first talk about mono-connected boxes and use the seven year look that ELFA used in their analysis; this is an absolute seven year decrease and not a compounded annual decrease—in other words, it is the decrease from seven years back until 2009. Segment 2 (43%), segment 3 (30%), segment 4 (24%), segment 5 (27%) and segment 6 (12%). Even scarier was color, using the same methodology, segment 1 (49%), segment 2 (54%), segment 3 (55%), segment 4 (25%) and segment 5 (61%).

Strategy Development has spoken about using environmental information in your planning and in previous posts on this blog we have already highlighted some of the year on year unit placement decreases. Now you have information on unit placement decreases, there is indication that lease rates will rise (interest rates can’t stay at zero forever and used equipment pricing isn’t holding), and AUSP is decreasing. Juxtapose those issues against more and more non-contract devices moving to contracts (MPS) and your ability to reduce your general and administrative expense and increase your service margins and you have some great environmental issues on which to build a solid business plan.

We will be running our BTA Business Planning Workshop in October in the Miami area—hope to see you there so that you can seize the future!

Are You Maximizing Your Business Potential?

2010-05-26T15:04:00.000-07:00

Greece’s fiscal crisis is a clear indication that the global economy is not totally out of the woods. The “Great Recession” came in with a roar after Lehman Brothers filed for bankruptcy in September, 2008, and by most economists and Government accounts ended in the second half of 2009. Today, the US appears to be experiencing some level of recovery in almost all sectors, albeit against week comparables from last year.

Strategy Development’s copier company clients are experiencing year on year equipment growth and year on year click growth, although against weak comparables from last year in the copier segment. The big question is sustainability—does the short-term growth result in a sustained growth run.

Unfortunately, many companies react based on what is occurring today rather than on sound planning. If business is down—throw some bodies at the problem and when that doesn’t work, and you’ve needlessly drained cash—take an ax to expenses. If business is going well don’t take the time to understand “why” simply enjoy the ride. Yet history demonstrates that without planning and innovation the good times end and the bad times usually get even uglier.

I would suggest that now is not the time to be euphoric about your growth against weak comparables. Enjoy the additional revenue, operating income, and cash flow, but take the time with your senior team to understand where the industry is headed and how your business can properly invest today to be a leader tomorrow. Moreover, don’t assume that “better” is “best,” look for areas to increase revenue, improve gross profit, and reduce general and administrative expense (G&A).

Those of you that have heard me speak on business planning know that I use a concept of “air cover,” where I look for short-term gains in high leverage areas to provide me the investment dollars to grow the business. Service and back office operations were always two of the areas I looked to leverage. Both back office operations and service are quasi production environments. Without deep understanding of these areas of the business it is difficult to maximize gross profit and minimize G&A; yet they usually provide the greatest opportunity to provide the “air cover” you need to invest in growth.

MPS adds complexity to back office operations and service because many aspects of the MPS agreement are foreign to employees of a copier company. E.g., there were 100 devices on the initial assessment, 104 at the first quarterly read—plus three totally different from the initial assessment—then on the second quarterly read there are 103 devices, two reappeared from the initial assessment, and two others are different from the prior reads. And oh yea, the rep added four devices, changed the minimum and CPP rate, and extended the lease out six more months! Service has to deal with five different vendors and 18 different models.

Let’s say service represents 40% of your revenue and with the correct processes you can improve margins by 5%: That added 2% to your bottom line. Let’s assume you are in the 19% - 22% G&A range of most dealers and with the correct back office processes you can reduce that by 2%. You now have 4% operating income improvement to invest in sales. Isn’t that a lot more logical than hoping the new sales employees can outrun their expense? After all that expense coverage from sales never happens but by taking the “air cover model” you now you have money to invest in growth without feeling the severe pinch of cash flow.

Unless you have a team of analyst to run off and research back office operations and service—or you want to go down the trial and error route—you’ll need help. Fortunately for you Mike Woodard, service consultant and Jim Boulden operations consultant from Strategy Development have the experience to help you get your air cover. Every dealer engagement Mike and Jim have entered has had a three to four month payback period with ongoing savings that could be invested in growth. These two guys provide you the air cover!

If you are nervous about entering a consulting engagement enroll your team members in one of the classes they put on through BTA: MPS Operations and Service or Service Management University (SMU). Jim also instructs, along with Ed Carroll and me, BTA’s business planning workshop.

What about MPS? Where do you think you’re going to make those investments! Our MPS clients also experienced year on year click decreases on a comparable basis (same customers) during the recession (keep in perspective we’ve been consulting in MPS since early 2006); but they experience substantial overall growth because they were continuously adding new customers. How is your MPS program going—honestly? I add that qualifier realizing that it is hard to be honest when everybody you speak to says they have an MPS program, and at least in public, tell you it is going “GREAT.”

Strategy Development consults for the most successful MPS providers in the country so we know what great looks like. You want the first indication that “GREAT” may not be that good? When you are quoted a quantity of prints they manage (our start-up MPS clients did that until the figure was bigger than McDonald’s hamburgers sold). Let’s be realistic here: That “3,000,000 print” contract actually means 50,000 prints per month or $750 per month (most companies use 5 years as the multiplier even if the contract is for 3). And “we’re managing 60,000,000 prints” means they manage (maybe) 1,000,000 prints per month or $20,000 per month: Decent revenue for one rep 12 months into the MPS business.

What is good? Hyper growth to simplify the answer but here’s a quick financial look. After 12 months—from dead start—a good MPS specialist will be managing $24,500 in monthly recurring aftermarket revenue. After two years that same single rep will be managing $64,500 in monthly recurring revenue and will have sold $360,000 in equipment the second year; in other words your single rep will be a $1 million plus business by the end of year two. Use these figures to really get successful in the space! If you want to realize these results attend BTA’s Managed Print Services Workshop or download licenses from InfoTrends MPS Sales eLearning workshop through the BTA website (at a discount to members) or directly from InfoTrends.

What about copiers? According to the research firms you will continue to see year on year unit decreases. That doesn’t mean you cannot grow; you will need to increase your market share with better programs or processes than your competitors. Attend our BTA Sales Management program, or if you are a KMBS dealer the KMBS Sales Management Workshop, subsidized by KMBS and instructed by Strategy Development.

Finally, to tie it all together BTA has the Business Planning Workshop.

You probably see a theme here in that Strategy Development and the BTA have a training program for every ailment. Believe me SD didn’t invent the ailments we simply developed training programs to help dealers/resellers overcome the issue they face. We are in the business of helping you achieve success. Primarily, Strategy Development accomplishes that through our consulting engagements but the seven of us cannot possibly think we can touch all 2,500+ dealers with our consulting. BTA is also focused on helping the dealer community achieve success and we choose each other as partners to help dealers thrive.

Things are good now because most companies have very easy comparables from last year but don’t take long-term success for granted. Whether or not you work with Strategy Development, take the time to put together a business plan and take into consideration the environmental issues affecting the industry.

Should You Acquire Companies To Grow

2010-05-18T08:57:00.000-07:00

There is a common belief that acquisitions are the sure fire method to growth: Are they? You first need to analyze logical reasons to acquire another company:

To enter a new geography: You want to expand geographically and your analysis demonstrates that acquiring a company will provide a faster return on investment (ROI) than a start-up operation

To gain new customers for your offering: You are in the copier business and believe that if you buy a company in an adjacent space you will be able to continue to sell them the products or services of the company you acquire as well as gain their copier business.

To expand your portfolio: This is the opposite of the gaining new customers for your offering in that you buy a company with the expectation that you will be able to sell their products or services into your accounts.

Selling into the acquired customer base and selling the acquired technology into your customer base are the most common and logical reasons to buy companies. You see this all of the time in the tech world, with examples including HP’s acquisition of EDS, Google’s acquisition of Double Click and AdMob, and Oracle’s dozens and Cisco’s hundreds of acquisitions.

The most common acquisition in the copier space today is undertaken with the goal of acquiring to gain base. At one point, when unit sales were increasing year over year that made a lot of sense— but does it today? If your only goal is to replace the MIF—and you aren’t a manufacturer so you aren’t gaining any economies of scale at the factory—I think it is difficult to justify. You are paying for 1,000 units of MIF to hopefully, and it is a risky assumption today, to sell 1,000 units over the next (four) years.

Price always matters, but in a declining year over year space price is paramount. If you buy a MIF of 1,000 units today you can almost bet it will be 800 in two or three years so make certain you take that into consideration when calculating out the value of the base you are buying. Don’t overpay or your payback period may stretch into a decade, which would be an unacceptable ROI.

If there is a small but competent MPS company in your area they may make for a good acquisition so you can bring their expertise into your copier base, assuming you have the correct type of companies in your base. If you are an MPS company you may consider acquiring a copier company that has the proper mix of customers. For an MPS company acquiring a managed services company for their expertise in the desktop IT space and remote monitoring and resolution is also a consideration.

The bottom line—acquisitions may be a great growth strategy for your company. Like all major business decisions give it careful consideration before jumping in.

Is cartridge spend and toner usage one in the same?

2010-04-28T15:40:00.000-07:00

One of the areas I see MPS professionals struggle with in managed print services is the area of explaining the difference between what a prospect has spent on cartridge for a period of time, versus what the professional has determined to be the toner expense based on usage. Many times they want to use the prospect’s spent amount in their assessment /review as the basis for calculating current output costs. This is a big mistake.

The assessment process is designed to capture current output costs in order to build a sound business case to outsource the responsibility of their fleet to your firm. It starts by identifying types of devices, page volumes, internal resources used to support the current fleet, current supplies on hand, current business process for cartridges, service, parts, and how new technology is acquired. Except in the case where an MPS agreement is already in place, the current costs for the prospect are fragmented and not readily known. Sometimes amount spent on cartridges is known for a period of time but this is not necessary to complete the assessment. You are looking for what they pay for each individual type of cartridge used in the output fleet. This might draw attention to what they have spent in this area for a period of time but this is not their expense based on usage for the same period of time.

A proper analysis of toner costs is to apply page volumes by device to the cartridge yield to the cost of the cartridge to determine each device’s cost. Summing all devices then determines the toner cost for the assessment period which is converted to a month’s expense. This might be very different to what the prospect believes is their monthly toner expense.

The reasons for this are many. First it is impossible to match when cartridges are purchased to when they are used. Cartridges are purchased in most cases well in advance of the need. Most companies stock on-hand extra cartridges, and since the print volumes and cartridge yields by device vary, at any point in time you do not know how full or empty a cartridge may be in each machine. Measuring toner usage based on cartridge yields and print volumes account for all the variables mentioned.

A similar example of this would be use of gas in a car. Let’s say a few days before a scheduled trip you filled your tank with gas. When you left on your trip, you had ¾ of a tank. Upon returning from your trip you still had a ¼ of a tank remaining. You did not buy any gas while on the trip. Was the cost of gas for this trip $0? No. While you did not buy gas during the trip, you did use the gas in your tank, let say 8 gallons. So the real expense for this trip would be $24 (at $3/gallon).

Printer usage/expense calculated based on the method described above will account for printers with low volumes, printers with high volumes and the different yields each type of cartridge produces. A very important difference when determining prospects current cost.

MPS can be very rewarding for your business but there are many pitfalls. If you would like to learn more about our approach to MPS, register for one of our workshops. The next workshop is May 10 & 11 in Chicago. You can register at http://www.bta.org/i4a/pages/index.cfm?pageid=2127. I hope to see your there.

Hard Drives Could Lead to Hard Times on Digital Output Devices

2010-04-28T06:33:00.000-07:00

There was a recent interview on CBS News linking the relatively unknown dangers of sensitive data and digital output devices. In the segment, used multifunctional devices were being bought and sold through a warehouse in NJ. Sounds harmless enough, right? Wrong!

Since 2002, nearly every digital printer contains a hard drive, similar to that of a computer. Every time a page is printed, emailed, scanned or faxed from that device, a digital copy is stored. Think about how many times you printed reports that contained proprietary company data; customer data; made copies of personal documents like your Social Security card, Birth Certificate, health records. Then, the lease comes up, or a printer is traded in, and out walks all of that sensitive information. This data can be accessed by removing the hard drive from the printer or copy machine and connecting it to a PC or an erasure station. That is like removing the password from your laptop, leaving all your personal/professional information on it, then selling it.

This might be happening at your office, but also as you take trade-in devices from your customer, it is something to keep in mind. Depending on the printer manufacturer, there are a variety of revenue generating and free solutions that will permanently and completely erase the hard drive. Smells like new revenue opportunity to me! This is also an opportunity to differentiate yourself from your competitors. By taking the time to educate your customers, whether you take the onus on yourself to always erase the drives or sell a solution for your customer to do it first, you are one-step closer to being a solutions partner… not just another copier guy.

Methods to permanently delete these electronically stored copies include software-based solutions, degaussing solutions (erasing), and even physical destruction of the hard drive. Software solutions are available from the printer manufacturer as well as 3rd party solutions. The methodology of the software solution varies greatly, and I would suggest talking to the print manufacturers of the lines you carry for more information.

Even if you are saying, “Of course, I knew this already.” Many of your customer’s don’t, so it’s a compelling reason to get your customer to accept a meeting about it. From there, you have a captive audience, I’m sure, so the door is open to also selling other products and solutions.

Private Equity Jumps Into Recharge Business

2010-04-15T10:15:00.000-07:00

Below is a press release from our friends at West Point Products.

In case you haven’t heard, we are excited to inform you about the acquisitions of West Point Products and Clover Technologies by Golden Gate Capital, a San Francisco-based private equity firm. These acquisitions are the beginning of a portfolio of companies focused on aftermarket imaging supplies. While our two companies will continue to operate independently with focus on our respective segments of the market, our new relationship creates a tremendous opportunity for us to add more value to you.

We are confident that these acquisitions will result in West Point Products becoming an even stronger partner for you in the future, creating growth opportunities for you and your customers. You’ve already become accustomed to our high quality products manufactured in the USA and Canada, our reliable and timely shipping performance, our outstanding levels of customer service, and our industry leading Axess Managed Print Services offering. In addition to these foundational strengths of West Point Products, our product offering will expand to include an even wider variety of toner cartridges, inkjet cartridges, printer parts, fusers, maintenance kits, and refurbished printers. We will also have enhanced empty core collection capabilities and a more robust distribution network.

We wish Tom, Joe and the rest of the WWP team continued success.

