Among the office technology dealer community, the subject of managed print services (MPS) is a well-visited discipline. For years now, we have been duly informed on the merits of MPS and the laundry list of reasons to provide a comprehensive offering that goes a long way toward fostering stickiness with customers.
After all, the cost-per-page formula has devolved into a race to the bottom, with commoditization offering only heartbreak and fiscal disaster. It’s all about going beyond offering consumables and break/fix capabilities to provide automation and workflow efficiencies. We seek to analyze printing habits and modify behaviors, tossing in some user rules to make sure that Jill in payroll isn’t doing 100 color copies on heavy stock to promote her daughter’s under-12 soccer team tryouts all through town. Hey, that’s what Facebook is for, right?
In the end, it’s about truly managing a client’s printing proclivities—it’s the first letter in the acronym, for crying out loud. It’s about leveraging customer data to provide a portal to workflows and business process optimization.
Yeah, yeah, you mumble. We’ve heard all of this already.
So why are we still failing with MPS? Why are so many dealers giving up the MPS ghost because they cannot make money? It’s the number-one objective of any business to make a profit and keep the lights on. But the dimmer switch is set to the low position with MPS. The good news is, there are ample opportunities to garner that monthly recurring revenue through MPS contracts, and even the more successful players out there will admit that MPS only accounts for 10-15 percent of their overall pie.
We’ve pulled together a roster consisting of a half-dozen MPS specialists, including a pair of pure-play providers. They’ll garner insight into the evolution of their offering and some key points into what makes their offering so popular among their client base. What’s more, we’ll tackle the issue of profitability and the talking points behind why some dealers are struggling or failing to make MPS a vital aspect of their overall business.
ID, Contain and Control Costs
Cannon IV, a dealer that falls under the Flex Technology Group umbrella of companies, waded into the MPS pool when a client requested cost-per-page billing that included toner and service. Its program has evolved into identifying, containing and controlling costs to help customers better manage their financial outlays, while understanding their processes with printing and documents.
Jim Jones, Cannon IV
According to Jim Jones, COO, Cannon IV eschews a rip-and-replace philosophy in favor of a stepped process to outline the customer’s costs at every juncture, including areas that may require swapping in new equipment. The dealer uses FMAudit to collect the client’s data to track usage and glean information on frequency and user habits.
Canvassing a client’s employee base is an experience in itself. “Printing is pretty personal to people; no one wants to lose their device,” Jones explained. “Everybody wants something better. It’s kind of a sensitive thing to interview people, to see what they’re doing, how they’re using it and what equipment they’re using. Whenever people think things are going to change, they’re pretty vocal. We tend not to recommend equipment that is overkill for the environment.”
Cannon IV adheres to the HP balanced-deployment philosophy to define what the client’s environment entails, then develops an assessment plan that speaks to the goals of the client, taking page volumes and workflow into account. The FMAudit tool yields true print volumes, peaks and cycles, which helps devise an auto toner replenishment program and furnish predictive maintenance.
Between the FMAudit data and its own analytics, Cannon IV is able to keep a tight hold on its customer costs, not to mention its own profitability. Nothing short of a full commitment to MPS will yield a profitable experience for dealers, Jones notes.
“You have to be focused on this with all of your staff, your tools, how you’re going to collect data and ship toner,” he said. “It’s not a me-too product, and not something you can just tack on because you want to get into a different market. FMAudit doesn’t provide all the answers. Data collection is one tool for understanding a customer’s environment, but it’s not a secret sauce. It’s important to talk to customers about their cycles.”
Dedicated Digital Solutions
Jim George, DME
Cincinnati-based Donnellon McCarthy Enterprises (DME) is another dealership that leverages the FMAudit software tool for data collection, which has enabled it to substantially grow its MPS business. But what helps set the dealership apart is its digital solutions center in the Queen City. According to Jim George, DME president, the dealer has full-time employees monitoring its printer fleet seven days a week. These employees are tasked with remotely installing FMAudit’s VCA audit tool, in addition to managing the printer fleet, while also acting as a backup for DME’s technicians.
