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.
Showing posts with label MPS. Show all posts
Showing posts with label MPS. Show all posts
Thursday, October 14, 2010
Monday, August 30, 2010
Frank Gaspari Looks to Separate FlexPrint from the MPS Clutter
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.
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.
Wednesday, August 25, 2010
An SOS from AOS Raises the Performance of its Service Operation to the Next Level
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.
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.
Wednesday, August 18, 2010
Poll: Managed Print Services – Are you on board?
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?
Please take two minutes (literally!) to participate in this poll: Managed Print Services - Are you on board?
Tuesday, August 17, 2010
Introducing ClearView, a tool to properly price and position MPS opportunities
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.
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.
Monday, August 16, 2010
Never Listen to Anybody Worse Off Than You
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.
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.
Thursday, August 12, 2010
For U.S. Remanufacturers, MPS Is Both A Blessing And A Curse
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.
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.
Wednesday, August 11, 2010
The Death of MPS
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.
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.
Tuesday, August 3, 2010
A Dedicated Staff = MPS Success at GFI Digital
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.
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.
Wednesday, July 21, 2010
Oklahoma Office Systems: Successfully Selling MPS from the Top Down
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.
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.
Monday, June 28, 2010
It’s Time to Grow Your Equipment Revenue
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.
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.
Thursday, June 10, 2010
Understanding the Language of Sales
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!
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!
Thursday, June 3, 2010
Why CIOs Are Last Among Equals
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.
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.
Saturday, May 29, 2010
Thoughts from the ELFA
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!
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!
Tuesday, May 18, 2010
Should You Acquire Companies To Grow
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.
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.
Thursday, April 15, 2010
Private Equity Jumps Into Recharge Business
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.
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.
Thursday, March 18, 2010
ITEX 2010—What a Great Event
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 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.
Saturday, February 27, 2010
The Road Map to Reposition Your Business Model
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.
Tuesday, February 23, 2010
How to Make Money in MPS
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!
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!
Tuesday, February 16, 2010
The Obituary is Written: Is the Patient Dead?
“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
‘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
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