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 user 2006-11-09 at 12:17:00 pm Views: 67
  • #16706

    The great printer dust-up
    Far from delivering the paperless office, digitisation has given people the ability to print directly from their computer and access to a quickly expanding, seemingly bottomless pool of information worth printing.Freefalling printer prices have produced few savings for business as the purchasing of consumables, especially paper and ink, has soared.Printing costs have more than doubled over the past three years, according to Gartner. The research firm estimates that one to five percent of revenue is spent in print – “and two percent is more than the rent,” points out one distributor.Managed print services can give SMEs a way to rationalise printer fleets, monitor usage and rein in costs, and allow them to get on with the business of making money.The sales pitch is more difficult than simply selling hardware because some of the benefits are more subtle than increased output.A managed services reseller can offer a regular agenda of review where the volume of paper and toner, as well as the number, position and use of printing devices, are recorded and analysed.Identifying the right machine for the job and placing it in a position where it will be used the most will lift staff productivity and morale.Without an external partner in charge of the process, few organisations would bother to do so.Outsourcing print management removes it from a customer’s weekly schedule, thereby freeing up more time for tasks related to making money. A summary of print assets and their usage gives a customer greater knowledge of what is happening within its business.And finally, managed services can save a customer a lot of money. Exactly how much money depends on several factors including the size of the organisation and how printing was managed beforehand.

    However analysts, vendors and resellers interviewed for this article claimed potential savings averaged at 30 percent.
    Managed services in IT have brought big savings in time and money to SMEs with the external management of networks and PC fleets. “Now it is print’s time to come under the microscope and I think there are some huge savings to be made,” says Malcolm Hancock, a UK-based principal analyst for print markets and management, Gartner.Managed services bring two obvious boons to the supplier – ongoing revenue and a deeper engagement with the customer. However it also includes the lucrative consumables market that often is missed by traditional printer suppliers.Direct sales businesses such as Corporate Express and OfficeWorks target the front desk with colour catalogues that often snare bulk orders of toner and reams of paper among the highlighters, staples and other stationery.Managed services wrap up toner and paper into the contract which builds in a level of profitability that the box-dropping reseller will never see. “That’s exactly the reason a managed print environment is so important,” says Gary Cox, managing director of Lexmark Australia.

    The walk-through
    Managed print services begin just like any other traditional sale – with an audit of the customer’s current set-up. Typically this involves a walk-through the premises noting the location of each imaging device and its “owner” or a point of contact.Using management software or manually printing off meter readings and other data, a reseller compiles a picture of the way in which the devices are being used.Staff surveys can reveal workflow patterns, complaints and requirements that are difficult to identify in more complex environments.General truths emerge from audits. As a rule companies tend to significantly underestimate what they are spending on print. They also undercount the number of devices, as well as the amount of paper and toner used each month.“Machines will only tell you so much. It is important to talk to the users as well,” says Peter Burr, marketing director of Print Services Australia, a managed print services reseller.Then a reseller studies current service-level agreements and lists the support organisations involved in maintaining the printer fleet, which include device vendors and ink, paper and service suppliers.There are often too many suppliers involved in maintaining the printer fleet, each with their attending SLAs.SMEs which use devices from multiple vendors can find themselves calling a different toner supplier and service company for each brand.Managed services lets a customer retain the choice of vendors but have the devices operated by a single company, which cuts down on confusion and cost.A reseller can become the sole supplier and a trusted consultant, says Joe Ciliberto, national product and marketing manager for Lanier Australia.“It opens up new doors for non-printer related business, all the printers, all their computers, which leads to greater profitability.”Rationalising the number of models also generates savings. Revlon, a customer of PSA, reduced the number of copier models from seven to four, simplifying the printing process and reducing staff training.Sometimes saving money can simply be a matter of moving a machine’s position. The placement of printers affects their usage, and some basic psychology – a printer closer to end-users is used more often – could reduce the use of other machines with higher per-page print costs. PSA’s Burr says laziness is often a major contributor to cost when an employee has the option of doing a high-volume print job on his desk printer rather than the dedicated, higher-end model down the hall.Other times it might be a matter of breaking traditional behaviour. Older employees that witnessed the arrival of the fax machine may still continue to print and fax documents to another part of the company or elsewhere.Either using email or a fax server in the first instance or scanning in a document through an MFP cuts print costs, speeds up workflow and enables electronic archiving. It is also an opportunity to upsell to an MFP with scan-to-email function.

    Colour is becoming more common in business printing.
    “Anything used in the outside world with colour certainly stands apart,” says Mike Pleasants, director of marketing communications at Epson Australia. “Colour says, ‘I’m a professional company and I mean business’.”However colour is the easiest way to blow out your printing bill. Black and white printing costs can fall to one or two cents a page, whereas the best colour is eight cents a page on a colour laser, a four-fold increase. The bulk of colour printers cost 15-20 cents per page or higher.Using management codes to restrict the use of colour in printing can dramatically reduce unnecessary spending. Most businesses find that 90 percent of jobs can be done on a mono printer, says Cox.A reseller may even recommend outsourcing certain print jobs that are high volume or require special production such as saddle-stitching or binding rather than advise a customer to buy a machine and produce it in-house.These decisions require a reseller to develop skills as a business consultant and weigh up the frequency of print runs against overall TCO. A real estate agent who prints his own leaflets every month might do it in-house for eight cents and not 50 cents at the local Kinko’s.The best resellers in managed services are across all the features, advantages and disadvantages of lasers, inkjets and MFPs, and can pick a solution that will cover a customer’s needs for the lowest cost. “A customer is looking for good, sound, solid advice for their business and there is no one answer,” says Pleasants. “Understanding the person’s business is vital to making the right decision.”

