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The potential is huge, so say industry pundits. But in the European OP reseller community at least, the concept of managed print services hasn’t taken off quite as much as it perhaps needs to. And the risk of being left behind could prove very costly indeed.

Europe is going to overtake the US in terms of managed print services (MPS) engagements by 2014; that’s what we’re hearing all the time. In real money, that’s a market estimated to be $31 billion in Europe versus $68 billion on a global basis, says MPS market intelligence and research company Photizo.

How so when the US is several years ahead at the moment? Sure, the well-known OEMs are deeply involved in MPS with their large corporate customers and have been for many years, on both sides of the pond. Xerox, Hewlett-Packard and Canon are ahead of the curve in Europe (though not necessarily in that order), followed by Ricoh, Océ, Kyocera and Konica Minolta, to name a few.

The real opportunities – and a vast untapped market in Europe so far – lie in the SMB segment, however, where thousands of companies also want to optimise their print environment, save money, up productivity and basically concentrate on their core business. This segment is increasingly on the radar of the OEMs, but is best accessed through the channel rather than directly.

But nothing truly remarkable appears to be happening on the reseller side. And where are the wholesalers that can match their US cousins with dealer-focused MPS offerings?

For now, it’s by and large the copier dealers and IT VARs/resellers that are grabbing the most sizeable chunks of the tasty MPS pie – they can support multiple brands, already have cost-per-page contracts in place (the copier people specifically) and, in the case of the IT resellers, speak the necessary ‘tech’ language. Most importantly perhaps, they are already used to running a service-focused rather than a transactional business.

Dennis Kramer, Business Director EMEA at Canada-based (Switzerland HQ in Europe) technology provider PrintFleet, says: “We have seen that take-up in the OP channel is running two or three years behind the US. In the OEM space and also for office equipment resellers, pick-up has been much closer to the US, with maybe just a six-month delay.

“Certainly, the SMB market frontrunners in Europe are the brand independent copier/IT dealers that take care of their total customer fleet. The ones that have stepped in early have seen some impressive growth numbers. Some of PrintFleet’s customers in this segment have seen their managed fleets growing in size by more than 30% year over year, at very healthy profits of 40-50%.”

Fear factor

The opportunities are clearly there and acceptance of MPS as a must-have are slowly filtering through to the OP space. The most compelling reason for this gradual adoption is not solely the prospect of generating higher margins and gaining extra business, but the sheer danger of losing the all important consumables business – often 40-50% of a dealer’s revenue mix – to those players that supply these products as part of their MPS programmes.

But it’s not a commitment to be undertaken lightly, says Richard Ford, Sales Solutions & Enablement Manager EMEA at HP’s Imaging and Printing Group. “It’s a different business model and to be successful, you need to have complete buy-in from the senior management down,” he says.

“There must be a total understanding that this is an entirely different approach to selling. It’s highly consultative and requires people with the right skills who are capable of being credible with the IT department and who will focus 100% on driving MPS. Sales cycles are much longer and there will be trial and error, even with an OEM vendor supporting. I have seen many examples where resellers don’t make the required changes and fail.”

Office Depot Europe is one reseller that works directly with an OEM, in this case Xerox. The big box player announced its partnership with the OEM’s channel-orientated offering Xerox Partner Print Services earlier this year, with an initial rollout in Germany, followed by the rest of its European markets later on this year. Like HP’s Ford alluded to, the timescales in any MPS engagement are lengthy and full of preparatory measures, leaving Depot executives somewhat reluctant to jump the gun too early with reports of amazing success stories.

Paul Gaiser, MPS Programme and Business Development Manager at the European Channels Group of Xerox Europe, points to the fact that in the Xerox-enabled, channel-led MPS offerings, the business relationship is firmly between the reseller and the end-customer.

“We have defined a restricted number of large customers that we want to target directly and for the others we want to go through the channel,” he says. “In Office Depot’s case, there may be an overlap on occasion (since the target is not just the SMB segment), but we see it as a challenge as well as an opportunity. If you’re transparent about it and manage accordingly, it can work very well. Ultimately, it is the customer that will decide, of course.”

Geographically speaking, leaders of the European pack – in no particular order – are Germany, the UK, France, the Netherlands, Italy and the Nordics. Often, it depends on the type of MPS engagement, its scale (a simple cost-per-page contract is not MPS, though some may view it as such) and what type of sector and channel is implementing it.

