Category Analysis: The MPS land grab

The MPS sector is rapidly evolving, but are OP dealers keeping up? OPI digs deep to find out


Pinning  down a concrete definition of Managed Print Services (MPS) is difficult; no wonder it is hard for OP dealers to keep up. The Managed Print Services Association (MPSA) definition is "the active management and optimisation of document output devices and related business processes" but, as MPSA President Greg Walters points out, this defines the notion of a constantly evolving MPS market.

Gary Downey, Group Marketing Director of UK managed print provider Balreed, notes: “MPS is a term that is increasingly misused and often very confusing to customers. Some OP dealers are selling MPS when in reality they are delivering the same reactive break-fix service they have always done. Others use MPS simply to describe a fleet that combines software with hardware.”

Rapidly maturing market

Supplies Network VP Sales David Concors agrees, saying that all too often MPS is offered as a commodity, creating little long-term client etention.

The reality is that MPS, particularly in the mature US market and increasingly in Western Europe, is continually and rapidly developing. The good news is that there is still scope in this market if dealers jump on the bandwagon quickly.

Supplies Network SVP Strategic Business Doug Johnson explains that while only a minority of dealers are currently offering truly optimised fleet management, they are now beginning to look beyond document output to document input (scanning, related storage, archival and retrieval) and document workflow solutions, both paper and electronic.

Increased customer demand is making MPS the de facto way in which businesses buy and manage print. InfoTrends predicts a CAGR of 6.1% from 2013-2018, reaching $9.9 billion in 2018, with 40% of machines in use in Western Europe under MPS contracts.

With demand clearly rising, it is no surprise when dealers are suddenly faced with the reality of losing their consumables contracts. As co-founder of IDeAs, a network of independent document advisors, Steven Swift points out: “Often, the first time OP dealers hear of this is when they are informed they no longer have responsibility for the procurement of printer consumables as these are now being handled by the IT department under an MPS contract.”

Compensating for declines

A shift to MPS may incur a change of business model, but all the signs point to one conclusion: OP dealers need to make the change to offset declining print revenues. Swift says that MPS providers sell a range of solutions and services to manage the fleet and move up the value chain.

“This way, they can more than compensate for the decline in sales of hardware and consumables," he comments. "If OP dealers do not find a way to be part of this, they face an ongoing squeeze in revenues and margins."

Canon UK and Ireland Partner Channel Director Matthew Searle adds that dealers should be adapting to a longer-term sales mindset, which could represent a fundamental change in their traditional sales cycle. “This is a natural evolution, taking the customer on the journey from print to digital documents, and to managing information stored in these documents,” he says.

Photizo MPS Practice Director Ken Stewart states that leading MPS providers have moved beyond simple price-per-page contracts and are willing to go on the hook for a customer’s outcomes. “If customers don’t achieve the expected results, they pay a percentage based on the amount of the miss,” he says.

Stewart’s prediction is that resellers must gravitate to one of two models: high volume, low margin or high value and higher margin. “A recent Photizo channel partner loyalty study leads us to the conclusion that providers in the UK are really starting to see aggressive pricing pressures (perhaps even stronger than in the US, the largest MPS market in the world),” he says.

Making the MPS move

OP dealers should also be using existing print customer relationships to their advantage while building knowledge to deal with technical and commercial components. “Most customers we have spoken to recently want a smooth service offering to take away the pain of dealing with print devices," says Print Audit Managing Director Phil Madders. "The key for dealers is to get involved with the processes that integrate them more closely with the core business.”

Supplies Network’s Concors adds that dealers which focus on the larger view of managing documents are more likely to remain relevant as document output declines over time.

On the other hand, Chris Iburg, Xerox Managed Print Services, United States Solution Providers Director, warns that traditional ‘box sellers’ need to look at MPS carefully as it’s not a simple transactional sell, but more of a consultancy proposition. However, he adds that in the mature US market, many OP dealers have already learnt to add the necessary specialisation or to partner with a company that fills the required expertise gap.

In addition, Madders suggests that OP dealers should focus less on the capital sale of devices and instead concentrate more on the complete service package and recurring revenues.

Entering the MPS market may seem daunting, but help is always at hand. And, advises MPSA’s Walters, “OP dealers would do well to investigate any and all the MPS programmes that are on offer”.

The majority of MPS vendors now offer entry-level MPS programmes designed to ease the way into the MPS market.

Xerox, for example, has recently extended its offering to include entry-level offerings. “The entry-level offerings are an opportunity for many OP dealers to step into the MPS market. They can begin by offering a proactive supplies management service, for example,” says Xerox Director, Managed Print Services, Channel Partner Operations Paul Gaiser.

Lexmark UK and Ireland Channel Director Martin Fairman agrees, adding that over the past 12 months, the vendor has seen an increase in requests for MPS solutions from the private sector and SMB users. Like most MPS vendors, Lexmark has created a channel programme aimed at encouraging more dealers to look at MPS as a viable option, particularly in light of flat or dwindling hardware margins. “Dealers now have MPS packages that are easier to articulate and sell, and easier to deploy without hindering the sales cycle. They have been developed to drive down the complexity of delivering MPS,” says Fairman.

A Zen view of MPS

UK dealer ZenOffice, which made the decision to move into MPS almost three years ago, hasn’t looked back. As a Xerox XPPS partner, the dealer has access to all of the vendor’s enterprise tools and is currently signing over ten deals a month, including hardware.

ZenOffice MPS Director Dale Needham advises dealers wishing to engage in MPS business to prepare for a different sales cycle and – importantly – to start understanding the technology involved. “Choosing the right MPS vendor that provides great products and services is also a must,” he adds.   

Click here to read more on MPS with the Steven Swift Q&A