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 Managed print services. Show all posts
Showing posts with label Managed print services. 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.
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.
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 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
Friday, February 5, 2010
Top 10 CIO Issues for 2010
Bob Evans, VP of InformationWeek Global CIO Unit wrote this week on the focus areas for CIOs in 2010. When I read the article I started to think about where MPS fit in allowing CIOs to accomplish their goals this calendar year, and how to approach those regarding MPS.
Top 10 CIO Issues for 2010 per Bob Evans, VP of InformationWeek Global CIO Unit
1. The cloud imperative – Cloud computing takes the top spot because this allows for CIOs to really attack #2. Despite all the questions and concerns, it offers CIOs huge potential for flipping the 80/20 ratio and exploiting #3 (driving revenue growth).
2. The 80/20 spending trap – If the majority of your IT dollars are spent keeping the lights on, then how will IT organizations fund transformative and customer-centric projects?
3. CIO-led revenue growth and customer engagement – If you don’t become part of the company’s revenue engine, and you choose to keep yourself isolated from customers, how can you expect to be taken seriously in today’s economy?
4. Mastering end-to-end business processes – CIO has the chance to analyze and understand all business processes end-to-end. It’s a remarkable opportunity. Where is the waste? Where is the latency? How is the revenue mix changing? Where is the new-product opportunity?
5. Business Intelligence and Predictive Analytics – You’ve got plenty of data, but how much insightful information? Are you able to see over the horizon? CIOs that seize the initiative will have a huge advantage.
6. External information vs. internal information – What is going on outside your four walls is more important than what’s going on inside. What are customers saying about you? Do you talk back? Do you listen?
7. CIO priorities, CIO compensation, CIO evaluation – Does comp reflect growth and customers and market –centric innovation? Is performance measured by plumbing-style metrics or by business-value breakthroughs?
8. Vendor consolidation, with radical exceptions – For the past couple of years CIO’s have reduced the vendor list – but have you also cut access to innovative ideas? Have you connected with unconventional vendors whose solutions might help spark a breakthrough?
9. The mobile enterprise – If a team of peers, customers, and competitors were to do a day-long review of your company’s mobile capabilities, would you be eager to share the results with boss?
10. The transformation quotient – When the economy turns, CIOs need to be out in front with new ideas and leadership on how their companies can aggressively tap into the new opportunities that await while shedding old restrictions about what a CIO’s responsibilities area and what they are not.
This paints a pretty complete view of what is important in IT organizations today. Obviously MPS doesn’t address all 10 and that is ok. Number 1 is out obviously, unless you are already an expert in Cloud Computing with applications like Software as a Service (SaaS), Utility Computing, Web Services, Platform as a Service (PaaS), etc. in your portfolio of professional services. Also out are numbers 3, 5, 6, 7, 9 and 10. What, did you think MPS was going to eradicate every IT woe in the world?
How does MPS address numbers 2, 4 and 8 respectively?
Number 2 - CEOs are increasingly focused on IT strategies that aggressively shift budget dollars from an internal focus to external.
MPS accomplish this by allowing IT to reallocate their resources to more strategic external focused projects by shedding the managing of the fleet of printers. This also allows them to outsource a nuisance area because printers are not strategic in the IT world and they don’t like dealing with them. Typically they have no imaging or output fleet strategy because equipment, supplies and maintenance are reactive. I hear the objection coming…”What happens when the IT person I am working with wants to “protect” the employee that is doing four to 10 hours a week on printer repair?” A) You are at the wrong level. B) IT organizations of today/tomorrow will be tasked with generating revenue (see #3 above) and if they don’t understand this today they will soon enough. Maybe you are the resource to help them realize this.
Number 4 – Mastering end-to-end business process as it relates to an imaging fleet is difficult when investment in supporting the fleet is so fragmented over multiple internal budgets.
The assessment process in MPS allows for you to identify and quantify all of the cost related to managing and maintaining the fleet. The assessment will also find waste as it relates to how the fleet is utilized. You also identify waste in manpower, capital expenditures on hardware and costs related to maintaining and supplying the infrastructure. After completing the detailed assessment you will work with them, in the strategy session, on a plan to capitalize on this opportunity and manage what they have today. Over time they can reduce the investment with proper device selection and management.
Number 8 – Vendor consolidations… this is always a tricky obstacle.
In complex organizations where decision making is made up of multiple players you have to recognize that there are existing relationships with many of these vendors that you are suddenly trying to unseat. These vendors are engaged with numerous employees and functional areas, and possibly each of them has worked with their primary contacts in areas such as purchasing, facilities, IT, finance, etc. for years. I know MPS and the reduction of multiple invoices is a good talk track but what about the discussion on overlap in responsibility or the discussion on current procurement methods or the time each vendor wants with their primary contact and their getting involved with other functional areas. Each of these relationships takes time to maintain and that pulls resources from what they need to do on a daily/weekly/monthly basis.
The bottom line – MPS is not going to cure every IT organizations challenges but if you have the right discussion points prepared for IT’s focus areas you will have a higher probability of building a business case for moving forward.
Tuesday, January 26, 2010
What is MPS?
