What a difference 18 months can make. At the beginning of 2011, OPI looked at managed print services (MPS) in the US, the fastest growing and most developed MPS market for now. Practically everybody had something to say about it but in reality, the core of the OP industry, certainly on the reseller side and outside the largest corporate customer segment, remained on the periphery of the action, with the copier and IT industry being the frontrunners in the MPS race.
Jumping on board
In Europe too, even just under a year ago, it was a pretty barren landscape in MPS terms. But increasingly, over the past few months, everybody’s been jumping on board and upping their MPS efforts, from dealer groups and wholesalers to a whole range of OEMs and reman/compatible manufacturers, not to mention a few brave independents (Germany’s Kaut-Bullinger being one of them). Whether there’s much substance to all of their stories – and their programmes for that matter – is another discussion, with the ‘experts’ frequently bemoaning the ‘MPS pretenders’ and those that confuse true MPS with simple cost-per-page contracts, coupled with a bit of supplies replenishment and a rudimentary break-fix service.
Also, after the fanfare of the initial big MPS announcement, there’s often a conspicuous silence when it comes to follow-up. We don’t appear to be hearing much from Office Depot after its MPS partnership announcement with Xerox last March, for example. And how many dealers are offering real contractual MPS to their customers through Spicers’ Sprintwise programme? (Both companies’ counterparts, Staples and VOW, have interestingly chosen to bide their time, do a lot of the initial work behind the scenes and only fairly recently officially announced their first MPS offering – we will carefully monitor their progress too.)
And while Europe is growing the fastest at the moment – certainly for solution providers such as PrintFleet – it’s the US that is still the most advanced MPS market, with particularly IT distributors/ wholesalers making headway in bringing MPS to customers via the independent channel. SYNNEX is now in its sixth year since its PRINTSolv programme was launched and last year recruited a dedicated sales rep to focus specifically on OP dealers (as opposed to printer/copier and IT resellers).
In fact, the efforts of the distributors have put the dealer groups rather on the back foot in MPS terms (although TriMega appointed former Laserworks President Brian Stevenson as its Director of MPS at the beginning of the year). As Janet Eshenour, Director of Marketing at Independent Stationers, says: “Over the last few years, we’ve discussed programmes with third-party organisations. However, we decided since there are so many good programmes out there from the wholesalers, we thought it best not to add another one.”
So are we really seeing a slowly maturing market already in the US, as Photizo Group’s 2010 research would suggest (see heat map below)? Some would argue that, now MPS has (had to) become a hot topic among practically all channels and we’ve entered the nuts and bolts trial and error phase, maturity is a while off yet.
And that’s a good thing, says Doug Johnson, SVP of Managed Print Services at Supplies Network. “It’s a bit like the early days of compatible toner cartridges. Everyone said they have a remanufactured compatible cartridge, but some were just drilling a hole in the end of the cartridge and pouring more toner in while others were doing a complete remanufacture of the cartridge, putting in new components and so on. But ultimately they called it the same thing and as a result some end-users had a bad experience with a drill-and-fill and paint compatibles as a bad product category as a whole.
“The same is happening with MPS. Now that end-user awareness is much higher we see it all the time – resellers go in and want to talk about MPS, but the end-user has already made up its mind and says ‘yeah, we tried that and it doesn’t work’.”
What may have happened, Johnson explains, is that perhaps a copier reseller at some stage took the customer’s current leasing programme that’s been in place for 25 years, changed it, called it MPS and charged for it differently. “The end-user then thinks ‘wait a minute, I didn’t really get anything new or different or improved’, hence the skepticism when they hear of the miracles that MPS can perform.”
As Quocirca’s research on the next page shows, there’s certainly a gap between expectations and achievements among customers that have gone down the MPS route.
Getting beyond the bad experience and the ‘pretenders’ is the challenge now, but one that is potentially even swelling growth of MPS adoption, compared to original industry estimates because, as OEMs and increasingly resellers sell a more sophisticated story to the end-user, the uptake will be all the greater.
In the SMB customer segment, the stronghold of independents in most western markets, MPS is still in its infancy, with the core focus being on basic fleet assessment, supplies optimisation and replenishment.
