As soon as the ball dropped in Times Square on Sunday, the countdown began for all the Negative Normans and Nellies who reside in Pessimistic Cove. They’re all asking the same question: when will something bad happen in 2023?
It’s a coping mechanism, a raising of the defense shields for all of those who are cautiously optimistic at best, skeptical at worst. There’s merit to it, really; when living in dread of the unknown is your MO, it becomes more difficult to suffer from disappointment. Perhaps it’s not the healthiest approach, but the 2020s are to blame for lowering expectations.
All we can do is judge the future by what the past has offered, and as we kick off this month’s State of the Industry report on trends and predictions, we have a leftover trend or two to share—hey, holiday dinners are great for leftovers, right? We’ll tap the fridge for a sample platter from our expansive cast of industry dealers.
Lauren Hanna, vice president of sales for Blue Technologies of Cleveland, believes the focus on security issues will continue to garner momentum. “We live in a world where we are used to information at our fingertips,” she said. “I believe that with the increased vulnerabilities and increased focus on security, customers want more control and real-time data than ever. IT professionals expect that as we evolve and diversify into more security-related solutions, we will be able to provide real-time security monitoring of the core MFD business.”
One of the growing trends is increasing focus and programs to continue to drive net-new impressions, notes Melissa Confalone, vice president of sales for Fraser Advanced Information Systems of West Reading, Pennsylvania. She believes it became a focus for dealers who did not think bundling contracts was an essential business practice pre-pandemic.
Attitudes are quickly changing. “Compensation plans and budget numbers for sales will need to be all-inclusive of hardware and aftermarket,” Confalone remarked.
Diversification opportunities abound for dealers looking to make up for lost clicks. That will be a focal point for Virginia Business Systems, where President and CEO Jim Dotter will lead a concerted push toward offerings beyond the imaging realm.
“We’ll continue to grow our managed service offerings with SMB customers,” he added.
M&A Landscape
One person who is keeping a watchful eye on the M&A landscape is Mason Smith, president and CEO of MTS Office Systems in Anderson, South Carolina. Smith has noted a number of dealers in his regions have been gobbled up by mega dealers, manufacturers and private equity firms. In his view, it creates opportunities for dealers who can focus on locally owned and operated businesses that value support.
“I believe it will result in more consolidation, but then out of that we will eventually see the opposite as displaced employees will go out on their own,” he said. “That is how we got started at MTS and I would imagine that is something happening across the country.”
By the same token, Tyson Johns, director of finance for Pearson-Kelly Technology of Springfield, Missouri—ponders whether the role of the so-called mega dealer will change, particularly those backed by private equity resources. Both the mega dealer and the PE firm follow similar models for growth and long-term planning, he said, but as they grow, it limits the ability for an exit strategy outside the scope of another PE firm coming into play.
“In the copier industry in the past, mega dealers became so huge and then decided to sell,” he explained. “OEMs freak out that if they don’t buy them, then their competition will convert all that base away. That’s when they ask themselves how they can recoup this market loss. Even the acquisitions that turned out remotely wise weren’t as successful at the beginning of the transition, so if this happens now, what OEM is financially strong enough to make this play? Or does it potentially take another one down?”
Another factor that arises from massive acquisition activity is the domino effect it imparts from both a personnel and services standpoint, notes Josh Salkin, a partner with EDGE Business Systems in suburban Atlanta. “Competitive landscapes will continue to change as legacy dealers sell to mega dealers who enter new markets,” he said. “What that means to client disruption, talent retention and services remains to be seen.”
Explosion of Color
One of the more positive trends witnessed by Stargel Office Solutions is the increase in color click volumes. TJ DeBello, vice president of sales, notes that while monochrome volume has remained flat in the post-pandemic era, the color volume has grown by 20%.
“If this trend continues in 2023, we look at surpassing our pre-pandemic service revenues,” he said. “This would be a positive trend for our industry because of the higher revenue and profit potential.”
