(Editor’s note: This article, which I authored, appears in the February issue of Independent Dealer magazine www.idealercentral.com, a publication focused on the office products dealer channel. I thought you might enjoy reading my treatment of MPS for that channel. I recommend you subscribe [it’s free] to Independent Dealer magazine to see what’s happening within the office products dealer channel. After all there is some synchronicity between the two channels.)
Managed Print Services (MPS) may go down in history as one of the most over hyped services ever to sweep the office products channel, office technology, and IT VAR channels. But the reality is that many dealers are doing an excellent job selling this service although the ones who get the most press tend to be on the office technology side of the aisle. But there are still plenty of office technology dealers who have either yet to enter the business or are just now getting started with an MPS program. If you’re an office products dealer and are feeling inferior because you don’t have an MPS offering or haven’t considered it up until now, you’re not alone.
But be forewarned, the window of opportunity is shrinking as rapidly as page volumes. That’s why hardware vendors like Toshiba are promoting strategies to offset that trend. At Toshiba’s LEAD dealer conference last November, Bill Melo, vice president marketing, Services & Solutions for Toshiba, informed dealers that one of Toshiba’s strategies and a defensive strategy for dealers to stave off the effects of declining pages was to continue grabbing as much market share in managed print as possible. That’s prudent advice for office products dealers as well.
It’s been a couple of years since I last wrote about MPS in the office products dealer channel. I thought it would be interesting to go back and check in with some of the dealers who might have been considered early adopters of MPS within the office products channel to find out if they’re still doing it, if MPS is all it’s cracked up to be, what are they doing differently now, and what do they know now that they wish they knew when they first got into the business? To round things out I contacted two definitive sources on MPS, Ken Stewart, an analyst with Photizo and Greg Walters, president of the MPSA (Managed Print Services Association), to get their thoughts on whether MPS is a good fit for office products dealers.
When I last spoke with John Givens, founder and chairman of Source Office & Technology headquartered in Golden, Colorado, he had recently become a Canon dealer (which helps explain the name change from Source Office Products to Source Office & Technology). He was riding high selling MPS through HP’s OPS Elite program. That program has since evolved into the HP Managed Print Specialist Resell program, a program that allows HP channel partners such as Givens to grow their MPS business by leveraging HP bundled pricing and investments in cloud-based MPS toolsets.
This program and the ability to sell Canon and HP hardware allow Givens to compete in MPS even if he’s not selling MPS the way he was in the past. Initially, it was more of a CPC (cost per copy) approach. Today, it’s more consultative with a focus beyond print and copy.
“We help people understand total cost of ownership and business process technology solutions to help them migrate from the paper world to the digital world,” says Givens. “Involved in that is print along with how you scan, deployment, where devices are located, rules-based programming for the equipment, and on top of that, an electronic content management solution.”
The office supply background helps provide Source with an edge.
“We know how customers are using paper so it’s convenient to be able to walk in and talk about how much paper they’re buying from us, why they should be buying less, how we can help them do that, and how we can improve their internal business processes. That concept has paid significant dividends and we have been able to expand our relationships in office supply accounts with our MPS offering.”
Asked what he knows now that would have been helpful when he first got into MPS, Givens admits it’s difficult to rewind and say I wish I could have, would have, should have. “When we thought about getting into selling more technology products several years ago I wish we would have done it maybe 18 months earlier because we’re finding that with the channel migration that’s occurring the more you can do for an account, the better.”
Three years into offering customers MPS, Specialty Enterprises in Westminster, CO is doing just fine. “We think we’re one of the leaders out here,” says Dave Cohen, vice president of sales & marketing. “We understand it very well.”
During the past year Specialty’s MPS business has grown from 15 percent to about 25 percent. “It’s a nice piece of business that works well and we try to convert transaction sales over to MPS sales whenever we can,” reports Cohen.
United’s HQueue MPS program was instrumental for getting Specialty into MPS although they’ve since graduated to Supplies Network’s mpsSelect. “They supply the service and the backbone,” says Cohen. “It’s a nice turnkey solution for us.”