But even a basic involvement is worth investigating, as 64% of the total cost of an MPS engagement comes from supplies. If an OP dealer can control that 64% efficiently for the end-user, the benefits could still be substantial. Even if dealers can’t offer the more advanced MPS capabilities that some of their competitors can, such as document workflow information, having a basic contractual relationship, if done well, should still go a long way towards maintaining a relationship with that customer – and keeping the important supplies business.
John Taylor is CEO of UK managed print provider M2 which mostly works with customers in the mid- and large corporate market on a direct basis. That said, he challenges the notion that MPS cannot transition far down into the small customer space and as such into the core remit of the independent dealer, as the costs to serve that customer from an MPS standpoint are too high and the returns too low.
The company last year started developing an affinity partnership programme with VOW that would target – through the wholesaler’s dealers – exactly that customer segment. But unlike other programmes (including some of its own), MPS Lite very deliberately only skims the surface of what’s possible in MPS terms, enough to have a contractual long-term relationship with the end-user but less resource-hungry than other, more in-depth programmes.
As Taylor says, for the dealer it’s less about the cost of going down the MPS route than it is about the intensity and stamina required.
“The idea of managing a customer proactively in a very intensive way for three, four or five years without an order receipt every time they pick up the phone or visit the customer is still a real mind shift change with the OP business. But that’s the challenge you’ve got. If you can do it, it really secures loyalty because you have worked with that customer for years and evolved with its changing business needs.”
As MPS evolves, so do the challenges for dealers that embrace the concept. Margin pressures are just one of those challenges, says Ray Loisel, SVP of MPS at West Point Products: “As the MPS market is maturing, increased competition is leading to greater pressure on margins. For some dealers, this pressure makes pricing MPS programmes very difficult as there is little margin for error remaining to guard against mispriced service, supplies and maintenance.”
MPS pricing tools, such as West Point Products’ Axess TCO Calculator, are available with the aim of helping dealers apply model-specific service factors in their pricing programmes.
Not worth the squeeze
Some argue, however, that for many independents the juice just isn’t worth the squeeze – yet. Says Gordon Thrall, VP of Sales & Marketing at Guernsey Office Products: “While the dialogue seems to be increasing at the large account level we’ve only actually lost a few customers to an MPS approach over the last few years. And the largest of those is considering a move back to a transactional method of procuring supplies from us because of the disappointment in the poor execution and unmet expectations.
“Don’t get me wrong, I don’t think MPS is going away. It will continue to be a threat to the upper edges of our account base and ultimately seep down into the top of the SMB space. And I don’t think it’s too late for a dealer to move into MPS because significant customer acceptance of MPS at the SMB level is still nascent. But there is still much to be sorted out. Particularly for office products dealers that don’t currently sell and service printers, copiers or MFPs, the upfront investment in a product manager and other resources to adequately support a viable programme, even a turn-key solution offered by a third party seems pretty significant compared to the opportunities for payback that currently exist.”
Guernsey itself, for now, is working with SYNNEX and its PRINTSolv programme as well as its primary reman supplier Clover Technologies in bringing MPS to some of its customer base. But, says CEO Dave Guernsey, “as yet, we don’t see the clear path that best positions Guernsey to offer meaningful MPS services to our clientele”
He adds: “We are fully on board with the notion that MPS is a significant part of our dealership’s future. But we do see a need for a programme that goes beyond a simple supplies replenishment programme with a repair component. To us, that is barely half a loaf. The key benefit from an end-user’s point of view will be the information on document workflow and recommendations on a better, less costly process.
“We also think we would better serve the customer if we come at this with good objective information that is not tainted with Guernsey pushing a favourite son. In fact, taking that tack might be the best differentiator for us to gain credibility for our programme.”
With only few exceptions, the true innovators in terms of MPS solutions remain the OEMs, with Xerox and Hewlett-Packard (HP) ahead of the curve. And Guernsey admits it will be interesting to see what HP – the world leader in printer installations – will come up with in terms of a channel MPS offering.
HP channel offering
After the recent coming together of HP’s print (IPG) and PC (PSG) business units into what’s now called the Printing and Personal Systems Group, the global giant’s MPS efforts fall under Managed Services headed by SVP Bruce Dahlgren.
A clue as to some of the changes that are happening at HP in MPS terms can be found in the title of this particular business as it’s scaling up from Managed Enterprise Solutions to what’s now called Managed Services. It’s a clear indicator that HP is intent on increasingly selling MPS through the channel as well as direct to its large corporate customers. This process essentially started last year with the acquisition of MPS expert Printelligent.
