Lexmark's Printing & Solutions Showcase
Last week I had the good fortune to travel to Lexington, Kentucky for a Lexmark press/analyst briefing. In case you’re not aware I fit squarely into the press category and that’s the way I like it.
There weren’t any major revelations as far as new products introductions, but the day included an update on Lexmark’s dealer program, a review of the company’s solutions, a tour of Lexmark’s Printing & Solutions Showcase, and overviews of the company’s MPS strategy and U.S. channel focus.
The briefing began with Chairman and CEO Paul Rooke’s update on Lexmark’s financial performance, the company’s global objectives, and its growth in the SMB market.
The past year was a challenging one that saw flat revenues as the company was down one percent overall. “We had economies that were rather stagnant by most indicators, particularly in North America and Europe,” states Rooke.
There was some growth, however, in Latin America and Asia. Although overall revenue was down one percent, the company’s core business (laser, business inkjet, MPS, solutions) grew about 7 percent in 2011. “That was encouraging for us in an imaging market that by all indicators declined in 2011,” notes Rooke.
It came as no surprise that Lexmark will continue to focus on its core business, particularly laser even more in 2012 as it drifts further away from its legacy business—consumer inkjet, a segment they’re no longer participating in. Additionally, Rooke reports the company’s inkjet business with the OfficeEdge line is poised for growth. He describes these products as “robust, solid, network solutions, MPS-capable inkjets, nothing like our previous inkjets.”
Rooke further emphasized the importance of the company’s fleet management tools and the continued investment in solutions. “We’re growing our solutions capability to provide more end-to-end solutions capability for our customers.”
Those end-to-end solutions encompass hardware, software and services.
The copier channel represents the fastest growing channel for Lexmark. As a result Lexmark is ramping up its dealer programs to emulate what the traditional copier companies offer their dealers.
Phil Boatman
“Because of the growth of our dealer program there’s a concerted effort between us, this channel team, and our large account team to leverage the dealer network to drive as much business as possible,” reports Phil Boatman, manager, North America Channel Business Development. “There’s an obvious recognition of our large account team’s part of the success and power of the independent dealer and the value they bring to the table from the ability to service the account from top to bottom to the local relationships, flexibility, their overall care of the customer. It’s been a big win for us all around as we’ve driven more of our dealers into all sorts of accounts from mid market to large.”
What’s different in 2012 are growth incentives for dealers rather than the one-size-fits-all approach Lexmark had in the past. “We’ve been able to drive growth year after year and to continue to grow we need to make our program richer,” acknowledges Boatman.
More importantly, Lexmark continues to welcomes input from their dealers.
“We’re very intent on listening and learning from our dealers,” states Boatman.
It’s not just the dealer principles who Lexmark wants to hear from either and Boatman says that input from dealer sales reps in the field is equally important.
If you’re keeping track, Lexmark has about 250 dealers and is looking to grow that number. But they’re not bringing on just anybody.
“We want committed, proactive dealers that understand it’s not just about the box,” says Boatman. “We want a dealer who has a balanced A3/A4 attack, understands managed print services is here to stay, understands the power of solutions and changing that conversation with their customer and understands that whole picture and moving the conversation to a different level.”
With that in mind solutions are critical to Lexmark’s growth and viability in the channel and the company isn’t ignoring this area either. Sean Endicott, senior manager, North American Channel Business Development, outlined the various solutions offerings from the company, emphasizing acquisitions such as Perceptive Software and Pallas Athena along with key opportunities such as distributed capture at the MFP, mobility, workflow, and the cloud, plus managing all content not just content residing in databases.
“There’s still a lot of paper-based workflow processes out there we can solve,” says Endicott. “We want the Lexmark device to be the central focus point for capturing [information].”
As Endicott further emphasized, Lexmark wants to help its dealers with the entire document life cycle. “We want them to have a piece of that no matter where they are in the value chain,” he says.
Lexmark views solutions in a couple of different ways, including fleet management via smart MFPs that can solve problems for customers along with single-function devices that provide those capabilities as well. Being able to manage those devices effectively requires what Endicott says is world class service and tools to help the dealer be more intelligent and have confidence in what they are delivering to their customers.
“From capturing to accessing to managing that content whether it’s a Lexmark solution or a third-party device we want to be easy to work with from a dealer’s perspective,” says Endicott.
The bottom line is Lexmark is looking to drive the dealer’s incremental revenue stream that comes with the software. Also of note for the dealer channel is Lexmark’s focus on embedded solutions such as the smart MFPs with the eTask interface that places the solution on the device itself.
