Innovate or fail

-- by Scott Hornbuckle, Market Analyst, Photizo Group

There was an interesting article on Forbes’ website on Monday entitled “Why the Pursuit of Innovation Usually Fails.” (article) The author, Adam Hartung, discussed the difficulties companies experience while trying to become innovative. Many of the concepts are applicable to the MPS industry.

The first theme in the article is the restrictive nature of the creative process in most companies. While management at most firms is intelligent, competent and experienced; they struggle with innovation. Hartung stated, “When companies launch innovation programs, management invariably wants to make sure they are carried out ‘effectively’ and ‘efficiently.’” It then becomes management’s prerogative to “apply a watchful eye” and eliminate ideas that appear difficult to implement, that require the company to enter new markets, etc. This dynamic creates an environment where ideas cannot reach maturity because they are dismissed before ever having the opportunity to be realized.

The second major inhibitor is fear. Companies are not comfortable with the unknown, and managers are not comfortable with investments with longer returns that can lower bonuses. The company and its management are trained to defend and expand it’s core competencies. Anything beyond this presents more risk.

Due to these factors, companies find themselves looking to become innovative, yet they succeed in simply modifying their current products, services, pricing structure, etc. While they make changes, they are holding their punches, not being innovative. In our research we have found evidence of this occurring often in the channel.

How does this apply to MPS you may ask? Well, in order to be successful, you MUST innovate. MPS is a different beast. Hardware vendors have to make money in an environment where hardware is a commodity and service is the new revenue source. The channel is asking the vendors for vendor agnostic support; this of course makes vendors sleep a little less soundly. Meanwhile end users want the best device for the job, regardless of brand, and they want the fleet maintained and optimized – while saving money.

Detractors of this philosophy may say something to the effect of “MPS is simply a new sales strategy; nothing has really changed.” This is simply not true. When the boundaries between BTA dealers and IT VARs begin to blur, and IT VARs are expected to provide service, and BTA dealers are expected to coexist with companies’ IT departments and provide a compatible solution within a company’s existing infrastructure – it’s safe to say that MPS involves more than a modified sales strategy. In fact, approaching the MPS industry from the “different sales strategy” standpoint is a perfect example of limiting innovation. It’s impossible to be innovative if you simply change the sales tactic, but deliver the same products/services.

Transitioning to the MPS model requires a provider to make significant changes in its business model and its capabilities. The goal is to sell service – not hardware. However, the MPS model requires more than a classic cost per page contract. The MPS provider must assess the current state of the fleet and optimize it to the point that the right number of the right devices are in the right place and serviced at the right time. In addition to all of this, the MPS provider must combine the strengths of IT VARs and BTA dealers. As the industry evolves, more and more customers will require document workflow and business process consulting. I believe we’ve gone beyond a “sales strategy.”

Ed Crowley, Photizo Group’s CEO, stated that when beginning in the MPS industry one must “burn the boats.” This is referring to the legend of Cortez and represents the fact that MPS requires commitment, and you cannot let fear inhibit innovation. MPS is the wave of the future. If you don’t innovate, you won’t survive.

MPSA Announces Nomination Process is Open for International Board Members

The Managed Print Services Association just announced the start of the nomination process for the election of International Board Members. The MPSA board voted unanimously to create two new board members in order to bring an international perspective to the MPSA. The nomination process will run from November 7 through November 21st, and the election process will run from November 30th to December 14th. If you are a member of the MPSA, you can cast your nomination using the link below. For all others, please hit the second link where you can see how to become a member of the MPSA.

Current MPSA Members Click Here.

For Information on How to Become an MPSA Member Click Here.

MWAi Announces nMPS

Exciting Turnout at Pre-Conference Workshops

BY: MISTY HAMEL, editor and media relations

The last of the Photizo Group to arrive in Amsterdam, I missed registration and the beginning of the workshops.  The actual kickoff to the conference begins tomorrow; however, the workshops appear to be quite a hit already. These hands-on workshops are hosted by industry experts and are designed to provide a solid foundation for implementing and offering successful MPS programs.

Originally, we were expecting about 25 attendees per end-user and dealer workshop and were quite impressed when over 100 people registered for the conference, and walk-ins continued to roll in throughout the morning with hopes of registering for the workshop.

