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!
Tuesday, January 26, 2010
Sunday, January 17, 2010
Hiring a Consulting Firm: Proceed With Caution
You engage a consulting firm to add skills and help you achieve your business goals. If the consulting firm is going to be successful in their support they need to still be in business 90 days after you sign the agreement. Over the last five years I have seen consulting firms come and go, and the going almost always follows the big announcement of the coming.
This last week I read a press release announcing that Supplies Network hired the former owner of a consulting business, who I congratulate on his new job, but what of his consulting clients? What do they do now? The same day I received an e-mail from the former owner of a consulting practice selling remanufactured cartridges as the director of sales for Virtual Imaging Products—he too apparently deserves congratulations for his new job. Six months ago he put out a press release stating he developed the first internet based MPS training program (Strategy Development has had an MPS sales mentoring program that is internet based for over a year). What if you bought that program? Two months ago Printer Essentials announced the hiring of another consulting firm owner.
Three consulting firms are apparently out of business in the last two months—this is just an example of what I have witnessed over the last five years. The biggest losers in this situation are those companies that engaged these consultants to help them launch their MPS program (they are all MPS consulting firms).
These “flash in the pan” consultants nibble at our prospect client base as well, but whenever we hear that a company hired one of these “Johnnie come lately” firms we simply feel bad for the hiring company. MPS is the most important growth strategy the industry has seen in over a decade and this company is going to get poor advice on making the transition and their “expert” will probably be working for a competitor before the hiring company comes to the conclusion they made an error in selecting the consultant. Worse, they may paint all consultants with the same brush as their short term advisor.
How do you make a decision to hire a consulting firm? The first decision point you have is do you need a consultant or trainer. If you want more information on that decision e-mail me and I’ll send a copy of an article on the subject (callinan@strategydevelopment.org).
Once you make a decision to hire a consultant look at the depth and experience of the consulting team. I would start by analyzing whether they are a firm or an association of independent consultants. If the latter there is a higher probably of them deciding to “find a job.” The other category of consultant that is apt to find a job is the sole proprietor firm. It is difficult to develop business, develop tools, and conduct consulting—and earn a living. You need a team. Make certain the consulting firm has experience in all areas of your initiative. For MPS this means you need back office operations, service, sales, and business planning. Finally, look for tenure; it appears as if most consultants fold in the six to nine month range, although some have made it as long as two years. I would not engage a firm that has less than two years of experience unless it is for a very short term project.
I am an entrepreneur and love it so I would encourage anybody to follow the dream of entrepreneurship if they have that dream. Failure is a necessary outcome of being an entrepreneur: I have a favorite saying that if you haven’t failed you haven’t tried hard enough. Nevertheless, make sure the entrepreneur you hire has a plan and not simply a dream--hire with caution and!
This last week I read a press release announcing that Supplies Network hired the former owner of a consulting business, who I congratulate on his new job, but what of his consulting clients? What do they do now? The same day I received an e-mail from the former owner of a consulting practice selling remanufactured cartridges as the director of sales for Virtual Imaging Products—he too apparently deserves congratulations for his new job. Six months ago he put out a press release stating he developed the first internet based MPS training program (Strategy Development has had an MPS sales mentoring program that is internet based for over a year). What if you bought that program? Two months ago Printer Essentials announced the hiring of another consulting firm owner.
Three consulting firms are apparently out of business in the last two months—this is just an example of what I have witnessed over the last five years. The biggest losers in this situation are those companies that engaged these consultants to help them launch their MPS program (they are all MPS consulting firms).
These “flash in the pan” consultants nibble at our prospect client base as well, but whenever we hear that a company hired one of these “Johnnie come lately” firms we simply feel bad for the hiring company. MPS is the most important growth strategy the industry has seen in over a decade and this company is going to get poor advice on making the transition and their “expert” will probably be working for a competitor before the hiring company comes to the conclusion they made an error in selecting the consultant. Worse, they may paint all consultants with the same brush as their short term advisor.
How do you make a decision to hire a consulting firm? The first decision point you have is do you need a consultant or trainer. If you want more information on that decision e-mail me and I’ll send a copy of an article on the subject (callinan@strategydevelopment.org).
Once you make a decision to hire a consultant look at the depth and experience of the consulting team. I would start by analyzing whether they are a firm or an association of independent consultants. If the latter there is a higher probably of them deciding to “find a job.” The other category of consultant that is apt to find a job is the sole proprietor firm. It is difficult to develop business, develop tools, and conduct consulting—and earn a living. You need a team. Make certain the consulting firm has experience in all areas of your initiative. For MPS this means you need back office operations, service, sales, and business planning. Finally, look for tenure; it appears as if most consultants fold in the six to nine month range, although some have made it as long as two years. I would not engage a firm that has less than two years of experience unless it is for a very short term project.
