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.
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