ChannelWeb's publication of Gartner's placement statistics for printers and copiers is sobering, although not surprising. The economny--which as of late actually seems to be improving--may be driving the lower hardware investment, but my guess is that the process changes implemented to operate with fewer devices will be maintained by many of the companies when the economy starts to grow. Executives that manage budgets, the CIOs, CFOs, and Chief Procurement Officers (CPO) have now set a new, and lower, bar for output device expense.
The imaging business is still a great business. Make sure you have a plan in place to leverage this new environment. The link below will take you to ChannelWeb's article on the Gartner stats:
http://www.crn.com/hardware/215900485;jsessionid=ICR4AUYE2SGMMQSNDLPCKH0CJUNN2JVN?cid=VARBusinessFeed
Sunday, March 29, 2009
Monday, March 2, 2009
What CEO’s Want From CIO’s
According to Information Week's Global CIO unit:
1) Create new products
2) Create new revenues
3) Deepen the company’s engagement with customers
4) Conserve cash, liberate trapped cash, and understand implications of cash flow
5) Create and enforce global standards for processes and applications
6) Unlock new ways to find, deliver, and assess higher value information
7) Reverse the 80:20 glut to make the first six possible
8) Create massively transparent organizations with all metrics focused on business value
Doesn't that list scream for print management? Numbers 4 and 5 are addressed with an MPS agreement. Number 6 benefits because you free up IT support time to work on higher value projects. The 80:20 glut references 80% of money spent in support and only 20% on innovation. MPS will cut their support expense over time. Number 8 will be addressed with quarterly account reviews.
I am not suggesting print management is the cure to all of IT's problems, or a major contributor to any of the eight focus areas. But it does help the CIO close the gap in the CEO's goals.
1) Create new products
2) Create new revenues
3) Deepen the company’s engagement with customers
4) Conserve cash, liberate trapped cash, and understand implications of cash flow
5) Create and enforce global standards for processes and applications
6) Unlock new ways to find, deliver, and assess higher value information
7) Reverse the 80:20 glut to make the first six possible
8) Create massively transparent organizations with all metrics focused on business value
Doesn't that list scream for print management? Numbers 4 and 5 are addressed with an MPS agreement. Number 6 benefits because you free up IT support time to work on higher value projects. The 80:20 glut references 80% of money spent in support and only 20% on innovation. MPS will cut their support expense over time. Number 8 will be addressed with quarterly account reviews.
I am not suggesting print management is the cure to all of IT's problems, or a major contributor to any of the eight focus areas. But it does help the CIO close the gap in the CEO's goals.
Sunday, March 1, 2009
How Much Will The Copier Industry Change?
Significantly, if you pay attention to the research companies! I recently read a research report that indicated that mono copier based MFD placements had declined from 1.1 million in 2007 to 900,000 in 2008 and will decline another 20% in 2009. This analysis showed mono copier based MFD placements in the low 500,000s by 2012 (in case you missed it that is less than half of the 2007 placements). Think the answer is a shift to color? Not according to this report that showed color placements fairly static, rising from 250,000 in 2007 to 292,000 in 2012, after initially falling in 2008 and 2009. Nice percentage increase but only 40,000 units.
So a research group and their crystal ball are suggesting a “sea change” in the copier industry! Maybe they are wrong; it certainly would not be the first time. Maybe they are only half accurate and the industry will decline from 900,000 mono placements (let’s give them credit for accuracy on an event that already occurred, 2008) to 750,000, and color will remain under 300 thousand units. What will the industry look like when total placements decline from approximately 1.35 million in 2007 to 1 million in 2012? That is a 30% decline in placements. I would keep in mind they are stating that will occur this year, so they would have to be really far off in their predictions.
Let’s throw in the shift to A4 copier based units. Regardless of your desire, over the long term A4 will replace many A3 units at a lower average unit selling price (AUSP). Since we still have the same major copier manufacturers today as we did last year we clearly have a production over capacity issue: There are more factories pumping out more copiers than can be absorbed by end users. Over capacity—as any economist will tell you—leads to lower prices (the old supply and demand theorem). So you have a couple of dynamics suggesting AUSP will continue to decline.