Wholesalers lagging behind

Take the wholesalers, for example, the distribution channel  – and typical portal into the SMB segment – that in the US wholeheartedly embraced MPS several years back. Even the broadline OP wholesalers United Stationers and SP Richards have been fully on board for well over a year now (trailing SYNNEX and Supplies Network).

The European landscape, in contrast, looks rather sparse. But changes are afoot, with the UK seemingly leading the field. VOW is currently in the final stages of developing its new MPS offering while rival Spicers in the UK and Ireland has already launched Sprintwise and is as such among the first OP wholesalers in Europe to have fully embraced its own MPS programme.

Again, it’s the fear factor – on the part of the dealers – that has played a substantial part in Spicers’ decision to take the leap. Spicers’ MPS Consultant Ian Hixon was employed by the company in February and developed the wholesaler’s MPS proposition based on his extensive knowledge of the industry. The idea behind it is to help dealers to protect their market share in EOS sales, while at the same time embracing the new revenue opportunities that the MPS market represents.

After consultation with several of Spicers’ dealers, Hixon is clear about why Sprintwise became a necessity. He says: “When dealers are having their core market attacked by somebody with an MPS offering, then generally their first port of call is the wholesaler. We want to help our customers combat the threat by working together.

“Sprintwise has been developed as a full MPS solution for dealers so that they can compete with the likes of the IT resellers and also the traditional copier dealers.”

Spicers itself has no direct relationship with end-users; it acts as a facilitator that bears the considerable upfront investment and the back office expertise needed for a successful MPS offering. The company is using PrintFleet’s software product, branded as Sprintwise. With the software, dealers can deliver to their end-user customers a whole host of print information including volumes, the type of printing (mono, colour), power consumption and coverage on the page. Spicers is also partnering with Sharp as its vendor partner, though not exclusively.

Feedback from dealers so far has been excellent, says Sales Director Tom Rodda: “We went live with Sprintwise in July following a consultative period to make sure we got the proposition correct. We have engaged with approximately 50 dealers and now have over 20 dealers signed up, with more expected to take it up through the remainder of 2011.

“It’s definitely a challenge for dealers in that your traditional office products salesperson has a different mindset from your MPS-type salesperson. MPS is very much a consultative sell, so some dealers may have to invest in additional resources to help sell the product. In terms of actually implementing the software and using the partners we have in place it’s relatively straightforward.”

The question whether Spicers is hoping to roll out the programme across Europe became redundant the minute Unipapel bid for its continental European business in early July. Interestingly, the soon-to-be-largest OP and consumables wholesaler in Europe hasn’t got MPS on its immediate radar.

Instead, says Ramón Vidal, European Managing Director of the Adimpo Group, Unipapel’s EOS part, it’s working with some of the OEMs’ MPS programmes, particularly HP and Oki. “Up to now, our role as a wholesaler has been to teach and support our reseller partners with the different aspects of MPS vendor programmes and, in some cases, supply equipment as well as supplies.

“At the same time, we are learning from the vendors’ different programmes, as these are aimed at different end-user targets. We will then decide if we should create our own MPS solution that may be offered to our customers as a value-added service.”

Alpha International has adopted a somewhat similar attitude. While MPS is clearly playing an ever bigger role for the Dutch consumables distributor, it remains a distributor rather than a service provider.

Its approach is two-pronged. The first element is that it works with the OEMs that offer MPS programmes directly to the large corporate sector. Says Commercial Director Marc Nijhof: “Our vendor partners need a consumables partner for their MPS programme and that’s us. So vendors or OEMs sell their MPS solution to the end-user, but we are part of the programme in that we directly receive alerts about toner levels across the fleet, for example, and then do our job – taking care of the distribution of these consumables to customers, at location level.”

The second approach, adds Nijhof, works in a similar manner, the difference being that the OEMs are providing their SMB-orientated MPS solutions to resellers – both in the IT and OP space. Alpha effectively works with these resellers in the same way by delivering consumables to the end-users. “We are included in all these MPS programmes through our consumables fulfilment. But it’s much more than that. Vendors, for example, typically offer a special rebate for toners inside an MPS programme so we are authorised to forward these rebates and work out all the financials, which can be very complicated.”

In the absence of long-established wholesaler-led programmes, many independent dealers – like their big box cousins – have chosen to partner directly with the large OEMs that are investing large amounts of money in their European markets to capture the large SMB segment of customers.