    Decentralise now
    Management theory can be no more reliable than weather reports. Changing circumstances can send good advice out of date and even reverse entrenched ideas.Printing is going through just such a reversal now, according to Geoff Croshaw, managing director of Fuji Xerox Printers Australia New Zealand.For 10 years companies have stored their larger printers and copiers in dedicated rooms at the behest of the accounting department. Some vendors still back centralisation as a better finance model that reduces the amount of hardware and simplifies use and management. However Croshaw believes plunging hardware prices have given end-users the upper hand. “We will see a decentralisation of printer environments over time,” says Croshaw.A decentralised printing environment puts the device closer to the user, which boosts productivity and staff satisfaction. However it also means more machines and often more consumables. Both arguments are well entrenched and it is up to resellers to decide whether a customer’s primary objective is saving costs or raising productivity.Falling printer prices have allowed middle management to make purchasing decisions and workgroups are often able to buy their own machine. But the IT department remains stuck with the management of the device and its consumables during and after the workgroup’s project.A Gartner report on print management tools in September last year advised businesses to manage, monitor and track their output fleets to lower operating expenses.By measuring device usage IT departments can channel printed pages to more-efficient (faster) and cost-effective devices or redeploy underutilised printers to areas with higher demand, the report added.New software tools that can “see” all imaging devices on a network allow an administrator to monitor toner levels, take page counts and respond immediately to paper jams or more serious malfunctions.

    Previously vendors released their own programs but these were often limited in their ability to collect data from competitors’ devices. Independently produced programs now on the market are vendor-agnostic and can poll machines of all types.The software also lets customers calculate how much they are paying to print a page on each device or for the organisation as a whole.A usage plan shows a company exactly what it is spending and where – a critical step in reducing costs which until now has been missing from the SME market, according to Gartner’s Hancock.Other recommendations from the Gartner report included keeping printer fleets under five years old and compatible with the latest management tools.Better management that removes bottlenecks in printing should also improve employee satisfaction, noted the report.Tech providers stood to benefit from regular refreshes of printer fleets and higher numbers of pages printed.Of course there is one unavoidable blind spot with software management tools which hamstrings the audit process – printing devices connected directly to machines by USB.These are more likely to be inkjet printers which typically have cheaper purchase prices but much higher running costs. The greatest wastage in any company comes from the locally connected products bought ad hoc and not through the IT department, according to Gartner’s Hancock.These printers can arrive through multiple routes into an organisation – a new employee, workgroups looking for greater security and convenience or simply a well-meaning receptionist – but they end up forming a hidden cost within an organisation.Any software tool that provides some sort of business analysis can give a reseller the evidence needed to persuade a customer to upgrade tired devices.Kyocera provides a TCO calculator on its website for resellers to assess all major running costs for a customer’s current printer. They can then save this data as a PDF and present it to the client.The corporate world is well-accustomed to buying managed services contracts for their copier fleets. Photocopiers have traditionally been expensive to purchase, difficult to maintain and costly to feed, and customers are generally happy to pay for expert care.However the waves of consolidation that have swept through other areas of IT are only just beginning to break in the copier-printer world, and the lucrative corporate market is now in the sights of traditional printer vendors.Multi-function printers that print, scan and fax as well as copy are biting chunks from the fleshy haunches of the copier market and cost structures are under pressure.Although the total volume of office paper output is increasing, Gartner research has shown that the growth is coming from print, scan and desktop output, whereas copy and fax volumes are actually decreasing.