“Customers can call in and if they need help with an application, (digital solutions center employees) can help assist them,” George said. “It’s not just managing the output devices or the toner, it’s assisting the customer to do their job.”
The VCA (value chain analysis) tool allows DME to capture printers that may have been missed on the initial walkthrough of a client. The volume analysis is handy to ferret out devices that are overused, and DME can then recommend a more-robust production machine in its stead during a subsequent quarterly analysis review. It allows DME to have a more educated and specific conversation with its customers, thus demonstrating the managed value in the process.
George is put off by the attitude of competitors who use blanked statements like, “For a penny a copy, we’ll service all of your fleet,” which is asinine. Given that a client may have a mixture of printers, including one-offs and inkjets that cost a lot of money to replenish, it’s a losing proposition. When DME does its initial walkthrough, they will recommend replacing the inkjet goblins with remanufactured HP printers that can be more economically serviced. If a client balks, that could be a telltale sign that it’s time to walk away.
“Inkjet will kill you every time,” George said. “(A client’s) IT department will go online and order three $250 inkjet printers, but those cartridges are very expensive for us. The cost-per-copy for us might be 50 to 80 cents per sheet. That’s why when you tell a customer you’ll take over everything, you’ve already lost. You have to take the time to do an analysis of the organization to know exactly what they’re doing and how you can add value, while doing it at a profit.”
Streamlining the Process
Novatech of Nashville, TN, recently rebranded from NovaCopy, but it’s no stranger to MPS. The dealer endured its share of growing pains with MPS, particularly in regards to pricing, the level of resources required and timeframes for client implementations. It now boasts a streamlined process that is efficient, offers maximum savings for customers and keeps the dealer in the black with profitability.
Novatech employs an industry-standard platform and proprietary data tools, along with PrintFleet’s data-driven device management and assessment software solutions. According to John Sutton, director of sales, Novatech’s MPS platform allows it to gain more detail and granularity in its metrics to provide more educated consultations for clients.
John Sutton, Novatech
“The data really allows us to influence user behavior in the way that most benefits clients,” he said. “Our MPS program is one facet of our holistic offering, and I truly believe that they’re interconnected; one discipline impacts, and can benefit, the other. Many of our MPS opportunities are not strictly MPS; obviously, there are going to be some software and professional services involved, and usually hardware that goes along with that. It also leads to other opportunities in other areas of business that we serve. Leveraging that user data allows us to not only spot those trends, but also provide the ability to build an actionable program that enforces the business process, whatever that happens to be. It’s much more effective than having to cookie cutter the approach and saying it has to be a certain way.”
A number of sticking points can often impact profitability from the dealer end, Sutton added. Foremost is not setting proper expectations for the client as to the engagement and outcome parameters. He also feels it’s vital for the client to mobilize its own people for the implementation and to help drive the vision. Asking a client to tell the dealer what it wants, then promising to do it, might be the ultimate goal. But too often, the dealer will give up too much leverage at the onset, which flies in the face of setting proper expectations.
“That is one of the key drivers to really maintain profitability in an opportunity, whether it’s MPS or otherwise,” Sutton noted. “Those are things that impact your outcome, whether it’s an older fleet that is going to require a flip of the equipment, or a mixed fleet of old and new, and the customer is expecting us to really guide them. If we don’t set expectations, that’s going to be harder to do.”
A High-Level Offering
Kevin DeYoung, Qualpath
One pure-play MPS provider, Qualpath of Pompano Beach, FL, offers a platform that is a combination of third-party and self-fulfillment. CEO and President Kevin DeYoung, the former president and currently a board member of the Managed Print Services Association, notes that while his company handles the more basic elements of MPS (print outputs/volumes, costs, user burdens and device rationalization) it has evolved to include security elements, least-cost print routing, workflow inputs and processes (such as invoice processing, remote worker image processing and electronic signatures) in an effort to streamline work and eliminate errors.
Qualpath’s primary strength, according to DeYoung, is in avoiding off-the-shelf programs. Prospective clients are assessed without leaning toward a specific MPS offering. Thus, Qualpath’s strength is flexibility in its offering, which combines both input/output analysis.