I am an entrepreneur and love it so I would encourage anybody to follow the dream of entrepreneurship if they have that dream. Failure is a necessary outcome of being an entrepreneur: I have a favorite saying that if you haven’t failed you haven’t tried hard enough. Nevertheless, make sure the entrepreneur you hire has a plan and not simply a dream--hire with caution and!
Monday, January 4, 2010
Trade Shows: Are they worth the time
I am frequently asked the by clients “Should I attend (fill in the blank) show / conference?” I tend to answer the question with another question, “What are you looking to get out of the event?” Your answer to that question will then lead to some research to determine if the event is worth the investment in entrance fee, travel expense, and more importantly, your time.
There are many trade shows out there and a new one seems to pop-up every other year. They may be disguised as conferences or some other educations sounding event but when you look under the covers most are simply trade shows. Let’s explore some of the goals of a trade show:
Networking: An important aspect of business and one that requires focus. Many dealers belong to industry groups such as BPCA, CDA, SDG, or others and get to see their fellow group members at the events held by these groups. The networking aspect is just one of the many reasons why we recommend that our clients belong to an industry peer group. You also have the manufacturer dealer meetings held every 18 – 24 months. The problem with both of these types of events is that they are closed—you need to be a member of the peer group or you need to be a dealer for the manufacturer.
To network with dealers outside of this group you need an open forum. Two that accomplish this goal are the BTA regional events and ITEX. As by far the largest advocacy group for the copier / MPS industry, the BTA provides many benefits to the dealer / reseller community. One of those many benefits are the regional events they hold every year. I have participated in events in the Northeast and Southeast and they had drawn a large quantity of regional dealers and they are easy to get to, not requiring extra time for travel. I strongly recommend membership in the BTA and attendance at their events.
ITEX is the other forum that provides for networking, but in this case on a national basis. Las Vegas is a destination city and airfare and hotels are relatively inexpensive. You have great restaurants, entertainment, and oh yea, gambling. One of the largest benefits ITEX provides is the networking.
Education: Two warnings when it comes to education. First and foremost, if the event sponsors have most of the speaking spots you are wasting your time. One thinly veiled secret of the conference set is that some events are simply designed to generate revenue for the event coordinator and not designed to actually provide any value to the participants. Want to provide the keynote address? Become the platinum sponsor. Want to provide the day one closing address? Buy the gold sponsorship. Just align the sponsorship hierarchy with the relative status of the speaking spot and I think you will find perfect alignment. When you pay $10,000 to $20,000 to be the sponsor you talk about what you believe is a legitimate subject—the event coordinator doesn’t have a lot of influence after they take your check.
Do you really need to pay to see a vendor speak? It is my experience that the vendor will gladly pay for you to visit their office for the presentation and maybe even buy you a nice dinner or round of golf. Heck, lately some have even been flying dealers to their offices in Asia—on their dime.
And if you gave it some thought do you think that software vendor, toner recharge sales person or parts sales person really knows how to instruct you on launching an MPS program? Improve your sales effectiveness? Improve service margins? How about that MFP manufacturer trying to sell you that they don’t necessarily want you to sell their hardware? Why on earth would you pay to have these vendors that would either pay you for the opportunity to meet or who don’t have competency in the subject matter to speak to you…or should I be more straight forward and ask why pay for a sales pitch?
The second warning is on the concept of education at a trade show or conference. Most of the time the person giving the “training” is not being paid to instruct (in the sponsorship scenario they are actually paying for their opportunity to “train” you), but more than likely considers the speaking engagement an opportunity to give a sales pitch on their program. The degree of “pitch” vs training varies. I am sure we have all sat through the training program where we received 5 minutes of 80,000 foot theory and 55 minutes of program pitch, some disguised and some not so disguised. At other times we did get 45 – 50 minutes of 5,000 foot information and 10 – 15 minutes of pitch. The former is a complete waste of time and the latter provides you an opportunity to determine if the speaker can help your organization on a consulting or training basis.
The point is that you can learn at some of the conferences where the sponsors don’t get the majority of the speaking slots, but don’t expect to learn too much and choose the seminars you attend carefully. Let’s be realistic, do you think that a person that makes a living selling their knowledge is going to provide it to you for free, and do that in one hour?
What should you look to avoid? Preconference days that are completely paid for by sponsors and all of the speaking slots are taken by sponsors. These usually focus on the hot topic of the day like MPS or service improvement. Ironically, even though the sponsors paid to speak at these events they usually cost you additional money to attend—so you are paying to get a sales pitch.
The other area to avoid is conferences designed strictly to generate revenue for the show producer. What do they look like? A subject matter conference (always the hot topic of the day as that is the only topic anybody would be lured into paying for without much investigation) where all of the sponsors have speaking engagements. Whereas the add on day to the conference usually only costs an additional $99 - $150, effectively doubling the cost of the conference, it isn’t unusual for these total rip-off subject matter conferences to cost $795 - $995. Some go as far as having an add on day as a front runner to their totally sponsored conference.