IKON Executives Assume Responsibility for Ricoh Americas

2010-03-30T09:42:00.000-07:00

The rumors were confirmed yesterday as the executive team from IKON assumed all of the senior roles at Ricoh Americas.

Kevin Togashi announced in a memo to Ricoh and IKON employees

“First, to manage the asset value and to execute governance of all of our sales companies in the Americas, I will be leading a newly formed holding company, Ricoh Americas Holdings, Inc. (RAH), as Chairman and CEO. RAH is a wholly owned subsidiary of Ricoh Company, Ltd. and owns 100% of the shares of Ricoh Americas Corporation. Ken Tokuhiro will report to me and assist in developing the role of RAH in the Americas. I am excited about my new role and look forward to continued involvement with Ricoh Americas in this new capacity.

Second, I am pleased to announce Matt Espe’s appointment to Chairman and CEO of Ricoh Americas Corporation. As Chairman and CEO of IKON since 2002, Matt’s strengths in leadership and vision have delivered outstanding results for IKON, and his recent responsibility leading the business improvement teams gives him a strong foundation to lead Ricoh Americas. In addition to Matt’s role leading the day-to-day operations, he will also oversee the integration planning for Ricoh U.S. and IKON.”

Matt Espe announced in his memo:

“We have a lot of work ahead of us, but also a tremendous opportunity. As we enter FY10 and develop our integration plans, we will pursue a balanced business approach with three key objectives:

• Growing revenue and increasing market share through an unrelenting focus on our customers and our dealer channel and by delivering the most valued products and services in the industry.
• Increasing our efficiency and creating the most competitive organization in the industry.
• Attracting, retaining, motivating and developing the best team in the industry as an employer of choice, while remaining committed to living our values and conducting business with the highest level of integrity.

In order to accomplish these objectives, I am pleased to announce a new Ricoh Americas Corporation leadership team that will report to me and have responsibility over the entire Ricoh Americas organization, including IKON. In addition to the day-to-day operations, this team will work closely together on developing a multi-step integration plan for Ricoh and IKON in the U.S. The following leadership structure will be effective April 1, 2010:

• Martin Brodigan will take on a new role as Executive Vice President and CFO, with responsibility for leading the Finance organization for Ricoh Americas Corporation, with both Dennis Dispenziere and Henry Miller reporting to him. He will also have responsibility for Ricoh Canada and Ricoh Latin America, with Glenn Laverty, President and CEO of Ricoh Canada, and Peter Stuart, President and CEO of Ricoh Latin America reporting to him. In addition, Martin will be responsible for the Business Development team led by Vince Roma. Martin brings a strong background to this role, most recently as President and CEO of Ricoh U.S. Prior to his current role, Martin held the position of CFO for Ricoh U.S., served as President of Ricoh Canada for eight years, and held other leadership positions throughout his 19 year tenure with Ricoh. Martin will bring strong leadership and experience to his new responsibility.

• Jeff Hickling will take on a new role as President and CEO of Ricoh U.S., with a leadership team who will have operational responsibility for both Ricoh U.S. and IKON. Jeff’s background and experience will be instrumental leading this team and developing our integration plans. In his current role as IKON’s President and Chief Operating Officer, Jeff has responsibility for IKON’s U.S. sales, services and operations functions. Since 2005, he has held responsibility for supply chain and customer administration, and played a key role in IKON’s Oracle stabilization. Jeff will send additional information to all U.S. employees shortly to provide more detail about the Ricoh U.S. structure and integration planning.
Rounding out the leadership team for Ricoh Americas Corporation are the following direct reports:

• Mark Hershey, IKON’s Senior Vice President and General Counsel, will expand his role to Senior Vice President and General Counsel for Ricoh Americas Corporation, with Allen Hans reporting to him.

• Hede Nonaka, Ricoh’s Executive Vice President of Marketing, will become Senior Vice President of New Business Development, with responsibilities including strategic alliances such as IBM. Dan Murphy will report to Hede.

• Shun Sato, Ricoh U.S.’s Senior Vice President of Corporate Marketing, will succeed Hede Nonaka as Senior Vice President of Marketing for Ricoh Americas.

• Tracey Rothenberger will continue to lead IT as Senior Vice President and Chief Information Officer, expanding to a Ricoh Americas role.

• Donna Venable will continue to lead HR as Senior Vice President, expanding to a Ricoh Americas role.

• Ike Kakegawa, Vice President of Environmental Sustainability, will continue to have responsibility for environmental initiatives.

• Akira Oyama, Joji Tokunaga and Steve Poole will form the Strategic Management Office to help lead our integration planning and improve strategic alignment.”

Jeff Hickling then went on to announce:

“In conjunction with Matt’s announcement of a new leadership structure for Ricoh Americas Corporation, I am announcing an integrated leadership structure for Ricoh U.S., with leaders that will have day-to-day functional leadership for both Ricoh U.S. and IKON. Additionally, these leaders will oversee the development of functional integration plans. The following senior leadership team will report to me effective April 1, 2010:

• Mark Bottini will lead the direct Sales organization as Vice President, Direct Sales, Ricoh U.S. Dave Greene will report to Mark with continued responsibility for Ricoh Business Solutions sales, and IKON’s four Regional Vice Presidents will continue to report to Mark with responsibility for IKON. In addition, Associated Business Systems and Automated Business Products, both Ricoh companies, will report to Mark.

• Kiyo Shimizu will continue to lead the dealer channel for Ricoh U.S. as Vice President, Dealer Division, Ricoh U.S.

• Glen Mandernacht will lead Technology Services as Vice President, Technology Services, Ricoh U.S., with responsibility for the Ricoh U.S. and IKON service teams and operations. Brian Murphy will report to Glen.

• Tom Hammond will lead the Customer Administration / Customer Care organization as Vice President, Customer Administration, Ricoh U.S. and Dan Piccoli will report to Tom.

• Suzanne Shenk will lead our Supply Chain operations as Vice President, Supply Chain, Ricoh U.S. Hank Ando and Dan Piccoli’s current Supply Chain direct reports will report to Suzanne.

• Tim Vellek will continue to lead the Production Printing Business Group (PPBG) as Vice President, PPBG and Matt Sakauchi will continue to lead the Office Printer Business Group (OPBG) as Vice President, OPBG.

• Vic Rainsford will lead Enterprise Services as Vice President, Enterprise Services, Ricoh U.S. Enterprise Services includes Managed Services and Professional Services, as well as the Ricoh Technology Center and the Solutions and Services Business Group (SSBG). Carl Sills and Mark Minshull will report to Vic.

• Mike Dane will lead a new Ricoh U.S. marketing organization to support both the direct and dealer business as Vice President, Marketing, Ricoh U.S. Mark Boelhouwer will report to Mike.

• Gary Crowe, Vice President, Finance, Ricoh U.S., will provide financial support to Ricoh U.S. and will report to Martin Brodigan.

• Mark Pagenkopf, Vice President, Human Resources, Ricoh U.S., will provide HR support to Ricoh U.S. and will report to Donna Venable.

This new U.S. structure is the important first step in building the plan to integrate the Ricoh and IKON team. As Matt mentioned, we will continue to explore business synergies and are excited to blend cultures, including foundational elements such as vision, mission and values, organizational vitality, and diversity and inclusion.”

I assume next week the announcement will come out that Ricoh America’s headquarters is moving to Malvern…….

ITEX 2010—What a Great Event

2010-03-18T19:18:00.000-07:00

Wow, ITEX was phenomenal this year. For those of you that attended, and there were many, I know you agree because I have heard the feedback. What makes ITEX such a great show? To me the number one attribute of ITEX is the networking opportunity; most of the industry decision makers attend the show. When I say decision makers I mean dealer/reseller principals and senior management. Company owners and senior management have a unique perspective on the industry and having the opportunity to speak with thousands of this group provides untold benefits to all, including companies like mine in the consulting field.

The second benefit of ITEX is the education. Unlike many shows, where the sponsors get all of the speaking spots (Nothing against listening to a software or hardware vendor giving their perspective on the industry but after all, won’t the vendors pay you to listen to them), ITEX vets the presenters and chooses those that bring benefit to the dealer/reseller community. For less than $100, the entry fee, attendees get to choose from dozens of educational tracks on all aspects of the business. SD has presented for years and this was the first year we had a booth at the show, and we were asked to speak months before we were asked to consider exhibiting.

If I had to critique the show I will say that I was disappointed with the “Hybrid” moniker. Every time I hear hybrid I think of a car or fuel option. It seems to be the most over used word in the English language these days. I can’t pick up a newspaper or magazine without reading about some company, industry, or option presenting themselves as hybrids. I think it supplanted “solution” as the most ubiquitous word in the business press. ITEX is more than the hybrid dealer, covering education on all aspects of running a successful company. That was reflected in the educational options offered at ITEX.

Strategy Development consultants presented in many areas of the business and each of our classes had approximately 200 participants. David Ramos presented on self managed teams and opportunities in the color space. Ed Carroll presented on professional service. Mike Woodard presented on creating the ideal service and IT team as well as managing the base to control service cost. And I (Tom Callinan) presented on repositioning your business model, which was essentially business planning.

So if you look at the educational offerings presented by Strategy Development we covered sales management, color opportunities, professional services, service operations, and business planning. And, there were dozens of other well (albeit the SD seminars were sold out…) received educational offerings.

If you missed ITEX you missed a great event, and we missed you! We’ll be at the BTA Northeast and Southeast events as well as InfoTrends Solution Summit 2010 in Chicago. Like ITEX, all of these events provide a great ROI. The BTA events have solid education and networking opportunity, on a regional level, and InfoTrends provides enough research to make the trip well worth the effort. If you cannot make these great events we hope to see you next year at ITEX 2011 in DC.

The Road Map to Reposition Your Business Model

2010-02-27T16:32:00.000-08:00

There are untold numbers of industry players “shouting from the roof tops” about MPS. Opinions vary widely on everything from the definition of MPS to what will happen to your company if you do not enter the MPS space today. Regardless of what decision you make to enter the MPS space—or not—or even to continue your business or sell, you should make that decision based on facts and not hype. At this ITEX seminar, taking place Wednesday 11:00 AM – 12:15 PM Tom Callinan, the leading expert in MPS and business planning, will be presenting The Road Map to Reposition Your Business Model. In this don’t miss seminar, Callinan will cover industry statistics and trends you need to consider in planning your next five years in the imaging industry. If you are attending ITEX this seminar is included with your general admission ticket. Arrive early as preregistration is extremely high.

How to Make Money in MPS

2010-02-23T10:54:00.000-08:00

That seems to be the new theme of all of the MPS conferences and road shows. I guess just holding a MPS event is passé so the event coordinators needed a new theme. As a member of the leading consulting firm in the MPS space, I thought the theme was rather humorous. I mean could anybody really be in MPS and not be making money in a 56%+ GP business? Then, and this is true, As I was writing this blog post I received an e-mail from a dealer asking me for some free advice on how to fix his MPS business, on which he is “getting killed.” I took that to mean he is losing money.

This dealer principal explained that he had worked with two “consultants” on how to set-up his MPS program and inferred that they had sent him down the wrong path (he named the consultants but I will not). I’ll note that this dealer principal had spoken to me about two years back regarding helping him set-up his program and remarked that SD was too expensive; the two “consultants” in question seem to make a living speaking at vendor events about MPS so maybe he didn’t even pay them for their “advice.” Now after getting his bargain basement advice he wants to know how to fix his program for free? Doesn’t sound like much of a bargain….maybe Strategy Development was less expensive afterall.

The e-mail isn’t the point of the post I originally was writing it simply changed the focus slightly so let’s get back to the point. You can make a lot of money in MPS; the model is tried and true and Strategy Development has clients that have been executing on it for the last five years. If you go back and read the articles written by Strategy Development consultants you can pretty much design your own high profit MPS program based on our model. Those dealers and resellers that are committed to MPS—who invest in getting a real MPS program off the ground—are earning profits in excess of the copier model of 15%.

How do you achieve those returns? Not by going to conferences with a bunch of vendor’s giving you their spin on MPS; so you can stop doing that now and just add that expense back into your profit.

The first thing you need is an absolute commitment to building an MPS business. You need the same passion and commitment you had when you started the company you now lead.

The second item is an investment. I don’t know how to put it any other way except to state that you cannot rationally believe you can enter a new space without any investment, yet I see people trying to do it every month with MPS.

Third is an education. If you are a copier dealer that started your company you probably had experience in the copier space. If you are a VAR you probably had experience in the VAR space. Unless you have experience selling outsourcing (facilities management) it will be a long road for you to travel to learn the MPS space. You can travel that road alone but you’ll pay one way or another—either through mistakes or by investing in a consultant. An important note on the advice you seek: Make sure you are investing in real expertise. As the aforementioned e-mail demonstrates not all advice is equal.

Last, and tying into the commitment, is an open mind. Although MPS is about “putting marks on paper,” just like selling printers or copiers, it is not selling printers or copiers and it requires a different approach.
Follow these simple steps and you won’t have to worry about making money in MPS. You’re worry will be that more companies crack the code and start to experience success in your area!

The Obituary is Written: Is the Patient Dead?

2010-02-16T04:45:00.000-08:00

“Long before digital tools such as listservs, e-mail blasts, and even Facebook enabled us to easily broadcast messages, photocopiers were the most efficient way to distribute information to groups of all sizes. If the boss needed to discuss a new company policy, workers got memos in their (physical) in-boxes or slipped under their office doors. Community newsletters, fliers for parties, and the oft-maligned Christmas letters in holiday cards were all made possible by the automated copying machine, which made its commercial debut 50 years ago.

‘It was democratizing technology,’ says Stephen P. Hoover, vice president of global software solutions for Xerox.”

Is it me or does this read like an obituary? It is from an article in the February 8, 2010 Fortune Magazine titled Paper Chase, celebrating the copier’s 50th birthday this year. Note the phrase I highlighted, which I think we sometimes forget: Copiers were used to distribute information. Is that the functionality you think of today when you think copier?

Many in the industry don’t want to talk about it but the copier is dying. Unit sales are dropping and are forecasted to continue their decline. More disturbing is that prints produced on mono A3 devices (devices with 11X17 platens) is forecasted to drop by more than 50% by 2013. Those clicks are your profits.

