As we put the wraps on our January state of the industry look at trends and predictions, we have a second round of “sleeper” trends, issues and variables that might not have an immediate impact on the industry during 2019, but have the potential for long-term consequences.
Hiro Imamura, Canon
Hiro Imamura, senior vice president and general manager, Business Imaging Solutions Group for Canon U.S.A., notes that more organizations are expressing interest in subscription-type solutions as a way to streamline costs and purchasing methods. This model translates into short-term revenue decreases and changes to standard transactions, requiring dealers to make adjustments to their current sales processes. However, the upshot going forward is the opportunity for strong recurring revenue.
In addition, as new technology continues to enter the market at an increasing frequency, it taxes the workforce to keep pace, he observed. “Dealers need to take advantage of OEM and specialized partner resources to ensure talent can keep pace with industry innovations and guide end users to products that meet unique workflow needs,” Imamura said.
Downward Pressure
Nick Capparelli, LEAF Commercial Capital
Moving forward, as M&A continues to ratchet up the competition for adding new businesses, it also raises the competitive bar across the industry. Nick Capparelli, managing director for LEAF Commercial Capital, feels that not only does this threaten the existence of under-performing, small enterprises, but it also increases pressure on pricing and service delivery for larger businesses.
“Consolidation is self-reinforcing in that the more it happens, the more it becomes necessary to survive,” he said. “The advantages of M&A—economies of scale, greater bargaining power, etc. —even out pretty quickly as the consolidation arms race accelerates, and what you’re left with is a business landscape that’s even more competitive than before as behemoths fight for market share. That’s why it’s so important to properly capitalize on any acquisition or merger, not just for the event, but also for the aftermath, which is where the winners will truly be decided.”
Sammy Kinlaw, Lexmark
With the availability of working capital and the friendly lending rates, smaller VARs are able to grow quickly, notes Sammy Kinlaw, vice president of worldwide channel and OEM sales for Lexmark. This is driving Lexmark’s business, he said, but the manufacturer acknowledges its responsibility when it comes to inventory.
“I want to be mindful and careful with our inventory and about putting a methodical amount of inventory on the shelf,” he said. “I will not allow us to be caught with too much product sitting. We will manage this stringently.”
Protecting HR Investments
Pete Peterson, Xerox
One of the more overlooked aspects for dealers is attracting and retaining qualified staff, states Pete Peterson, president of Xerox Channels. Dealers make significant investments in new employees, only to find that maintaining good people can be equally as challenging as finding them.
“As new hires go through certification training—a necessary onboarding step which also raises their market value—it opens up new opportunities for them elsewhere,” Peterson said. “Retaining employees after formal training completion is a challenge for many of our partners, who continue to look for creative ways to keep employees.”
Tyson Stargel, Stargel Office Solutions
Accounting Issues
Tyson Stargel, the vice president of Stargel Office Solutions, speculates that large, publicly traded companies may start looking into purchasing office equipment as opposed to leasing it due to new lease accounting rules approved by the Financial Accounting Standards Board (FASB). The new rules went into effective last Dec. 15 for public companies.
“(Companies) might start looking for more transparency when they do lease, which would mean dealers would have to break out bundled leases,” Stargel observed.
