By Brian Albright, Business Solutions magazine.
MPS presents a lucrative opportunity for VARs willing to invest in staffing, education, and training.
We’ve been hearing about the paperless office for years, but the reality is that most organizations still print large amounts of documents. Large enterprises may produce thousands of documents a week, while keeping an eye on the cost of maintaining their printers, purchasing paper and toner, and keeping track of where all of those printed documents have gone. The IT department, meanwhile, is trying to find out how printing can help reduce the cost and complexity of Web enablement, cloud computing, and mobility.
Managed print services (MPS) is one way companies try to better control their printing and imaging operations, streamlining business processes and saving resources by establishing print rules and workflow solutions. VARs have an opportunity, particularly in the SMB market, to establish themselves in the MPS space and create new revenue opportunities.
“Growth for both managed print services and basic print services within the SMB segment is expected to outpace that of large enterprises,” says Michael Weir, VP of strategy and marketing for laserjet and enterprise solutions at HP. “This is because many hard-copy vendors see increasing demand in the indirect channel segment for these types of offerings. In response to this demand, vendors have been aggressively building out programs to capitalize on the market opportunity.”
According to CompTIA’s “Examining the Print and Document Management Market” report, only 20% of SMBs with fewer than 100 employees are using managed print services, providing a significant market opportunity for VARs that can make the transition from selling hardware to offering MPS. Photizo Group, a research firm that specializes in MPS, expects a 20% annual growth rate for MPS through 2015, with the market reaching $78 billion worldwide (although much of that growth will likely stem from very large companies selling services directly to very large customers).
Still, there will be emerging opportunities in the SMB space for VARs that can move quickly to establish vendor partnerships and create managed print offerings. According to the vendors interviewed for this article, MPS can provide more long-term contract agreements while increasing margin gains. And, by targeting the existing customer base, a VAR can do so while reducing the sales cycle by 70% to 80% and realizing faster profits.
Getting Started With Managed Print Services
Establishing a new managed print services business requires a significant investment in time, education, staffing, and cash — as much as $100,000 to $150,000, in some cases. That’s because many VARs and MSPs are not equipped for managed print.
“Many VARs are currently missing the key components of a managed print business model,” says Tim Brien, director of managed print services at OKI Data Americas. “These include device data capture and independent analysis and benchmarking, customizable proposal generation, flexible acquisition options, implementation services, ongoing remote monitoring and management, predictive maintenance, personalized service and supplies fulfillment, back office billing and collection services, continuous fleet optimization, and ongoing reporting.”
MPS are often complex offerings and can involve everything from supplies and break-fix contracts to complex fleet rationalizations and document management solutions, finance and procurement services, and asset management. “Only 15% of the cost savings potential is in hardware and toner; the rest is in improving document management and workflow,” Weir says. “This is also where VARs can differentiate their business relative to their competition and achieve higher margins.”
The education required to move from selling hardware to full-service MPS can be steep, and the investment level varies depending on the existing expertise of the VAR. Vendor partnerships are critical, since many vendors and distributors provide most of the infrastructure components and many of the services, allowing the VAR to focus on selling and customer engagement.
“The speed it takes to get up and running with an MPS offering directly correlates to the VAR’s business focus and commitment to execution,” says Tom Gall, director of value channel marketing at Xerox. “The initial investment typically entails staffing updates, software upgrades, and marketing. Depending on the vendor you partner with, some of this is free.”
A New Sales Approach
Selling managed print services requires a more consultative approach and often involves selling to higher levels within an organization. That means the sales team will need to be retrained, and new staff members with MPS experience may need to be brought in to lead the effort.
The VAR has to be committed to making the transition and to making the necessary investment in new personnel to be successful. “There are two changes that need to be met to ensure your success in managed print,” Brien says. “First, there has to be a top-down commitment by the owner/principal to implement the MPS practice. As the principal, they will have to establish and promote the core business changes required to effectively execute the managed print corporate vision. The second key change is acquiring or appointing a dedicated, knowledgeable MPS sales specialist who can work as an overlay to your existing sales team.”
Vendors typically offer sales training and support, and these programs often are set up in tiers to accommodate the existing capabilities of the VAR. (HP’s program, for instance, has three tracks designed around existing VAR capabilities.) Take advantage of these resources, and any other vendor offerings that can help get your MPS offering to market sooner.
“To avoid pitfalls, it is important to set expectations with customers as you are presenting the option of managed print services,” Gall says. “Train your sales staff to explain the benefits of MPS and understand how it’s implemented. Work with your MPS vendor, or create your own training covering topics such as assessment, design, implementation, and management.”
MPS Competitive Landscape
VARs entering the MPS space will be competing with other established VARs, channel partners, and vendors that sell direct, and the competition is increasingly fierce. “This is why differentiation is important for the VAR, and differentiation opportunities exist in becoming an expert in vertical solutions such as healthcare or financial services or in key horizontal applications such as mobile printing,” Weir says.
One strategy is to target document-intensive markets like real estate, healthcare, legal, and financial services, which may be underpenetrated or which may be seeing less than average savings with their current MPS solutions. Luckily, the market is growing so quickly that there should be plenty of customer opportunities to go around for the next few years. “The competition is heating up with more MPS solutions entering the market,” Gall says. “However, the market is expected to grow significantly, allowing more partners to get a piece of the MPS pie. It is important for providers to get started quickly, as they need to gain expertise as they compete for deals.”
Again, that is why vendor partnerships are so important. “There is a wealth of emerging infrastructure providers (e.g. Supplies Network, OKI, Pitney, Print Fleet, Clover, etc.) that can be leveraged for their end-to-end integrated managed print business models, including all systems, tools, support, and service capabilities,” Brien says. “By partnering with one of these platform vendors, today’s VAR/MSP can quickly and competitively structure an aggressive MPS growth engine that will simply bolt onto their existing infrastructure.”
Print Services Are Rapidly Evolving
MPS provides another point of entry for VARs to attract new business and transition from transactional business into contractual business. Marketing this new offering to customers and prospects is a key part of successfully capitalizing on the current MPS opportunity for resellers. Marketing efforts should be focused on a customer’s specific industry, size, and needs. Partnering with the right vendor will provide VARs with the tools that will help them succeed in this rapidly growing market.
The market is also rapidly evolving, and vendors will have to adapt their offerings to help their resellers provide the right solutions to customers. “Vendors will need to equip the channel by providing capabilities like diagnostics and analytics that help customers gain better visibility into their print ecosystem to better manage workflow and processes,” Weir says. “Partners that can support areas such as business process document management, print procurement, and imaging and archiving will be successful.”
New technologies will also push VARs and their customers to create even more advanced ways to better manage printing operations. “The MPS market will move away from asset management into an optimization model — solutions,” Brien says. “Growth will be within cloud/mobile computing apps, including tablets and other mobile devices, which will provide total access anywhere, anytime, all the time. Everything will likely be sold as a service.”