HP CLOSES GAP ON XEROX ….

[Anonymous]

http://www.it-director.com/business/content.php?cid=11558
HP CLOSES GAP ON XEROX
HP rides the perfect storm, closes gap on Xerox with latest MPS initiatives
HP’s
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
For
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
HP’s
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
HP’s
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
Quocirca’s
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.

While
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.

Quocirca
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.

Meanwhile
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
partners.

[Author]

September 25, 2009 at 11:02 AM