“We subscribe to a Six Sigma-type of analysis, meaning that we audit the existing process, capture costs and errors, monetize the current state and evaluate if our solution is business justifiable (less than the current costs and errors) to drive a compelling business justification,” DeYoung explained. “In some cases, we cannot and are forthright in that representation.”
What saddens and often frustrates DeYoung is the proliferation of toner-break/fix providers masquerading as MPS, which in turn confuses customers who were expecting a more managed approach that would produce continuous improvements—leaving DeYoung’s team to perform tutorials for clients on the true meaning of MPS.
“The problem with offering a basic program is that it lacks the managed part,” he added. “Continual meetings as to what is happening and where continual improvements can be made is the key. The downside of a basic offering is that it isolates a previous unknown spend and makes it tangible. This previous hidden cost that was buried in invoices from various providers (toner suppliers, break/fix providers, printer suppliers) now is consolidated into one cost that is looked at as perhaps an additional spend or cost. So constant communication of the ongoing state in relation to the starting point (reminding the customer of where they were, what they have saved, and where they can go next) is critical.”
Evolving the Platform
John Turner, Loffler
Loffler Companies of Bloomington, MN, has been in the MPS game for 15-plus years, serving clients throughout the United States and Canada. John Turner, director of managed print services for Loffler, notes the dealership has evolved its national call center to take all service and supply requests, and boasts an automated supply-delivery service.
“Our MPS solution includes a secure follow-me-print and secure-scan solution,” Turner said. “This allows us to manage all MFDs and single-function printers across the enterprise. We also offer a solution around securing the print environment. We use HP security manager software and other manufacturer-specific tools, and wrap around a managed service contract.”
Turner believes that offering a security solution and supporting via its national operations center allows it to create client retention. The service also allows Loffler to be more integrated with the client’s IT staff, creating customer adhesiveness that can defy the allure of another MPS vendor offering a lower CPC on printers.
Kevin Morris, OneDOC
Another pure-play MPS provider, OneDOC Managed Print Services of Oklahoma City, modeled its MPS business after a Seattle-based company called Print Inc., which unveiled one of the earliest platforms more than 20 years ago. Kevin Morris, president and CEO of OneDOC, says the company prides itself on getting to the heart of a client’s true program costs, which is refreshing to many prospects who have endured dismal, so-called MPS platforms devoid of the management aspect.
“A lot of dealers ventured into the MPS waters and stepped back away because they didn’t how to manage it, put it together and couldn’t differentiate it from their normal offerings of CPP and providing supplies,” he said. “We take a look at what the user does every day. We’ll install software and see what people are printing, what applications they’re printing from. We see who the biggest users are, the least users, see what devices are over-utilized and under-utilized within the organization. We want to know what they’re trying to accomplish as well. We look at a lot of things that many of our competitors couldn’t give two rips about.”
OEM-Agnostic Approach
What truly separates OneDOC from other MPS providers is its structure: it is 100 percent sales, with all service, supply, warehousing, NOC and other functions farmed out to a third party. OneDOC is also brand-agnostic. Though it primarily sells HP, Konica Minolta and Xerox equipment, it is authorized to sell many OEM lines, thus it is not beholden to any small cadre of providers. The SMB space is its sweet spot.
In order for dealers to get the most mileage out of their MPS program, Morris believes it’s a matter of answering a simple question: do you want the OEM to control your dealership, or do you want control of your own dealership? Many will answer the latter, but find it difficult to break free of the quota grip.
“Dealers end up buying X-number of devices at the end of each month, quarter or annually, based on what a manufacturer provides them in the way of discounts,” he said. “I still get rebates from my manufacturers, but I get them in a different way. I have no quotas with my manufacturers and I won’t sign a quota agreement. We want to sell what’s best for the client, which may not mesh with what the manufacturer wants us to move.
“Companies like BEI provide us information on breakdowns of devices for every manufacturer, and we’ll guide clients accordingly. We select the best of the best from each manufacturer; we never sell an entire line. Too many dealers sell MPS three weeks a month, and the fourth week they sell boxes. That’s the OEM driving that.”