Yesterday, Document Solutions Daily, a great publication available by subscription, had a link to a blog post titled “MPS Isn’t Just for the Big Boys.” Although the post details what can be described as an admirable job by a sales person to place a MFD, and that sales person works for a well known and respected copier company—so this commentary isn’t directed at either the sales person or the employer—does the post really describe an MPS agreement?
I ask the question for two reasons. First to define the MPS space, because if selling one MFD to replace an older MFD and some printers is MPS we may as well simply pull out the market size stats that have been put forth by Info Trends, Gartner, and IDC for the last few decades and change the title at the top from “copier and printer market” to “MPS Market.” It seems like anything with MPS on it sells so why not? Second is focus, the MPS space is a high growth high profit business today so should dealers / resellers really be looking at single placements of MFDs as an MPS opportunity?
Don’t get me wrong—I want sales professionals that can solve problems to get me new customers and retain those customers. If I still owned a copier dealership I would want them to sell copiers and I would want reps with problem solving skills to sell MPS. But I would clearly define my MPS space so I am not spending time in areas with little to no ROI.
Few companies with 250 – 1,000 knowledge employees are in MPS contracts today so why deploy resources at companies with fewer than 10 employees? Moreover, why focus on the hardware placement when the profits are in the aftermarket? We shouldn’t be measuring MPS by selling and MFD….we should be measuring MPS by how much recurring revenue it brings to our business. Strategy Development has been encouraging traditional copier dealers to get away from measuring sales success by hardware sales and to start measuring sales success by aftermarket growth. If you own the contract on the equipment you will sell the equipment.
So congratulations to that sales professional and the company mentioned in the blog—it appears as if you helped that customer solve a business problem with the correct MFD. But I would encourage companies to take a rifle approach to MPS and focus to the sweet spot, companies with 250 – 1,000 knowledge worker employees. Once that market is saturated with MPS contracts you can work your way down the food chain if you find it necessary and profitable. Don’t lose focus just yet!
I ask the question for two reasons. First to define the MPS space, because if selling one MFD to replace an older MFD and some printers is MPS we may as well simply pull out the market size stats that have been put forth by Info Trends, Gartner, and IDC for the last few decades and change the title at the top from “copier and printer market” to “MPS Market.” It seems like anything with MPS on it sells so why not? Second is focus, the MPS space is a high growth high profit business today so should dealers / resellers really be looking at single placements of MFDs as an MPS opportunity?
Don’t get me wrong—I want sales professionals that can solve problems to get me new customers and retain those customers. If I still owned a copier dealership I would want them to sell copiers and I would want reps with problem solving skills to sell MPS. But I would clearly define my MPS space so I am not spending time in areas with little to no ROI.
Few companies with 250 – 1,000 knowledge employees are in MPS contracts today so why deploy resources at companies with fewer than 10 employees? Moreover, why focus on the hardware placement when the profits are in the aftermarket? We shouldn’t be measuring MPS by selling and MFD….we should be measuring MPS by how much recurring revenue it brings to our business. Strategy Development has been encouraging traditional copier dealers to get away from measuring sales success by hardware sales and to start measuring sales success by aftermarket growth. If you own the contract on the equipment you will sell the equipment.
So congratulations to that sales professional and the company mentioned in the blog—it appears as if you helped that customer solve a business problem with the correct MFD. But I would encourage companies to take a rifle approach to MPS and focus to the sweet spot, companies with 250 – 1,000 knowledge worker employees. Once that market is saturated with MPS contracts you can work your way down the food chain if you find it necessary and profitable. Don’t lose focus just yet!
Tuesday, December 8, 2009
MPS: The 30% Catastrophe
Many commentators in the MPS space like to talk about the 30% savings companies receive through an MPS agreement. I guess it helps them sell research, advance the theory of displacing printers with departmental MFDs, or helps the weak sales person generate some commission and retain his (her) job for a period.
But I have to ask a simple question, what is the rational to deliberately taking 30% of the revenue out of our industry? Overcapacity and technological improvements are already creating year on year decreases in hardware and aftermarket pricing and A4 is replacing A3 at a lower unit selling price. Those environmental changes should easily drive 10% of revenue per year out of our industry. Over the last two years units sales have decrease by more than 30%; they are gone and probably will never come back. Now we are all going to join in a concerted effort to drive an additional 30% of revenue out of the imaging space? Let’s all go to the jungle and drink some Jim Jones juice!
You can read my blog post from September titled: MPS: Growth Strategy or Harbinger of a Smaller Pie on the topic that MPS is not new revenue, simply a revenue shift from transactional to contractual. We are not generating new industry revenue with MPS; different players are capturing the revenue, which is good for those MPS providers in the short term.
As the industry leading MPS consulting firm we have been advocating for companies to adopt an MPS strategy for the past four years. Nevertheless, when you do launch your MPS strategy there is no reason to lead with a value proposition of saving a company 30%. Managing copiers, printers, scanners, and fax units is not a core competency for most companies; it is a nuisance area. Tying up valuable IT employees to remove misfeeds, install maintenance kits, or replace feed tires irritates CIO’s and IT directors who do not have enough resources to devote to their more mission critical projects like business intelligence, security, virtualization, and unified communications. Therein lies the value proposition—you build a business case for outsourcing.