“It’s more economical and there’s less barrier to entry,” says Endicott. “Oftentimes, you don’t need a detailed IT discussion. These are things that bode very well for the dealer sales rep and what they like about our solutions. They’re easy compared to more server-based applications. The embedded vehicle allows us to bring solutions more often to the customer.”
Lexmark's Business Development Manager Solutions, Doug Frazier in the Printing & Solutions Showcase
Following Endicott’s presentation, press and analysts took a tour of Lexmark’s Printing & Solutions Showcase where devices and solutions are demonstrated in vertical environments such as education, healthcare, and manufacturing.
Lexmark may not have been the first on the block to unveil a MPS strategy for the dealer channel, but they’ve got some experience in that area at the enterprise level and have fashioned that into a solid MPS strategy for their dealer channel. “We want our dealers to know we are leaders in our thinking, our strategy, and our vision for managed print services,” states Boatman. “We’re translating the successes we’re having in the enterprise space into the midmarket space. I think dealers appreciate that.”
Lexmark Fleet Manager 2.0 is the name of the company’s toolset for MPS. Originally introduced in 2010, it’s expected to be a key component in Lexmark dealer’s MPS arsenal. Further validation for Fleet Manager 2.0 comes from Toshiba who has selected it as their main go-to-market toolset.
“We are getting a lot of success out of that partnership and we’re leveraging that in the rest of our independent dealer space,” reports Boatman.
Lexmark views MPS as more than a cost-per-page program.
“We see it as an opportunity to tie in solutions, proactive management of devices and consumables and the businesses processes, driving the output to those devices,” explains Boatman.
Part of that is acknowledging that paper is more than storage and communicating, understanding there are other ways to collaborate and share information, and understanding the ability to consolidate paper-based processes and help customers understand and manage their costs this is the direction Lexmark is driving their dealers towards.
“It’s not just about device optimization,” contends Boatman.
That’s only a sampling of what Boatman had to say about MPS. Based on his presentation any dealer aligned with Lexmark is in an excellent position to leverage the tools and expertise the company provides to get a foothold in MPS. And based on the comments of Lexmark executives throughout the day, Lexmark has every intention of ensuring that their dealers can deliver the MPS goods.
The day concluded with comments from Ron Binkauskas, VP & GM, Global Channel Sales & Marketing, who discussed the company’s U.S. channel focus, revealing that 2012 will see the company’s most significant investments in terms of resources to that channel. We also learned that he’s got a thing for A4.
“I’m passionate about A4. I believe the future is A4.”
The traditional copier world is in the midst of an evolution and Binkauskas opines that the requirement of A3 nowhere near matches the actual production of A3. Many analysts would say he’s dead on in those comments. If that’s the case, Lexmark is looking to take advantage of this shift.
“We are going to leverage our capabilities with our partners in the copier dealer channel very heavily,” says Binkauskas. “Up to this point we’ve been in a complimentary relationship. A3 is still the primary product being rolled out to the copier dealer channel clients and A4 is being placed around the A3 devices. I think there’s a better model, the A4 model.”
He further emphasized that it’s not about the device anymore. Using a cell phone analogy, Binkauskas explains, “If it doesn’t enable workflow and your personal productivity you don’t want it. An output device is no different. It’s not about the hardware it’s about the services and capabilities you wrap around that hardware. Business size doesn’t matter; you’re looking for these devices to enable productivity and efficiency and at the same time drive cost out of your business. That’s where Lexmark can provide the greatest value.”
He continued with the theme of the day regarding the importance of the dealer channel to embrace new ways of doing business.
“I believe our partners in the copier dealer channel will continue to embrace that more and more. We are looking to be the prime versus the complimentary offering, that’s my ultimate goal.”
Incidentally, Binkauskas joined Lexmark to launch the MPS business so he’s accustomed to changing mindsets.
“We had to change direction of market and I believe Lexmark can change the direction of this market by promoting our capabilities and value add to our customers, which is the customer, our dealer channel and grow their business at a faster pace than if they maintain the status quo. I can’t wait for the market, I need to provide direction that accelerates the change in the market. If I wait for A3 to progress out of the marketplace before A4 assumes the prime position, I don’t believe I have that much time left.”
Time will tell, but what we have here is a company that shows no failure to communicate its strategy to the press, to the analysts, and to the dealer channel. I don’t think it’s overreaching to say Lexmark is a viable contender not only for dealers looking to fill in gaps in their product line, but for dealers looking to move into MPS and partner with an organization that truly understands the value of the independent dealer channel and isn’t afraid to ask questions and take the necessary steps to better serve that channel. If anyone has the potential to conquer the A4 and MPS worlds, you’d have to place the company based in Lexington on that short list right now.