There is tremendous opportunity in all of this change, but it will not come naturally. If you plan and use some of the cash you are generating in your copier business to move into the services business you can generate more revenue and earn more profit than ever. You will also be able to make acquisitions of smaller competitors on the cheap—nobody is paying 5X adjusted EBITDA today.

I am instructing a seminar at ITEX 2010 titled “The Roadmap to Repositions Your Business Model,” at 11:00 AM Wednesday. I encourage you to attend. At the same time Mike Woodard, service consultant, will be instructing a service module on “….Managing The Base to Control Service Cost,” which is perfect for your service leadership. If you want more information contact Marc Theaman at Theaman@strategydevelopment.org

Top 10 CIO Issues for 2010

2010-02-05T15:33:00.000-08:00

Bob Evans, VP of InformationWeek Global CIO Unit wrote this week on the focus areas for CIOs in 2010. When I read the article I started to think about where MPS fit in allowing CIOs to accomplish their goals this calendar year, and how to approach those regarding MPS.

Top 10 CIO Issues for 2010 per Bob Evans, VP of InformationWeek Global CIO Unit

1. The cloud imperative – Cloud computing takes the top spot because this allows for CIOs to really attack #2. Despite all the questions and concerns, it offers CIOs huge potential for flipping the 80/20 ratio and exploiting #3 (driving revenue growth).

2. The 80/20 spending trap – If the majority of your IT dollars are spent keeping the lights on, then how will IT organizations fund transformative and customer-centric projects?

3. CIO-led revenue growth and customer engagement – If you don’t become part of the company’s revenue engine, and you choose to keep yourself isolated from customers, how can you expect to be taken seriously in today’s economy?

4. Mastering end-to-end business processes – CIO has the chance to analyze and understand all business processes end-to-end. It’s a remarkable opportunity. Where is the waste? Where is the latency? How is the revenue mix changing? Where is the new-product opportunity?

5. Business Intelligence and Predictive Analytics – You’ve got plenty of data, but how much insightful information? Are you able to see over the horizon? CIOs that seize the initiative will have a huge advantage.

6. External information vs. internal information – What is going on outside your four walls is more important than what’s going on inside. What are customers saying about you? Do you talk back? Do you listen?

7. CIO priorities, CIO compensation, CIO evaluation – Does comp reflect growth and customers and market –centric innovation? Is performance measured by plumbing-style metrics or by business-value breakthroughs?

8. Vendor consolidation, with radical exceptions – For the past couple of years CIO’s have reduced the vendor list – but have you also cut access to innovative ideas? Have you connected with unconventional vendors whose solutions might help spark a breakthrough?

9. The mobile enterprise – If a team of peers, customers, and competitors were to do a day-long review of your company’s mobile capabilities, would you be eager to share the results with boss?

10. The transformation quotient – When the economy turns, CIOs need to be out in front with new ideas and leadership on how their companies can aggressively tap into the new opportunities that await while shedding old restrictions about what a CIO’s responsibilities area and what they are not.

This paints a pretty complete view of what is important in IT organizations today. Obviously MPS doesn’t address all 10 and that is ok. Number 1 is out obviously, unless you are already an expert in Cloud Computing with applications like Software as a Service (SaaS), Utility Computing, Web Services, Platform as a Service (PaaS), etc. in your portfolio of professional services. Also out are numbers 3, 5, 6, 7, 9 and 10. What, did you think MPS was going to eradicate every IT woe in the world?

How does MPS address numbers 2, 4 and 8 respectively?

Number 2 - CEOs are increasingly focused on IT strategies that aggressively shift budget dollars from an internal focus to external.

MPS accomplish this by allowing IT to reallocate their resources to more strategic external focused projects by shedding the managing of the fleet of printers. This also allows them to outsource a nuisance area because printers are not strategic in the IT world and they don’t like dealing with them. Typically they have no imaging or output fleet strategy because equipment, supplies and maintenance are reactive. I hear the objection coming…”What happens when the IT person I am working with wants to “protect” the employee that is doing four to 10 hours a week on printer repair?” A) You are at the wrong level. B) IT organizations of today/tomorrow will be tasked with generating revenue (see #3 above) and if they don’t understand this today they will soon enough. Maybe you are the resource to help them realize this.

Number 4 – Mastering end-to-end business process as it relates to an imaging fleet is difficult when investment in supporting the fleet is so fragmented over multiple internal budgets.

The assessment process in MPS allows for you to identify and quantify all of the cost related to managing and maintaining the fleet. The assessment will also find waste as it relates to how the fleet is utilized. You also identify waste in manpower, capital expenditures on hardware and costs related to maintaining and supplying the infrastructure. After completing the detailed assessment you will work with them, in the strategy session, on a plan to capitalize on this opportunity and manage what they have today. Over time they can reduce the investment with proper device selection and management.

Number 8 – Vendor consolidations… this is always a tricky obstacle.

In complex organizations where decision making is made up of multiple players you have to recognize that there are existing relationships with many of these vendors that you are suddenly trying to unseat. These vendors are engaged with numerous employees and functional areas, and possibly each of them has worked with their primary contacts in areas such as purchasing, facilities, IT, finance, etc. for years. I know MPS and the reduction of multiple invoices is a good talk track but what about the discussion on overlap in responsibility or the discussion on current procurement methods or the time each vendor wants with their primary contact and their getting involved with other functional areas. Each of these relationships takes time to maintain and that pulls resources from what they need to do on a daily/weekly/monthly basis.

The bottom line – MPS is not going to cure every IT organizations challenges but if you have the right discussion points prepared for IT’s focus areas you will have a higher probability of building a business case for moving forward.

What is MPS?

2010-01-26T08:53:00.000-08:00

Yesterday, Document Solutions Daily, a great publication available by subscription, had a link to a blog post titled “MPS Isn’t Just for the Big Boys.” Although the post details what can be described as an admirable job by a sales person to place a MFD, and that sales person works for a well known and respected copier company—so this commentary isn’t directed at either the sales person or the employer—does the post really describe an MPS agreement?

I ask the question for two reasons. First to define the MPS space, because if selling one MFD to replace an older MFD and some printers is MPS we may as well simply pull out the market size stats that have been put forth by Info Trends, Gartner, and IDC for the last few decades and change the title at the top from “copier and printer market” to “MPS Market.” It seems like anything with MPS on it sells so why not? Second is focus, the MPS space is a high growth high profit business today so should dealers / resellers really be looking at single placements of MFDs as an MPS opportunity?

Don’t get me wrong—I want sales professionals that can solve problems to get me new customers and retain those customers. If I still owned a copier dealership I would want them to sell copiers and I would want reps with problem solving skills to sell MPS. But I would clearly define my MPS space so I am not spending time in areas with little to no ROI.

Few companies with 250 – 1,000 knowledge employees are in MPS contracts today so why deploy resources at companies with fewer than 10 employees? Moreover, why focus on the hardware placement when the profits are in the aftermarket? We shouldn’t be measuring MPS by selling and MFD….we should be measuring MPS by how much recurring revenue it brings to our business. Strategy Development has been encouraging traditional copier dealers to get away from measuring sales success by hardware sales and to start measuring sales success by aftermarket growth. If you own the contract on the equipment you will sell the equipment.

So congratulations to that sales professional and the company mentioned in the blog—it appears as if you helped that customer solve a business problem with the correct MFD. But I would encourage companies to take a rifle approach to MPS and focus to the sweet spot, companies with 250 – 1,000 knowledge worker employees. Once that market is saturated with MPS contracts you can work your way down the food chain if you find it necessary and profitable. Don’t lose focus just yet!

Hiring a Consulting Firm: Proceed With Caution

2010-01-17T16:12:00.000-08:00

You engage a consulting firm to add skills and help you achieve your business goals. If the consulting firm is going to be successful in their support they need to still be in business 90 days after you sign the agreement. Over the last five years I have seen consulting firms come and go, and the going almost always follows the big announcement of the coming.

This last week I read a press release announcing that Supplies Network hired the former owner of a consulting business, who I congratulate on his new job, but what of his consulting clients? What do they do now? The same day I received an e-mail from the former owner of a consulting practice selling remanufactured cartridges as the director of sales for Virtual Imaging Products—he too apparently deserves congratulations for his new job. Six months ago he put out a press release stating he developed the first internet based MPS training program (Strategy Development has had an MPS sales mentoring program that is internet based for over a year). What if you bought that program? Two months ago Printer Essentials announced the hiring of another consulting firm owner.

Three consulting firms are apparently out of business in the last two months—this is just an example of what I have witnessed over the last five years. The biggest losers in this situation are those companies that engaged these consultants to help them launch their MPS program (they are all MPS consulting firms).

These “flash in the pan” consultants nibble at our prospect client base as well, but whenever we hear that a company hired one of these “Johnnie come lately” firms we simply feel bad for the hiring company. MPS is the most important growth strategy the industry has seen in over a decade and this company is going to get poor advice on making the transition and their “expert” will probably be working for a competitor before the hiring company comes to the conclusion they made an error in selecting the consultant. Worse, they may paint all consultants with the same brush as their short term advisor.

How do you make a decision to hire a consulting firm? The first decision point you have is do you need a consultant or trainer. If you want more information on that decision e-mail me and I’ll send a copy of an article on the subject (callinan@strategydevelopment.org).

Once you make a decision to hire a consultant look at the depth and experience of the consulting team. I would start by analyzing whether they are a firm or an association of independent consultants. If the latter there is a higher probably of them deciding to “find a job.” The other category of consultant that is apt to find a job is the sole proprietor firm. It is difficult to develop business, develop tools, and conduct consulting—and earn a living. You need a team. Make certain the consulting firm has experience in all areas of your initiative. For MPS this means you need back office operations, service, sales, and business planning. Finally, look for tenure; it appears as if most consultants fold in the six to nine month range, although some have made it as long as two years. I would not engage a firm that has less than two years of experience unless it is for a very short term project.

I am an entrepreneur and love it so I would encourage anybody to follow the dream of entrepreneurship if they have that dream. Failure is a necessary outcome of being an entrepreneur: I have a favorite saying that if you haven’t failed you haven’t tried hard enough. Nevertheless, make sure the entrepreneur you hire has a plan and not simply a dream--hire with caution and!

Trade Shows: Are they worth the time

2010-01-04T12:47:00.000-08:00

I am frequently asked the by clients “Should I attend (fill in the blank) show / conference?” I tend to answer the question with another question, “What are you looking to get out of the event?” Your answer to that question will then lead to some research to determine if the event is worth the investment in entrance fee, travel expense, and more importantly, your time.

There are many trade shows out there and a new one seems to pop-up every other year. They may be disguised as conferences or some other educations sounding event but when you look under the covers most are simply trade shows. Let’s explore some of the goals of a trade show:

Networking: An important aspect of business and one that requires focus. Many dealers belong to industry groups such as BPCA, CDA, SDG, or others and get to see their fellow group members at the events held by these groups. The networking aspect is just one of the many reasons why we recommend that our clients belong to an industry peer group. You also have the manufacturer dealer meetings held every 18 – 24 months. The problem with both of these types of events is that they are closed—you need to be a member of the peer group or you need to be a dealer for the manufacturer.

To network with dealers outside of this group you need an open forum. Two that accomplish this goal are the BTA regional events and ITEX. As by far the largest advocacy group for the copier / MPS industry, the BTA provides many benefits to the dealer / reseller community. One of those many benefits are the regional events they hold every year. I have participated in events in the Northeast and Southeast and they had drawn a large quantity of regional dealers and they are easy to get to, not requiring extra time for travel. I strongly recommend membership in the BTA and attendance at their events.

ITEX is the other forum that provides for networking, but in this case on a national basis. Las Vegas is a destination city and airfare and hotels are relatively inexpensive. You have great restaurants, entertainment, and oh yea, gambling. One of the largest benefits ITEX provides is the networking.

Education: Two warnings when it comes to education. First and foremost, if the event sponsors have most of the speaking spots you are wasting your time. One thinly veiled secret of the conference set is that some events are simply designed to generate revenue for the event coordinator and not designed to actually provide any value to the participants. Want to provide the keynote address? Become the platinum sponsor. Want to provide the day one closing address? Buy the gold sponsorship. Just align the sponsorship hierarchy with the relative status of the speaking spot and I think you will find perfect alignment. When you pay $10,000 to $20,000 to be the sponsor you talk about what you believe is a legitimate subject—the event coordinator doesn’t have a lot of influence after they take your check.

Do you really need to pay to see a vendor speak? It is my experience that the vendor will gladly pay for you to visit their office for the presentation and maybe even buy you a nice dinner or round of golf. Heck, lately some have even been flying dealers to their offices in Asia—on their dime.

And if you gave it some thought do you think that software vendor, toner recharge sales person or parts sales person really knows how to instruct you on launching an MPS program? Improve your sales effectiveness? Improve service margins? How about that MFP manufacturer trying to sell you that they don’t necessarily want you to sell their hardware? Why on earth would you pay to have these vendors that would either pay you for the opportunity to meet or who don’t have competency in the subject matter to speak to you…or should I be more straight forward and ask why pay for a sales pitch?

The second warning is on the concept of education at a trade show or conference. Most of the time the person giving the “training” is not being paid to instruct (in the sponsorship scenario they are actually paying for their opportunity to “train” you), but more than likely considers the speaking engagement an opportunity to give a sales pitch on their program. The degree of “pitch” vs training varies. I am sure we have all sat through the training program where we received 5 minutes of 80,000 foot theory and 55 minutes of program pitch, some disguised and some not so disguised. At other times we did get 45 – 50 minutes of 5,000 foot information and 10 – 15 minutes of pitch. The former is a complete waste of time and the latter provides you an opportunity to determine if the speaker can help your organization on a consulting or training basis.

The point is that you can learn at some of the conferences where the sponsors don’t get the majority of the speaking slots, but don’t expect to learn too much and choose the seminars you attend carefully. Let’s be realistic, do you think that a person that makes a living selling their knowledge is going to provide it to you for free, and do that in one hour?

What should you look to avoid? Preconference days that are completely paid for by sponsors and all of the speaking slots are taken by sponsors. These usually focus on the hot topic of the day like MPS or service improvement. Ironically, even though the sponsors paid to speak at these events they usually cost you additional money to attend—so you are paying to get a sales pitch.