I led a $225 million outsourcing business and that was simply the services revenue; there was an additional $60 million or so in equipment sold into the facilities management (FM) accounts. A portion of that $225 M was “fleet management” agreements. There are industry commentators who want to tell you MPS is not FM, but curiously those commentators have no FM background so how could they possibly make that statement? We didn’t sell outsourcing by telling companies we would save them money. At times it cost more money to outsource but the customer outsourced because we took away areas of their business that were not core competencies: Areas that distracted them from their business. Nuisance areas like imaging and printer fleets to most companies.
There were many FM agreements that included “gain share,” where working with the customer we drove efficiencies that resulted in lower cost that we shared with the customer. But the key there is the phrase “working with the customer.” You can do the same with an MPS agreement. Strategy Development’s three phases of MPS are manage, optimize and improve. Manage comes first followed by optimize and improve. Working with the customer—after you are generating revenue from an MPS agreement (manage)—you can help your customer make a decision on the lowest TCO device for each location that will provide the required functionality. This is where the cost savings come from, although reaching 30% is a stretch.
Why does Strategy Development have what appears to be a significantly different take than many industry commentators? For one, we are on the front lines every single day working on MPS transactions with our clients; and, we are fortunate to have the most successful MPS companies in the country as our clients. So we know what is happening out there and our client’s are not saving their customers 30% to get them to sign a contract. Our clients are building business cases that support an outsourced agreement with their customers.
Second, we don’t recommend what we would categorize as “scams” for selling MPS agreements. A relationship started on a lie cannot end well. Coverage area is, in the vast majority of the situations a scam; I will add that it is an easily exposed scam as more and more companies enter the MPS space. So “saving 30%” with a coverage area scam is no more a real savings than the consistent 16% returns investors thought they were getting with Bernie Madoff were wealth creation.
Next, we aren’t trying to sell you research and we aren’t consulting for end user companies. If there is a business out there that is trying to sell you something, be it research, training, a trade show, or newsletters and at the same time they are out telling end user companies that they can drive down their spend with you by 30% I recommend you cut off their nutrition—avoid them. When that business can’t survive because the industry cut them off maybe they’ll stop selling sensationalism and start selling reality.
Lastly, we aren’t a manufacturer trying to keep their factories churning out boxes and the trailing supplies and parts in an ever decreasing space that already has significant over capacity. We aren’t telling you go out there and replace all of their “Brand A” printers with “Our brand” printers or MFDs. We aren’t suggesting that you turn your sales force into change management consultants. That is a really tough sell that will be embraced by a small segment of the business population. Let’s thank God for that because if everybody out there reduces their device count by 60% or 70% we had better find something else to sell…..and fast!
Get into MPS but make certain you truly understand the MPS space so that you maximize revenue and margins. Because of the revenue shift described in the aforementioned blog post it can be a significant revenue driver. But the opportunity to capture significant new revenue combined with the 30% decline in MFD unit sales, which is really hurting the core copier business, has brought out every snake oil salesman in the land with the latest “elixir” for an MPS program. Choose wisely as any further delay in launching a successful program will be critical. Once those prospects are another company’s customers they will be locked into contracts that will be difficult to change.
If you want the best sales, back office operations, and service training the industry has to offer check out the BTA MPS Sales and BTA MPS Ops and Service Workshops at www.bta.org
But I have to ask a simple question, what is the rational to deliberately taking 30% of the revenue out of our industry? Overcapacity and technological improvements are already creating year on year decreases in hardware and aftermarket pricing and A4 is replacing A3 at a lower unit selling price. Those environmental changes should easily drive 10% of revenue per year out of our industry. Over the last two years units sales have decrease by more than 30%; they are gone and probably will never come back. Now we are all going to join in a concerted effort to drive an additional 30% of revenue out of the imaging space? Let’s all go to the jungle and drink some Jim Jones juice!
You can read my blog post from September titled: MPS: Growth Strategy or Harbinger of a Smaller Pie on the topic that MPS is not new revenue, simply a revenue shift from transactional to contractual. We are not generating new industry revenue with MPS; different players are capturing the revenue, which is good for those MPS providers in the short term.
As the industry leading MPS consulting firm we have been advocating for companies to adopt an MPS strategy for the past four years. Nevertheless, when you do launch your MPS strategy there is no reason to lead with a value proposition of saving a company 30%. Managing copiers, printers, scanners, and fax units is not a core competency for most companies; it is a nuisance area. Tying up valuable IT employees to remove misfeeds, install maintenance kits, or replace feed tires irritates CIO’s and IT directors who do not have enough resources to devote to their more mission critical projects like business intelligence, security, virtualization, and unified communications. Therein lies the value proposition—you build a business case for outsourcing.
I led a $225 million outsourcing business and that was simply the services revenue; there was an additional $60 million or so in equipment sold into the facilities management (FM) accounts. A portion of that $225 M was “fleet management” agreements. There are industry commentators who want to tell you MPS is not FM, but curiously those commentators have no FM background so how could they possibly make that statement? We didn’t sell outsourcing by telling companies we would save them money. At times it cost more money to outsource but the customer outsourced because we took away areas of their business that were not core competencies: Areas that distracted them from their business. Nuisance areas like imaging and printer fleets to most companies.