Don’t jump off that ledge just yet! How do you deal with this news? In a word, “PLAN” for it. It wouldn’t surprise me if one or more copier manufacturer merged operations or was acquired by another manufacturer; in this situation operations being defined as technology and channel (dealers). It also wouldn’t surprise me if we had 50% fewer dealers by 2012. Fewer product placements will result in less distribution, either planned or unplanned. This is another fact to discuss with your economist friend.
So PLAN on being one of the thriving survivors!
Put together a strategic business plan that models out the change over the next five years. Launch and perfect a print management program. After all, where do you think some of that decline in copier placements is going? Yes, to printers! Not all of it as printer placements are also declining but there is a shift. And, all of that additional aftermarket revenue coming out of the printer fleet has the potential to more than offset the decline in copier hardware revenue—at a higher profit margin.
Focus on productivity in all departments. Lower equipment AUSP will translate into lower gross profit dollars, even if you maintain your gross profit percentage. Optimize operations so you can operate your back office with high customer service and low cost: Focus to processes and automation. Maximize your return on service. Drive improvements in all areas year over year: Stay focused and maintain a high intensity level.
You don’t want to be one of the “unplanned exits” from the industry and by planning now not only will insure your place in history but you will insure a high profit business. Copiers and printers are not going away, they are just fading slightly. It will remain a great business for those with a plan!
So a research group and their crystal ball are suggesting a “sea change” in the copier industry! Maybe they are wrong; it certainly would not be the first time. Maybe they are only half accurate and the industry will decline from 900,000 mono placements (let’s give them credit for accuracy on an event that already occurred, 2008) to 750,000, and color will remain under 300 thousand units. What will the industry look like when total placements decline from approximately 1.35 million in 2007 to 1 million in 2012? That is a 30% decline in placements. I would keep in mind they are stating that will occur this year, so they would have to be really far off in their predictions.
Let’s throw in the shift to A4 copier based units. Regardless of your desire, over the long term A4 will replace many A3 units at a lower average unit selling price (AUSP). Since we still have the same major copier manufacturers today as we did last year we clearly have a production over capacity issue: There are more factories pumping out more copiers than can be absorbed by end users. Over capacity—as any economist will tell you—leads to lower prices (the old supply and demand theorem). So you have a couple of dynamics suggesting AUSP will continue to decline.
Don’t jump off that ledge just yet! How do you deal with this news? In a word, “PLAN” for it. It wouldn’t surprise me if one or more copier manufacturer merged operations or was acquired by another manufacturer; in this situation operations being defined as technology and channel (dealers). It also wouldn’t surprise me if we had 50% fewer dealers by 2012. Fewer product placements will result in less distribution, either planned or unplanned. This is another fact to discuss with your economist friend.
So PLAN on being one of the thriving survivors!
Put together a strategic business plan that models out the change over the next five years. Launch and perfect a print management program. After all, where do you think some of that decline in copier placements is going? Yes, to printers! Not all of it as printer placements are also declining but there is a shift. And, all of that additional aftermarket revenue coming out of the printer fleet has the potential to more than offset the decline in copier hardware revenue—at a higher profit margin.
Focus on productivity in all departments. Lower equipment AUSP will translate into lower gross profit dollars, even if you maintain your gross profit percentage. Optimize operations so you can operate your back office with high customer service and low cost: Focus to processes and automation. Maximize your return on service. Drive improvements in all areas year over year: Stay focused and maintain a high intensity level.
You don’t want to be one of the “unplanned exits” from the industry and by planning now not only will insure your place in history but you will insure a high profit business. Copiers and printers are not going away, they are just fading slightly. It will remain a great business for those with a plan!
Saturday, February 28, 2009
Toshiba Puts Rumors to Rest
In a memo to “All Toshiba Copier Dealers,” Mark Mathews, TABS President and COO, put to rest the rumor that has been gaining momentum over the last three weeks: That Canon was buying TBS, TABS direct organization.
Quoting Mark’s memo, “As valued Toshiba dealer partners, I felt it was important to address any TABS-related rumors directly and immediately. Toshiba Corp. is not currently, nor has it previously been in discussions with any manufacturer regarding the potential purchase of its MFP business, TABS or Toshiba Business Solutions (TBS), nor does it have any future plans in this area. Please be assured, and feel confident in assuring your customers, prospects and employees, on these points. Any related rumors to the contrary are completely unfounded and without merit.”