The other area to avoid is conferences designed strictly to generate revenue for the show producer. What do they look like? A subject matter conference (always the hot topic of the day as that is the only topic anybody would be lured into paying for without much investigation) where all of the sponsors have speaking engagements. Whereas the add on day to the conference usually only costs an additional $99 - $150, effectively doubling the cost of the conference, it isn’t unusual for these total rip-off subject matter conferences to cost $795 - $995. Some go as far as having an add on day as a front runner to their totally sponsored conference.

If you really want education you need to pay for it and you should select the education topic you require. The good conference, like the main ITEX show or BTA regional events, may give you exposure to different speakers to help you make your assessment but once you believe you found a good trainer go to the specific workshop they offer on the subject and don’t attend any overpriced conferences hoping to get trained. You’ll only get trained if the trainer is getting compensated for their knowledge. The BTA offers some great programs.

Product information: If you want to compare and contrast products you have three choices, two of them logical. The first, illogical approach is to visit each company (illogical because of cost and time). The second is a series of webinars. The third is got to the main ITEX show and have appointments scheduled with each of the vendors to review their products.

Research: I find InfoTrends conference to be a great research opportunity. This isn’t the traditional educational event but it is one of the most educational events you can attend. Want to know what is going to happen with unit placements? You’ll learn it at the infoTrends conference. Want to know about print volume trends and where documents are being printed? You’ll learn it at the infoTrends conference. Basically, if you want to get into the details of the industry, copier or MPS, attend this conference.

You might want to research a new area—document archival for instance. There are trade shows for these areas such as AIIM. Search out the trade shows but use the information you have above to vet the show. If it is comprised totally of talking heads from the sponsors that are going to tell you how to do something they never did avoid the event.

The bottom line—there are a few shows that are worth the money if they fit into your goals but evaluate what your goals are against the agenda of the show.

Paul Schulman leaving Global

2009-12-16T05:35:00.000-08:00

In an e-mail dated December, 9 to the Global leadership team, Michael Shea announced that Paul Schulman has decided to leave Global effective December 31.

Paul was one of Global’s most visible leaders as President and COO and in his previous position as SVP of Business Development. Paul was well known and respected in both the dealer community as well as within Global. I know his leadership will be missed at Global.

I got to know Paul on a dealer trip almost 15 years back. He is engaging, intelligent, and passionate about the business. The announcement stated that Paul left because “(he) decided his work at Global is now accomplished.” I hope that is true and that we are not seeing the second iteration of the IKON story where politics and egos became the determinant of who stayed and who goes.

Tom Johnson led a great “build-up” as he called it; he let the successful entrepreneurs, and eventually professional management, run their business and quickly weeded out the unsuccessful players. It never appeared that politics had any influence on Tom’s decisions—performance did. Tom made Global the envy of the industry and made his shareholders and investors a phenomenal ROI. Paul Schulman thrived in this environment. As president of IKON NYC I competed against Paul’s company, Carr Business, and I can tell you he was a strong but honest competitor that grew year after year.

I am confident that Paul will use his leadership skills and business acumen to lead another successful venture. I enjoyed the time that Paul spent making the copier industry a better place and wish him continued success.

MPS: The 30% Catastrophe

2009-12-08T12:15:00.000-08:00

Many commentators in the MPS space like to talk about the 30% savings companies receive through an MPS agreement. I guess it helps them sell research, advance the theory of displacing printers with departmental MFDs, or helps the weak sales person generate some commission and retain his (her) job for a period.

But I have to ask a simple question, what is the rational to deliberately taking 30% of the revenue out of our industry? Overcapacity and technological improvements are already creating year on year decreases in hardware and aftermarket pricing and A4 is replacing A3 at a lower unit selling price. Those environmental changes should easily drive 10% of revenue per year out of our industry. Over the last two years units sales have decrease by more than 30%; they are gone and probably will never come back. Now we are all going to join in a concerted effort to drive an additional 30% of revenue out of the imaging space? Let’s all go to the jungle and drink some Jim Jones juice!

You can read my blog post from September titled: MPS: Growth Strategy or Harbinger of a Smaller Pie on the topic that MPS is not new revenue, simply a revenue shift from transactional to contractual. We are not generating new industry revenue with MPS; different players are capturing the revenue, which is good for those MPS providers in the short term.

As the industry leading MPS consulting firm we have been advocating for companies to adopt an MPS strategy for the past four years. Nevertheless, when you do launch your MPS strategy there is no reason to lead with a value proposition of saving a company 30%. Managing copiers, printers, scanners, and fax units is not a core competency for most companies; it is a nuisance area. Tying up valuable IT employees to remove misfeeds, install maintenance kits, or replace feed tires irritates CIO’s and IT directors who do not have enough resources to devote to their more mission critical projects like business intelligence, security, virtualization, and unified communications. Therein lies the value proposition—you build a business case for outsourcing.

I led a $225 million outsourcing business and that was simply the services revenue; there was an additional $60 million or so in equipment sold into the facilities management (FM) accounts. A portion of that $225 M was “fleet management” agreements. There are industry commentators who want to tell you MPS is not FM, but curiously those commentators have no FM background so how could they possibly make that statement? We didn’t sell outsourcing by telling companies we would save them money. At times it cost more money to outsource but the customer outsourced because we took away areas of their business that were not core competencies: Areas that distracted them from their business. Nuisance areas like imaging and printer fleets to most companies.

There were many FM agreements that included “gain share,” where working with the customer we drove efficiencies that resulted in lower cost that we shared with the customer. But the key there is the phrase “working with the customer.” You can do the same with an MPS agreement. Strategy Development’s three phases of MPS are manage, optimize and improve. Manage comes first followed by optimize and improve. Working with the customer—after you are generating revenue from an MPS agreement (manage)—you can help your customer make a decision on the lowest TCO device for each location that will provide the required functionality. This is where the cost savings come from, although reaching 30% is a stretch.

Why does Strategy Development have what appears to be a significantly different take than many industry commentators? For one, we are on the front lines every single day working on MPS transactions with our clients; and, we are fortunate to have the most successful MPS companies in the country as our clients. So we know what is happening out there and our client’s are not saving their customers 30% to get them to sign a contract. Our clients are building business cases that support an outsourced agreement with their customers.

Second, we don’t recommend what we would categorize as “scams” for selling MPS agreements. A relationship started on a lie cannot end well. Coverage area is, in the vast majority of the situations a scam; I will add that it is an easily exposed scam as more and more companies enter the MPS space. So “saving 30%” with a coverage area scam is no more a real savings than the consistent 16% returns investors thought they were getting with Bernie Madoff were wealth creation.

Next, we aren’t trying to sell you research and we aren’t consulting for end user companies. If there is a business out there that is trying to sell you something, be it research, training, a trade show, or newsletters and at the same time they are out telling end user companies that they can drive down their spend with you by 30% I recommend you cut off their nutrition—avoid them. When that business can’t survive because the industry cut them off maybe they’ll stop selling sensationalism and start selling reality.

Lastly, we aren’t a manufacturer trying to keep their factories churning out boxes and the trailing supplies and parts in an ever decreasing space that already has significant over capacity. We aren’t telling you go out there and replace all of their “Brand A” printers with “Our brand” printers or MFDs. We aren’t suggesting that you turn your sales force into change management consultants. That is a really tough sell that will be embraced by a small segment of the business population. Let’s thank God for that because if everybody out there reduces their device count by 60% or 70% we had better find something else to sell…..and fast!

Get into MPS but make certain you truly understand the MPS space so that you maximize revenue and margins. Because of the revenue shift described in the aforementioned blog post it can be a significant revenue driver. But the opportunity to capture significant new revenue combined with the 30% decline in MFD unit sales, which is really hurting the core copier business, has brought out every snake oil salesman in the land with the latest “elixir” for an MPS program. Choose wisely as any further delay in launching a successful program will be critical. Once those prospects are another company’s customers they will be locked into contracts that will be difficult to change.

If you want the best sales, back office operations, and service training the industry has to offer check out the BTA MPS Sales and BTA MPS Ops and Service Workshops at www.bta.org

Where’s the Silver Bullet

2009-12-08T12:01:00.000-08:00

I talk to many business owners that are looking for the cure to their ailment—and they would prefer something that cures them quickly. What is the ailment? Lower revenue and operating income. Some want to recreate the good old days of growth and can’t understand why that would be so difficult. Heck, in the 80’s we just worked hard and revenues increased: Why can’t we do that now? Are the new Generation X, Y, or Z kids simply lazy? My experienced reps just can’t seem to get the appointments they were once able to achieve. They’re all spoiled—we need to put them back on draw against commission and make the hungry!

If only it were that easy. Let’s start with the most obvious, although constantly over looked fact that it is not the 80’s anymore. That means that copiers are not a growth technology any longer. It means that the product extensions that allowed us to continually move upstream and replace other products is almost gone (HP, Xerox, and some other players are going full bore after displacing all printing presses with sheet fed and cut sheet high speed “digital presses” as one of the last product extensions left to conquer). Our color devices have brought outsourced work back in house and replaced presses as has our segment six production devices. B2C went main stream and penetration has stalled in the 30% range. Fax machines have gone the way of the typewriter. Copier (and printer) placements are down substantially over the last two years and are projected to continue to decrease, albeit at a slower pace.

The 80’s brought us Bill Gates (and Paul Allen but he is almost forgotten) and Microsoft, Steve Jobs and Apple, and IBM’s invention of the PC. Since then Larry and Sergey founded Google, who can even remember those two guys from Yahoo and Al Gore invented the Internet! Copiers are not “high tech,” or more appropriately, “sexy” devices to sell. Your fraternity or sorority buddies might be envious of your job at Google, Facebook, or Genentech, but selling copiers won’t elicit that same feeling.

It is a great industry with solid profits and recurring revenues, and sales professionals can still make a good living, but we have to face reality and understand that people aren’t standing in line to apply for jobs in our industry. For those of you who weren’t in the business in the 80’s I can recall when a Sunday ad in the paper (Do they still exist?) resulted in a lobby packed with applicants on Monday. The only chance you had to get the job, which was straight commission (draw) was to show up Monday…..with a wagon or van close behind.

What does all this mean? It is tougher to grow in a declining market than in an increasing market and your potential employees, and customers for that matter, have a lot more information available to make a decision. So how do you thrive in this new environment? Get real about putting together a solid business plan and stop wasting your time looking for the silver bullet. Maybe you don’t have the best website on earth, maybe your reps can set more appointments, maybe you do need some basic sales training…..anything is possible. But I’d bet that your rep’s telephone and sales skills aren’t any worse than they were 20 years ago and you grew then.

The aforementioned internet provides job seekers with lots of information. Want to know what salary or commissions to expect for your education and experience? Go to salary.com or one of their competitors. Want to know what a company pays the specific job you are interested in? Go to glassdoor.com or one of the thousands of blog sites available. Sales professionals are fungible—they can take a job with you selling copiers, they can sell medical supplies, pharmaceuticals, software, or ads on Google. The common thread of those last four is that they pay salaries. Now if you are ambitious you will take the opportunity with an “unlimited” variable compensation component over one with fixed bonuses. But will you take the opportunity of unlimited compensation—with no foundation (salary) over one with a solid base? Not if you could get the latter; for those not paying a salary that is known as adverse selection. You only get a pool of candidates that cannot get the jobs that pay a salary. Wonder why your turnover is 100% and your productivity is low?

As for growth, it isn’t in the copier space. Just in case you don’t believe me take a look at unit placements in any InfoTrends, IDC, or Gartner research. Placements, in the 1,300,000 area in 2007, have dropped to 900,000 or so in 2009. What does that mean? If you maintain your market share you will sell 30% fewer units in 2009 than you did in 2007. It is that simple. Add to that lower average unit selling price and your equipment revenue for equal market share is off more than 30%. Those units are never coming back…..they are actually going lower.
The industry has been talking about it for years but if you are not focused on clicks over placements you are chasing a quickly declining revenue stream. The answer—managed print services.

Done correctly MPS is a totally different business than you are in today. It is a solution that is focused to growing your aftermarket—it is not focused on equipment. So whether you sell Canon, Ricoh, Konica Minolta, Sharp, HP or one of the many other brands is irrelevant. You will sell equipment into your MPS agreements—and brands do have value, as any first year marketing student will tell you—but providing a consultative outsourced approach is what companies are buying with MPS.

So take the time to put together a solid business plan that has your company transitioning to clicks over equipment revenue. Transitioning is the key as you don’t want to throw out the baby with the bath water. The number you need to talk about day and night is your recurring revenue stream. With focus you can easily grow that revenue 30% or more year on year. If you want to find the silver bullet for selling more copiers I wish you luck. If you want to continue to lead a growth company that generates significant profits forget the bullet and hunker down with your senior team to put together a plan that gets you growing.

New Wave of Industry Certification: Value or Marketing Gambit

2009-11-09T08:43:00.000-08:00

We’ve all heard or read the stories: Company Big Shot or Government appointee discovered to have PhD, or other degree, from “diploma mill.” There is always the denial from the “degree” holder, referencing how hard they worked to earn the degree and how they considered the degree legitimate. But could they really believe that? Haven’t we all seen the advertisements? “Credit given for life experiences.”

Okay, so I have attended some “professional education” events and have worked my way up from sales professional to vice president of sales at the dealership, managing four sales professionals. I never stepped foot on a college campus other than to pitch a deal. I collect all of the certificates from my professional training and send them along with my resume and $25,000 to “University of some Geography” and puff, I have a BS in management. You didn’t actually attend any professional training and you don’t want to take the time to download some certificates from the Microsoft Office website, just send in your resume and the check for $25,000 and puff, BS in Management. What, you don’t have any professional training and you aren’t really the VP; actually you’ve never achieved quota in your 10 years of sales and you’ve worked for nine different companies? Son, you need this BS more than most so just send in the check for $25,000 and your diploma will arrive—get that check in within a week and we’ll send a free frame with the diploma.

Why don’t we all set-up colleges and collect checks? Heck, it would save me a fortune sending my three children to accredited universities. But therein lays the answer –accreditation. You see “real colleges” don’t accredit themselves. Rather, they are accredited by a recognized organization. I can’t say it any better so here is a copy of the blurb from ed.gov:

The goal of accreditation is to ensure that education provided by institutions of higher education meets acceptable levels of quality. Here you will find lists of regional and national accrediting agencies recognized by the U.S. Secretary of Education as reliable authorities concerning the quality of education or training offered by the institutions of higher education or higher education programs they accredit.