Asked what he knows now about selling MPS that he didn’t know a few years ago. “I’m learning every day,” responds Cohen. “The vendor you choose, the shipping arrangement, the service backbone, the help desk, all that’s important.”
Overall, MPS has been a good fit for Specialty. “It’s crucial to our long-term success in the industry.”
COS Business Products and Interiors in Chattanooga, Tennessee continues to grow its MPS business although thanks to some alterations to their program. COS now uses more of a hybrid MPS program combining elements of SP Richards’ PrintSmart and West Point Products’ AXXESS.
But the big difference between then and now is the competition. “The amount of people who have gotten into this has grown exponentially,” says Owner Skip Ireland who feels that it’s likely more difficult now for a dealer not offering MPS to get into it. “There’s much more competition, especially from the copier guys.”
Where he used to be the first guy to talk about MPS when he walked into a customer or prospect’s office, now he may be the third.
How does he get customers to pay attention when they’re probably sick of hearing about MPS by then?
“I work out my costs, the price per page and so on and try to present it to them in different ways from the copier guys and how they go to market and market their services. I still go out of my way to position our solution; it’s all inconclusive and where it’s advantageous I’ll add paper. I’ll do things that I know those guys aren’t necessarily set up to do.”
Another change in the past two years is that COS now sells Lexmark printers and MFPs. “We sell a lot more complex devices than I ever thought we would,” notes Ireland. “We spend a lot of time not only converting laser printers to MPS, but incorporating all output devices,” notes Ireland. “Our approach is if it’s a printed image it needs to be part of the program.”
Can an office products dealer compete in the MPS space without the hardware?
“It’s going to be more difficult,” opines Ireland. “When I see the Kyocera’s of the world offering decent printers at a cheap price, and obviously some of those traditional copier guys provide devices for the whole gamut, I think it’s foolish for us if we don’t have a total MPS solution. When we first started out you could go out and generate 30 or 50 percent savings, because nobody ever paid attention to what they were buying or what they were spending. Now it’s a much more holistic approach so the answer is no. We might maintain what we have, but I don’t see us growing the business without having all types of devices. It allows us to load apps and make that larger device an integral part of the MPS solution.”
What does Ireland know now about MPS that he wishes he knew when he first started?
“I spent a year and a half trying to make everything perfect, trying to make all the numbers perfect, the whole presentation perfect,” he responds. “If I can fix 80 percent of the problems I’m light years ahead and the customer is light years ahead of where they were. I’ve learned to customize and accept what I can’t do or manage well and concentrate on the parts I can. I thought it would hurt my business but it doesn’t because nobody else can do it either.”
Eakes Office Plus in Omaha, NE was doing better with MPS two years ago than today. It’s still a big part of their business, but things have changed.
“One reason it’s not as big is because everybody and anybody is doing it,” reports Doug Galloway, Eakes’ digital marketing manager. “As you get more and more competitors it splits the pie.”
“It’s become commoditized,” adds Paul McKinney, operations manager. “MPS used to be a way to set yourself apart, now it’s just a normal way of life and you’ve got to find another way to differentiate yourself.”
Eakes does that by blending software and document management solutions into their MPS offering.
“We do a lot with cost control, rules-based printing, secure printing, and follow-me printing,” says Galloway. “A lot of these applications are cloud based and Sharp’s one of the leaders with cloud connectivity. That reduces the upfront costs and increases the pool of possible players when there’s little or no upfront investment.”
Being an office products and an office technology dealership carrying Sharp hardware is an advantage for Eakes over traditional office products dealers.
“Supplies dealers, unless they’ve invested heavily in service technicians or picked up a copier line are in a second position to machine dealers,” opines McKinney. “The advantage supply dealers have is they have a lot more individual relationships and make a lot more contacts throughout the day, but I see machine dealers in a solid first place here.”
