MPS: Channeling the Opportunity
From high-ticket, high-output networked printers to low-cost personal multi-function devices tucked in private offices, organizations spend a small fortune each year managing, maintaining, and operating their armies of printers and copiers—and savvy solution providers are helping clients take control of the associated costs, management issues, and upkeep through margin-rich, customer-centric managed print services offerings.
Indeed, managed print services—or MPS—revenue is growing at more than 20 percent per year, industry experts agree. Last year, managed print services were valued at $25 billion, Ed Crowley, CEO of Photizo Group, told Channel Insider. By 2014, MPS could be worth almost $70 billion, he said.
"We don’t see anything that we believe is going to make it slow down. There’s a huge amount of momentum behind it," said Crowley, in an interview. "This market has incredible jet fuel."
Cost-savings are primarily fueling customer interest: After all, MPS can drive down print costs by almost one third, according to IDC. Many offices use printers and copiers inefficiently, and the economic downturn forced them to scrutinize their output costs, said Joe Barganier, MPS consultant at MT Business Technologies and president of the Managed Print Service Association, in an interview.
"You have a garbage can next to the printer, right? People don’t read the instructions. Paper gets lost in all these output bins. It’s inefficient," he said. "When money dries up, people start looking at things they could have looked at 20 years ago."
Service providers are helping organizations cut through the paper overload, and also providing break-fix, maintenance, and toner replacement services. While many VARs often have shunned ink and toner sales, the traditional IT reseller channel should proactively pursue this opportunity to not only win revenue but also another chance to interact with customers, vendor executives told Channel Insider.
"In general, partners are doing better with managed print
offerings because they’re able to capture 100 percent of the revenue after
selling a device," said Tom Gall, value channel marketing manager for Xerox, in
an interview. "A lot of resellers think that the toner business or the printer business
is kind of a painful business. They don’t think they can make money at it. They
can’t make money on the hardware, and they don’t think they can make money on
the supplies. That’s why the tools we’re bringing to them make so much sense to
them. We’ve made it easy for them to get into that business by leveraging the
tools we have."
MPS is a key initiative for top-selling printer vendors such as Hewlett-Packard and Xerox, both of which are expending resources on recent acquisitions, channel programs, tools, and other initiatives designed to extend their direct and indirect MPS revenue.
In late May, HP announced it would acquire Printelligent, which has provided managed print services since 1993, working closely with HP to support VARs selling MPS to midsize customers, Scott Dunsire, vice president, Imaging and Printing Group Business and Sales Management, Solution Partners Organization – Americas at HP, told Channel Insider. Once the acquisition is finalized, VARs will be able to leverage Printelligent and HP’s expertise rather than build their own MPS infrastructures to support midsize customers, he said. This will allow providers to support multiple vendors—not solely HP models—and go to market faster, at better margins, said Dunsire.
"One of the things we’re going to bring to market, and this Printelligent acquisition allows us to do this on a world-class level, is white-glove service," he said.
Also in May, Xerox said it had purchased NewField IT, a British print consultancy and software solution provider for customers ranging from small to enterprise. NewField IT’s Asset DB software, for example, combines visual mapping of printers and copiers with a database of usage patterns in order to better monitor and manage the devices and their costs. Xerox will incorporate NewField IT’s solutions into its existing MPS offerings, the company said.
"We’re just seeing this industry consolidate," MPS
provider Barganier said.
The Make-Up of MPS
Like other services, MPS consists of several components—and revenue opportunities.
"A provider—whether it’s internal or external—doesn’t make their money by providing the hardware anymore. So managed services is really taking over all that which was copier or printer, and telling the user 'You need someone to manage all that outflow.’ It’s drastically different because it’s the totality," said Barganier. "It’s a holistic approach."
That holistic approach includes assessing an organization’s printer and copier arsenal; recommending enhancements; designing and implementing improved networked printer and copier installations; monitoring; break/fix; maintenance, and proactive toner replacement.
Traditional IT providers and copier dealers are vying for MPS contracts, sometimes partnering, sometimes acquiring one another, executives said. VARs have networking expertise and IT know-how; copier businesses understand print. But most experts agreed that printers and copiers, plus supplies, increasingly are becoming the bailiwick of IT departments, and moving farther from office managers and procurement departments’ spheres of influence because of their networking and integration capabilities.