There were many FM agreements that included “gain share,” where working with the customer we drove efficiencies that resulted in lower cost that we shared with the customer. But the key there is the phrase “working with the customer.” You can do the same with an MPS agreement. Strategy Development’s three phases of MPS are manage, optimize and improve. Manage comes first followed by optimize and improve. Working with the customer—after you are generating revenue from an MPS agreement (manage)—you can help your customer make a decision on the lowest TCO device for each location that will provide the required functionality. This is where the cost savings come from, although reaching 30% is a stretch.
Why does Strategy Development have what appears to be a significantly different take than many industry commentators? For one, we are on the front lines every single day working on MPS transactions with our clients; and, we are fortunate to have the most successful MPS companies in the country as our clients. So we know what is happening out there and our client’s are not saving their customers 30% to get them to sign a contract. Our clients are building business cases that support an outsourced agreement with their customers.
Second, we don’t recommend what we would categorize as “scams” for selling MPS agreements. A relationship started on a lie cannot end well. Coverage area is, in the vast majority of the situations a scam; I will add that it is an easily exposed scam as more and more companies enter the MPS space. So “saving 30%” with a coverage area scam is no more a real savings than the consistent 16% returns investors thought they were getting with Bernie Madoff were wealth creation.
Next, we aren’t trying to sell you research and we aren’t consulting for end user companies. If there is a business out there that is trying to sell you something, be it research, training, a trade show, or newsletters and at the same time they are out telling end user companies that they can drive down their spend with you by 30% I recommend you cut off their nutrition—avoid them. When that business can’t survive because the industry cut them off maybe they’ll stop selling sensationalism and start selling reality.
Lastly, we aren’t a manufacturer trying to keep their factories churning out boxes and the trailing supplies and parts in an ever decreasing space that already has significant over capacity. We aren’t telling you go out there and replace all of their “Brand A” printers with “Our brand” printers or MFDs. We aren’t suggesting that you turn your sales force into change management consultants. That is a really tough sell that will be embraced by a small segment of the business population. Let’s thank God for that because if everybody out there reduces their device count by 60% or 70% we had better find something else to sell…..and fast!
Get into MPS but make certain you truly understand the MPS space so that you maximize revenue and margins. Because of the revenue shift described in the aforementioned blog post it can be a significant revenue driver. But the opportunity to capture significant new revenue combined with the 30% decline in MFD unit sales, which is really hurting the core copier business, has brought out every snake oil salesman in the land with the latest “elixir” for an MPS program. Choose wisely as any further delay in launching a successful program will be critical. Once those prospects are another company’s customers they will be locked into contracts that will be difficult to change.
If you want the best sales, back office operations, and service training the industry has to offer check out the BTA MPS Sales and BTA MPS Ops and Service Workshops at www.bta.org
Where’s the Silver Bullet
I talk to many business owners that are looking for the cure to their ailment—and they would prefer something that cures them quickly. What is the ailment? Lower revenue and operating income. Some want to recreate the good old days of growth and can’t understand why that would be so difficult. Heck, in the 80’s we just worked hard and revenues increased: Why can’t we do that now? Are the new Generation X, Y, or Z kids simply lazy? My experienced reps just can’t seem to get the appointments they were once able to achieve. They’re all spoiled—we need to put them back on draw against commission and make the hungry!
If only it were that easy. Let’s start with the most obvious, although constantly over looked fact that it is not the 80’s anymore. That means that copiers are not a growth technology any longer. It means that the product extensions that allowed us to continually move upstream and replace other products is almost gone (HP, Xerox, and some other players are going full bore after displacing all printing presses with sheet fed and cut sheet high speed “digital presses” as one of the last product extensions left to conquer). Our color devices have brought outsourced work back in house and replaced presses as has our segment six production devices. B2C went main stream and penetration has stalled in the 30% range. Fax machines have gone the way of the typewriter. Copier (and printer) placements are down substantially over the last two years and are projected to continue to decrease, albeit at a slower pace.
The 80’s brought us Bill Gates (and Paul Allen but he is almost forgotten) and Microsoft, Steve Jobs and Apple, and IBM’s invention of the PC. Since then Larry and Sergey founded Google, who can even remember those two guys from Yahoo and Al Gore invented the Internet! Copiers are not “high tech,” or more appropriately, “sexy” devices to sell. Your fraternity or sorority buddies might be envious of your job at Google, Facebook, or Genentech, but selling copiers won’t elicit that same feeling.
It is a great industry with solid profits and recurring revenues, and sales professionals can still make a good living, but we have to face reality and understand that people aren’t standing in line to apply for jobs in our industry. For those of you who weren’t in the business in the 80’s I can recall when a Sunday ad in the paper (Do they still exist?) resulted in a lobby packed with applicants on Monday. The only chance you had to get the job, which was straight commission (draw) was to show up Monday…..with a wagon or van close behind.