The newest wave in the industry appears to be certifying dealerships or sales professionals. You can become one of the top 100 service companies in the industry or even a certified MPS sales specialist. Heck, these programs are trademarked (I think that is what they say...or copyrighted but you wouldn’t copyright a trade name so they seem confused on that) doesn’t that show credibility? Go to the office of patent and trademark and fill out a form and you have the makings of a trademark. For copyrights it is even easier….I could send this blog post into the copyright office to “file” and it is copyrighted. It simply costs some money, like a diploma from the diploma mill, and doesn’t add any credibility.

I think Strategy Development has the deepest talent of consultants and trainers in the industry. Our experience speaks for itself. If you want to improve your service operations or get trained on how to sell MPS I strongly recommend you contact Strategy Development. But we are not an accredited institution and we are not going to insult your intelligence by telling you we will certify you. Besides, even if there are folk’s naïve enough to believe that a company can create their own recognized certification, like the diploma from the “University of Geography” that certification will have no legitimacy in front of a prospect when they ask “How did you earn your certification.” I paid a consulting / training firm to attend their course……

We provide real results, not gimmicks and we certainly will never insult your intelligence.

Sharp gave out more details on its recent dealer meeting in Washington DC

2009-10-31T17:24:00.000-07:00

- Total US revenue was down 3%
- Has self-financed leases on a few major account deals, but has no plans to open up
its own leasing company
- Has a total of 440 dealers in the U.S.
- Is adding 20-40 new dealers per year, but also losing about half that many per year
- Has 10 factory direct branch operations from 13 acquisitions
- Has temporarily halted acquisitions, until economy improves, but still hopes to have 25 locations total in next few years
- Goal is for branches to account for 45% of sales in U.S.
- 4 of its 10 largest dealers are Global dealers (owned by Xerox)
- While it launched the Frontier series of A4 MFPs last year, it only has sold a total of 7000 units
- Healthcare vertical market is where most A4s are sold, accounting for 14% of units sold
- Only 310 of its 440 dealers are selling the Frontier A4 models
- In 2005, the total number of 31ppm+ A3 units was 479,431, and in 2008 was 563,309
- In 2005, the total number of 31ppm+ A4 units was 21,779, and in 2008 was 116,536
- Now has 135 technology partners for its OSA embedded solutions offering
- Now offering Front Panel, or ability for end user to customize the copier LCD display
- My Sharp Digital Signage, allows end users to run an announcement on the LCD display
- Future models will come standard with OSA, rather than current option for $349

Canon stated that since Ricoh bought IKON, it has signed up only 23 new dealers in the U.S.

2009-10-31T17:23:00.001-07:00

Lexmark announced a new program for copier dealers

2009-10-31T17:18:00.000-07:00

- Has created a line of 15 models that will not be sold on-line or through retailers
- These “XS” models will only be available through copier dealers
- 5 are A4 b/w MFPs, 3 are A3 b/w MFPs, 2 are A4 color MFPs, 2 are A3 color MFPs, 2 are A4 b/w printer, and 1 is A4 color printer.
- Speeds range from 35 to 55ppm
- All have a published MSRP, but not a published street price
- All have large touch screen LCD display
- Offer eTask software for embedded application ability
- Have high yield cartridges so they are ideal for managed print services contracts
- Lexmark claims it has signed up 150 dealers in the U.S. so far, and hopes to have
300 total in next few years
- Typical opening order is $12K to $30K to become authorized
- Product is actually ordered from Tech Data or Synnex, instead of directly from Lexmark
- Will have it first dealer meeting in Kentucky

More details on the new alliance between Canon and Hewlett Packard

2009-10-31T17:15:00.000-07:00

- HP will begin advertising Canon copiers on its website on 11/1/09
- HP will resell imageRUNNER, imageRUNNER ADVANCE, and imageRUNNER ADVANCE PRO series
- Speed range from 23ppm to 105ppm devices
- According to Larry Trevarthen, HP’s Worldwide Director of Market Development, HP also has access to the imagePRESS production print products
- All the devices will initially carry the Canon name
- The products will be identical to what Canon dealers sell, including supplies
- Service will be provided by a Canon factory direct branch primarily. Only if there is no Canon branch in the area, will the service contract be offered to a Canon dealer.
- Canon currently has 60 factory branch locations, but will expand to 90 locations within 2 years
- HP will support Canon copiers with its Web JetAdmin utility
- HP will also modify its Universal Print Driver to support Canon copiers
- Starting in early 2010, HP will begin to develop its own print controllers for the Canon copiers

Hewlett Packard launches three new laser MFDs available exclusively for its PartnerONE dealers

2009-10-31T17:07:00.000-07:00

- LaserJet M9059 is a 50ppm, b/w A3 unit, based on existing M9050.
- LaserJet M4349x is a 45ppm, b/w A4 unit, based on existing M4345
- Color LaserJet CM6049f is a 40ppm, color A3 unit, based on existing CM6040f
- All are actually made by Canon

The only difference of the new models, versus the units that they are based on, is that they have toner cartridges that are keyed, so end users have to buy the toners from the HP PartnerONE dealer, and not on-line, or in a superstore.

This appears to be an effort by HP to provide their channel with products that can be used in an MPS engagement. I have not seen pricing for the cartridges, and probably would not be able to disclose the pricing if I did see it, but unless HP is deploying pricing similar to their supplies meter program they probably will not get much traction with these products. Keyed products create logistic issues in mixed fleets--those with the keyed models as well as the orginal modles--and if the units have a short shelf life due to lack of acceptance the vendor and customer have a small group of "orphaned" devices with a special cartridge. Furthermore, the ability to move to compatible cartridges is probably lost.....another fact that probably drove HP to this strategy.

The importance of business planning

2009-10-22T14:59:00.000-07:00

At several recent workshops, I asked the workshop participants how many of their companies prepared an annual business plan. I was surprised that in both workshops, only 20% of the companies represented actually prepared a business plan. It was interesting to note that at a follow-up question where I asked how each company was coping with the economy, they all admitted to their business being tougher than ever but the ones who earlier acknowledged that they prepare a business plan also indicated that they were doing reasonably well in a tough economy. They had a formal business plan, worked it continuously and adjusted areas as the year progressed.

That is not surprising. When a company properly prepares and executes on their business plan, the results that they achieve typically far exceed the results of companies that do not have a plan. In addition, their plan provides a basis for a scorecard of performance throughout the year. Without a plan, a company doesn’t know if they are leaving money on the table because they have no idea what they should be able to achieve.

Many companies don’t know where to begin in preparing a business plan. This is where an investment in attending a Business Planning Workshop would be a great benefit. The workshop is tailored for the Office Products industry and takes you through every detail of what a plan should entail and how to work through every detail. You will come out of there fully prepared to work with your team to construct and execute on a plan for your company

CIOs Pare Their Suppliers

2009-09-28T16:02:00.000-07:00

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

2009-09-28T15:03:00.000-07:00

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

Details:

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.

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

2009-09-26T08:37:00.000-07:00

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.

http://www.capv.com/public/Content/Press/2009/08.27.2009.2.html

We have a great training program in partnership with the BTA (www.bta.org) 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: callinan@strategydevelopment.org

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

2009-09-26T08:34:00.000-07:00

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.

http://www.crn.com/hardware/219500374;jsessionid=KFQSF1LOTLXB1QE1GHOSKH4ATMY32JVN?cid=CRNFeed

Culture: A Key Ingredient to Success

2009-09-24T13:14:00.000-07:00

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.

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

2009-09-20T16:23:00.000-07:00

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

2009-09-20T08:13:00.000-07:00

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.

Join the LinkedIn Groups: Print Management, Copier Service Management, or MPS Executive Management and add yourself as a follower of this blog

MPS: Growth Strategy or Harbinger of a Smaller Pie

2009-09-10T10:04:00.000-07:00

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 (http://www.strategydevelopment.org)

Add yourself as a follower to this blog and join the Linked In Group, “Print Management”

Ricoh: Getting Ready to Rumble?

2009-08-11T10:22:00.000-07:00

The August 3 issue of Barron’s had a great article on Ricoh and their acquisitions, including InfoPrint and IKON. The link below will take you to the article.

One item that was startling to me was the quote “IKON, which also hasn't delivered a profit to its new parent,….” It would seem to me that the war between RiKON (Ricoh owned IKON) and Canon is having a significant impact on IKON’s ability to make a profit. Word is that street level equipment margins at RiKON have been halved, to 14%, over the last year. Service margins are also taking a hit as RiKON fights off Canon’s assault on their service base, having to match aggressive offers. Whatever the reason it is clear that RiKON has been operating in the red for the last year.

More perplexing are the future revenue and expected operating profit EPS from RiKON, at ¥280 billion and ¥8 respectively. Converting to dollars, revenues would equal $3 billion with approximately $65 million in operating income. Let’s assume there were subsidiary sales of approximately $350 million between Ricoh and IKON, this still represents an approximately 30% decline in IKON’s pre acquisition revenues and an almost 40% reduction in operating income. Wild to say the least.

Ricoh has been reorganizing their direct operations for years. Well informed individuals have stated that Ricoh direct has been losing money for years, with those losses accelerating. It seems to make sense for Ricoh to combine their current RBS operations with RiKON. The question is not if but when, and it appears as if the current results indicate that the still nebulous answer is “sooner rather than later.” If Europe and Canada are any indication—both of which have been combined with the Ricoh direct operations—it could be real soon.

It is nice that Ricoh takes risks to increase their business. We will see how Ricoh’s IKON acquisition works out long term. I believe a lot of changes will need to occur if it is going to be successful. When this acquisition first occurred I stated it would be great for the independent dealer. One year later and clearly it is great for the independent dealer. Revenue is cratering, the entity is losing business, Canon is assaulting the base: In a nutshell RiKON is focused on survival. Carpe Diem!

http://online.barrons.com/article/SB124908694002798273.html

Xerox Results: MPS Bright Spot and HP Comments

2009-07-24T06:03:00.000-07:00

Xerox provides great information in their quarterly reports and their conference calls. The links to their slide deck and transcripts of their conference call on quarterly results are below. I encourage you to read them.

Some of the highlights of the presentation and call:
· Segment 2 – 5 installs up 10%
· Service annuity revenue down 4% in constant currency (CC) Note :(Xerox is global, and therefore has currency risk. The 4% decline is in constant dollars year over year (YOY)
· Pages declined by 5%
· Color pages grew 12% YOY
· Color equipment declined 21% CC
· Segment 1 installations declined 84%
· Office color MFD declined 21% with color printers declining 42%
· Balance Sheet improvements and expense reduction drove better margins and strong cash flow
· MPS has a $3.5 billion run rate and is growing

The CEO’s take on MPS:

Ursula M. Burns

About $3.5 billion on the MPS business the whole MPS businesses, large and small MPS business about $3.5 billion. It is growing it is a stronger growth engine or being impacted less than our equipment business. So it's an area of strength for us. By the way, these are global businesses as well. It's something that we practice around the globe. I think that's what you asked as well.

And on HP’s new MPS initiative:

Chris Whitmore - Deutsche Bank Securities

Just a follow-up on that, HP recently held a call which seemed to place a bull's eye on both your production business and your office business in terms of their expected growth going forward. What do are you seeing from HP, and maybe can you specifically address how you complete against Indigo in the high end production market.

Ursula Burns

What we're seeing from HP is their focus on our business, as you said, and they recently announced a managed print service offering that we've had in the market for quite a while. We are the leader there, as I pointed out when I was speaking earlier. So what we see in HP is trying to catch up with the position that Xerox has both in the production space, in the managed print services space, in the A3 MFP space across the board. We don't take them lightly, we are very confident based on our investments, our history, what we're doing in the marketplace today that we can effectively compete against HP.

Chris Whitmore - Deutsche Bank Securities

Are they competing more with price or more with service and solutions?

Ursula M. Burns

What we're seeing in managed print services they're competing right now with words so that's right now with an advertisement so we have to see that in the marketplace. As I said on managed print services we are very, very confident there. In the high end space, which I didn't answer to that portion of the question before, we are very, very pleased with iGen position, the install base, the activity we got in quarter two, very strong. We do not see them positioning, competing with us on price.

As you know, they are positioned in a different place in the marketplace our AMPBs and usage patterns for our iGen 4s are higher than their Indigo devices. But we have a breadth of portfolio that allows us to complete effectively and surround them, get right on top of them. So we're very - it's a tough market out there, we are very confident in the position that we have in both high end color and management services and A3 Office against HP and other competitors as well.

I encourage you to spend time reviewing the slides and to read the entire call transcript. You should also add yourself as a follower of this blog.

Link to slides:

http://a1851.g.akamaitech.net/f/1851/2996/24h/cacheA.xerox.com/downloads/usa/en/i/ir_Xerox_Second_Quarter_2009_Earnings_PresentationSlides.pdf

Link to call transcripts:
http://seekingalpha.com/article/150964-xerox-corporation-q2-2009-earnings-call-transcript?source=yahoo&page=1

A Statement To Live By

2009-07-22T15:34:00.000-07:00

“Pain is temporary. Quitting lasts forever.”

Lance Armstrong (1971 – )
American cyclist
seven-time Tour de France champion and cancer survivor

Gartner Released Prediction of Print Technologies

2009-07-22T13:15:00.000-07:00

By 2012, over 75% of all printed bills and statements in the U.S. will have advertisements for products and services, generating more than $2.8 billion in ad revenue for billers
-Do you sell variable data?

By 2012, over 30% of enterprise customers with document intensive business processes will use applications or custom workflows deployed on MFPs to lower paper process costs and improve worker productivity
-Are you selling advanced capture and routing?

By 2012, over 70% of businesses with more than 250 employees will adopt a managed print services program
-This is your core; are you selling MPS (Attend the BTA MPS Sales Workshop)

By 2012, over 80% of enterprise businesses will be using fax servers

Ricoh Makes Another Dealer Acquisition

2009-07-22T13:06:00.000-07:00

Ricoh announced it has made another dealer acquisition.

Details:

Purchased Automated Business Products, a Savin dealer, based in Salt Lake City, UT

Owners wre Lee Christensen and Mike Archer

Lee and Mike will remain running the new wholly owned subsidiary and the current RBS branch in SLC

This current ABP was founded in 1999 and has 63 employees

The original ABP was founded by the Archer family and had locations in Utah, Colorado and others, before selling out to IKON.

