This is certainly not a new topic to frequent readers of ENX Magazine. Whenever the subject of diversification, non-traditional products or those we’ve dubbed “hidden gems” comes up, it piques the curiosity of dealers large and small. Also, whenever you expand the product and service portfolio, it means you’re providing another tool that can help end-users become more effective in their line of work.
But we must be pragmatic and even a bit selfish. Any new offering has to benefit the dealer’s coffers, either directly through recurring revenue or by gaining entry into a new account, which can then yield MFP or managed service opportunities. It need not be lucrative, but to borrow from Don Fanucci of The Godfather 2 fame, you need to wet your beak a little (just in a non-murderous or extorting-type manner).
As we kick off this month’s State of the Industry report on non-MFP “hidden gems,” we asked our dealer panel to provide insight as to the degree of recurring revenue, if any, can he gleaned from their product of choice. Again, recurring revenue is certainly not a must-have, particularly if it furnishes other, perhaps lucrative opportunities.
As one of the nation’s largest print and IT service providers, St. Cloud, Minnesota-based Marco is hard-wired into the as-a-service discipline. This includes having information regarding its ACE365 basic protection services baked into every Microsoft 365 quote. It follows the security-first approach it also employs with print, IT, voice and video, according to Adam Ramberg, director of IT consulting for Marco.
“Most of our customers suffer from multi-vendor fatigue, so being able to offer top-tier managed services in every one of these areas simplifies our customers’ vendor management and due diligence processes,” he said.
SME Standout
Given his expertise in advanced managed IT security, some people might think that Dave Moorman wrote the book on the subject, and they wouldn’t be far off. The president and CISO of Novatech is currently penning a tome on print security that’s being funded by the Sharp Dealer Advisory Council. He fully believes print security is destined to dominate conversation over the next 10 years.
Clearly, managed IT and managed security, regardless of how it’s packaged, offers substantial revenue potential. Moorman pegs it at 60% gross margin on predominantly 36-month pacts. It does require a host of resources, including a security operations center, which (once built) doesn’t require a lot of labor after the fact. It’s not a set-it-and-forget-it proposition—after all, we are talking about cybersecurity and the ever-evolving bad actors behind the curtain—but an advanced system such as Novatech’s is doing the constant monitoring.
“We’re really leveraging automation or what we call even hyper-automation, artificial intelligence and machine learning to do a lot of the heavy lifting for us,” Moorman noted. “The system alerts the security team if something gets out of whack, somebody gets breached or we see somebody penetrating one of our customer networks. For the most part, a lot of the managed services that we deliver are done by machines and automation in the background.”
Trust the Process
Business process optimization is one offering where Spectrum Technologies identified a significant opportunity for recurring revenue. Kyle Elliott, president of the El Paso, Texas-based dealer, notes a typical software development shop operates on a project-based model that often requires a six-figure starting point. Spectrum Technologies, meanwhile, focuses on quantifying the value it provides and how it translates to the clients’ bottom line.
There’s something to be said for the business approach, which enables the dealer to implement a more straightforward pricing model. “For example, if we save a client $15-$20k a month through our efforts, charging $5k a month becomes a clear value proposition,” Elliott said. “This model not only ensures continuous value for our clients but also complements and strengthens our existing relationships by providing consistent, measurable benefits.”
In the world of label printers, the golden goose of monthly recurring is truly label supplies. It falls to the dealer to provide a thorough analysis to determine a contracted volume at x-cents per label, notes T.J. DeBello, vice president of sales for Houston-based Stargel Office Solutions.
As is the case on the copier end, it makes business easier to have an all-inclusive price. He gave the example of a client that stated its needs to be 90,000 labels over a 12-month span. However, if the client eclipses the 90,000 mark by the sixth month, the contract is ended and a new one is drawn up.
“That’s how we’re positioning it and protecting ourselves,” DeBello notes.
