Coming off a 2019 that witnessed a dizzying degree of M&A activity from players large and small across our humble industry, it will be interesting to see what the new year holds in store. But if 2020 is anything resembling its predecessor, fasten your seat belts and hold on for a fun, if not tumultuous ride. The ongoing Xerox-HP saga rolled over with the calendar, and many companies are on the verge of announcing new agreements.
Let’s ask our panel of industry players what trends and predictions they have for 2020. Our State of the Industry review in this month’s issue only scratched the surface, so read on.
Dean Swenson, president of The Swenson Group, has first-hand knowledge of the voracious appetite being shown by private equity and venture capital organizations who are in the market for annexing dealers, and it’s not just the major players, either.
“Dealers are getting hammered by organizations interested in acquisitions,” he said. “This goes beyond the known PE roll-ups like Flex Technology Group. We are getting calls from organizations I’ve never heard of. I am cautiously optimistic that this will allow the remaining independent dealers’ value to grow and value proposition to be different than private equity or manufacturer-owned dealers.”
Paper Chase
The digital transformation will continue to apply downward pressure on paper usage, according to Joseph Odore, product manager-document and imaging, Office Products Unit of Panasonic. There is more ingestion than output, he notes, and more users are starting to get the message.
“People are still stuck with warehouses full of paper and I think that the digital transformation is going to increase further,” he said. “I think there are a lot more business out there taking the larger initiative and starting to face some of the potential issues of how paper-based documents are going to be an issue going forward, especially with on-demand information. The digital transformation will definitely be a top focus for a lot of customers.”
While MPS is often viewed as the worst-kept secret to dealer growth, a remarkable amount of dealers have been loath to leverage it as a tool for increasing their bottom lines. Jeff Gau, CEO of Marco, notes that when he obtains a dealer, managed print only accounts for about 10% of that firm’s business.
“I think MPS is going to continue to be a nice business. Ours continues to grow organically at about 15% per year, and that’s a huge number,” Gau said. “It will continue to be an opportunity for those who execute on it. This is really low-hanging fruit for the dealer. When we buy dealerships, one of the first things we do is introduce MPS to their customers on a broader scale.”
Security Concerns
Cybersecurity ranks as a threat and an opportunity. Lee Flood, director of sales for Pearson-Kelly Technology, notes the various layers of protection needed for true security tasks the dealers to raise their game. As security continues to rise in popularity, the more competitive it becomes, and providers need to be mindful of making measures too difficult for end-user employees to do their jobs.
“The biggest risk is the client’s own people, clicking on email attachments they’re not supposed to, using old passwords,” Flood said. “If I (as an end-user) have too much security and make employees’ jobs too difficult to do, they stand the chance of losing good people. There’s this balance we have to weigh as a provider for clients who come to in order to fully outsource or augment their existing IT. We have to be vested into the organizations we’re working with.”
Laryssa Alexander, president of the field services division for ECi Software Solutions, believes mobile applications will enable the industry to be more efficient and effective when providing service. “Mobile applications provide technicians better visibility into the offices they’re servicing, how equipment is used and how they can discuss new offerings with the client,” she said. “It also helps them to pull up any previous service appointments before they go into an office, where the more information they have on previous problems, the better.”