Alternatively (or in addition), resellers run their own self-hosted programmes using companies such as PrintFleet. Good examples of that are Vasanta’s Supplies Team Clearclick programme, Altodigital’s Total Print Management and Compass Gruppe’s FleetCockpit from Germany.

A handful of dealer groups have also come to the fore with the services they offer to their dealer members, Germany’s Büroring and Soennecken being particularly proactive in the area. Büroring already has its own MPS programme in place, working in collaboration with solutions firm FMAudit.

Soennecken’s MPS efforts, meanwhile, began two years ago and it now offers a variety of educational and training services, among them MPS Academy and MPS Competence Seminars. The latter trains dealers to become certified and qualified ‘MPS counsellors’, for example.

The objective of MPS-Soennecken, says Winfried Schneider, Business Unit Manager for printing and copying, is to enable its dealer members “to optimise the end-consumer’s document and information workflow and to shift labour-intensive activities to the trade”.

In its various workshops and through some direct partnerships, it also informs members about the host of fleet management software solutions available in the market, better enabling them to select the right one for their specific circumstances. Soennecken’s dealers vary considerably in size, but the cooperative is trying hard to make MPS accessible across the spectrum. Schneider says: “Independents are perfectly capable of adopting a comprehensive approach to MPS, offering their very own hardware brand-independent service solutions.”

There’s no doubt that parts of the European reseller community remain somewhat in denial about MPS, its importance, its inevitability and its scope. Whichever way it’s approached, however, ignoring the demand for MPS would be a grave mistake to make.

“I wouldn’t advocate office products resellers leaving MPS alone because if we were to move the clock forward five years they really wouldn’t have a business.

We did some analysis of print devices a little while ago. If you look at a low-end monolaser printer, the real-term cost of that device now is probably about 20% of the ten-year-ago value and with margins probably even smaller than a decade ago.

So for a reseller to make the same margin now as they did ten years ago on that type of product, they’d need to sell at least five times as many, probably more. I don’t think they have a choice, quite frankly. OP dealers are well placed and they’ve got certain advantages.”

Geoff Hogg, Consulting Services Director, NewField IT

“The market is mainly driven by end-users wanting to decrease cost. Any other existing drive might come from the copier/IT dealers and OEMs. Rather than being proactive, most office products dealers in Europe still take the passive approach, until they realise that a valuable supplies contract can get cancelled in favour of an MPS contract with a copier/IT reseller.

We have been told by OP dealers selling to large/medium-sized companies that they have seen their business decrease by 5-7% year over year, which prompted them to change their business model to embrace MPS. Now signs of a decrease are appearing in the SMB business segment as well. Office products resellers need to quickly jump on the MPS bandwagon because the market is maturing at a faster pace than many might think.”

Dennis Kramer, Business Director EMEA, PrintFleet

 

The hybrid approach

• Company: Avenir DSI • Location: Paris, France
• Revenue: €1 million ($1.4 million)
• MPS start: April 2008 • Target audience: SMBs

Avenir DSI is one of those companies coined by MPS advisory firm Photizo as a so-called ‘hybrid dealer’, essentially a mix between a BTA/copier dealer and an IT VAR/reseller. Unlike your typical office products dealer that has to make a considerable shift in its selling approach – not to mention embrace a wholly different financial commitment – a hybrid dealer’s business is set up completely around the concept of marrying a transactional product-based business relationship with a service-orientated one, with the focus being on service.

Avenir DSI’s premise is to sell MPS to SMBs – that’s its core remit and main revenue stream now. Based in Paris, France, Managing Director Cédric de la Celle founded the company in 2008, initially selling printers and copiers. Seeing the potential of MPS and in an attempt to get customers on board, it also offered an equipment repair service, a novel idea at the time that filled a market gap.

Says de la Celle: “When I started selling printers and copiers, I also created a web-based repair agency for office equipment. Customers at the time didn’t have any real solutions in place to fix their printers or photocopiers. They found my agency, we carried out the job and afterwards it was much easier to go back to these companies and say ‘if you like our service, we can provide you with a comprehensive MPS service for your whole print environment’. That’s how it basically started.”

Feedback from the start has been very positive, de la Celle adds. “I have my own equipment engineers, so we’ve always been able to respond to client requests promptly and personally. The fact is, repairing a printer or a copier is usually not part of anybody’s job description. If you can also offer customers a complete MPS programme whereby they don’t have to buy toner anymore, in fact they don’t even have to ask for it anymore as we have the necessary information before they’re even aware they’re about to run out, it’s a very compelling offering. So we’ve had excellent feedback from most of our clients.

