*NEWS*THE GREAT PRINTER DUST-UP

[Anonymous]

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

[Author]

November 9, 2006 at 12:19 PM