The Ins and Outs of MPS

Published in Imaging Spectrum issue June 2009 and Recycler Trade Magazine issue June 2009

Recycler imageManaged print services (MPS) are sprouting up everywhere – both remanufacturers and OEMs are launching offerings – each with their own unique flair. There are so many benefits to MPS programs, but in the past end users have been hesitant to adopt them. But with new end user behaviours, dealers are realizing that selling a solution is in higher demand than selling a product.

Offering managed print services can be a huge opportunity in this market. But it takes time, money and expertise to perfect MPSs.

In TCO Partners’ Special Report: “Six Reasons You Might Fail at Managed Print Services—And What to Do About It!”  it was reported that, “Of the billions of pages printed each year across Europe and Asia, it is estimated that fewer than 10 percent are under active management. Capturing these pages in Managed Print Services (MPS) contracts represents the biggest emerging opportunity in our industry.”

What are Managed Print Services (MPS):

“On a very simple level, managed print services are managing a printer fleet (remotely) under a contract agreement, while taking the onus away from the end-user’s IT department,” said Aldo Spensieri, vice president of sales at West Point Products.

MPSs usually include hardware, service, support, financing, supplies and management and are based on a cost-per-copy billing model. Servicing the account, managing the account and owning the account is the MPS model, according to the Photizo Group. These offerings are a savings program, opposed to a discount program, and they are about managing the fleet while helping the end user manage their costs.

Ed Crowley, president of the Photizo Group, said there are three stages in the customers’ adoption of outsourcing:
Control: MPS implementations are focused on gaining control of the fleet
Optimize: implementation is focused on optimizing the fleet by trying to ensure that hardcopy assets are deployed in the optimal manner
Enhance: customers move beyond optimization of the fleet to actually enhancing the capabilities of the fleet by using document management and document workflow to improve basic business processes

History of the concept:

According to Crowley, managed print services started in the copier market in the 1990s. It was more of a cost-per-copy idea for the copier vendors and dealers. Around the same time, a similar trend was materializing in the IT side of business. IT departments were looking to outsource the infrastructure. Hence, vendors started offering  the first stage of MPS offerings to their dealers.

Then as early as 1998, printer manufacturers began looking into and adopting managed print services. Vendors started offering MPSs and dealers started gaining control of their end users printer fleets. The problem was that there wasn’t software on the market that allowed dealers to control printers, copiers and MFPs. They had to stick to one type of device, said Spensieri. But in early 2000, that all changed. There was now a synergy between the software, the devices and the MPS provider.

Many advanced infrastructure tools came to the surface. And supply providers started collaborating with others who provided management software.

Through all these transitions companies were launching their MPS programs. Unfortunately, many of them were unsuccessful. Today these same companies are either revamping their offerings or are starting from scratch to offer a comprehensive solution to their customers.

TCO Partners believes there are six reasons why a company’s MPS program might fail. These include: 1.) ineffective sales training
2.) inadequate infrastructure
3.) incorrect marketing positioning
4.) insufficient marketing
5.) inadequate assessment tools
6.) no dedicated managed print sales force

It all comes together
Right now is a tough time for many businesses. The recession is hitting every industry. But if a company can offer a program that boasts cost savings, efficiency improvements and green initiatives, most customers are at least going to listen to the pitch.

“More financial directors were willing to talk to talk to us than they ever have been before,” Darrell Amy of TCO Partners said.

Darrell Leven, vice president of sales and marketing for FM Audit echoed this. “Before, everyone was in an educating and gathering information mode. Today though, everyone is in action mode.”

Managed print services have been around for a while, but the recession is definitely giving these solution programs a boost. “The recession is forcing dealers to change their ways to become full solution providers, otherwise they’re going to fall by the wayside,” said Steve Templin, director of sales for International Laser Group.

Companies are taking advantage of this angle when promoting MPS offerings. When staff reductions and layoffs occur, other employees pick up the slack, leaving less and less time to worry about their fleet. Companies are also looking at reducing their expenses. MPS can help there.

In the article “Making Good on the Promise of Print Assessments” by Ken Roche, VP sales and marketing for the Print Operations Group, featured in the September issue of The Photizo Group’s newsletter, Roche reports, “In 2001, the Gartner Inc. released a seminal research report that claimed an astonishing 1 to 3 percent of an organization’s entire annual revenues were deployed to cover internal printing costs. Later, International Data Corp. (IDC) independently confirmed the logic of these estimates. This suggested a total global spend of approximately $150 billion on printing devices, consumables and maintenance, a figure in accordance with estimates from the world’s largest imaging and printing systems provider, HP.”

With employees having to wear different hats, efficiency can sometimes get lost, which can be a downward spiral for the company. MPS programs aid in managing business processes and result in efficiency improvements.  Efficiency can also be improved on the IT side. IT specialists often spend their time working on and fixing the company’s fleet. But when this is outsourced to the MPS provider, it frees up the IT department’s time and allows them to work on other responsibilities and tasks. According to Crowley, “Many organizations can reduce their IT support by 20 percent through outsourcing.”