“Its [Dealer track] has been real interesting. Doug [Doug Johnson, Principle of RedSage Consulting and workshop leader] has a lot of knowledge. It’s really, really interesting and reflects the reality of the market place,” said Christopher Poisson of Kyocera.

“While, the content on the Dealer Track is nothing new, it is helpful to see it laid out in this way. At work we don’t have the time to think about [practices] in a structured way,” said Nicolas Bouillon of Bluemega Technology.

An industry expert for the end user track, Justin West of Nationwide Insurance, said he experienced really great interaction, especially from a jet-lagged crowd. There are a lot of great questions and everyone seems to be very interested.

What’s interesting to see is the dealer turnout for the workshop Here we can see business who are teetering on the edge of jumping into the MPS market. One of the businesses, who I will leave anonymous since they have made no formal announcements at this time, said, “We have been selling the hardware for years, now its time we start selling the services.”  They are hoping to launch an MPS program in Q1.

If this is just a pre-cursor to tomorrow’s kickoff then we should expect one smashing conference!

By: Misty Hamel

Media Relations/Editor MPS Insights

mhamel@photizogroup.com

Managed Print Services Market Heats Up

Managed Print Services Market Heats Up: "Corporate America's focus on cost cutting is moving rapidly into the digita..."

Selling the Invisible

-- by Mike Huster, Sr. Consultant and Partner, Photizo Group

What would the printing and imaging industry be without mergers and acquisitions? BORING is my answer. I mean, how difficult is it to put marks on paper and sell the concept to customers? With a worldwide market of over $150 billion, the printing and imaging industry has plenty of customers willing and ready to purchase its wares. Then, along comes HP, Dell, and Xerox and the apple cart is upturned. HP acquires EDS in August 2008, Dell buys Perot Systems last week, and now Xerox merges with Affiliated Computer Services (ACS) this past Monday (9/28). Taken separately, these events stand on their own - each company believes it has gained new customers, new geographies, new services and new revenue opportunities – all well and good, but what is really interesting is what does this mean for the printing and imaging industry as a whole?

IBM has been the forerunner of this move to services from hardware. When I worked for IBM as a system engineer there was a major shift in the early 1990’s from completing tasks for clients at no charge to then charging for basic and advanced tasks. There was an uproar of sorts among IBM’s clients because it was not rolled out effectively. Clients (and people in general) have a short memory of these changes and the rest is history; IBM has secured its place among the most powerful corporations through foresight that hardware was not the way to improve its margins and success. It has been the move to IT services – IT Outsourcing and Business Process Outsourcing that has saved the day for IBM.

I believe that HP has seen the light and over two years ago started its major move into services – particularly managed print services. With the acquisition of EDS, HP has been able to offer customers a simpler way of managing their IT infrastructure and their printers. The recent announcement of their new MPS division again shows their services orientation.

Xerox has used “out of the box” thinking and has demonstrated they do not want to be driven solely by pages any longer. Their recent merger with ACS and previous acquisitions of XMPie and Amici has shown that Xerox values the control and movement of information (which drives business worldwide).

These two examples from our industry are raising eyebrows. It is not enough to have a company built around hardware, it is vitally important in this current economic malaise, to soften any hardware losses through a services orientation – preferably related around information or business process flow. IBM, HP, and now Xerox have shown us the way, now it is up to the rest of the industry to make tough decisions to change their business model, in effect, to change their company, to “sell the invisible” – services.

Canon’s Big Event

Ed Crowley, CEO, Sr. Partner – Photizo Group

Every once in a while there are a series of events which are significant on their own, but which when viewed in total, represent a significant industry change.  I believe we are in the midst of one of these times.  It began with HP’s announcement of the new MPS division titled Managed Enterprise Solutions (MES), and their expanded relationship with Canon, which allows them to sell Canon copiers (primarily Segment 4-6) and production printing devices.  The events are culminating in the Canon announcements today at their Canon Integrated Solutions Showcase in Las Vegas.

Photizo Group clients are receiving in-depth analysis through the “Blips” and “Market Flashes” which are being provided as part of our MPS Market Watch service (okay, that was a shameless plug for our client advisory services, but I always like to let people know what they are missing!).  However, I wanted to share with our blog readers at least a few key highlights from the Canon  event.  While Canon launched an impressive line-up of new imageRUNNER products (the imageRUNNER ADVANCED line) MFP’s to the 1,200+ attendees at the event, they also announced a series of very significant solutions and services to support MPS including their new Managed Document Services (MDS) which is a not a single program, but rather a delivery platform for providing multiple tools to support MPS engagements.  In addition Canon announced an upgraded uniFLOW output manager and the new Imageware Document Server. 