Strategy Development did not participate in permeating this rumor. When first contacted by industry players asking us if there was any validity we did what research we could within our network and determined that the rumor probably did not have validity. That was our message to whoever asked over the last few weeks.
I provide that retrospect because of this next statement. We do believe that consolidation will occur in the hardware manufacturing space. Unit sales continue to decline and it appears as if that decline will continue; I will talk about this in my next post. So in a less public, because of foreign stock listings and manufacturing plants, and less dramatic fashion the copier industry seems to be mirroring the auto industry: Same level of manufacturing with lower unit sales.
We are not a research company so we offer no opinion on how quickly that consolidation will occur or who might merge with or buy whom. We simply use the information we get to help our clients prepare for a prosperous future in the space. It will be those that don’t plan that will be in trouble; those that do will still thrive.
Quoting Mark’s memo, “As valued Toshiba dealer partners, I felt it was important to address any TABS-related rumors directly and immediately. Toshiba Corp. is not currently, nor has it previously been in discussions with any manufacturer regarding the potential purchase of its MFP business, TABS or Toshiba Business Solutions (TBS), nor does it have any future plans in this area. Please be assured, and feel confident in assuring your customers, prospects and employees, on these points. Any related rumors to the contrary are completely unfounded and without merit.”
Strategy Development did not participate in permeating this rumor. When first contacted by industry players asking us if there was any validity we did what research we could within our network and determined that the rumor probably did not have validity. That was our message to whoever asked over the last few weeks.
I provide that retrospect because of this next statement. We do believe that consolidation will occur in the hardware manufacturing space. Unit sales continue to decline and it appears as if that decline will continue; I will talk about this in my next post. So in a less public, because of foreign stock listings and manufacturing plants, and less dramatic fashion the copier industry seems to be mirroring the auto industry: Same level of manufacturing with lower unit sales.
We are not a research company so we offer no opinion on how quickly that consolidation will occur or who might merge with or buy whom. We simply use the information we get to help our clients prepare for a prosperous future in the space. It will be those that don’t plan that will be in trouble; those that do will still thrive.
Thursday, February 26, 2009
Maximize Service Return
Our current economy serves up many challenges; however, there’s never been a better time to take stock of your situation and get your service house in order. If you recognize the need to achieve a service return of 50%+ the best place to focus on is service productivity and staffing: labor is the largest and the most controllable service cost component you have.
There never seems to be the right time to “right-size” the service organization. When overstaffed there is always the tendency to say – “we will just grow into it” or “we will reduce staffing through normal attrition.” The problem with the first approach is if growth does occur, everyone is so comfortable with the current workload and pace that they will push for additional staffing rather than work harder and productivity will actually suffer. If the position taken is to reduce staffing through normal attrition you lose the opportunity for a planned cost reduction, and believe me, in today’s economy, turnover is at an all time low, so you may never get to where you need to be, and you will suffer a “lost opportunity”.
Here is a common observation relative to service staffing: When analysis concludes there is excess technician staffing the most frequently expressed justification is the need to maintain current service call response time levels. Response time tends to become the cloud cover for productivity issues associated with technical proficiency, resource planning, and time utilization. Obviously, when overstaffed, there are multiple productivity related processes that must be reviewed and changed to enable staffing reductions and still deliver quality service.
This year you have the perfect opportunity to right-size your service organization. Correct staffing levels are essential to controlling your costs, improving your productivity, and delivering the bottom line results you need. The key is determining how many resources you really need to support the customer base that you have while delivering quality service. If you have questions about how I can help you plan and optimize your staffing resources please contact me at woodard@strategydevelopment.org.
There never seems to be the right time to “right-size” the service organization. When overstaffed there is always the tendency to say – “we will just grow into it” or “we will reduce staffing through normal attrition.” The problem with the first approach is if growth does occur, everyone is so comfortable with the current workload and pace that they will push for additional staffing rather than work harder and productivity will actually suffer. If the position taken is to reduce staffing through normal attrition you lose the opportunity for a planned cost reduction, and believe me, in today’s economy, turnover is at an all time low, so you may never get to where you need to be, and you will suffer a “lost opportunity”.
Here is a common observation relative to service staffing: When analysis concludes there is excess technician staffing the most frequently expressed justification is the need to maintain current service call response time levels. Response time tends to become the cloud cover for productivity issues associated with technical proficiency, resource planning, and time utilization. Obviously, when overstaffed, there are multiple productivity related processes that must be reviewed and changed to enable staffing reductions and still deliver quality service.
