U.S. PRINTING SRVCS GETTING OUTSOURCED

[Anonymous]

Printing services getting
outsourced to cut costs
Some companies find
equipment too expensive to own, hard to keep track of

Ford Motor Co. Estimates that its maintenance and
support costs for office printing are in the range of $40 million to $50
million. But that’s only an estimate. While Ford knows how many PCs it has —
172,000 — it can’t say for certain how many printers are installed.

“The reality is, we don’t know how many devices we’ve got,” said Clive
Johnson, Ford’s European deskside services manager. But based on its studies and
pilots, the automaker maintains that under its recently signed agreement with
Hewlett-Packard Co., it can reduce printing costs by 20% to 30%.

Johnson said he’s become so aware of the cost of printing that when he sees
papers in a wastebasket, “I don’t see paper in there, I see dollars in there.”

Ford officials last week shared details of a printer outsourcing agreement it
signed with HP, which follows pilot projects at Ford facilities in London and
Dearborn, Mich. Ford and HP officials declined to disclose the value of the
contract, however.

Ford is one of the largest and most visible companies to outsource its
printing services. But analysts say there’s accelerating interest in improving
printer management, and in many cases, companies may choose to outsource.

“The problem that Ford has is very, very common,” said Ken Weilerstein, an
analyst at Gartner Inc. in Stamford, Conn. Most companies don’t know how much
they are spending, he said, adding, “They don’t really know how they are using
the equipment, and they really can’t pinpoint the benefit from what they’ve
got.”

Gartner estimates that by the end of next year, 60% of companies will have
undertaken initiatives to cut document printing costs. “It is very much the
topic of interest,” said Weilerstein.

Ford has a proliferation of printers that came into the company “one way or
another,” said Johnson. These printers aren’t managed and are often ink-jet
models, which are cheap to buy but expensive to run, he said.

The company began looking at options several years ago, examining
multifunction devices that can scan and fax as well as print, but it felt that
the technology wasn’t mature. That opinion has changed.

HP will install multifunction laser printer devices that can be networked,
giving Ford the ability to monitor printer use through a portal. Ford employees
will replace paper and toner, but HP will manage the remaining functions.

Printer outsourcers are paid in a variety of ways, from per page to fixed
rates. But key to any payment method is having a view into how printers are
used, users said.

Tim Armstrong, chief financial officer and former CIO at Vinson & Elkins
LLP, has outsourced printing operations for the past three years to Lexmark
International Inc. in Lexington, Ky. Attorneys at the Houston law firm print
about 30 million pages annually. Printing costs used to account for about 5% of
its IT spending; they’re now about 2.9% to 3.2%. Armstrong said he believes
costs will decline further as the firm installs more shared Printers.

[Author]

March 24, 2005 at 10:22 AM