"This really is a race against the copier and printer
companies. Our bet is on the IT channel," said HP’s Dunsire. "Solution
providers definitely give us that avenue. They’re excited."
Channeling the Opportunity
Just as all industries use printers and copiers, solution providers of all sizes and areas of expertise are embracing the MPS opportunity. Some are expanding their service practices, building on their knowledge of managed services in security, storage or networking to add managed print capabilities, vendor executives said.
Others are vertical-market VARs who integrate their knowledge of specific industries with managed print, experts said. AUXILIO, for example, specializes in providing MPS to healthcare providers. The Mission Viejo, Calif.-based service provider recently inked a five-year MPS contract with MemorialCare [A1] Health System in Southern California and renewed a five-year deal with Saint Barnabas Health Care System in New Jersey.
Solution providers naturally can extend MPS into other disciplines such as workflow and document imaging. "That’s the ultimate goal of MPS: To eliminate all hard copy and streamline data," said Barganier.
No matter how natural the fit, however, entering a new market requires that solution providers invest in the resources necessary to sell and support the service. Many printer vendors have created programs and tools designed to minimize some of that investment of time and money, by allowing partners to tap their software and services.
Samsung only sells its MPS contracts through reseller partners, which can offer services in a variety of complexities ranging from basic cost per page to more in-depth services including print assessment, on-site support, help desk, maintenance, and statistical usage reports. Samsung’s CounThru 2 Pro [A2] managed print solution enables remote management, and the vendor’s Cost Simulation Tool is designed to help partners speedily deliver accurate MPS bid proposals. The Assessment Consulting Tool gathers and analyzes data from networked printers and multi-function devices, which solution providers then can use to save customers’ money and energy.
Samsung’s approach to the market centers on partnering—with manufacturers, with distributors, and with all types of channel businesses ranging from office superstores to VARs, Peter Richardson, channel and product marketing manager at Samsung, told Channel Insider.
"We directly partner at the manufacturer level with the industry-leading technology behind managed print services, at a development level. That way we don’t have to drive anyone to our home-baked solution. We look at not hosting, not being Xerox and not being what HP is moving towards because that leads us down to the road to direct," said Richardson. "There are so many things that go into managed print services that you have to build yourself or partner. You have to buy or partner. That’s just the business."
Rather than developing its own print-management and assessment software, Samsung—as well as other printer and copier makers including Kyocera, HP, Minolta and Xerox—partner with PrintFleet. Samsung, and many leading output makers, also work with FMAudit, a developer of print assessment, remote meter, supply and service data applications, for example.
Although it works with third-party products, Xerox also internally created solutions designed to equip its partners to best-serve midsize customers, said Gall. Xerox PagePack integrates with various third-party billing, ticketing and device monitoring back-office applications, and features a plug-in with Great America Leasing designed to save partners time and, therefore, money, he said.
"It helps people get more familiar with leasing, and that helps their business. It gets them oriented and helps them. We have a host of folks whose job is to get partners up and running and successful at print. There’s learning that you have to help people with, and that’s really, really important," said Gall.
Likewise, HP aims to reduce much of the complexity and time-consuming nature often associated with printer maintenance through its MPS programs. Although a small percentage of its MPS sales are direct, the vast majority go through HP’s channel, said Dunsire. And the company’s recent Printelligent acquisition will only swell that number, he said.
"This is channel-managed print. This is not direct. I want to be clear about that. We do have a direct managed print program in our enterprise accounts. These are Fortune 100, Fortune 200. Printelligent actually helps us in that midmarket space," Dunsire said. "You can build your managed print services from the ground up. You can take the enterprise space and repackage or you can go out and acquire the services, resources, and intellectual property to get it out faster. It allows us to get it out to market faster with the service network."
Inking the Deal
MPS contracts can last three or even five years. And organizations typically award 100 percent of a contract to one provider, Crowley said.
"What happens is it becomes a matter of account control. Our data shows in 95 percent of the engagements 100 percent of the devices come under a single contract. You win or you lose. It’s that clear-cut," he said.
It’s also apparent that, with more businesses warming to managed services, MPS opens the door to cementing an existing relationship or creating an opportunity for a competitor to creep into a client’s operation if solution providers do not themselves provide this option.
"At the end of the day, if their customer is comfortable with their partner managing their security and their data I think they’ll be comfortable with them handling their printers," said Xerox’s Gall.