“Of course, some clients decide to leave us, for example when they want to change all their printers to one brand, such as Konica Minolta or Canon. We’re a small company and our prices are not as competitive as if you go directly to the big OEMs.”

Avenir DSI mostly uses HP’s Web Jetadmin to install in a customer’s print environment. Web Jetadmin is a manageability tool that allows customers to manage all their copying and printing equipment, including software updates, printer jams, toner replenishment, tracking devices and their settings, if they’re moved to a different network. It’s a free downloadable software that supports not only HP hardware, but also other brands, including Lexmark, Brother and Oki. 

Today, 35-40% of Avenir’s revenue comes from selling office equipment – everything from copiers and faxes to MFDs and desktop printers – while the remaining 60-65% stems from its MPS offering, including all consumables and supplies. A typical customer has between 20-100 printfleet users – the typical SMB market segment that remains the great untapped MPS business for OEMs and resellers alike – with about 200 clients under contract.

About 70% of Avenir’s business is generated in the Paris/Greater Paris area and this is where seven of the company’s employees are based. Three further engineers are located in the cities of Lyon, Lille and Marseille to service local contracts.

With a profit margin of almost 50%, de la Celle’s current business is a far cry from his days when he worked for toner company Eurotoner. “I saw revenues going down substantially because of the huge competition we had,” he says. “When you provide MPS services, your revenues go up because you can really sell as a result of the added value you provide.”

France is probably in the top five best-performing markets in MPS terms, but it’s still a very mixed bag when it comes to who offers the service.

Says de la Celle: “There are two markets in France. One is the copier OEMs such as Canon or Konica Minolta. That’s not really MPS, it’s just cost-per-page, but this part of the market is very mature. All customers are used to paying cost-per-page. It’s when the OEMs – or resellers – add services such as remote monitoring or automated toner replenishment that it becomes something else. The printer market meanwhile, in MPS terms, is still in its infancy. As far as I know there are only five companies in the Paris area that offer a service like ours.”

Traditional OP dealers haven’t realistically appeared on the scene yet and have so far shied away from taking the leap into MPS. A big leap no doubt, but one that is ultimately worthwhile – and necessary – taking.

Leap of faith

• Company: RED BOX • Location: London, UK
• Revenue: £20 million ($33 million)
• MPS start: May 2011 • Target audience: SMBs

London-based RED BOX is one of a growing – albeit slowly – number of OP dealers that decided sitting on the fence would no longer work and in May launched its own MPS offering.

The reasoning behind the move was simple, says Gordon Christiansen, Managing Director of Colway, RED BOX’s holding company. Aggressive selling from companies from, mainly, a photocopying background has led to an erosion in sales of consumables over the last 18 months or so as an increasing number of customers become locked into MPS contracts.

This, coupled with the need to drive some organic growth with existing customers as sales of general office supplies continue to be under pressure, prompted RED BOX to look for its own MPS solution.

“We made the decision that we wanted RED BOX MPS to be a knowledge-based business, advising and helping clients to reduce and manage their costs, not just about selling hardware and toner,” Christiansen explains.

RED BOX has already gained experience of the print market through its London Graphic Systems sister firm, which offers high-end printers and copiers for design and advertising agencies across London.

The company chose to partner with Xerox Print Services, the SMB-targeted offering of the global giant, but has also established deals with Canon and HP, allowing it to manage and monitor all the brands it sells to clients on a single system.

Given the considerably different service and selling approach, Christiansen believes that successfully ‘getting into’ MPS requires an all-or-nothing approach, total commitment and, not least, a substantial financial investment. In addition to working with its OEM partners, the dealer has also recruited MPS specialist Mike Brown, plus two other support staff, all of whom will be focused on developing and managing the MPS offering.

Christiansen hopes that its unique client approach and logistics capabilities will set it apart from the non-OP competition. “If you look at the copier companies, their main driver is about selling hardware in the marketplace,” he notes. “We’re trying to change that a bit – the mentality of an office supplies company is that we are taking orders from our clients every day, so we have to look after our clients on a constant basis. You then apply that philosophy within the MPS environment, not just a big sale every three years or so.”

In terms of long-term sales projections, RED BOX is hoping to generate 10% of its revenue through its MPS offering within three years, a target that according to independent research is entirely achievable. More important, however, is perhaps the fact that RED BOX will also have maintained its all important consumables business in the process.

Keywords: Managed, print, services, MPS, hot, topic, September