If you really want education you need to pay for it and you should select the education topic you require. The good conference, like the main ITEX show or BTA regional events, may give you exposure to different speakers to help you make your assessment but once you believe you found a good trainer go to the specific workshop they offer on the subject and don’t attend any overpriced conferences hoping to get trained. You’ll only get trained if the trainer is getting compensated for their knowledge. The BTA offers some great programs.
Product information: If you want to compare and contrast products you have three choices, two of them logical. The first, illogical approach is to visit each company (illogical because of cost and time). The second is a series of webinars. The third is got to the main ITEX show and have appointments scheduled with each of the vendors to review their products.
Research: I find InfoTrends conference to be a great research opportunity. This isn’t the traditional educational event but it is one of the most educational events you can attend. Want to know what is going to happen with unit placements? You’ll learn it at the infoTrends conference. Want to know about print volume trends and where documents are being printed? You’ll learn it at the infoTrends conference. Basically, if you want to get into the details of the industry, copier or MPS, attend this conference.
You might want to research a new area—document archival for instance. There are trade shows for these areas such as AIIM. Search out the trade shows but use the information you have above to vet the show. If it is comprised totally of talking heads from the sponsors that are going to tell you how to do something they never did avoid the event.
The bottom line—there are a few shows that are worth the money if they fit into your goals but evaluate what your goals are against the agenda of the show.
There are many trade shows out there and a new one seems to pop-up every other year. They may be disguised as conferences or some other educations sounding event but when you look under the covers most are simply trade shows. Let’s explore some of the goals of a trade show:
Networking: An important aspect of business and one that requires focus. Many dealers belong to industry groups such as BPCA, CDA, SDG, or others and get to see their fellow group members at the events held by these groups. The networking aspect is just one of the many reasons why we recommend that our clients belong to an industry peer group. You also have the manufacturer dealer meetings held every 18 – 24 months. The problem with both of these types of events is that they are closed—you need to be a member of the peer group or you need to be a dealer for the manufacturer.
To network with dealers outside of this group you need an open forum. Two that accomplish this goal are the BTA regional events and ITEX. As by far the largest advocacy group for the copier / MPS industry, the BTA provides many benefits to the dealer / reseller community. One of those many benefits are the regional events they hold every year. I have participated in events in the Northeast and Southeast and they had drawn a large quantity of regional dealers and they are easy to get to, not requiring extra time for travel. I strongly recommend membership in the BTA and attendance at their events.
ITEX is the other forum that provides for networking, but in this case on a national basis. Las Vegas is a destination city and airfare and hotels are relatively inexpensive. You have great restaurants, entertainment, and oh yea, gambling. One of the largest benefits ITEX provides is the networking.
Education: Two warnings when it comes to education. First and foremost, if the event sponsors have most of the speaking spots you are wasting your time. One thinly veiled secret of the conference set is that some events are simply designed to generate revenue for the event coordinator and not designed to actually provide any value to the participants. Want to provide the keynote address? Become the platinum sponsor. Want to provide the day one closing address? Buy the gold sponsorship. Just align the sponsorship hierarchy with the relative status of the speaking spot and I think you will find perfect alignment. When you pay $10,000 to $20,000 to be the sponsor you talk about what you believe is a legitimate subject—the event coordinator doesn’t have a lot of influence after they take your check.
Do you really need to pay to see a vendor speak? It is my experience that the vendor will gladly pay for you to visit their office for the presentation and maybe even buy you a nice dinner or round of golf. Heck, lately some have even been flying dealers to their offices in Asia—on their dime.
And if you gave it some thought do you think that software vendor, toner recharge sales person or parts sales person really knows how to instruct you on launching an MPS program? Improve your sales effectiveness? Improve service margins? How about that MFP manufacturer trying to sell you that they don’t necessarily want you to sell their hardware? Why on earth would you pay to have these vendors that would either pay you for the opportunity to meet or who don’t have competency in the subject matter to speak to you…or should I be more straight forward and ask why pay for a sales pitch?
The second warning is on the concept of education at a trade show or conference. Most of the time the person giving the “training” is not being paid to instruct (in the sponsorship scenario they are actually paying for their opportunity to “train” you), but more than likely considers the speaking engagement an opportunity to give a sales pitch on their program. The degree of “pitch” vs training varies. I am sure we have all sat through the training program where we received 5 minutes of 80,000 foot theory and 55 minutes of program pitch, some disguised and some not so disguised. At other times we did get 45 – 50 minutes of 5,000 foot information and 10 – 15 minutes of pitch. The former is a complete waste of time and the latter provides you an opportunity to determine if the speaker can help your organization on a consulting or training basis.
