One of the key overlapping themes at this year’s Executive Connection Summit (ECS) was the importance of exploring alternatives and adjacencies. Driven by the habits of millennials, among other factors, the ecosystem of the print environment is changing, and many of the discussions and presentations suggested that the manner in which we adapt to those changes will ultimately determine success and longevity.
In Changing Demographics, Social Media and Service-led Opportunities, Doug Johnson, Chief Strategy Officer, LMI, addressed the market bifurcation taking place in the print space, and offered insights about employing assets and competencies to create a service-based model.
Johnson began by asking the dealers in the audience how many of them who were doing MPS would say it represented half of their business.
Few people raised their hands.
“For all the talk of managed print, whether it is page-based or seat-based or any other way you want to look at it, the reality is that the vast majority of opportunity is not services driven,” said Johnson.
Doug Johnson, LMI
For Johnson, regardless of whether you’re selling a commodity or a service, the most important point to consider is that the capabilities that you build into each of the models are very different and lead you down separate paths.
Selling managed print, for example, demands the ability to communicate to a C-level individual – the financial decision maker. It requires assessing, understating and having a sales force that can sell at that high level. Johnson says that managed print is consultative selling at its core.
“You don’t know what solution you can sell until you go in and see the problems,” he cautioned.
On the other hand, commodity selling is about high volume and low costs and touching the customer with effective marketing campaigns.
Just like in our consumer lives, suggested Johnson, there are certain services that we will pay more for and there are certain items that we buy based on price.
Johnson posited three fundamental reasons why managed services provide value. First, because a customer can’t keep up with all the trends in that service category. Second, because it often falls outside their core competencies. Third, it optimizes a system.
According to Johnson, these can be applied to any outsourced service.
Understanding this is important, he said, because it enables you to determine if you need to focus your competencies and assets on managing commodities or if you should adopt a services-based model.
Johnson also asserted that the market is moving towards an out-sourced service model at a much faster rate today. Recalling a saying, “technology is only something that was introduced in our memorable lifetime,” he reiterated that for many older people, technology was something we had to learn and adapt to, but for the millenials, it’s neither new nor scary.
To provide some context, Johnson recalled when he started at Hewlett Packard in 1981 they were manufacturing disc drives the size of washing machines.
“The biggest one we had was 64 MB and we thought that was amazing,” he said.
With this shift in expectations and attitude, Johnson argued that this is an opportune time to develop the assets and competencies needed to develop an outstanding services business model. Not to just focus on the components, he cautioned, but to create all the resources, tools, skills, competencies and knowledge to successfully sell outsource services.
Most importantly, he noted, the capability to sell outsource services to a C-level; to provide consultative selling, assessments and audits and custom solutions that go on multi-year contracts, can extend that capability beyond the traditional print space.
Johnson used 3D printers as an example.
He noted the basic opportunity of consumables and break-fix service, but also the challenges that have made it a difficult market: a different buyer, and a different customer base. Yet he insisted that there is a great service model for 3D printing.
Why?
To illustrate this, he cited a friend who manufactures drones using 3D printers. He said that the printers at the company had initially sat idle over 60 percent of the time. To address this, a brokerage firm was contracted, a service was supplied, and now they are working outsourced jobs around the clock.
Another example Johnson used was the companies that inspect buildings, conduct audits, install software that draws out data, run big data analytics and then return to offer services that can improve energy efficiencies and up time.
Johnson even noted companies bundling managed building services with managed print services because the contractors from the managed building services have neither the assets nor the competencies to reach the C-level people.
Near the end, Johnson showed a slide from Cisco that cited figures on potential energy savings from buildings. He noted that the amount of money we spend on energy every year dwarfs what we spend on printing.
“I’m not setting us up to save the industry,” he said. “I’m setting us up to be a services-based company that allows us to leverage our assets and competencies to get into whatever the next big outsource opportunities are in the market.
Clearly for LMI, with the licensing deal with Kodak and an eye towards a service-based future, the assets and competencies for both paths have been carefully considered.
