Any dealership that is still plugging away and independent after three-plus decades must be doing something right. You can certainly say that about Oklahoma Office Systems, LLC/OneSOURCE in Oklahoma City, Oklahoma. They remain a major player in their market and lay claim to being one of the first dealers in the U.S. to offer managed print services.
At the helm these 30+ years is co-owner Ron Carr. We had the opportunity to speak with him recently about the MPS business, the industry in general, and the company’s transition into managed IT services.
How are things going?
Carr: We’re looking to finish out our year real strong, but we don’t know the final numbers yet. (We asked Carr this question in early January and their fiscal year ended at the end of the month.)
What’s going right?
Carr: Equipment sales are up about 12 percent, which includes some solutions and software. Our managed print services is a huge piece of our business, all the way from the hardware side wrapped into our managed print services, as well as our service side of the business. I would say that 62-70 percent of what we’re doing might end up being what we classify as MPS.
We had some major accounts, and accounts that were up for renewal and that helped. And I had a couple of good accounts myself that added to the overall revenue of the company, and that’s where we are as a management team right now sitting and evaluating what we have to do this year to continue to sustain and improve what we accomplished last year. It’s not getting easier, we all know that. When you take an A3 product and say that is an average of $7,300, but then selling a lot more A4 product that are an average of $3,500 which may be on the high side of that, you have to do twice as much business in hardware to get the same revenue.
I understand your sales force is quite adept at selling MPS?
Carr: We’ve been able to convert our sales force as our customer’s initial contact to completely focus on managed print services and do the document assessment.
We established a separate division of our company called OneSOURCE about 10 years ago that was focused on managed print services. For a number of years we ran it with several people and several guys just doing the managed print piece of it. About five years ago we began converting our sales team more to that. I think we’ve done a pretty good job. We still have a long ways to go.
You were one of the first dealers in the U.S. to get into MPS. What was the inspiration?
Carr: We felt like that was the future.
How did you even know about it in the first place?
Carr: Obviously, Print Inc. was a company we had heard about and our management team just started doing our own research – where is this thing going, how can we create it, and everything else.
It’s had its challenges hasn’t it?
Carr: We’ve obviously had to tweak it quite a bit since the beginning stages. We don’t have it all together yet because we still struggle getting into the accounts for just the service piece of it. Some analysts talk about going out and picking up the service contracts and the hardware will follow. We’ve not been successful doing that. What we’ve been successful with is wrapping the equipment and services into the complete picture up front.
How did you end up educating your sales reps to sell MPS?
Carr: Sales reps figured, ‘If I sell a copier that will get me more money than 60 percent of a deal over here, then okay, let me just go sell the box.’ That’s when we began thinking we needed to educate the everyday rep how to do it. What we ended up doing was creating a support team that works with them. In my Oklahoma City office I have an overlay sales rep that knows how to help them do their spreadsheets, the audits, everything else and they are paid differently than the reps. The reps are paid the normal commissions structure and this overlay person picks up money based on the additional service clicks that we do get.
There’s a lot of talk in the industry about MPS becoming a commodity, do you agree?
Carr: It’s not a commodity the way we do it. If we’re not careful in the industry it can become a commodity. The people who get into MPS and just think you’re doing it the same way you do the copier business, the answer is yes it’s a commodity. I have a major account I renewed this year and we had to go back and rebuild everything we did since day one. He had gotten some quotes from some people who came in said, ‘We’ll take over your 300 some odd printers and I’ll do it for X.’ There was no thought process, no consideration of what kind of printers he has, the age of the printers, what he was going to do or anything. That type of stuff is going on, but I think there are enough smart business people who are going to realize, ‘I screwed up.’
Some people are just trying to go out and throw it against the wall and think, ‘If I get one, then I’ll figure out what to do with it later.’ I don’t know if that’s going on across the country, but that’s my perception.
I have close to over a half million dollars a year in additional overhead expense just to help the MPS side of the business. So if you take a normal copier model and say, ‘I’m just going to go out and pick up service business the way I’m picking it up,’ and you don’t think you’re going to provide any extra value to the customer, you’re crazy. Why would a customer do an MPS deal if that’s all they’re going to get?
I get the impression there’s still plenty of dealers who still don’t get the concept of MPS or have done it and are disappointed by the returns?
Carr: You’ve got dealers who are either going to continue down the path of it and say this still has a lot of life left and some who say, ‘I still can’t get it, it’s too tough.’
For me I’m kind of hoping some people make the decision to jump out of MPS and go into managed network services and say, ‘I’m not going to do the MPS business anymore.’ If they do, it’s going to be a better situation for us.
You’re now offering managed network services. How is that going?
Carr: We just started last year and have wound up with a couple of accounts where we’ve done it and the ones we have are working well. So much for us is coming back and looking at the alignment of our sales force and how much can our sales force handle and how much can they not.
I feel like we’re maybe trying to throw much at the complete team and are now backing up and trying to decide if I need to hire a sales person for managed network services and drive it in that direction. We’re also looking at if that’s the best way or to acquire someone. I’m a member of CDA and many members who are doing well with it went and acquired an IT company. It’s a different culture and you need to be aware of that.
We’re still working on that piece. That’s one of the things about this industry, it’s either going to be exciting or drive you crazy because when you start looking at the phone industry, the audio visual industry, the IT industry and all of our industry and this piece of pie in the middle and everything is converging to it, somebody is going to win and somebody is going to lose. We hope we win.
Do you see other areas or opportunities to grow the business and remain relevant?
Carr: Our three targets for the next year in addition to moving MPS up to larger companies is refocusing on the production print side of our company. We’ve been in and out of that business and I think it’s a viable business especially on the services side. The software solutions side is the other area we’re going to focus on this year and we’re looking specifically at software and solutions. We need to be efficient with and go back into our MPS customers and help them even more with their documents.
Our printing is at some point going to go down in the office and we need to go against our grain and begin to co-educate our customer not to do prints. Services have to continue and software solutions will hopefully bring those extra services to the company. And we’re starting to see some success with the engineering machines and are looking at some very good deals for this year. That’s because Xerox got out of it, and hopefully we’ll pick up some services on that as well.
What’s the secret to being able to successfully do what you’ve been doing for 31 years?
Carr: A huge portion of it is our employees. Since we’ve been in business the tenure of our employees is unreal. My administrative assistant has been with me for 25 years, my accounts payable clerk has been with us for over 20 years, my accounts receivable 15 years, my service dispatch person just celebrated 7 years. Our service technicians average about 15 years.
If we ever had a weakness it’s been creating stability on the sales side of the company, but we’ve still been able to create some stability over the years and now we’re creating a little bit more.
You truly believe in taking care of the customer don’t you?
Carr: We started in a small town with less than 20,000 people and grew that to over $1-million from basically $60,000. Our whole focus was just to take care of the customer. That’s what I’ve tried to keep in our [employees’] minds and focus throughout the years, which is how important the customer is to the organization. We have little turnover of accounts. Part of that is we’ve been a company that has focused on the mid-sized Mom & Pop and down-the-street type business. It has sustained us and been there for us. If I lost a large customer for whatever reason I wouldn’t lose more than 5 or 6 percent of our total business revenue because they aren’t a big part of our business even though they’re still an important part.