The point is that you can learn at some of the conferences where the sponsors don’t get the majority of the speaking slots, but don’t expect to learn too much and choose the seminars you attend carefully. Let’s be realistic, do you think that a person that makes a living selling their knowledge is going to provide it to you for free, and do that in one hour?
What should you look to avoid? Preconference days that are completely paid for by sponsors and all of the speaking slots are taken by sponsors. These usually focus on the hot topic of the day like MPS or service improvement. Ironically, even though the sponsors paid to speak at these events they usually cost you additional money to attend—so you are paying to get a sales pitch.
The other area to avoid is conferences designed strictly to generate revenue for the show producer. What do they look like? A subject matter conference (always the hot topic of the day as that is the only topic anybody would be lured into paying for without much investigation) where all of the sponsors have speaking engagements. Whereas the add on day to the conference usually only costs an additional $99 - $150, effectively doubling the cost of the conference, it isn’t unusual for these total rip-off subject matter conferences to cost $795 - $995. Some go as far as having an add on day as a front runner to their totally sponsored conference.
If you really want education you need to pay for it and you should select the education topic you require. The good conference, like the main ITEX show or BTA regional events, may give you exposure to different speakers to help you make your assessment but once you believe you found a good trainer go to the specific workshop they offer on the subject and don’t attend any overpriced conferences hoping to get trained. You’ll only get trained if the trainer is getting compensated for their knowledge. The BTA offers some great programs.
Product information: If you want to compare and contrast products you have three choices, two of them logical. The first, illogical approach is to visit each company (illogical because of cost and time). The second is a series of webinars. The third is got to the main ITEX show and have appointments scheduled with each of the vendors to review their products.
Research: I find InfoTrends conference to be a great research opportunity. This isn’t the traditional educational event but it is one of the most educational events you can attend. Want to know what is going to happen with unit placements? You’ll learn it at the infoTrends conference. Want to know about print volume trends and where documents are being printed? You’ll learn it at the infoTrends conference. Basically, if you want to get into the details of the industry, copier or MPS, attend this conference.
You might want to research a new area—document archival for instance. There are trade shows for these areas such as AIIM. Search out the trade shows but use the information you have above to vet the show. If it is comprised totally of talking heads from the sponsors that are going to tell you how to do something they never did avoid the event.
The bottom line—there are a few shows that are worth the money if they fit into your goals but evaluate what your goals are against the agenda of the show.
Wednesday, December 16, 2009
Paul Schulman leaving Global
In an e-mail dated December, 9 to the Global leadership team, Michael Shea announced that Paul Schulman has decided to leave Global effective December 31.
Paul was one of Global’s most visible leaders as President and COO and in his previous position as SVP of Business Development. Paul was well known and respected in both the dealer community as well as within Global. I know his leadership will be missed at Global.
I got to know Paul on a dealer trip almost 15 years back. He is engaging, intelligent, and passionate about the business. The announcement stated that Paul left because “(he) decided his work at Global is now accomplished.” I hope that is true and that we are not seeing the second iteration of the IKON story where politics and egos became the determinant of who stayed and who goes.
Tom Johnson led a great “build-up” as he called it; he let the successful entrepreneurs, and eventually professional management, run their business and quickly weeded out the unsuccessful players. It never appeared that politics had any influence on Tom’s decisions—performance did. Tom made Global the envy of the industry and made his shareholders and investors a phenomenal ROI. Paul Schulman thrived in this environment. As president of IKON NYC I competed against Paul’s company, Carr Business, and I can tell you he was a strong but honest competitor that grew year after year.
I am confident that Paul will use his leadership skills and business acumen to lead another successful venture. I enjoyed the time that Paul spent making the copier industry a better place and wish him continued success.
Paul was one of Global’s most visible leaders as President and COO and in his previous position as SVP of Business Development. Paul was well known and respected in both the dealer community as well as within Global. I know his leadership will be missed at Global.
I got to know Paul on a dealer trip almost 15 years back. He is engaging, intelligent, and passionate about the business. The announcement stated that Paul left because “(he) decided his work at Global is now accomplished.” I hope that is true and that we are not seeing the second iteration of the IKON story where politics and egos became the determinant of who stayed and who goes.
Tom Johnson led a great “build-up” as he called it; he let the successful entrepreneurs, and eventually professional management, run their business and quickly weeded out the unsuccessful players. It never appeared that politics had any influence on Tom’s decisions—performance did. Tom made Global the envy of the industry and made his shareholders and investors a phenomenal ROI. Paul Schulman thrived in this environment. As president of IKON NYC I competed against Paul’s company, Carr Business, and I can tell you he was a strong but honest competitor that grew year after year.
I am confident that Paul will use his leadership skills and business acumen to lead another successful venture. I enjoyed the time that Paul spent making the copier industry a better place and wish him continued success.
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.
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