Rain On Me

2009-07-22T13:04:00.000-07:00

IKON’s warehouse in Orange County, Florida, had its roof ripped off and trailers upended during a severe storm last week. 16,792 copiers were exposed to rain.

CIT: Will They Survive

2009-07-13T13:17:00.000-07:00

Talk to any dealer or reseller today and they will tell you that their biggest issue is getting a deal approved. Finance companies have black listed many industries and some large providers have become fickle, pulling out of the industry and then reentering, while others have exited the small ticket leasing business completely. Add inventory floor planning issues to the mix and life has become difficult for many.

It looks as if things will only get more difficult; it was reported over the weekend that CIT had hired a prominent bankruptcy firm. For more details on the possible bankruptcy follow the link below.

http://finance.yahoo.com/tech-ticker/article/279272/Save-CIT-or-Let-it-Fail-Obama-Geithner-Navigating-a-%22Slippery-Slope%22?tickers=cit,ge,wfc,xlf,skf,fas,%5Edji&sec=topStories&pos=3&asset=&ccode=

HP Stepping Up The Aggression with MPS

2009-07-13T04:55:00.000-07:00

Today's Wall Street Journal (Monday July 13) featured a full page color ad "Introducing the HP Printing Payback guarantee" that promises to "...cut your printing costs or....cut a check."

When you go to the web page for the program (hp.com/guarantee) you find a series of case studies citing large companies that saved millions by implementing an HP MPS program.

Document Solutions Daily

2009-07-10T14:09:00.000-07:00

Document Solutions Daily

On an average day Document Solutions Daily summarizes over 20 articles that could effect your business and the businesses of your colleagues throughout the industry. If you missed a month of Document Solutions Daily, you missed on the order of 450 industry news items, product release notices, product reviews, white papers, case studies or market studies that you should probably be aware of!

It's how I stay up on industry information....quickly and inexpensively.

http://kworkspublishing.com/

CFO Magazine and MPS

2009-07-09T14:55:00.000-07:00

Below you can find a link to an article in the May, 2009 issue of CFO Magazine focused to savings in the technology area. “Hiring Managed Service Providers” is one of the seven highlighted areas, and managed print services is the example under the MS heading.

But before you leave add yourself as a follower to this blog and to the group “Print Management” on Linked In.

Don’t get hung-up on the source of the article. Although published in CFO, you will note that there is only a single reference to a CFO in the entire article, and even that is more of a technical expert role to the CTO. All of the savings mentioned were driven by the CIO’s team. In over 60% of engagements the decision to enter an MPS agreement is made inside of the CIO’s organization: They own the budget for acquiring and supporting technology.

http://www.cfo.com/article.cfm/13526087

How Well Do You Understand the “C” Level?

2009-07-09T14:53:00.000-07:00

Consultants, trainers, and authors earn a nice living pontificating about how to sell to the “C” level. If you have spent any time in sales you have heard how only “C” level employees have the ability to weigh the business impact of your product or service; you have also heard that the CFO is the person you want to speak to about saving money.

I believe there are few simple and unilateral solutions to complex problems. Unless your target market is small entrepreneurial companies, the belief that only a handful of employees truly understand how to evaluate business impact is misplaced. It may border on naïve and could be insulting to the people that actually make the decision regarding your product or service.

Saving money is not the sole purview of the CFO. Any business manager with control of a budget wants to find better value where they currently spend money so that they can fund other projects. Maybe you can save them money in their imaging and printing fleet that they can spend on a virtualization project?

If you sell a product or service that can have strategic impact or significant risk for a company then the decision will be made in the “C” suite. Trying to convince a company to adopt a six sigma initiative? Better call on the CEO. It is extremely expensive in the near term with the payback being long term, culture changing at every level of the organization, and has a high rate of failure. The CEO’s job could be on the line if it fails.

The key is to identify the person that has the budget responsibility for what you are selling. If you are selling training you will want to speak to the director of training and development. If you are selling office supplies you will be talking to purchasing. If you are selling liability insurance you will want to speak to the company’s risk manager. If only the “C” suite could make these decisions then it would not be logical to have these other employees; would it?

You can raise your entry point but only if you change your value proposition. MPS has changed the value proposition for purchasing printers, copiers, supplies, services, and some software. Prior to MPS these items were most frequently purchased by low level IT or purchasing. As part of an MPS agreement you can raise the value proposition to the level of middle management: Most frequently the director of IT. But it is not a highly strategic or risky endeavor so the “C” suite, except in the smallest of companies that would qualify for an MPS agreement, will not probably not be involved.

I realize it is human nature to look for exceptions so I will state up front you will find them. In a law firm you will need to be on the “business side” of the decision process so you will probably be calling on a COO or CFO. Then there are the “C” suite executives that have developmental opportunities in the delegation area and who will want to be involved in many tactical decisions. But for the most part if you identify the person that controls the budget, and your value proposition does not have an impact on the company’s strategy or involve high risk, you are at the correct level.

Xerox's Managed Migration

2009-07-04T12:11:00.000-07:00

Departing chief Anne Mulcahy on why printing less is good business for her company.

NORWALK, Conn. -- Anne Mulcahy came to the leadership position at Xerox in the midst of a financial crisis when she was a little-known sales executive. Named chairwoman and chief executive in 2001, she faced an SEC investigation of the company, a loss of market share, restated earnings and a downward-spiraling stock price. She sold assets, pared debt and rebuilt Xerox's product line to include more services and advanced industrial printers. She spoke to Forbes in May, just before announcing she would resign as CEO effective July 1. She remains chairwoman of Xerox. This is a transcript of a recent interview with Forbes' Quentin Hardy.

http://www.forbes.com/2009/07/01/xerox-mulcahy-innovation-intelligent-technology-retiring.html

New CEO Takes Helm at Toshiba

2009-06-27T11:24:00.000-07:00

On June 24 Norio Sasaki, 60 years old, was appointed president and CEO of Toshiba Corporation. Toshiba lost $3.61 billion for the fiscal year ending March 31. In an attempt to shore up its balance sheet the company issued $5 billion in additional debt and equity.

Mr. Sasaki immediately set a goal of boosting the shareholder equity ratio from 19% to 30%. As noted by Daisuke Wakabayashi and Yuzo Yamaguchi in the WSJ, In order to meet the target, Toshiba not only needs to return to profitability, but might also have to exit unprofitable or weak businesses, as well as overhaul its capital-intensive chip operations. In the past, the company has been reluctant to take such steps.

In discussing business units, the article focused on semi conductors and nuclear power plants. Mr. Sasaki started in Toshiba’s nuclear power plant business and expects “significant growth” in revenues over the next two years. There was no mention of the office equipment business in the article.

Strategy Development Launch MPS Mentoring Program

2009-06-21T14:59:00.000-07:00

Bryn Mawr, PA (June 2009) — Over the last four years, Strategy Development has helped hundreds of dealers enter the managed print services (MPS) space through their industry leading consulting and training practices. The Strategy Development Team leveraged their significant experience leading large outsourcing, professional services, and equipment focused businesses to develop the services led MPS approach now advocated by most industry players.

Based on the Strategy Development Print Management Processes, the MPS Mentoring Program offers a Sales Track and Operations Track to help channel players enter the fast growing MPS space.

MPS Mentoring Sales Track

Dedicated Print Management Sales Professionals participate in a 13 week webinar series covering every aspect of the print management / MPS sale. Each weekly training event is paired with a weekly best practices call so that participants have the opportunity to learn from the other participants in their cohort. The Strategy Development consultants facilitate these calls and hold monthly update calls with the participant’s manager to ensure the learning’s are being applied and reinforced.

MPS Operations Mentoring Track

With the industry leading service and financial operations consultants on staff, nobody is better positioned to help you understand the processes and requirements to effectively support an MPS business. Over this 12 week program, with offsetting biweekly webinars supported by biweekly individual dealer calls, your team will learn how to build a business plan, developing a compensation plan, profitably price and manage MPS transactions, and handle all of the intricacies of installation and service, among other operational areas.

Participants in the mentoring program receive a toolset that includes:

• Sample contracts

• Web based employment ad

• Power Point scripted value proposition

• Power Point strategy session template

• Power Point proposal template

• Pricing tool

“We have encountered numerous VARs and BTA Dealers that sought the level of expertise that they could only get from Strategy Development and our team of employee consultants, but who did not have the resources to commit to a full consulting engagement,” commented Tom Callinan, managing principal. “Our mentoring program will provide a strong foundation for a VAR, BTA Dealer, or OEM Branch to launch a successful MPS strategy.”

Callinan continued “Our consulting engagements have helped channel players add millions of dollars in monthly reoccurring revenue, which I think is the correct way to measure an MPS program. You can extrapolate monthly clicks into multimillion print agreements over a three year period, but marketing spin doesn’t pay the bills so look at reoccurring revenue to drive your program.”

In addition to the consulting and mentoring programs, Strategy Development developed and instructs the BTA Print Management Workshop, open to all channel players. Ed Carroll, principal of Strategy Development, commented “An industry trainer recently commented that his MPS training doesn’t work. After having over 100 companies represented in our BTA training program, I can tell you unequivocally that our training program produces measurable results. The choice seems clear.”

You now have a choice on how to use the industry leading expertise of the Strategy Development Team: Consulting engagement, mentoring program, or training in partnership with the BTA.

For information on the MPS Mentoring Program or to request an complimentary assessment contact Tom Callinan at callinan@strategydevelopment.org or 610.527.3317

Strategy Development, a management consulting firm focused to the technology and outsourcing space, specializes in business planning, sales effectiveness, advanced sales training, and operational and service improvement. For more information visit Strategy Development at www.strategydevelopment.org

The Business Technology Association (BTA) serves office technology dealerships, manufacturers, distributors and service companies. Its members manufacture and/or sell and service hardware, software and supplies that help businesses be more efficient and save money. Through education, information and guidance, BTA members are the premier source of the technology used by businesses throughout the United States every day.

Still Wondering if A4 Will Impact the Industry?

2009-06-21T11:07:00.000-07:00

Sharp(R) Frontier Series Powers Company Into the Color MFP Segment 3'S Top Position in Leading Market Research Firm's US Quarterly Hardcopy Peripheral Tracker

First Quarter Shipment Results Show Sharp's Dramatic Market Foray Has Resulted in Increased Market Share as Well as Higher Overall Market Sale

-- 06/05/09 -- Sharp Imaging and Information Company of America (SIICA), a division of Sharp Electronics Corporation, today announced that they have finished with the highest overall United States market share for 31-44ppm* color MFPs** in Q1 2009. This data was made available by IDC, a premier global provider of market intelligence, and shows a dramatic increase in unit sales by Sharp over last year; particularly in the A4 subcategory of the same speed range, where SIICA was able to capture major market gains in less than two quarters.

Sharp's strong performance in the category was bolstered by the introduction of the company's award-winning Frontier Series A4 MFPs. According to the report, in just less than two full quarters, Sharp was able to move from having no presence in the color A4 31-44ppm color MFP segment, to a 40% share. This explosive growth, coupled with continued strong sales in the A3 sales, helped Sharp gain the largest percentage of overall 31-44ppm color MFP* sales for Q1 2009. In fact, the entry of the new Frontier Series helped to nearly double the total number of A4 31-44ppm color MFP units sold by all manufacturers between Q1 2008 and Q1 2009.

"Despite a challenging economic climate, Sharp continues to innovate and introduce new products that revolutionize the way companies work," said Ed McLaughlin, president, Sharp Imaging and Information Company of America. "This innovation can not be overlooked, and companies are finding products such as our Frontier Series help them work more efficiently and economically. In addition, dealers have found that the A4 Frontier line is fitting in nicely into their customers' workgroups without taking away from A3 sales. It speaks volumes about how smart our dealers are and the need for truly innovative new products as we continue to move forward."

Sharp introduced the MX-C311, MX-C401, DX-C311 and DX-C401 models as part of the Frontier Series MFPs in Q4 2008 and the DX-C310 and DX-C400 in Q1 of 2009. These units feature digital color copier, network printer and scanner capabilities in a single MFP, and a unique design that makes them aesthetically pleasing when placed directly in the workgroup. Sharp's newest A3 devices include the MX-4100N, MX-4101N, and MX-5001N, which were introduced in Q1 2009.

With Frontier, Sharp has successfully leveraged the Sharp OSA® development platform to change the MFP from a print/copy device into an IT document management system. Sharp A3 and A4 MFPs feature Sharp OSA technology, making them truly customizable; a brilliant 8.5" touchscreen panel for easy operation; and Sharp's award-winning security suite, which provides a multi-tiered system that protects data at every step of the document cycle. Sharp A3 MFPs also feature a retractable keyboard as a standard feature -- something not found on any other A3 MFP.

McLaughlin continued to say, "Sharp remains dedicated to producing a wide range of high quality MFPs that are changing the competitive landscape and giving our dealers the most comprehensive product line available."

For information about the complete line of Sharp MFP products, contact Sharp Electronics Corporation, Sharp Plaza, Mahwah, N.J. 07495-1163, or call 1-800-BE-SHARP. For online product information, visit Sharp's Web site at sharpusa.com.

*Based on letter speeds for Segment 3

**Source: IDC US Quarterly Hardcopy Peripheral Tracker, Q1 2009 for Laser Multifunction (print and at least one other function) and Single-Function Printers shipments.

Xerox Joins as Gold Sponsor for the Solutions Summit and Office Document Strategy Conference

2009-06-21T10:55:00.000-07:00

(Weymouth, MA) June 18, 2009…. InfoTrends, the leading worldwide consulting firm for the digital imaging and document solutions industry, announced today that Xerox, a leading document management technology and services enterprise, has signed as a Gold Sponsor for their upcoming Solutions Summit and Office Document Strategy (ODS) Conference. The inaugural Solutions Summit will take place September 29-30, 2009, and the Office Document Strategy Conference will follow immediately September 30 – October 1, 2009. Both events will be hosted at the Hyatt Harborside, in Boston, Massachusetts.

http://www.infotrends.com/main/public/Content/Press/2009/06.18.2009.2.html

Strategy Development & The BTA Launch Business Planning Workshop

2009-06-21T10:50:00.000-07:00

Bryn Mawr, PA (June 2009) — Dealers are seeking strategies to grow revenue and profits in the face of year-over-year industry unit placement declines, a shift from A3 to A4 products, a difficult financing environment and new competition for pages from other channels selling print management solutions.