But the recession is not the only aspect driving customer appeal to MPS offerings. Being green is a goal for many companies, and MPS can help companies achieve these goals. Many managed print services offer reports to the customer that tell them how much devices are being used and how they can consolidate or grow, which can reduce energy consumption and paper waste.

So, if managed print services provide so many positive aspects to companies, why aren’t more companies under MPS contracts?

MPS is Personal
According to Crowley, only about 11 percent of the “global fleet” are under an MPS contract. Of those companies, 57 percent of them are in their first MPS engagement and have only reached and mastered the first two stages of managed print services (1. Control; 2. Optimize).

End users can be hesitant to adopt managed print services. But with all the benefits, why are they sceptical?

Part of a MPS offering is outsourcing. Due to the recession, outsourcing has become a scary word in the business environment. Outsourcing, to many people, means giving away their work and jobs. So that word is a buzz word – a killer. People hear that and want to reject everything having to do with it.

Another reason MPS offerings have been a hard sale is that people are attached. They are attached to the way things have always been. It’s human nature. Very few people like change. So if the benefit of change is not crystal clear, rejection is a good possibility. And not only are people attached to the culture, people are surprisingly attached to their printers.

The September issue of The Photizo Group’s newsletter (MPS Insights) quoted a recent article in CFO Magazine (May 2008, “Effort of duplication: ‘managed print services’) saying: “’People inevitably resist change, especially if it means losing a beloved desktop printer. Xerox has seen printers hidden under desks or in closets. Health First [an MPS client cited in the article] encountered similar resistance: executives initially complained about having to print confidential documents at shared printers.”

So how do companies address these hesitations and get customers to see the benefits?

Hybrid dealers and MPS champions

Hybrid dealers, as the Photizo Group has titled them, are the answer. Hybrid dealers are companies that have mastered what it means to offer managed print services. They have MPS champions who are MPS and solution sales experts. They embody the MPS model and structure and are able to perform assessments and provide management for their customers’ fleets.

Hybrid dealers have avoided the six reasons a company will fail at MPS by having a strong marketing message about the MPS program they offer; investing in resources and training to support them; and getting the education to be solution salesmen and women.

According to the Photizo Group, “Less than 5 percent of all dealers and resellers today are hybrid dealers.”

A MPS provider’s business model has to transition into a service centric business. “[Offering MPS] has been the single largest change in the company,” said Matt McLeish, director of managed print solutions at Parts Now. “I would guess that this is the biggest shock to companies,” Pam Olson, director of marketing at Parts Now followed up. “You really have to have a dedicated sales force. It’s a separate business unit. And you really have to be experts and focused. The key to success is knowing what this can do for you and putting the right people in place to achieve it.”

MPS Today

Solution sales and MPS programs are not a fad of the moment. Even if the economy turns around, MPS programs are here to stay. According to the Photizo Group’s research, “It is estimated that by 2012 MPS will have 40 percent share of the hardcopy market.”

“Managed print services will become the standard,” Templin said. “You’ll either have some sort of MPS offering or you won’t be selling cartridges anymore.”

“Cartridges are a commodity today,” said Spensieri of West Point Products. “Dealers are demanding [MPSs]. They are trying to find a way to protect their business and retain their margins.”

Managed print services have become such a big deal in the industry that 2009 marked the first-ever MPS Conference and launch of an association. The conference took place in San Antonio, Texas on 26-28 April and was hosted by the Photizo Group.

One hundred fifty people attended the conference where they were provided with a forum to network, panel discussions, interactive sessions and case studies.

“There was a real interesting mix. There was a blend of remanufacturers, infrastructure providers, dealers and end user/decision makers at the event,” said Crowley. “It was really fantastic. There was incredible attendance and just a lot of passion and discussion made it a great forum.”

During the meeting, talk of a MPS Association forming also took place. It was decided that six people, covering all facets of the industry, would gather and serve on the formation committee. These six individuals include two end users: Justin West of Nationwide and Marvin Reem of Bob Jones University; two software/infrastructure providers: Bill Brikiatis ode Copy and Darrell Level of FM Audit; two vendors: Freddy Castillo of Samsung and Jim Fitzpatrick of Oki Printing Solutions; and two dealers: Chris Stoate of Laser Networks and Bob Barrette of Perfect Output.

“In order to facilitate discussion, it was agreed that initially the Managed Print Services Linked-In group will be used to disseminate information,” it read on the group profile. The association has formed a network on Linked-In, named Managed Print Services. Interested parties can join the network and receive updates on the formation of the association and can participate in forums.

Looking forward

“MPS is an evolving thing,” Leven said.

“One year from now all these MPS providers are going to have to say, ‘this is what’s working; this is what’s not working.’ And all these companies are going to have to change,” echoed McLeish.

But no matter how MPS evolves, the industry has not heard the last of MPS. In fact, many say it’s all really just beginning. As Amy of TCO Partners said at The Summit conference at Remax, “For those who are considering MPS, do it now because if you don’t someone else will.”

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