On Tuesday, January 21, Ricoh announced that it will acquire mindSHIFT Technologies, a Managed Services provider, from Best Buy Co. The acquisition is expected to close in February 2014 at which time mindSHIFT will become a wholly owned subsidiary of Ricoh.
For Ricoh, this is a significant pickup, since the organization has more than 6,900 clients in major markets throughout the country. According to a Ricoh press release, “the company’s IT Services capabilities and comprehensive Managed Services offerings will help Ricoh continue to drive value to existing customers through expanded services offerings as well as support Ricoh’s growth as a provider of IT Services.”
Plus mindSHIFT Technologies’ clients are small and mid-sized businesses, a market directly in the wheelhouse of many Ricoh dealers.
On Tuesday afternoon I had the opportunity to speak with Tracey Rothenberger, EVP and COO of Ricoh Americas about the acquisition.
Initially, mindSHIFT services will be offered through Ricoh direct followed a short time later with a rollout to the Ricoh dealer channel. “Our first priority is to determine how we can get the basic set of services working within Ricoh and then our next step is expansion into the dealer space,” explains Rothenberger. “That’s a high priority for us.”
He adds that mindSHIFT is well prepared to facilitate this process. “They’ve already got all of the systems and billing processes in place to allow our dealers to set up an entire environment that will be branded by the dealers. Web portals will look like the dealer’s portals and invoices will come directly from the dealer.”
With the focus on SMB, I asked Rothenberger, how low into the SMBs can the mindSHIFT offerings go?
“It depends on what services the customer is interested in,” he responds. “There are parts of this business model that goes down to a very small customer—1-5 employees—but the sweet spot is a bit higher than that—the 20-250 employee range.”
No matter what size customer, mindSHIFT offers a broad range of services, many of them cloud based, that can be deployed to customers in a flexible manner. If a customer needs a virtual server, virtual storage, or desktop management, those are services that are easily deployed. “It’s very mature from a delivery standpoint and they scale down to quite a small level,” notes Rothenberger. “mindShift also has services that scale up to some very high levels—cloud services such as gmail hosting and virtual servers where you can go into major accounts and accounts with 500 to over 1,000 employees.”
As far as the challenges of bringing the two organizations together, there is none from a channel perspective says Rothenberger. “The reason we want to keep [mindSHIFT] as an independent entity is to avoid channel conflict. We want to deliver top quality services to our direct and dealer channels with independent, autonomous resources that are focused on the needs of the customer and not dependent on the channel the opportunity is driven from.”
mindSHIFT’s existing offices stretch from the Midwest to the East Coast. Since most services provided by mindSHIFT are cloud-based, they can be delivered independent of geography, which they’ve been doing for customers not only inside the U.S. but around world. As a result, geography will not be an issue for Ricoh’s dealer channel when it comes to offering mindSHIFT services.
What also made mindSHIFT an appealing acquisition for Ricoh is its focus on vertical markets, particularly legal, education and healthcare. Currently, mindSHIFT helps law firms or corporate legal teams set up their environments and automate the information flow inside of a law office. “Those are more geographically bound and we would look to marry that up with our legal vertical and extend those customer services out into the geographies they don’t operate in today,” says Rothenberger.
Asked about parallels to Konica Minolta’s acquisition of All Covered, Rothenberger emphasizes the differences. “We see mindSHIFT as being much more synergistic with our customer set and the needs our customers are asking for than All Covered. mindSHIFT has a bigger focus on the types of services they’re offering. They excel at having the right subject matter experts to deliver and execute on those services; I see them having more focus and intensity on what they’re good at, and what they’re good at happens to match much better for our industry than the All Covered Konica Minolta match up.”
I then asked Rothenberger to gaze into his crystal ball and describe to me what he anticipates the acquisition would look like a year from now.
“We’re going to have an organization at mindSHIFT that will continue to grow at double-digit numbers if not faster,” he replies. “I think you’re going to find we deliver many services to our customers and our dealer’s customers with a high degree of satisfaction. A year out we’re going to see customers that were early adopters starting to renew services with us. I see massive upside potential in the Ricoh mindSHIFT relationship or a synergy, and couple that with our dealer channel, and that becomes a powerhouse for our industry.”
Don’t expect this to be Ricoh’s last move to grow its services capabilities. “We have an active process ongoing right now to strengthen our services business,” states Rothenberger. “Acquisition is one of the areas we’re looking at. We have a team that’s looking at all strategic acquisitions, not just in the IT services space, but in other service entities. We will continue to evaluate any opportunity to strategically expand our services. We’re by all means not finished.”