Although there are many training programs that address different aspects of planning or focus on improving results in functional areas, there is no single program that comprehensively brings together all functional areas into a cohesive plan of action — until now. The BTA Business Planning Workshop is a 2.5 day program developed and instructed by the consultants from Strategy Development. Attendees will learn through a combination of instruction, case studies and class discussion how to build and execute a business plan that becomes a roadmap to achieving business goals.

A snapshot of some of the content from this workshop:

· How to use your financial statements to make good business decisions
· Using the Strategy Development Balanced Scorecard to maximize results
· Conducting SWOT analysis and using the data to grow
· Using industry trends to plan for a profitable future
· Launching new initiatives
· Driving productivity: A key to high profits
· Engineering processes to improve workflow and employee satisfaction
· Cash management

“We have been able to help scores of dealers across North America launch print management initiatives, improve their equipment sales effectiveness and improve back office and service operations,” said Tom Callinan, managing principal of Strategy Development. “But short of a consulting engagement with our team, until the launch of the BTA Business Planning Workshop there has been no single program available that allowed the dealer to get a holistic view of growing their business and profits.”

“Our members have benefited greatly from the expertise of the Strategy Development team and we are looking forward to enhancing our training curriculum with this comprehensive workshop,” added Brent Hoskins, BTA executive director. “Business planning is one of the most requested educational areas from our members, so we are happy that we can now provide that education.”

The inaugural BTA Business Planning Workshop will be held October 6-8. For information e-mail Tom Callinan at callinan@strategydevelopment.org or call 610.527.3317.

Strategy Development, a management consulting firm focused to the technology and outsourcing space, specializes in business planning, sales effectiveness, advanced sales training, and operational and service improvement. For more information visit Strategy Development at www.strategydevelopment.org.

The Business Technology Association (BTA) serves office technology dealerships, manufacturers, distributors and service companies. Its members sell and service and/or manufacture service hardware, software and supplies that help businesses be more efficient and save money. Through education, information and guidance, BTA members are the premier source of the technology used by businesses throughout the United States every day.

Printer Business Drops In Q1: IDC

2009-06-03T13:39:00.000-07:00

The economic downturn has taken its toll on the printer business, causing shipments to fall more than 17 percent worldwide compared with last year, with color laser multifunction devices a relative bright spot in an otherwise gloomy market.

Follow the link to read this article: http://www.crn.com/hardware/217701335;jsessionid=PNGJBEKCRPJWGQSNDLPCKH0CJUNN2JVN

Thank you to Joe at Document Solutions Daily for introducing us to this great information www.kworkspublishing.com

Why All The To Do About Printed Page Coverage

2009-05-17T11:14:00.000-07:00

For year’s copier vendors have been selling pages on a cost per page (CPP) basis without regard to an end user company’s page coverage. In so doing they have been able to achieve nice profit margins that allow them to provide quality service, an easy to understand pricing model, fund growth and provide a fair return to the stakeholders.

With copier unit placements dropping rapidly the traditional copier dealers are now moving into the printer world, bringing with them their CPP model. But many dealers are suddenly talking about page coverage area. After selling pages for years why worry about coverage area now. More important, how do you calculate coverage area? Do you take a month’s worth of samples and send them to a coverage area lab for analysis? Do we calibrate print management sales reps’ eyes to ensure they can accurately calculate coverage area?

I believe there are many players driving page coverage, all with a bias. Statistics tells us that with a normal distribution curve 95% of N fall within two standard deviations. Of the remaining 5 percent, half would fall into the “greater than expected” profit range and the other 2.5 percent would fall into the lower than expected range. Do you usually manage your process to the 2 percent?

Moreover, it appears as if there is more evidence that page coverage is not the big concern it is made out to be. Xerox, in discussing the hybrid pricing approach on their ColorCube 9200, estimates it can bring the average cost of color copies down by 62 percent.

So using my deductive reasoning, since Xerox has stated that a normal color page will be in the range of any other copier, but there will be savings with pages with less coverage, doesn’t is stand to reason that Xerox is counting on significantly more pages having low coverage? That is something to consider.

Here’s the link to this and other information on the ColorCube 9200, which does look like a nice device:
http://www.sfgate.com/cgi-bin/blogs/techchron/detail?&entry_id=39738

Print Managed Services firms told to target IT managers' headaches

2009-05-09T17:10:00.000-07:00

Service providers that position themselves as a consultative business focused on relieving IT management pain-points stand to reap benefits.

Follow the link below:

http://www.itbusiness.ca/it/client/en/home/News.asp?id=53057&cid=6

First HP Now Xerox: Is Tiered Color Pricing The Future of Color CPP?

2009-05-09T11:40:00.000-07:00

HP started tiered pricing with their Edgeline product. With low enough color density your expense per color page could be as low as that of a black print. If the color increased you fell into the accent color range or professional color range, and were charged accordingly.

The tiered approach had a lot of fans on both sides of the transaction. The vendor selling the CPP had great comfort that they were being fairly compensated for the quantity of supplies they would be providing. The users of the product were comfortable that they weren’t paying too much for color prints, particularly on those documents with only a few words in color.

We’ll have to wait to see what path HP takes with the development of the Edgeline. Now that Xerox has entered the tiered color pricing game other OEMs are sure to follow. The link below will take you to an article on Xerox’s new ColorQube 9200 series and the “Hybrid” pricing approach.

http://socialcomputing.ulitzer.com/node/952771

Don't Overlook the Hand that Feeds You

2009-04-28T06:37:00.000-07:00

Continuously working with business throughout the year gives us the opportunity to observe the practices of the successful ones and identify areas that we all could improve upon. An area many times lacking focus and attention is the value our existing customer’s bring to the business.

In a good economy we should never take for granted our customer base but in a business environment like the one we are living through now it is critical to implement an effective customer retention strategy.

As business’ spend slows we are all looking for ways to offset declining revenues and our focus often shifts to new business or our competitor’s accounts. So as you look for new opportunities your competitor’s are doing the same by targeting your existing base. Holding on to your base should be your number one priority.

Responsibility for customer retention does not live and reside only with the sales professional assigned to the account; it resides with all members of the organization. Actually leaving customer retention to the sales professional might be part of your customer retention strategy but it is the weakest part of that strategy. With turnover being as high as it is, with quota attainment being the sales professional’s number one priority and with expectations set to achieve the goals set by the organization, sales professionals often don’t spend nor have the proper amount of time to focus on existing customers.

Two methods that can add to an effective customer retention strategy are two of the areas we cover in the BTA Sales Management Workshop (www.BTA.org), effective account planning sessions and top customer visits. Effective account planning sessions provide the organization with a process driven towards engaging multiple members in an account, understanding the current business situation, exploring new business (share of wallet) and identifying steps to implement a stronger relationship with the account. Account planning sessions are the process focused on reviewing all accounts on a periodic basis.

Like account planning sessions, top customer visits are driven towards engaging multiple members in the same account but in this case it is also driven to establish a sound business relationship with multiple levels of the customer’s organization. By establishing contacts at different levels of the customer’s organization you are expanding the knowledge, expertise and value you bring to the customer. You are also focused on how you can be more effective for your customer’s and what their challenges and goals are. Top customer visits enable you to engage all members of the leadership team in effective customer retention. Assign each member of the team 12 accounts (one per month) and you will see customer retention grow.

Want to protect your base, focus on your current customers with an effective customer retention strategy and you will find retention levels growing and more time available to pursue new opportunities.

If you would like to learn more about the next BTA Sales Management Workshop in Chicago on May 12 & 13 visit: http://www.bta.org/i4a/pages/index.cfm?pageid=2408

Lexmark International, Inc. Q1 2009 Earnings Call Transcript

2009-04-26T18:33:00.001-07:00

One of the juiciest place to get information on the industry is in the quarterly presentations provided by the public companies and in the transcripts of their calls with analysts. The below link will take you to Lexmark's latest call with the analyst community.

http://seekingalpha.com/article/132076-lexmark-international-inc-q1-2009-earnings-call-transcript?page=1

Highlights include significant year over year and sequential revenue declines in both laser devices and laser supplies.

Developing An Effective Print Management Sales Process

2009-04-18T08:12:00.000-07:00

Part two of this six part series was recently published in ENX Magazine. You can follow the link to view this article.

http://enxmag.com/2007/new%20site%202007/website/2009_MONTHS/april2009/article_DevelopingEffectivePrintManagement_tcallinan_apr09.htm

If you would like to launch a print management / MPS program at your company please contact the professionals at Strategy Development or attend the BTA Print Management Workshop:

http://www.bta.org/i4a/pages/index.cfm?pageid=2127

Service Technology Solutions

2009-04-15T10:49:00.000-07:00

A recent industry research report indicates best-in-class service organizations (top 20%) are more than twice as likely as all others to have embraced technology solutions. These leading service organizations, having already placed there bets, are experiencing real savings and operational excellence. Of the remaining best in class service organizations, almost half have indicated they will be investing in service technology solutions within the next 12 months.

So, what are today's most beneficial technology enablers?

Mobile Field Service - automated dispatch, parts management, real-time data access for technicians (service history, parts inventory), signature capture, sales at the time of service, communications.
Scheduling and Routing - automated call assignment and routing based on technician location, customer entitlements,training, parts availability, traffic patterns.
Remote Product Monitoring - Automated service call generation using equipment generated service alerts, supply fulfillment, billing meters.
Forecasting and Planning - use of advanced F&P technologies that review history, trends, and real time developments to plan staffing (technicians) and inventory (parts/supplies).
Business Intelligence and Analytics - service performance reporting & benchmarking.

The adoption of the right technology, using a thoughtful strategy, is critical to enabling service organizations achieve success. If you have questions about service technology solutions and how to justify the required investment, please contact me at woodard@strategydevlopment.org

Sea Change For the Copier Dealer

2009-03-30T15:11:00.000-07:00

For years making a healthy profit has been a fairly easy formula for the principal of a copier dealership: Increase your unit placements, provide high quality customer service, and reap the benefits of the profitable aftermarket stream (defined as supplies, service and parts). Actually, it is a model similar to many, car dealerships being one that comes immediately to mind. Hold that example as we progress through this article.

This model of success was formulated during the late seventies and throughout the eighties as the industry flourished with technological advancements, product extensions, and year over year increases in units sold.

Many times the dealer channel has been told that there was a Sea Change occurring. First, companies like Alco (eventually IKON) and Danka were acquiring the independent dealer channel with the promise of leveraging efficiencies of scale. Some dealers wondered how they were going to compete against these behemoths. That fear never materialized as the Goliaths impaired themselves with poorly executed strategies.

Next, the transition to digital was going to be the tar pit of the copier dealership as network companies controlled the network. Remember the saying; whoever controlled the network controlled the output? Then came production units and the pundits who said that dealerships could never understand the space or afford the investment to be successful. This led to those that said the direct operations would be the death of the copier dealer. In reality, those direct operations that were not run to produce profit seem to be hurting the manufacturers themselves, but that is another subject.

I am confident that the Sea Change I am referring to is not a mirage: Year over year unit sales are declining—and rapidly. As detailed in a ChannelWeb article (see previous post) , Gartner reported that year over year fourth quarter shipments of copiers and printers in the professional segment, as opposed to consumer segment, declined by 25.3%. I saw a report by another research firm—included in a presentation so I am not quoting it since I did not see the original—that showed 2008 copier unit placements decreased 200,000 from 2007 and a projection that they would decrease by another 190,000 units in 2009. Placements were projected to decrease from 1,355,000 in 2007 to 963,000 in 2009. In case you are curious color was down year over year and projected to fall again and overall units were forecasted at 813,000 in 2012.

The dealer community has adapted to the roll-up years, the transition from analog to digital, into the color world, the proliferation of direct operations and the product extensions into the production space. And many of the dealerships around the country will adapt to the dramatic decrease in unit sales. The same can be said of the manufacturers: Many will adapt.

The other side of that equation is that there are quite a few that will not adapt. On the manufacturer side—and this has been said for years by many industry players but I think the time has finally arrived—there is simply too much distribution.

So back to that car dealership comparison; when we were buying 15 million + cars it was hard for a dealership or manufacturer to make a fatal mistake. Manufacturers produced inferior products and wasted billions of dollars in a multitude of areas. Car dealers were happy as the manufacturers drove traffic into their showrooms through big incentives. Then, unit sales fell 30% or more in a short period of time (sound familiar), the manufacturers cut back on incentives they could no longer afford to fund, and car dealerships (and soon it seems manufacturers) begin to fail.

The copier industry has a long and rewarding future for those dealerships that plan well. The second half of that statement is very important. If the predictions are accurate copier placements will decrease by 40% over the period 2007 – 2012. Combined with lower average unit selling price, the proliferation of printer based MFDs, and A4 units replacing A3 and you have a significantly lower revenue stream. Offsetting those decreases are color pages and capturing the prints made on the printers—print management or MPS. I believe the latter is a significantly larger revenue stream than the former.

But dealerships will also need to address high general and administrative expenses. At Strategy Development we believe that dealerships need to strive for a 10% G&A within the next five years. Our operations consulting practice is helping dealers put the plans in place to achieve that goal. We also believe that you need to maximize the return on aftermarket; our service consulting practice is helping dealerships achieve that goal. Our MPS practice has helped scores of dealerships launch successful print management initiatives; a must have to thrive in the future. And finally, and most important, you need a solid plan that ties together all of the aforementioned moving parts so that you are one of the dealerships that thrive through the Sea Change.

Get your plan in place, execute, and thrive!

This piece was also published in Document Solutions Daily (www.kworkpublishing.com)

Printer Market 4Q 2008: News That Isn't Fit To Print

2009-03-29T06:54:00.000-07:00

ChannelWeb's publication of Gartner's placement statistics for printers and copiers is sobering, although not surprising. The economny--which as of late actually seems to be improving--may be driving the lower hardware investment, but my guess is that the process changes implemented to operate with fewer devices will be maintained by many of the companies when the economy starts to grow. Executives that manage budgets, the CIOs, CFOs, and Chief Procurement Officers (CPO) have now set a new, and lower, bar for output device expense.

