Welcome back to another round of the office imaging industry’s most significant events of the past 25 years. It’s been quite the ride, a ride that shows no signs of abating. No doubt about it, the past 25 years have been some of the most exciting in the industry with ups and downs, major developments, channel changes, and product introductions that have made a significant difference—positively and negatively—to the bottom lines of many players no matter where they’re perched in the channel or in the industry.
With that in mind, let’s look at five more events that have had an impact on this industry during the past 25 years.
Managed Print Services Becomes “The Next “Big Thing”
That cost per copy concept that was one of our significant events in last week’s edition would eventually evolve into Managed Print Services (MPS) as dealers now had a strategy, albeit one that some are still trying to figure out, for taking over the service and supplies replenishment for their customer’s printer fleets. As Hunter McCarty of RJ Young in Nashville, TN, recalls, “This was difficult at first and although the model of a break-fix fit, there were still challenges in how to price the program and get customers to realize what they were spending on printers.”
In McCarty’s view, the 2009 economic downturn helped speed up the acceptance of MPS as customers began to look at all expenses and realized that the number of printers in their organization was out of control as was what they were spending on them. “Dealers were able to help the customer understand the total cost of ownership and wrap a program around the fleet that would not only minimize costs, but help control expenses,” says McCarty. “For the dealer in many cases the volumes picked up on printers offset the loss in volumes on the MFP.”
While some in the industry feel that this MPS horse has been beaten to within an inch of its life and has been supplanted as “The Next Big Thing” by Managed Services or Managed IT Services, it’s not going away and even thought it’s no longer “The Next Big Thing,” it’s still a big thing for the office imaging industry.
Consolidation in the Dealer Community
“Dealer consolidation has had one of the biggest impacts on the copier/imaging business,” opines John Hey of Strategic Business Associates (SBA). “Starting with Alco (which acquired my dealership in Minneapolis), Hillman, Danka, and Erskine House, role-up strategies initially provided liquidity for dealer owners, growth partners for manufacturers, and favorable returns for the shareholders of the acquiring companies. When Alco became IKON, the game changed. Some manufacturer relationships were disrupted and many talented people headed for the exits. Then the sale of IKON to Ricoh caused the manufacturers to further strengthen their direct distribution. Global Imaging was the hold out but their sale to Xerox only hardened direct distribution plans by the manufacturers. The independent dealer still has great opportunities, but dealers must be larger and more sophisticated to compete.”
All one has to do is look at the ranks of BTA dealer members and that’s proof enough that the office technology dealer community doesn’t exactly have the same strength in numbers as it did 25 years ago. After the mega dealers were done with their acquisitions (and making a lot of dealers who sold out in the process extremely wealthy), we saw a fair amount of dealers who sold out return and open new dealerships. Now we’re seeing a survival of the fittest trend with larger dealerships acquiring smaller ones as well as OEMs continuing to strengthen their distribution through dealer acquisitions even though it’s not on the scale they were buying a few years ago.
The Rise and Fall of the Mega Dealer Channel
Following up on John Hey’s comments on consolidation in the dealer channel, about It’s impossible to minimize the effect that IKON, Danka, and Global Imaging Systems have had on the office imaging industry. They’ve had a tremendous impact on the independent dealer landscape and for a time seemed omnipotent. Indeed, there were concerns in some circles that this was the end of the independent dealer channel as we knew it even if many independents never got that memo and continued to grow in this strange new world of office technology distribution. As fortune would have it, none of these organizations turned out to be omnipotent, the independent dealer channel is still viable, and that mega dealer channel as it once existed is no more, swallowed up for better or for worse by the likes of Konica Minolta, Ricoh, and Xerox although one can argue that Global still seems to have its #%&* together. Regardless, those organizations had a major impact on the industry, one that still reverberates today.
Solutions Move the Sale and the Sales Pitch Beyond the Box
Make no mistake about it a box selling mentality still pervades the industry as does a continued emphasis from thought leaders and even the OEMs about how the industry must focus on selling solutions. For sure, solutions are a key component of many box sales these days, especially when incorporated into the sale from the outset. That’s not to say solutions, i.e. software, are anywhere close to dominating in this industry. “If you look at software sales, the percentage of the sales is still relatively small,” notes Global Imaging’s Mike Pietrunti. “I’m not sure why; it’s [called] applications now, and I know everybody is selling them, and we’re selling them, but on a percent of total business it’s small and that’s probably because the manufacturers don’t really [develop] the software.”
Solutions selling isn’t a new concept, we’ve been hearing about it for well over a decade now, but that hasn’t stopped many in the channel from raising the issue or saying that’s how they sell now even if there continues to be a mad rush at the end of the month to hit those hardware quotas. Still one can’t underestimate the importance that software plays today compared to 25 years ago. Consider the wealth of partnerships between software companies and OEMs, dealers who have developed their own software, and how having a document management, workflow, or some other type of solution available to customers is the sign of a progressive office imaging dealership in 2015 and a potential source of differentiation.
The Popularity of the Global Benchmark Model
Some call it the Global Benchmark model, others the Tom Johnson model, but whatever you call it, it’s a model that’s been used by hundreds and hundreds of dealers to help manage and grow their dealerships over the years. “That operating metric model that dealers have adopted, either entirely or in a different form, has kept this industry somewhat healthy,” maintains office imaging veteran Harry Hecht. “It’s helped those dealers doing well, do better and those who haven’t, they’re feeling it.”
