Not many office technology dealerships are willing to make a deep, thoughtful evaluation of the way they do business, and fewer still are willing to make significant changes to their product and service offering and company culture. Then again, not many dealers boast the aggressive growth initiative put forward by Las Vegas-based Advanced Imaging Solutions (AIS).
With California offices in San Diego, Palm Desert and Corona, AIS is on track to amass $23 million in sales. A single-line provider of KYOCERA equipment, AIS counts education, legal, medical and manufacturing among its core of clients in the southern portion of Nevada and California.
Six years ago, the company implemented several changes that evolved the company from a copier-sales mindset to a technology services provider. AIS entered the world of managed network services and added 3D printing to its menu. But perhaps its biggest evolution was the establishment of its core values, which now permeate every facet of how AIS does business.
Gary Harouff, AIS President
ENX Magazine sat down with Gary Harouff, AIS president, and Dave Clark, vice president of sales and marketing, to learn how these changes have impacted the company and its quest to go from its current level of $23 million in sales to $100 million through organic growth and acquisition within the next eight years.
What does AIS pride itself on?
Dave Clark, Vice President of Sales and Marketing
Clark: We’ve positioned ourselves as a technology provider. Six years ago, we decided we were no longer just going be a copier company, because that is a race down to zero cents per copy and profitability was continuing to decline. So we diversified our business into managed network services/IT services, 3D printing and other professional services applications to really increase our productivity. We also wanted to be a total services offering to our customers. Instead of customers needing three or four vendors to meet all of their technology needs, they can contract with us and have one throat to choke. We do this by having a very strong back-end support system that monitors everything we do to ensure we’re delivering one-time call responsiveness, that we do accurate invoicing and monitor our internal processes to make sure that we’re delivering to our customers.
Your company is on track for 14 percent year-over-year growth. What has fueled this success?
Clark: We’ve enjoyed 216 percent growth with our managed network services year over year. We’ve had a dramatic increase this year in our IT services, which is a services-based, recurring revenue-type contract. Five years ago, we were around $13-$14 million dollars, so to increase revenues by $9 million in less than five years is pretty impressive.
Harouff: This year we’ve done this completely through organic growth, with no acquisitions. In a time when equipment MSRPs continue to decline, along with service and supplies CBCs, you have to sell considerably more every year to hit your same revenue target. We did two acquisitions two years ago and we’re in the middle of one now that, if it does take place, won’t roll into our facility until 2018.
During the BTA event in Las Vegas, you spoke about the culture change AIS experienced. How would you characterize this evolution?
Harouff: Roughly five years ago, we decided that we weren’t going to be just known as copier guys, because it’s turning into a commodity. We wanted to be more of a service organization, so we decided to provide deeper services inside our client’s offices. Often, our devices are on a network where if there is an issue with the printer, it may not relate to the device itself, but to the customer’s IT services or something else involving another vendor. We decided to take ownership of that problem and be more of a service provider to our customers. We had to convince our clients that we are now a technology company, which was easy to do as we were already touching their networks and doing things related to technology. The hard part was convincing our internal staff, and it made us aware that while we might be hiring people for the right skill set, maybe culture was the missing piece. We were having a hard time with them adapting and it took us about three years before everything sunk in with our staff.
AIS employees cut loose with members of the rock band Warrant, which performed in concert at the dealer’s customer appreciation event
Previously, we hired people based on skill sets, but we would discover they were not the right fit because they didn’t mesh with our culture, which we never identified or talked about. In the last two years, we’ve established that culture and who we are as AIS. The first thing we did was identify our best staff members through the ideal qualities they had, then established some other characteristics we felt were important to us. We made that our culture piece of AIS and set it in stone. Now, we interview to those culture attributes to make sure candidates fit those traits as well as offer the necessary skill sets. It’s elevated the people that we’re attracting to our company. The last six or seven hires that we have done have been among our finest ever. I attribute it 100 percent to the fact that we promote culture and hire to it.
Clark: Our core values motto is “We adapt and never lose our integrity to surpass expectations. We are AIS NOW.” Each core value is as follows: Adapt, Integrity, Surpass, Nurturing, Optimism and delivering a “Wow” experience. We talk about our processes and what we expect of our employees. We have a platform within AIS called “You Earned It,” which allows each of our team members to give and receive recognition from each other when exuding any of those core values. It challenges and encourages the entire team to live and carry out their duties by the qualities that we believe will make us successful. Nowadays, applicants are looking for a company that has direction as well as solid core values and a great culture. It’s more than just what products they carry. It really has been well adopted within AIS.
Harouff: With the “You Earned It” program, our team receives “points” every quarter that they get to give to other employees when they see them going above and beyond as well as exuding any of our core values. As we have multiple offices, it’s hard for people to see that there are fabulous things going on in our company every day. This platform allows them to see that and reward fellow employees. The employees can exchange the points for gift cards, unique experiences or a day off work.
What are some of your newer areas of business? Is it going the way you hoped?
Harouff: Managed network services has taken us longer to get up and running than we anticipated. By December, though, we’ll be turning a profit for the first time. That is a huge win, because it is highly profitable service revenue. We would probably need about 20 copier sales to equal what we would get from a typical managed network service contract. This area is of a critical importance to the company going forward. Some dealers don’t want to get into that market because they don’t believe they can make money. But even as a copier dealer, we weren’t making money when we first got into the market; it took us three years and we knew what we were doing. So if you expect to make money in managed network services right away, you’re fooling yourself. It was somewhat of a defensive move, because we were losing to IT companies who were encroaching on our space. Every MNS account that we have buys additional products and services from us. They trust us so much with the keys to the kingdom of IT that when they want to add a phone system or a printer, they just do it. It’s really a game changer for us.