What does all this mean? It is tougher to grow in a declining market than in an increasing market and your potential employees, and customers for that matter, have a lot more information available to make a decision. So how do you thrive in this new environment? Get real about putting together a solid business plan and stop wasting your time looking for the silver bullet. Maybe you don’t have the best website on earth, maybe your reps can set more appointments, maybe you do need some basic sales training…..anything is possible. But I’d bet that your rep’s telephone and sales skills aren’t any worse than they were 20 years ago and you grew then.
The aforementioned internet provides job seekers with lots of information. Want to know what salary or commissions to expect for your education and experience? Go to salary.com or one of their competitors. Want to know what a company pays the specific job you are interested in? Go to glassdoor.com or one of the thousands of blog sites available. Sales professionals are fungible—they can take a job with you selling copiers, they can sell medical supplies, pharmaceuticals, software, or ads on Google. The common thread of those last four is that they pay salaries. Now if you are ambitious you will take the opportunity with an “unlimited” variable compensation component over one with fixed bonuses. But will you take the opportunity of unlimited compensation—with no foundation (salary) over one with a solid base? Not if you could get the latter; for those not paying a salary that is known as adverse selection. You only get a pool of candidates that cannot get the jobs that pay a salary. Wonder why your turnover is 100% and your productivity is low?
As for growth, it isn’t in the copier space. Just in case you don’t believe me take a look at unit placements in any InfoTrends, IDC, or Gartner research. Placements, in the 1,300,000 area in 2007, have dropped to 900,000 or so in 2009. What does that mean? If you maintain your market share you will sell 30% fewer units in 2009 than you did in 2007. It is that simple. Add to that lower average unit selling price and your equipment revenue for equal market share is off more than 30%. Those units are never coming back…..they are actually going lower.
The industry has been talking about it for years but if you are not focused on clicks over placements you are chasing a quickly declining revenue stream. The answer—managed print services.
Done correctly MPS is a totally different business than you are in today. It is a solution that is focused to growing your aftermarket—it is not focused on equipment. So whether you sell Canon, Ricoh, Konica Minolta, Sharp, HP or one of the many other brands is irrelevant. You will sell equipment into your MPS agreements—and brands do have value, as any first year marketing student will tell you—but providing a consultative outsourced approach is what companies are buying with MPS.
So take the time to put together a solid business plan that has your company transitioning to clicks over equipment revenue. Transitioning is the key as you don’t want to throw out the baby with the bath water. The number you need to talk about day and night is your recurring revenue stream. With focus you can easily grow that revenue 30% or more year on year. If you want to find the silver bullet for selling more copiers I wish you luck. If you want to continue to lead a growth company that generates significant profits forget the bullet and hunker down with your senior team to put together a plan that gets you growing.
If only it were that easy. Let’s start with the most obvious, although constantly over looked fact that it is not the 80’s anymore. That means that copiers are not a growth technology any longer. It means that the product extensions that allowed us to continually move upstream and replace other products is almost gone (HP, Xerox, and some other players are going full bore after displacing all printing presses with sheet fed and cut sheet high speed “digital presses” as one of the last product extensions left to conquer). Our color devices have brought outsourced work back in house and replaced presses as has our segment six production devices. B2C went main stream and penetration has stalled in the 30% range. Fax machines have gone the way of the typewriter. Copier (and printer) placements are down substantially over the last two years and are projected to continue to decrease, albeit at a slower pace.
The 80’s brought us Bill Gates (and Paul Allen but he is almost forgotten) and Microsoft, Steve Jobs and Apple, and IBM’s invention of the PC. Since then Larry and Sergey founded Google, who can even remember those two guys from Yahoo and Al Gore invented the Internet! Copiers are not “high tech,” or more appropriately, “sexy” devices to sell. Your fraternity or sorority buddies might be envious of your job at Google, Facebook, or Genentech, but selling copiers won’t elicit that same feeling.
It is a great industry with solid profits and recurring revenues, and sales professionals can still make a good living, but we have to face reality and understand that people aren’t standing in line to apply for jobs in our industry. For those of you who weren’t in the business in the 80’s I can recall when a Sunday ad in the paper (Do they still exist?) resulted in a lobby packed with applicants on Monday. The only chance you had to get the job, which was straight commission (draw) was to show up Monday…..with a wagon or van close behind.
What does all this mean? It is tougher to grow in a declining market than in an increasing market and your potential employees, and customers for that matter, have a lot more information available to make a decision. So how do you thrive in this new environment? Get real about putting together a solid business plan and stop wasting your time looking for the silver bullet. Maybe you don’t have the best website on earth, maybe your reps can set more appointments, maybe you do need some basic sales training…..anything is possible. But I’d bet that your rep’s telephone and sales skills aren’t any worse than they were 20 years ago and you grew then.
The aforementioned internet provides job seekers with lots of information. Want to know what salary or commissions to expect for your education and experience? Go to salary.com or one of their competitors. Want to know what a company pays the specific job you are interested in? Go to glassdoor.com or one of the thousands of blog sites available. Sales professionals are fungible—they can take a job with you selling copiers, they can sell medical supplies, pharmaceuticals, software, or ads on Google. The common thread of those last four is that they pay salaries. Now if you are ambitious you will take the opportunity with an “unlimited” variable compensation component over one with fixed bonuses. But will you take the opportunity of unlimited compensation—with no foundation (salary) over one with a solid base? Not if you could get the latter; for those not paying a salary that is known as adverse selection. You only get a pool of candidates that cannot get the jobs that pay a salary. Wonder why your turnover is 100% and your productivity is low?