The imaging business is still a great business. Make sure you have a plan in place to leverage this new environment. The link below will take you to ChannelWeb's article on the Gartner stats:

http://www.crn.com/hardware/215900485;jsessionid=ICR4AUYE2SGMMQSNDLPCKH0CJUNN2JVN?cid=VARBusinessFeed

What CEO’s Want From CIO’s

2009-03-02T17:00:00.000-08:00

According to Information Week's Global CIO unit:

1) Create new products
2) Create new revenues
3) Deepen the company’s engagement with customers
4) Conserve cash, liberate trapped cash, and understand implications of cash flow
5) Create and enforce global standards for processes and applications
6) Unlock new ways to find, deliver, and assess higher value information
7) Reverse the 80:20 glut to make the first six possible
8) Create massively transparent organizations with all metrics focused on business value

Doesn't that list scream for print management? Numbers 4 and 5 are addressed with an MPS agreement. Number 6 benefits because you free up IT support time to work on higher value projects. The 80:20 glut references 80% of money spent in support and only 20% on innovation. MPS will cut their support expense over time. Number 8 will be addressed with quarterly account reviews.

I am not suggesting print management is the cure to all of IT's problems, or a major contributor to any of the eight focus areas. But it does help the CIO close the gap in the CEO's goals.

How Much Will The Copier Industry Change?

2009-03-01T07:40:00.000-08:00

Significantly, if you pay attention to the research companies! I recently read a research report that indicated that mono copier based MFD placements had declined from 1.1 million in 2007 to 900,000 in 2008 and will decline another 20% in 2009. This analysis showed mono copier based MFD placements in the low 500,000s by 2012 (in case you missed it that is less than half of the 2007 placements). Think the answer is a shift to color? Not according to this report that showed color placements fairly static, rising from 250,000 in 2007 to 292,000 in 2012, after initially falling in 2008 and 2009. Nice percentage increase but only 40,000 units.

So a research group and their crystal ball are suggesting a “sea change” in the copier industry! Maybe they are wrong; it certainly would not be the first time. Maybe they are only half accurate and the industry will decline from 900,000 mono placements (let’s give them credit for accuracy on an event that already occurred, 2008) to 750,000, and color will remain under 300 thousand units. What will the industry look like when total placements decline from approximately 1.35 million in 2007 to 1 million in 2012? That is a 30% decline in placements. I would keep in mind they are stating that will occur this year, so they would have to be really far off in their predictions.

Let’s throw in the shift to A4 copier based units. Regardless of your desire, over the long term A4 will replace many A3 units at a lower average unit selling price (AUSP). Since we still have the same major copier manufacturers today as we did last year we clearly have a production over capacity issue: There are more factories pumping out more copiers than can be absorbed by end users. Over capacity—as any economist will tell you—leads to lower prices (the old supply and demand theorem). So you have a couple of dynamics suggesting AUSP will continue to decline.

Don’t jump off that ledge just yet! How do you deal with this news? In a word, “PLAN” for it. It wouldn’t surprise me if one or more copier manufacturer merged operations or was acquired by another manufacturer; in this situation operations being defined as technology and channel (dealers). It also wouldn’t surprise me if we had 50% fewer dealers by 2012. Fewer product placements will result in less distribution, either planned or unplanned. This is another fact to discuss with your economist friend.

So PLAN on being one of the thriving survivors!

Put together a strategic business plan that models out the change over the next five years. Launch and perfect a print management program. After all, where do you think some of that decline in copier placements is going? Yes, to printers! Not all of it as printer placements are also declining but there is a shift. And, all of that additional aftermarket revenue coming out of the printer fleet has the potential to more than offset the decline in copier hardware revenue—at a higher profit margin.

Focus on productivity in all departments. Lower equipment AUSP will translate into lower gross profit dollars, even if you maintain your gross profit percentage. Optimize operations so you can operate your back office with high customer service and low cost: Focus to processes and automation. Maximize your return on service. Drive improvements in all areas year over year: Stay focused and maintain a high intensity level.

You don’t want to be one of the “unplanned exits” from the industry and by planning now not only will insure your place in history but you will insure a high profit business. Copiers and printers are not going away, they are just fading slightly. It will remain a great business for those with a plan!

Toshiba Puts Rumors to Rest

2009-02-28T10:33:00.000-08:00

In a memo to “All Toshiba Copier Dealers,” Mark Mathews, TABS President and COO, put to rest the rumor that has been gaining momentum over the last three weeks: That Canon was buying TBS, TABS direct organization.

Quoting Mark’s memo, “As valued Toshiba dealer partners, I felt it was important to address any TABS-related rumors directly and immediately. Toshiba Corp. is not currently, nor has it previously been in discussions with any manufacturer regarding the potential purchase of its MFP business, TABS or Toshiba Business Solutions (TBS), nor does it have any future plans in this area. Please be assured, and feel confident in assuring your customers, prospects and employees, on these points. Any related rumors to the contrary are completely unfounded and without merit.”

Strategy Development did not participate in permeating this rumor. When first contacted by industry players asking us if there was any validity we did what research we could within our network and determined that the rumor probably did not have validity. That was our message to whoever asked over the last few weeks.

I provide that retrospect because of this next statement. We do believe that consolidation will occur in the hardware manufacturing space. Unit sales continue to decline and it appears as if that decline will continue; I will talk about this in my next post. So in a less public, because of foreign stock listings and manufacturing plants, and less dramatic fashion the copier industry seems to be mirroring the auto industry: Same level of manufacturing with lower unit sales.

We are not a research company so we offer no opinion on how quickly that consolidation will occur or who might merge with or buy whom. We simply use the information we get to help our clients prepare for a prosperous future in the space. It will be those that don’t plan that will be in trouble; those that do will still thrive.

Maximize Service Return

2009-02-26T11:08:00.000-08:00

Our current economy serves up many challenges; however, there’s never been a better time to take stock of your situation and get your service house in order. If you recognize the need to achieve a service return of 50%+ the best place to focus on is service productivity and staffing: labor is the largest and the most controllable service cost component you have.

There never seems to be the right time to “right-size” the service organization. When overstaffed there is always the tendency to say – “we will just grow into it” or “we will reduce staffing through normal attrition.” The problem with the first approach is if growth does occur, everyone is so comfortable with the current workload and pace that they will push for additional staffing rather than work harder and productivity will actually suffer. If the position taken is to reduce staffing through normal attrition you lose the opportunity for a planned cost reduction, and believe me, in today’s economy, turnover is at an all time low, so you may never get to where you need to be, and you will suffer a “lost opportunity”.

Here is a common observation relative to service staffing: When analysis concludes there is excess technician staffing the most frequently expressed justification is the need to maintain current service call response time levels. Response time tends to become the cloud cover for productivity issues associated with technical proficiency, resource planning, and time utilization. Obviously, when overstaffed, there are multiple productivity related processes that must be reviewed and changed to enable staffing reductions and still deliver quality service.

This year you have the perfect opportunity to right-size your service organization. Correct staffing levels are essential to controlling your costs, improving your productivity, and delivering the bottom line results you need. The key is determining how many resources you really need to support the customer base that you have while delivering quality service. If you have questions about how I can help you plan and optimize your staffing resources please contact me at woodard@strategydevelopment.org.

2009-02-25T17:21:00.000-08:00

Control your G&A expenses

Controlling your G&A expenses is one of the most important requirements not only now, in a difficult economy, but long as the imaging business gets more and more competitive.
For years, it has been business as usual in the back office operations; if processing fell behind, the natural reaction was to add more employees to handle what was perceived as additional workload. Pretty soon, actual headcount grew to levels that could not be supported by the organization. Because employee expenses are the largest controllable expense area, G&A expenses were out of control. Orders were getting processed, but at a cost that could not be supported.
It is time to take a step back and re-assess how your back office is structured and determine if it still makes sense with the current and/or available technology. Understanding each person’s daily activities and tasks and how they measure up against what you need is a starting point. Beyond that, it would be time to reassess all of your current processes and you will most likely find that there are too many redundancies, unnecessary processes and inefficient use of available technology.
Periodic process inspection and, if necessary, re-design should be a regular part of business practices to make sure that you are as “lean and mean” as you can be. The ultimate goal being to continually drive down those G&A expenses that are leading to a degradation of your bottom line.
If you are setting a long-term target I suggest you need to have G&A expenses to 10% or less five years out. If you look at many of the companies that are entering the imaging space, VARs as an example, their G&A is below 10%. Competition is one consideration but changes in the industry are another driver. A4 will replace A3 at an accelerated rate as more copier companies introduce full A4 product lines. These new units will drive down average unit selling price, resulting in lower revenue for your company. You will need to be lean and mean to thrive so get focused on your G&A expense.
If I can help please contact me at boulden@strategydevelopment.org

Four Marketing Strategies For VARs In A Down Economy

2009-02-22T14:13:00.000-08:00

Sure, it's a tough economic climate these days, but it's still possible to keep clients and win over prospects.

At a meeting Thursday of The International Association of Microsoft Certified Partners (IAMCP) led by Howard Cohen, NYC IAMCP chapter president and U.S. IAMCP communications chair, marketing experts discussed effective methods that VARs can use to reach, penetrate and win business in the channel.

http://www.crn.com/it-channel/214501984

Don't Cut Your Prices!

2009-02-22T08:28:00.000-08:00

I realize that we are in a poor economy and that revenue is one measurement you always want to focus on, but cutting your prices is a death spiral. And don’t give me the cash flow reason either: the cash flow statement starts with the entry for net income. Lower prices results in lower margin, which results in lower net income—all else equal.

There are a lot of reasons for the death spiral comment. One is the cultural change you will instill in your sales force. If you have spent the last decade developing the team to sell value and fight for profit using enablers such as advanced capture, document routing, or variable data , and then send the message “get the deal at all cost,” your decade of work has evaporated in six words.

Once you get your sales force accustomed to selling on price how hard will it be to switch them back to value when we exit this economic trough? I would tell you it is next to impossible.

At the company I worked at prior to Strategy Development the CEO rolled out a new pricing and compensation structure for the sales force. Since I ran the largest business unit, and the only one gaining market share, I had my finance team run some Monte Carlo Modeling on the plan to see how it was going to affect our revenue and profit. The modeling demonstrated that GP would decline by 300 to 400 basis points and, depending on the mix of business, could actually increase compensation: Lower GP with higher compensation, about the ugliest of scenarios.

The CEO and I had what I’ll term as, robust discussion on the program (I always took delivering my results seriously). After this robust discussion we came to the conclusion that we had two distinct philosophies on strategy, and I left. Since it was a public company I could follow the results. The next quarter equipment GP decreased year over year by 430 basis points and the Wall Street Analyst annihilated the CEO on the earnings call. Even though it was a topic of discussion every quarter thereafter, the GP never recovered. That company spun out until it was ultimately acquired at what looked like a bargain, a significant discount, relative to other public companies acquired in the space.

The point is not that the modeling my team produced was accurate—who cares because I failed in delivering the message so that it would be heard—but that even with extreme focus and three years of opportunity that company could never get their margins back up. Don’t cut your prices!

So what actions should you take? Make well planned and strategic investments in sales and fund those investments by optimizing your service operations and your back office operations. Exiting the current economic trough in a position of strength is one big reason to focus on these two areas but another looming issue is that your new competitors—the VARs and print management companies stealthily entering your space—have G&A in the mid to high single digits. Most BTA channel companies have G&A in the high teens to low twenty percent area. Set your five year plan now to get G&A to less than 10% and to maximize service returns.

The next couple of entries will focus on how to accomplish these goals.

Gartner pushes managed print services

2009-02-21T10:17:00.000-08:00

Printer, copier and MFP sales are in a tailspin, but Gartner says end users should be investing in deployment alternatives

Read the article in CRN: http://www.channelweb.co.uk/crn/news/2236608/gartner-pushes-managed-print#Szene_1

Lexmark: Barclays Downgrades As Printer Biz Weakens

2009-02-20T13:38:00.000-08:00

Lexmark (LXK) shares are trading lower this morning after Barclays Capital analyst Ben Reitzes cut the firm’s rating on the stock to Underweight from Equal Weight. He chopped his price target to $17 from $26.

“While Lexmark is restructuring and could see some temporary benefits from supplies priceincreases,” he writes in a research note, “we remain concerned about business trends in both inkjet and laser supplies and do not see a strong near-term catalyst for hardware sales.” Reitzes adds that he sees risk from the company’s exposure to Dell (DELL) and from competition from Hewlett-Packard (HPQ), which spends about 4x more on R&D. “We prefer HP in printing as a consolidator and share gainer.”

For the March quarter, he sees EPS of 60 cents, two cents below the consensus; he expects the company to post a 12% decline in supplies, and a 25% drop in hardware. For 2009, he sees $2.05 a share, well below the Street at $2.36, on a 15% revenue decline. He sees 2010 EPS of $1.85 a share, below the consensus at $2.11.

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2009-02-19T15:48:00.000-08:00

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KMBS announces new direct organization

2009-02-19T15:07:00.000-08:00

In furtherance of their one company, one vision, one voice theme, Rick Taylor, KMBS COO, today announced the formation of a new direct organization named Konica Minolta Imaging (KMI). KMI will consist of Konica Minolta’s direct branches and some subsidiaries as well as the former Danka operations.

KMI will consist of approximately 150 sales locations covering 30 strategic market areas. Each market area will be managed by a Market Vice President, reporting to one of four Regional Presidents who will report to the President of KMI.

Stating that KMI has been designed to bring decision-making closer to the customer and allow quick response to changes in local market conditions, the Regional Presidents will have full operational and P&L responsibility for the region.

The leaders of this new organization are as follows:

President, Konica Minolta Imaging: Bill Troxil, who will report directly to Rick Taylor. Bill most recently served as President and COO of Konica Minolta Danka Imaging and Danka Office Imaging before last year’s acquisition.

President, Eastern Region: Mark Bradford has been with Konica Minolta for 25 years in numerous executive positions in both the field and home office. Since last September, Mark has served as Senior Vice President & General Manager of Konica Minota’s Direct Sales Operations.

President, South Region: Brent Colston joins KMI from Toshiba Business Solutions (TBS) where he spent the last eight years as President of TBS Florida/Georgia.

President, Western Region: Bill Michas joined KMI from Toshiba Business Solutions where he served as President of TBS California/Nevada.

The President or the Midwest Region is to be announced.

Rick went on to highlight how well positioned KMBS will be with their powerful dealer network and a profit focused branch network.

KMBS’ mantra of one company, one vision, one theme is clearly more than just words. Rick and the other executives at KMBS are focused to building a quality direct organization that will function harmoniously with their dealer channel.