Dahlgren says: “The hardest thing for a channel partner is to have the intellectual property to go through a device network – now increasingly in the cloud – find the devices, read the meter, get all the information and then share it back with the customer.
“With Printelligent, we’ve now brought all the tool sets together into what’s called the Smart Decision Suite and are offering them to our channel partners. It’s still rudimentary – a self-managed environment with toner replenishment, fulfilment and break-fix – but it’s based on real analytics rather than forecasting.”
In reseller terms, it might be tempting to think a company like Staples – a very recent MPS addition – is superbly placed to benefit as its B2B customer base is closely aligned to MPS’ typical current target audience, but the opportunities for independents should not be underestimated.
Robert Palmer, Director of Office Document Solutions at Photizo Group, has the last word: “Certainly a company like Staples would have a much stronger play with the larger customers, but as you begin to push MPS capabilities downstream, relationships shift.
“It’s been proven many times – independent dealers have survived because they thrive on building close relationships with customers. With that in mind, if they can develop the core MPS competencies they need, there are definitely opportunities for smaller players.”
OEM or compatible – does it matter?
When the large OEMs started offering MPS solutions to the upper echelons of the corporate world years ago, it was another way to lock customers into their consumables business too.
But more recently, compatible/reman vendors like Katun and West Point Products (part of aftermarket remanufacturer Clover Technologies) have established their own MPS programmes and are now loudly banging the more flexible compatible drum.
The question is: do end-consumers ultimately care where their supplies come from? Says Doug Johnson, SVP of Supplies Network’s Managed Print Services: “When there’s a good MPS engagement with an end-user, it’s the provider of that engagement that’s the most important, not the brand of the hardware and supplies.”
The supplies business is certainly coming under more scrutiny now as cost and quality in an MPS environment are monitored more closely. But it’s the MPS providers that send out the engineer now if something goes wrong, so it’s very much in their interest to make sure that what they offer works.
Historically, reman products have often received a bad press, but this is changing. Says Printfleet’s Director of Sales, Gordon Snider: “Customers have been conditioned to choose OEM over remanufactured products, because at one time the quality wasn’t there and it affected product warranties. But remanufacturing has come a long way and there are now some top tier remanuf
cturers with high-quality products.”
Johnson adds: “What end-users want when they sign up for an MPS programme is for everything to work. It doesn’t matter what kind of supplies are used. What we’re seeing, however, is that the OEM share of monochrome printing goes down while the OEM share of colour actually goes up. That’s because colour is still fickle on the compatible side. Basically, resellers are selecting products that they believe work; that’s their focus, even if gross margins are not as good.
“And end-users over time don’t appear to care particularly which also says something about brand loyalty. Once the MPS engagement is there, they look to the MPS provider for their expertise on what to put in place. As long as it prints when and what it needs to and it’s got the right capabilities for what’s being produced, it becomes irrelevant to the end-user.”
MPS ‘in the cloud’ is still very much pie in the sky for the average reseller offering some – any! – kind of MPS solution to its customers. But there’s nothing wrong with a little future-gazing, as Henning Volkmer from cloud desktop services company Cortado did in his presentation MPS & the Cloud at Photizo’s recent Transform 2012 conference in Orlando, Florida.
While printing remains a steady pillar of all business operations, it now increasingly needs to be brought to new types of devices and applications. The cloud is the perfect medium to do this securely while at the same time maintaining central management, said Volkmer. In an ideal world, he added, MPS can be offered to tablets and smartphones, monitor environments across different manufacturer platforms and provide a deeper integration into the customer environment up to and including the print servers.
Cloud-based MPS is nothing new for the OEMs, but further down the channel it’s still in its infancy and fast becoming the next big thing. In June at its 2012 Cloud Summit, for example, tech distributor Ingram Micro announced a raft of new cloud services including a cloud-based MPS offering. The solution is available in three levels – Plus, Advance and Total – offering such things as a simple data collection and automated supplies fulfilment service, an all-inclusive cost-per-page model and a complete, remotely managed hardware-as-a-service solution with help-desk support.
The reality of take-up and execution with these new solutions will no doubt take a while to trickle through, but is this what the future looks like?