As for growth, it isn’t in the copier space. Just in case you don’t believe me take a look at unit placements in any InfoTrends, IDC, or Gartner research. Placements, in the 1,300,000 area in 2007, have dropped to 900,000 or so in 2009. What does that mean? If you maintain your market share you will sell 30% fewer units in 2009 than you did in 2007. It is that simple. Add to that lower average unit selling price and your equipment revenue for equal market share is off more than 30%. Those units are never coming back…..they are actually going lower.
The industry has been talking about it for years but if you are not focused on clicks over placements you are chasing a quickly declining revenue stream. The answer—managed print services.
Done correctly MPS is a totally different business than you are in today. It is a solution that is focused to growing your aftermarket—it is not focused on equipment. So whether you sell Canon, Ricoh, Konica Minolta, Sharp, HP or one of the many other brands is irrelevant. You will sell equipment into your MPS agreements—and brands do have value, as any first year marketing student will tell you—but providing a consultative outsourced approach is what companies are buying with MPS.
So take the time to put together a solid business plan that has your company transitioning to clicks over equipment revenue. Transitioning is the key as you don’t want to throw out the baby with the bath water. The number you need to talk about day and night is your recurring revenue stream. With focus you can easily grow that revenue 30% or more year on year. If you want to find the silver bullet for selling more copiers I wish you luck. If you want to continue to lead a growth company that generates significant profits forget the bullet and hunker down with your senior team to put together a plan that gets you growing.
Monday, November 9, 2009
New Wave of Industry Certification: Value or Marketing Gambit
We’ve all heard or read the stories: Company Big Shot or Government appointee discovered to have PhD, or other degree, from “diploma mill.” There is always the denial from the “degree” holder, referencing how hard they worked to earn the degree and how they considered the degree legitimate. But could they really believe that? Haven’t we all seen the advertisements? “Credit given for life experiences.”
Okay, so I have attended some “professional education” events and have worked my way up from sales professional to vice president of sales at the dealership, managing four sales professionals. I never stepped foot on a college campus other than to pitch a deal. I collect all of the certificates from my professional training and send them along with my resume and $25,000 to “University of some Geography” and puff, I have a BS in management. You didn’t actually attend any professional training and you don’t want to take the time to download some certificates from the Microsoft Office website, just send in your resume and the check for $25,000 and puff, BS in Management. What, you don’t have any professional training and you aren’t really the VP; actually you’ve never achieved quota in your 10 years of sales and you’ve worked for nine different companies? Son, you need this BS more than most so just send in the check for $25,000 and your diploma will arrive—get that check in within a week and we’ll send a free frame with the diploma.
Why don’t we all set-up colleges and collect checks? Heck, it would save me a fortune sending my three children to accredited universities. But therein lays the answer –accreditation. You see “real colleges” don’t accredit themselves. Rather, they are accredited by a recognized organization. I can’t say it any better so here is a copy of the blurb from ed.gov:
The goal of accreditation is to ensure that education provided by institutions of higher education meets acceptable levels of quality. Here you will find lists of regional and national accrediting agencies recognized by the U.S. Secretary of Education as reliable authorities concerning the quality of education or training offered by the institutions of higher education or higher education programs they accredit.
The newest wave in the industry appears to be certifying dealerships or sales professionals. You can become one of the top 100 service companies in the industry or even a certified MPS sales specialist. Heck, these programs are trademarked (I think that is what they say...or copyrighted but you wouldn’t copyright a trade name so they seem confused on that) doesn’t that show credibility? Go to the office of patent and trademark and fill out a form and you have the makings of a trademark. For copyrights it is even easier….I could send this blog post into the copyright office to “file” and it is copyrighted. It simply costs some money, like a diploma from the diploma mill, and doesn’t add any credibility.
I think Strategy Development has the deepest talent of consultants and trainers in the industry. Our experience speaks for itself. If you want to improve your service operations or get trained on how to sell MPS I strongly recommend you contact Strategy Development. But we are not an accredited institution and we are not going to insult your intelligence by telling you we will certify you. Besides, even if there are folk’s naïve enough to believe that a company can create their own recognized certification, like the diploma from the “University of Geography” that certification will have no legitimacy in front of a prospect when they ask “How did you earn your certification.” I paid a consulting / training firm to attend their course……
We provide real results, not gimmicks and we certainly will never insult your intelligence.
Okay, so I have attended some “professional education” events and have worked my way up from sales professional to vice president of sales at the dealership, managing four sales professionals. I never stepped foot on a college campus other than to pitch a deal. I collect all of the certificates from my professional training and send them along with my resume and $25,000 to “University of some Geography” and puff, I have a BS in management. You didn’t actually attend any professional training and you don’t want to take the time to download some certificates from the Microsoft Office website, just send in your resume and the check for $25,000 and puff, BS in Management. What, you don’t have any professional training and you aren’t really the VP; actually you’ve never achieved quota in your 10 years of sales and you’ve worked for nine different companies? Son, you need this BS more than most so just send in the check for $25,000 and your diploma will arrive—get that check in within a week and we’ll send a free frame with the diploma.