Frankly, in my opinion, Canon has always had very impressive A3 copier /MFP products.  These new products ‘up the bar’ in terms of performance and capabilities.  However, the real news is the focus and tools, which Canon is building around global MPS capabilities.   When viewed in combination with their HP collaboration announcement, it is clear that Canon’s goal is to create a strong global MPS delivery system and a series of partnerships, which could position them as the preferred ‘go to market’ partner for Stage 3 engagements (business process optimization through document workflow / management improvements) in the SMB market.  The question is, can they execute? 

As the Chinese saying goes, “may you live in interesting times”.  Interesting times indeed!

To receive daily news updates regarding the MPS market, sign up now for a free trial of the MPS daily news at this link.  Daily News

For information regarding our advisory services, please contact the Photizo Group at 859 873 4518.

MPS and Scalability

-- by Rob Sethre, Sr. Consultant and Partner, Photizo Group

After numerous meetings with key MPS players in recent weeks a common concern came up with shocking regularity—the concept of scalability. We know from our tracking studies as well as from direct interviews that the enormous initial efforts to establish some MPS engagements are followed by the biggest challenge of all: how to scale the offerings?

From the vendor perspective, the issue is crucial to MPS business management and sustainability. The obvious starting point for every provider is to develop an MPS strategy and to create and implement an appropriate program. But that key starting point is really just that: a start. Now that you have a program, you need to think quickly about how to grow (or even shrink!) that program.

If a dealer has a handful of clients and a few hundred units under an MPS contract, he has certainly achieved a great deal, especially if those engagements are profitable and not just “loss-leader” investments. In fact, we do not need to single out dealers; the same is true of an OEM manufacturer who has won a few key bids.

But picture what has to happen next. If you expand the number and scope of the engagements, say by a factor of 10, can you maintain the system? A small number of customers and units can be tracked and managed in a number of ways, even manually if necessary. You will soon encounter an ecosystem with hundreds or even thousands of actionable events daily. Your systems, networks and service teams have to be scaled for that eventuality from the start.

From the client viewpoint, the issue is as simple as a service level agreement (SLA) that needs to be fulfilled, or it can be as complicated as the ugly reality of service triage. If I am one of just a handful of significant MPS engagements under contract with my vendor, I can probably expect a high level of personal attention and customer care. But if my vendor’s success in the MPS space adds 10 or 50 more contracts, is that system and team equipped to handle a much more demanding series of events?

Put most simply, how many incidents (device alerts, service calls, consumables orders, etc.) can my provider’s system and team realistically handle? With strong attention to preparing and fulfilling the SLA, you can potentially cover the issue. But the real point is to ensure that the vendor can fulfill to your needs and expectations.

The point of scaling UP is hopefully obvious, but we also have to consider the issue of scaling DOWN. Photizo research shows a definite trend towards medium-sized companies who are now attractive candidates for new MPS engagements. The initial focus for almost all MPS players was larger enterprises, for understandable reasons. But this space is becoming increasingly crowded as more vendors enter the market. Most start their activities with a focus on direct sales into large installations. But that crowding will automatically increase the competitive pressure and reduce margins, which are typically tighter in the key account contracts anyhow.

The emerging SMB space can be much more attractive, regarding both the number of opportunities and the average profitability. However, there is also an ongoing debate regarding the minimum size of the output fleet that would support an MPS engagement. Can you (or your provider) maintain a fleet of 40 devices and do so efficiently and profitably? Is the break-even point higher, lower, or even known at all? Different companies and MPS infrastructures will certainly deliver different answers.

Interestingly, some suppliers claim that they can scale all the way down to a single device. Such a potential engagement might seem nonsensical for some, but it can be a major threat for others. If my system can support a large number of small installations profitably, I have a huge competitive advantage, since there is an extensive number of companies in that category (for example, 100 - 1000 employees).

So as we move beyond the initial stage of setting up an MPS business, the scalability issue will take on increased visibility and importance. And even if you focus on one aspect of this issue, another side has to be recognized and addressed as well. Ah, the joys of developing new strategies for new markets!