    Nearly all copier vendors have responded by turning their backs on the channel and going direct.
    The Australian market now has the largest number of direct-selling copier vendors in the world; Sharp, Toshiba, Konica Minolta, Fuji-Xerox, Lanier, Ricoh and Canon are all on the list. “Ownership of the customer is too important,” says Lanier’s Ciliberto. Though it holds just six percent of the plain-paper copier market, Lanier is happy to sacrifice market share for profitability, says Ciliberto.Copier vendors see their experience in managed services as the key to surviving the coming industry shakeout, and some even refuse to train their own resellers to avoid boosting competition with their direct-sales teams.Ricoh is one vendor that arranges managed services for its direct channel only. Managed services for resellers is “just not something we are working on at the moment,” says a Ricoh spokeswoman.Lanier also only develops managed services with its regional resellers; metro resellers are given access to laser printers and low-end MFDs.Kyocera Mita Australia pursues a similar policy, holding copiers apart from the printers it sells through the channel.Managed services have grown strongly over the past three years and now represent 20 percent of printer sales sold through its distribution channel. The number of the vendor’s direct MS sales for its copiers are “a similar figure”, says Anthony Toope, marketing manager for Kyocera.When it comes to printers, Toope claims the vendor is in a more limited position than its own channel because resellers have a better relationship with their customers and can provide other IT infrastructure beyond printing.Some customers specify during the tender process that they will only deal direct, but Kyocera is committed to encouraging its resellers into managed services. “Our success has been very much largely to the support of the resellers,” says Toope.The one area where a vendor has more connections is with government, but Kyocera has recently launched a program to place resellers within that market.The authorised reseller program in April with special pricing, support material and training for suppliers willing to make the trip to Canberra. “We do want to be quite proactive promoting our sales through the reseller channel,” says Toope.Printer vendors are more familiar with balancing a channel and direct sales. The unspoken understanding is that the top 200 companies and government are left to the vendor, while resellers are left alone to chase SMEs.However some printer vendors have established managed services divisions or launched them in recent years, with OKI one of the latest.Lexmark provides more competition than one of its managed-services resellers is happy with, who labels the printer vendors’ direct-sales departments as his greatest threat.HP continues to offer its own in-house, managed services portfolio. A multi-tiered approach covers the full gamut, from toner and service through to full outsource.“For us it’s all managed services,” says Shane Lucas, sales and marketing manager, Imaging and Printing, HP South Pacific.The programs are quite specialised and include providing toner to legacy machines no longer on sale, a managed service for a single printer or break-fix service for over 1000 units.A fully outsourced program can involve the vendor owning the fleet and providing printing services as a cost per page, as well as project management.However not all printer vendors are on top of the managed services game despite the market shift. “Our expertise is fairly limited,” admits Epson’s Pleasants. “It is a new area for us.”

    Ex-copier resellers are on the street looking for new markets and other vendors.
    HP South Pacific’s vice president and general manager, imaging & printing and consumer group, Christoph Schell, reports that he meets two to three times a week with copier resellers wanting to sell HP products.HP is promising greater commitment and has rolled out three flexible programs designed to give resellers varying levels of sales support.With the most basic package, Print Advantage, the reseller is essentially a sales agent for the HP service, and the vendor provides training and a certification program as well as point-of-sale material.Resellers with some infrastructure and knowledge, often moving sideways into managed printing services from other areas, are enlisted under the ValuePage program. HP provides parts and limited support while the reseller maintains the relationship with the customer.The third program is for end-to-end resellers with the staff, parts and tools to provide a fully managed print service themselves.Copier resellers have a significant head-start over traditional IT and printer resellers in selling managed services. Their staff are experienced in break/fix work on larger machines, they often stock their own parts inventories and specialist tools.But the greatest advantage is that their customers are already paying for managed services for photocopiers. Adding printers and other devices to the list is an easier task than selling a services contract for the first time.Despite all evidence to the contrary, managed print services will inevitably move away from stamping ink on paper towards electronic document managementCopier vendors such as Fuji Xerox have led the field, and Lanier coined the ugly term “docutivity” more than 10 years ago to describe the productivity of producing documents.The corporate world has been moving in this direction for some time, albeit slowly. However the Sarbane-Oxley reporting requirements, introduced after the collapse of the US investment giant Enron, have forced SMEs to face the issue of document management, according to Lexmark’s Cox.He believes that the entire production of documents now requires management at a much higher level. “You can call it printing if you want,” says Cox.Scanning technology was the hot topic two years ago, and MFPs can now scan a document to email, a file or even more complicated tasks. Some software can automatically recognise a document as a company invoice and covert the text into data, then index and store it within a database.“These kinds of processes speed up the workflow and make huge savings,” says Gartner’s Hancock.But now workflow is the new buzzword, and print providers are destined to become management consultants that look holistically to improve a customer’s entire business through process engineering.At least, Lanier is convinced that this is the right direction and has employed document specialists to study workflow processes.“We are looking at breaking into that IT space to become a true IT solution provider for everyone, not just for a photocopier,” says Lanier’s Cilberto, who rates the move to managed services as big a jump as the shift from analogue to digital.

    Tough path to walk
    Selling managed services may be lucrative, but that doesn’t mean it is easy. Customers generally think of print in short-term episodes; the initial purchase followed by toner replacements and service calls only when needed.The pressure on MPS resellers is to explain the benefits first, which can be an uphill battle. “Our potential customers don’t sit up in the morning and say, ‘I need to make an investment in a managed services agreement’,” says Neil Tilley, managing director of Upstream, which claims to be Australia’s largest independent print solutions company.The clincher missing from the pitch is that a customer entering a managed services contract is not guaranteed to be in a better position than its competitors. An MS contract saves a company money and makes business easier to run, but it doesn’t buy a competitive advantage over its rivals.The reseller must also aim higher than the regular contacts in the IT department. Because managed services are a strategic rather than tactical sell, resellers must be prepared to take their case beyond the IT manager to the CEO.Consequently the sell itself is a lot harder, takes much longer and is therefore more expensive in staff time to the reseller.Ciliberto observed Lanier’s regional resellers making the transition from box-dropping to managed services go through a six to 12-month period where they were missing their budget targets