Why don’t we all set-up colleges and collect checks? Heck, it would save me a fortune sending my three children to accredited universities. But therein lays the answer –accreditation. You see “real colleges” don’t accredit themselves. Rather, they are accredited by a recognized organization. I can’t say it any better so here is a copy of the blurb from ed.gov:
The goal of accreditation is to ensure that education provided by institutions of higher education meets acceptable levels of quality. Here you will find lists of regional and national accrediting agencies recognized by the U.S. Secretary of Education as reliable authorities concerning the quality of education or training offered by the institutions of higher education or higher education programs they accredit.
The newest wave in the industry appears to be certifying dealerships or sales professionals. You can become one of the top 100 service companies in the industry or even a certified MPS sales specialist. Heck, these programs are trademarked (I think that is what they say...or copyrighted but you wouldn’t copyright a trade name so they seem confused on that) doesn’t that show credibility? Go to the office of patent and trademark and fill out a form and you have the makings of a trademark. For copyrights it is even easier….I could send this blog post into the copyright office to “file” and it is copyrighted. It simply costs some money, like a diploma from the diploma mill, and doesn’t add any credibility.
I think Strategy Development has the deepest talent of consultants and trainers in the industry. Our experience speaks for itself. If you want to improve your service operations or get trained on how to sell MPS I strongly recommend you contact Strategy Development. But we are not an accredited institution and we are not going to insult your intelligence by telling you we will certify you. Besides, even if there are folk’s naïve enough to believe that a company can create their own recognized certification, like the diploma from the “University of Geography” that certification will have no legitimacy in front of a prospect when they ask “How did you earn your certification.” I paid a consulting / training firm to attend their course……
We provide real results, not gimmicks and we certainly will never insult your intelligence.
Saturday, October 31, 2009
Lexmark announced a new program for copier dealers
- Has created a line of 15 models that will not be sold on-line or through retailers
- These “XS” models will only be available through copier dealers
- 5 are A4 b/w MFPs, 3 are A3 b/w MFPs, 2 are A4 color MFPs, 2 are A3 color MFPs, 2 are A4 b/w printer, and 1 is A4 color printer.
- Speeds range from 35 to 55ppm
- All have a published MSRP, but not a published street price
- All have large touch screen LCD display
- Offer eTask software for embedded application ability
- Have high yield cartridges so they are ideal for managed print services contracts
- Lexmark claims it has signed up 150 dealers in the U.S. so far, and hopes to have
300 total in next few years
- Typical opening order is $12K to $30K to become authorized
- Product is actually ordered from Tech Data or Synnex, instead of directly from Lexmark
- Will have it first dealer meeting in Kentucky
- These “XS” models will only be available through copier dealers
- 5 are A4 b/w MFPs, 3 are A3 b/w MFPs, 2 are A4 color MFPs, 2 are A3 color MFPs, 2 are A4 b/w printer, and 1 is A4 color printer.
- Speeds range from 35 to 55ppm
- All have a published MSRP, but not a published street price
- All have large touch screen LCD display
- Offer eTask software for embedded application ability
- Have high yield cartridges so they are ideal for managed print services contracts
- Lexmark claims it has signed up 150 dealers in the U.S. so far, and hopes to have
300 total in next few years
- Typical opening order is $12K to $30K to become authorized
- Product is actually ordered from Tech Data or Synnex, instead of directly from Lexmark
- Will have it first dealer meeting in Kentucky
More details on the new alliance between Canon and Hewlett Packard
- HP will begin advertising Canon copiers on its website on 11/1/09
- HP will resell imageRUNNER, imageRUNNER ADVANCE, and imageRUNNER ADVANCE PRO series
- Speed range from 23ppm to 105ppm devices
- According to Larry Trevarthen, HP’s Worldwide Director of Market Development, HP also has access to the imagePRESS production print products
- All the devices will initially carry the Canon name
- The products will be identical to what Canon dealers sell, including supplies
- Service will be provided by a Canon factory direct branch primarily. Only if there is no Canon branch in the area, will the service contract be offered to a Canon dealer.
- Canon currently has 60 factory branch locations, but will expand to 90 locations within 2 years
- HP will support Canon copiers with its Web JetAdmin utility
- HP will also modify its Universal Print Driver to support Canon copiers
- Starting in early 2010, HP will begin to develop its own print controllers for the Canon copiers
- HP will resell imageRUNNER, imageRUNNER ADVANCE, and imageRUNNER ADVANCE PRO series
- Speed range from 23ppm to 105ppm devices
- According to Larry Trevarthen, HP’s Worldwide Director of Market Development, HP also has access to the imagePRESS production print products
- All the devices will initially carry the Canon name
- The products will be identical to what Canon dealers sell, including supplies
- Service will be provided by a Canon factory direct branch primarily. Only if there is no Canon branch in the area, will the service contract be offered to a Canon dealer.