The 3D area is where we haven’t done as well. We’re looking at 3D as more of a Trojan horse. What it allows us to do is start conversations and hopefully expand into other services that we offer. If people see you’re doing 3D, they’re going to think of you as a leading-edge tech company. We’ve installed 82 units in five years. It’s a department that by itself is still making revenue, but it still loses money every month. We’ve already put in the work required to become a 3D dealer and take it to the next level, so when the new vendor comes out and 3D gets more standardized, we’ll be the first one approached. I wouldn’t recommend 3D to any dealer unless they have managed network services in place.
Is there a product or solution that you are looking to add in the near future?
Clark: We do a lot of document management, applications and workflow, but the area we haven’t had a lot of focus on is high-end EMR systems and ECM, the million-dollar-plus software implementations that offer us recurring revenue as well as professional services dollars up front. In working with our Fortune 1000, government, educational and legal customers, it has really helped them with long-term, large-scale document management solutions.
What was your dealership’s most significant accomplishment or biggest win last year?
Harouff: We’ve focused on making AIS a fun place to work. Two years ago, we implemented volunteer time off to make sure that we’re giving back to the community. We give everyone up to three days paid time off to volunteer for a charity. Our goal for this year is to achieve at least 300 hours of donated time, but we’ll be close to 500 by year’s end. We also updated every office to make it look more like a technology company, to be more warm and inviting. Soda, water and snacks are all free to employees. It’s like a mini Google or Facebook environment to help attract more millennials as well.
Clark: We’ve seen a measurable increase in performance and have exceeded KPIs in each of our departments. It directly relates to doing the culture piece. We’ve had five major wins this year, which were $500,000-$700,000 deals. A majority of our revenue comes from up and down the street, which is profitable. The Clark County School District is a very large portion of our pie, and we have a lot of placements, close to 30,000 devices.
What was your biggest challenge in the past year?
Clark: What comes with changing technology offerings and core values is adjusting the processes that measure up with our cultural transformation. One of the hardest to change is the sales department. If you have sales reps who make $200,000 or $300,000 a year and they’re successful, getting them to assimilate to that change is difficult. You’re trying to make them understand that the customer is looking for something different now. They want somebody who can identify what their business challenges are and provide solutions that can solve their needs. With our sales reps, we have them ask the customer eight simple questions that allow us to analyze what they could possibly be interested in or qualify for from all the solutions that we offer. The conversation revolves around asking about the customer’s business for the next six months, next year or next five years, and how we can help them achieve their goals. It’s getting better but it’s nowhere near where we want it to be.
Harouff: We’re trying to get our reps to use more social media to do research on their clients through Facebook and LinkedIn, and that’s been a hard process. In the past, we were trying to do business the old-fashioned way by setting appointments over the phone, when for the most part, our customers are doing research online. Seventy percent of the buying cycle is completed before they call us. We’ve really put a lot of work into social media as well as our website, and we’ve been constantly redefining it to improve our online presence. At the same time, we’re trying to make sure that when people are coming to our website, they’re getting the relevant content they need to make them comfortable enough to call us. We have a game plan laid out for the next 12 months that’s really pushing more to the online experiences of the customers and prospects.
We write 12-15 blogs every month and they were fun pieces. For example, we wrote about how we were the official copiers for the last presidential debate held here in Las Vegas. What we’re working on now is thinking about every question a customer would think about asking and writing content that speaks to it. So when the customers are doing online research, we’re going to create content to get people to think of us as the authority.
Who do you see as your biggest competition, and how do you differentiate your company from them?
Clark: The true copier dealership is no longer our competition. The biggest threat to our market is the IT companies. IT and solutions firms are figuring out ways to capture the equipment that goes along with the solutions that they offer. More and more, we’re finding consultants, technology companies and IT providers that are playing in our space that traditionally did not. With the manufacturers in general, we usually beat them because we have a way of delivering to our customers that they don’t, and we have a way to measure it that they don’t, which has to do with their size. Though there are a few manufacturers like Konica Minolta who have started to acquire the companies, talent and expertise to level the playing field.
What are your goals heading into 2018?
Harouff: We’d like to do a strategic acquisition, which I think will happen, and we’re looking at another 14 percent increase through organic growth. Over the next eight years, our plan is to hit $100 million. To do that, we need a strategic acquisition every other year and 14 percent growth. If we can do both of those, we can hit our $100 million target.
Outside of work, what do you like to do for fun?
Harouff: Travel and concerts are my biggest two reliefs from stress. I have pretty diverse musical tastes; the last concert I saw was Britney Spears, and before that it was Def Leppard and the King of the Mic tour. We had a customer appreciation event a few years ago where we put on a full-blown concert with the 1980s band Warrant. We had t-shirts printed up that said AIS-Warrant Tour, Sold Out. It was a really fun event.
Clark: Travel is definitely one way to let off steam and focus. I have older and younger kids that bring me enjoyment in different ways. Seeing my older ones grow up, get married and have kids has been fantastic. I love watching the younger ones develop and experience the wonders of learning new things.