This year you have the perfect opportunity to right-size your service organization. Correct staffing levels are essential to controlling your costs, improving your productivity, and delivering the bottom line results you need. The key is determining how many resources you really need to support the customer base that you have while delivering quality service. If you have questions about how I can help you plan and optimize your staffing resources please contact me at woodard@strategydevelopment.org.
Wednesday, February 25, 2009
Control your G&A expenses
Controlling your G&A expenses is one of the most important requirements not only now, in a difficult economy, but long as the imaging business gets more and more competitive.
For years, it has been business as usual in the back office operations; if processing fell behind, the natural reaction was to add more employees to handle what was perceived as additional workload. Pretty soon, actual headcount grew to levels that could not be supported by the organization. Because employee expenses are the largest controllable expense area, G&A expenses were out of control. Orders were getting processed, but at a cost that could not be supported.
It is time to take a step back and re-assess how your back office is structured and determine if it still makes sense with the current and/or available technology. Understanding each person’s daily activities and tasks and how they measure up against what you need is a starting point. Beyond that, it would be time to reassess all of your current processes and you will most likely find that there are too many redundancies, unnecessary processes and inefficient use of available technology.
Periodic process inspection and, if necessary, re-design should be a regular part of business practices to make sure that you are as “lean and mean” as you can be. The ultimate goal being to continually drive down those G&A expenses that are leading to a degradation of your bottom line.
If you are setting a long-term target I suggest you need to have G&A expenses to 10% or less five years out. If you look at many of the companies that are entering the imaging space, VARs as an example, their G&A is below 10%. Competition is one consideration but changes in the industry are another driver. A4 will replace A3 at an accelerated rate as more copier companies introduce full A4 product lines. These new units will drive down average unit selling price, resulting in lower revenue for your company. You will need to be lean and mean to thrive so get focused on your G&A expense.
If I can help please contact me at boulden@strategydevelopment.org
Controlling your G&A expenses is one of the most important requirements not only now, in a difficult economy, but long as the imaging business gets more and more competitive.
For years, it has been business as usual in the back office operations; if processing fell behind, the natural reaction was to add more employees to handle what was perceived as additional workload. Pretty soon, actual headcount grew to levels that could not be supported by the organization. Because employee expenses are the largest controllable expense area, G&A expenses were out of control. Orders were getting processed, but at a cost that could not be supported.
It is time to take a step back and re-assess how your back office is structured and determine if it still makes sense with the current and/or available technology. Understanding each person’s daily activities and tasks and how they measure up against what you need is a starting point. Beyond that, it would be time to reassess all of your current processes and you will most likely find that there are too many redundancies, unnecessary processes and inefficient use of available technology.
Periodic process inspection and, if necessary, re-design should be a regular part of business practices to make sure that you are as “lean and mean” as you can be. The ultimate goal being to continually drive down those G&A expenses that are leading to a degradation of your bottom line.
If you are setting a long-term target I suggest you need to have G&A expenses to 10% or less five years out. If you look at many of the companies that are entering the imaging space, VARs as an example, their G&A is below 10%. Competition is one consideration but changes in the industry are another driver. A4 will replace A3 at an accelerated rate as more copier companies introduce full A4 product lines. These new units will drive down average unit selling price, resulting in lower revenue for your company. You will need to be lean and mean to thrive so get focused on your G&A expense.
If I can help please contact me at boulden@strategydevelopment.org
Sunday, February 22, 2009
Four Marketing Strategies For VARs In A Down Economy
Sure, it's a tough economic climate these days, but it's still possible to keep clients and win over prospects.
At a meeting Thursday of The International Association of Microsoft Certified Partners (IAMCP) led by Howard Cohen, NYC IAMCP chapter president and U.S. IAMCP communications chair, marketing experts discussed effective methods that VARs can use to reach, penetrate and win business in the channel.
http://www.crn.com/it-channel/214501984
At a meeting Thursday of The International Association of Microsoft Certified Partners (IAMCP) led by Howard Cohen, NYC IAMCP chapter president and U.S. IAMCP communications chair, marketing experts discussed effective methods that VARs can use to reach, penetrate and win business in the channel.
http://www.crn.com/it-channel/214501984
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