- Canon currently has 60 factory branch locations, but will expand to 90 locations within 2 years
- HP will support Canon copiers with its Web JetAdmin utility
- HP will also modify its Universal Print Driver to support Canon copiers
- Starting in early 2010, HP will begin to develop its own print controllers for the Canon copiers
Hewlett Packard launches three new laser MFDs available exclusively for its PartnerONE dealers
- LaserJet M9059 is a 50ppm, b/w A3 unit, based on existing M9050.
- LaserJet M4349x is a 45ppm, b/w A4 unit, based on existing M4345
- Color LaserJet CM6049f is a 40ppm, color A3 unit, based on existing CM6040f
- All are actually made by Canon
The only difference of the new models, versus the units that they are based on, is that they have toner cartridges that are keyed, so end users have to buy the toners from the HP PartnerONE dealer, and not on-line, or in a superstore.
This appears to be an effort by HP to provide their channel with products that can be used in an MPS engagement. I have not seen pricing for the cartridges, and probably would not be able to disclose the pricing if I did see it, but unless HP is deploying pricing similar to their supplies meter program they probably will not get much traction with these products. Keyed products create logistic issues in mixed fleets--those with the keyed models as well as the orginal modles--and if the units have a short shelf life due to lack of acceptance the vendor and customer have a small group of "orphaned" devices with a special cartridge. Furthermore, the ability to move to compatible cartridges is probably lost.....another fact that probably drove HP to this strategy.
- LaserJet M4349x is a 45ppm, b/w A4 unit, based on existing M4345
- Color LaserJet CM6049f is a 40ppm, color A3 unit, based on existing CM6040f
- All are actually made by Canon
The only difference of the new models, versus the units that they are based on, is that they have toner cartridges that are keyed, so end users have to buy the toners from the HP PartnerONE dealer, and not on-line, or in a superstore.
This appears to be an effort by HP to provide their channel with products that can be used in an MPS engagement. I have not seen pricing for the cartridges, and probably would not be able to disclose the pricing if I did see it, but unless HP is deploying pricing similar to their supplies meter program they probably will not get much traction with these products. Keyed products create logistic issues in mixed fleets--those with the keyed models as well as the orginal modles--and if the units have a short shelf life due to lack of acceptance the vendor and customer have a small group of "orphaned" devices with a special cartridge. Furthermore, the ability to move to compatible cartridges is probably lost.....another fact that probably drove HP to this strategy.
Monday, September 28, 2009
CIOs Pare Their Suppliers
Information Officers Focus on Big Vendors With Wide Offerings
In a September 16, 2009 article in the WSJ author Jerry A. DiColo detailed
"Chief information officers--the executives charged with running corporate technology departments--are looking to reduce their number of suppliers to focus on large vendors with wider product offerings.
The Change reflects a growing push by companies on tight budgets to form partnerships with suppliers managing bigger swaths of information technology operations."
Sounds like MPS may help these CIOs achieve their goal of reducing vendors!
In a September 16, 2009 article in the WSJ author Jerry A. DiColo detailed
"Chief information officers--the executives charged with running corporate technology departments--are looking to reduce their number of suppliers to focus on large vendors with wider product offerings.
The Change reflects a growing push by companies on tight budgets to form partnerships with suppliers managing bigger swaths of information technology operations."
Sounds like MPS may help these CIOs achieve their goal of reducing vendors!
Details of the HP / Canon Alliance
Canon announced it will allow Hewlett Packard to sell most of its copier product line.
Details:
Details:
- Expansion of 25 year relationship between Canon and Hewlett Packard
- This is a one-way agreement, as Canon will not have access to HP devices
- HP will sell Canon branded B/W and color copiers from segment 2 up through segment 6
- Initially, HP will market the Canon brand, but then will switch to offering the Canon copiers with the HP name on them as soon as it develops HP JetDirect based print controllers for them
- All current HP LaserJet and Color LaserJet devices are made by Canon
- HP will also resell Canon’s imageWARE and MEAP solutions
- Canon is looking gain back marketshare when it lost all IKON locations when IKON sold out to Ricoh, and when DANKA sold out to Konica Minolta in the U.S.
- This is fifth time that HP has attempted to enter the office copier space
- HP will use expanded product offering to grow its Managed Print Services program, “creating an integrated platform and brokering a network of service partners that will enable resellers to sell contractual print offerings"
- "create new global business unit”, called Managed Enterprise Solutions, led by Bruce Dahlgren (former Lexmark executive) and headquartered in San Diego, CA
- HP, which recently acquired IT services provider Electronic Data Systems (EDS), will use 500 certified EDS account managers to sell managed print services with this new expanded device offering to companies in the U.S. (EDS currently accounts for 20% of HP’s MPS sales)
- While HP will do the billing for contracts that include Canon branded devices, HP will subcontract the service to either Canon branches or Canon dealers, based on customer request
- Customers will contact HP to place service calls, and HP will then dispatch to Canon branch or dealer
- HP claims to have 2000 customers under MPS contracts, including 450,000 devices and 18 billion pages per year.
- HP claims to win 60% of all MPS bids it participates in.
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