Eakes supplies reps sell some basic MPS programs, but McKinney says they’ve had a hard time making the transition from a transactional sale to any kind of contractual sale, which takes more time and investment. “The transition is still underway, but I don’t know if a lot of our supply reps will ever get there,” states McKinney. “It’s a different world for them.”
Despite commoditization in the MPS space, McKinney has no doubt that MPS is good for Eakes. “We think it’s an important part of our business and want to grow that. Once we take most of those [MPS] customers under our wing they’re very loyal.”
The advantage that these dealers have is that time is on their side since they’ve already entered the MPS space. What about those still on the outside looking in?
Ken Stewart an analyst with Photizo Group doesn’t think it’s too late for office products dealers to get into MPS. “There’s still some room, but the gap is closing quickly.”
He feels the relationships that office products dealers possess along with their location connections is an asset along with their relationships with the various buying groups. The challenge he says is service fulfillment. “They’ve got the supplies side down, but fulfilling a full length MPS contract is a different matter,” states Stewart.
It’s also a commitment.
“If you’re going to get into this it’s going to be a 2-3, if not a 5-7 year journey,” says Stewart.
Stewart concedes it’s not an easy transition for any dealer to make. The challenge is getting in front of the right buyer. That means the questions to consider are, do you really want to do it, and do you have the right relationships?
“Office products dealers seem less likely to have those relationships than office technology dealers,” acknowledges Stewart. “They’ve long had a transitional relationship with IT, and IT for a long time has been the Holy Grail compared to purchasing. But that ship is starting to sail based on what we’re hearing from the IT VARs; the copier guys are starting to have intelligent conversations with IT, but the really intelligent ones are having business discussions with C-level executives.”
He recommends understanding the customer’s business and their ‘pain’ points. “You need to move from a SKU-based conversation of price points to how do you impact the customer’s revenue positively in the year to come,” says Stewart. “One of the key questions I always ask clients about is do you know if your customer’s revenue went up or down last year, did they go up or down in customer accounts, and why. If you don’t know that then you don’t have the right relationship with your customer to begin the conversation. That’s where you start.”
He also cautions against walking in and talking right away about cost containment, cost control, or cost reduction. “That’s a double edged sword because once you start talking about price the conversation becomes price driven.”
It’s all about value differentiation in the relationship, which he feels office products dealers tend to be good at. “That’s one of the things they need to focus on and not talk about price,” says Stewart. “Understand how you’re positioning MPS although I’m not saying that cost reduction isn’t something you can focus on.”
Greg Walters, president of MPSA believes office products dealers can make a go of it with MPS. “But it’s a basic MPS approach; providing toners and supplies desk side in a proactive manner. That’s entry level MPS.”
He recommends starting with current suppliers that are providing toner, some of whom have their own MPS programs. Before one goes there, Walters says it’s important for the dealer to define what their version of MPS is and not define it as what everybody thinks it is. Doing the research is an important element when it comes to determining if MPS is the right opportunity. The Internet is full of information as is MPSA, but as Walters points out, the problem is there’s too much information.
Many dealers choose one of the various turnkey programs on the market offered by the likes of LMI, Supplies Network, West Point Products, and others as well as the traditional office products buying groups. “They’re not a bad thing,” opines Walters although he cautions, “a lot of people take these programs and go to market with it and lo and behold you have three different people with three proposals all looking the same because they’re all selling the same program.”
With existing programs he notes that as long as you use it to support your infrastructure while you remain the face to your customer, then the cookie cutter approach of these programs is fine. “As long as it’s in the back room, it doesn’t matter if it’s LMI or Printsoft as long as you’re using it as your value prop to support your definition of MPS,” states Walters.
Another option that Walters has seen is providers using more than one program. Why?
“It comes down to customer. Some will have machines or fleets of machines that are more easily read by FMAudit or Printsoft. Instead of fighting it, they use FMAudit here, Printsoft there, and whatever is most appropriate for the customer over there. Think of it as a palette of solutions and using whatever one makes sense for that customer.”
