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 user 2009-09-25 at 11:02:52 am Views: 41
  • #22775

    HP rides the perfect storm, closes gap on Xerox with latest MPS initiatives
    recent announcements bolstering its managed print services (MPS)
    credentials come at a time when market maturity, a steep decline in
    hardware and consumables revenues and diminishing margins means that
    capturing service revenue is critical to future success. With few
    organisations having the skills or resources to manage the print
    environment internally, many are turning to external providers to
    reduce spiralling print costs and improve business processes.
    Technology convergence, the advent of the sophisticated multifunction
    peripheral (MFP), accelerated demand for cost reduction and improved
    business processes, along with increased receptiveness to outsourcing
    are all factors which are creating a perfect storm that is fuelling
    momentum in the MPS market.

    MPS has evolved from the traditional
    approach to purchasing and servicing copiers through click-charge
    contracts based on usage. As pioneers of this service model, it is the
    copier companies, and Xerox in particular, which have been the most
    successful in moving to a service model for managing enterprise
    printing environments, building on long established relationships with
    procurement and facilities management. In contrast, HP’s MPS
    engagements have been driven by its strong relationship with IT, and
    have enabled it to gain over two thousand global MPS customers,
    managing 450,000 devices under contract.

    Despite its success in
    the office environment, HP has so far been unable to make strong
    inroads in managing the lucrative higher volume production printing
    environment, or winning MPS contracts which are driven by
    purchasing—both typically the domain of the copier companies. HP’s raft
    of recent MPS announcements, including a Printing Payback guarantee for
    new MPS customers, a new global managed enterprise services (MES) group
    and the expansion of its strategic alliance with Canon will certainly
    help increase its penetration of large enterprise MPS deals and
    ultimately close the gap with Xerox, its most formidable competitor in
    the MPS market.

    Yet navigating the perfect storm successfully is
    no easy task, and is not simply about focusing purely on cost
    reductions. Key to success in this market is that MPS providers are
    able to deliver on four main criteria—best-in-class products, strong
    professional services consulting, an ability to reshape business
    processes and a holistic approach to IT and network integration.
    Quocirca strongly believes that HP’s recent MPS announcements position
    it well to deliver on all four of these criteria and challenge Xerox’s
    stronghold in the market.

    Reducing cost and mitigating risk with Payback Guarantee
    organisations who are uncertain as to the extent of cost savings that
    can be gained by adopting an MPS, HP has introduced a Printing Payback
    guarantee. Under this scheme, any qualified enterprise that does not
    make the cost savings that HP’s consultants project for them, within 12
    months, can receive a cheque refunding the shortfall. Such a scheme
    requires ongoing monitoring of cost savings, which is also offered by
    other vendors such as Xerox’s guaranteed cost savings approach.
    Although HP’s Payback guarantee does mitigate some risk for an
    enterprise, it requires a much more detailed, fee-based evaluation and
    organisations should carefully consider the differing approaches
    offered in the market to ensure that, overall, an MPS not only delivers
    cost savings, but also provides the required products and offers the
    flexibility to adapt as business needs change .

    Dedicated global business unit focused on MPS

    new dedicated global business unit, Managed Enterprise Solutions (MES),
    demonstrates its commitment to driving its enterprise MPS business
    through providing direct customers a suite of customisable services
    software and solutions integrated with HP’s range of devices—including
    products from Canon. The MES unit will leverage HP’s EDS acquisition
    and is likely to have more than 600 certified EDS account managers
    globally to focus on this business. HP estimates that 20% of MPS
    engagements will be delivered through EDS in the coming year. The EDS
    relationship will certainly have an impact on Xerox as EDS was
    previously a key partner in delivering Xerox enterprise document
    services. Nevertheless, it will take some time to get EDS staff trained
    to effectively sell HP’s MPS offerings, and meanwhile, Xerox and Ricoh
    can be expected to deepen alliances with existing IT partners which
    include CSC and IBM.

    Best-in-class technology through alliance with Canon
    expansion of its 25 year strategic alliance with Canon plugs gaps in
    its existing product portfolio with Canon’s multifunction products
    (MFPs). This enables HP to offer a complete range of products from
    desktop to production, enabling it to compete more effectively against
    competitors such as Xerox and Ricoh and capture further service revenue
    from managing a wider range of devices which are typically printing
    higher value colour pages within an enterprise. However, HP and Canon
    products use different software platforms (OXP and MEAP respectively)
    and integration will be fundamental to ensuring devices can be managed
    holistically and that workflow solutions are integrated. HP is well
    positioned to do this with its Web JetAdmin print management tool but
    Xerox is still currently ahead of the game when it comes to managing
    multivendor products proactively. So HP’s next challenge is to ensure
    that introducing Canon products into an MPS engagement does not also
    introduce complexity. As time progresses, HP may also need to go
    further in providing additional support for other vendors’ devices,
    providing a greater depth of heterogeneous support that may be needed
    outside of their existing customer base.

    Quocirca opinion
    research shows that organisations are now treating printing more
    strategically and are ready to tackle control of their print
    environment. With Xerox firmly entrenched in this space, HP has made a
    shrewd move in seeking to capture more presence in the MPS market,
    particularly in the production printing arena where it has so far
    lacked the products. For enterprises, while the potential to make
    significant cost savings is real, the true business value will come
    from an MPS which can transform business processes to improve
    efficiencies and productivity as business needs change. HP has a strong
    set of software solutions which will support this direction and this
    area promises to be one of the key differentiators for MPS providers as
    they seek to compete on more than cost savings alone.

    deploying best in class products to support printing is a step in the
    right direction, the real product challenges are related to
    customisation for diverse corporate environments and ease of
    integration with existing systems. An MPS provider’s integration and
    interoperability expertise is central to delivering an effective
    managed print service and HP, like other vendors, needs to be able to
    offer as much of a standardised environment in order to offer platform
    flexibility, simplicity of management and integration.

    estimates that just 20% of enterprises are actively using an MPS, so
    the market opportunity is significant, particularly as more enterprises
    turn to outsourcing or out-tasking of other elements of their IT
    infrastructure. Indeed, HP should not overlook the potential of IT
    services engagements to pull in MPS offerings—and one to watch in this
    area is Ricoh who recently announced device integration with IBM
    Tivoli. This capability to potentially tie IT infrastructure and
    service management with printing gives Ricoh a strong route to market
    through IBM customers, and HP should certainly leverage its business
    technology optimisation solutions (formerly OpenView) to make the most
    of the potential to manage IT and print environments together.

    rapid growth of software as a service (SaaS) will drive demand for next
    generation MPS, particularly in the channel, and HP should not miss the
    opportunity to replicate and standardise its offerings to smaller
    cash-conscious customers and provide higher margins for channel