Print Management Insider Blog

Grow, Sell, or Dwindle Away: The Top Trends of 2018 in the Office Equipment Channel

Posted by West McDonald on Mar 6, 2018 9:00:21 AM

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In today’s episode of Convergence Radio we will be chatting with an old industry friend, Norm McConkey.  I actually started my managed print career with Norm back in the day when device monitoring and management for the humble printer was new and exciting. Times have certainly changed since then!

I caught up with Norm on the phone at MPS Toolbox to find out what he’s up to and where he thinks the office equipment industry is headed.  Here are some highlights from that interview.

West: Tell us about what you are up to these days.

Norm:  I started to see that a lot of the customers we were working with were too small for traditional managed print but that were still in need of some kind of solution. Question was, how do we tackle the small business market? The answer: eCommerce and online ordering.  MPS Toolbox became a tool for anybody that was looking to get into eCommerce for print and that’s where we’ve continued to evolve it.

West: What do you see as the largest trends in the office equipment world today, and which ones should we be paying close attention to?

Norm: That is THE question!  There is 2 fold trend. We are all aware that pages are decreasing. The amount of pages per user compared to 5 years ago and today and what people will be printing a couple of years from now is on a measurable downward trend.  Of course it’s not all bad news: There may be fewer pages, but if the remaining ones are color and we’re getting new customers, there’s tons of opportunity.

We have to let go of antiquated views on printer segments like “Segment 3, 4, 5”.  A4 devices have really changed.  What you could have bought 10 years ago as an A4 MFP weren’t real options in the office, but they are today, and they are very functional. The functionality delta between an expensive A3 devices and lower cost A4 has diminished and if we don’t pay attention to this we’ll be constantly oversubscribing what customers need and it will eventually hurt our businesses.  Modern providers have to embrace these changes and view them as opportunities.

West: The biggest whammy I see with the proliferation of high functioning/low cost A4 options is how it will affect service revenues at a dealership.

Norm:  Yeah, certainly.  When we say “A3” and “A4”, everybody has a different view of what we mean.  I look at the A4 format as having all the serviceable parts built right into the cartridge.  By placing these machines, I.T. departments will be comfortable swapping out devices after 3 or 4 years for a new one.  Many dealers think that this is a bad thing as it cuts into service revenues: “I have all these service people and I have to pay them to do something.”  The model for service is changing, and changing with that is important.  Is it a downside? Sure, because it requires business models to change.  But there it is.  It’s not the first time.

Single function devices are a thing of the past as well.  Customers want smaller more affordable devices that can scan, produce color, and security functions all for a small price point.  Dealers should be looking to replace as many single function monochrome devices as quickly as possible.

West: Yeah, I’m seeing that too.  Our existing approaches to managed print are more and more out of alignment with what customers actually want.  One day there will be a reckoning.  Scan to email, scan to SharePoint, these things are important for modern office workflow and often customers are left to figure it out on their own.  We can help them figure it out, and get paid!  Print Audit wouldn’t have bought a document management company if we didn’t see it trending in that direction.

For those things that people continue to print it looks to me like a “color everything” world.  I don’t think we are very far away from that.

Norm: Yes.  We need to pay closer attention to where the puck is going to be.  Where is it headed and what investments do I make today to make the most out of the opportunity?  In a serviceless economy we need to evolve.  We will have new competitors: VARs.  I know, I know, VARs hate managed print.  But once it’s simplified, once you don’t need a service department, it becomes much more attractive to them.  In my opinion, that’s why HP is doing so well right now and Xerox had to do a deal with Fuji.

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West:  Yeah, times change and VARs do too.  “The Cloud” used to be a dirty phrase, as did installing software for office equipment dealers for managed print once upon a time.

Norm: Yes! Remember how hard it was in the early days to get people to install a DCA or ICE?  It isn’t anymore.  There are some dealers, believe it or not, that still think it’s hard, but those are few and far between now.  Installing DCAs and ICE engines are elementary practices now.

West: What’s old is new again.  Our biggest battle in Seat Based Billing is that there is “new” software to install and some dealers are worried about installing it.  IT people aren’t scared of it, nor are VARs.

Norm:  VARs don’t even ask to install software because they own the customer's network.  And VARs charge for everything.  I think that dealers should be charging for software like Print Audit and wrapping services around those things. We’ve done ourselves a disservice.

West: One trend I see is this crop of new “Mega Dealers”. I’d say for the first time in our history as a channel we’re seeing economies of scale and size that are incredible.  How do smaller dealers compete in the age of the Mega Dealer?

Norm: If we go back 15 or 20 years we always find those that think rolling up a bunch of companies is a good idea.  Remember Danka, Ikon, and Global Imaging?  Improving buying power and decreasing costs is a pretty simple equation, nothing new to the world of business.  I think what has changed, however, is the motivation around why smaller dealers are selling to these mega dealers: It’s because they are likely looking ahead 2 or 3 years and based on current realities are thinking it’s time to get out.  They are motivated into selling as an age thing as well.  Most dealers are in late 50’s and early 60’s and looking to retirement.  I think a regional dealer that is big in their area still has the best opportunity in the world sitting in front of them right now.  They have a relationship with their customers that will allow them to sell new things that have nothing to do with print.  That is their opportunity: To expand their offerings with customers who know and trust them for managed print today.  If a dealer goes to a customer with a 20 year relationship they can very easily move new offerings.  If regional dealers don’t do this, they will shrink year after year after year.

West: What are some of the new things that dealers can tag onto their existing business lines?

Norm:  Dealers should leverage the financing and cash-flow angle of small businesses.  If you have a relationship with GreatAmerica for A3 machines, what else can you put on that contract? Monitors? Computers? A small business likes smaller monthly charges for things they may not have capital for.  Computer technology and financing is a huge opportunity for office equipment deals.  VARs do a terrible job at financing, today.  If I’m a regional dealer with great relationships I need to find out what else I can pack into the customer’s line.

West: Yeah, it’s “Everything as a Service” and the appetite from small customers for this kind of procurement model is increasing.  Following this trend is one of the reasons we’ve been working so hard on Seat Based Billing for managed print.

Norm: Yes, there is a place for SBB and packing pages into a monthly subscription, no matter how it’s done.  When I pay my cable bill every month, I just pay the package.  I don’t call the cable company for discounts when I think I’ve only watched 60% of the programming I did the month before.  Mobile phones are another good example: Package sales are where it’s at.  Customers don’t want to break out line items, they are happy paying for a package.  Office printing looks strange compared to these things now.

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West: The “package economy” is great for giving predictable billing.  Another question: How is convergence going to affect office equipment dealers as VARs and Managed IT come together?

Norm: The concept of a “network” in the past was tough.  Nowadays, cloud services, subscription storage, etc., VARs actually have a hard time with this.  Office equipment dealers are good at 2 things that technology sales companies aren't: Financing and sales!  I think this will put office equipment dealers ahead, there is a great opportunity for them.  They need to evolve, however.  If small business growth has been carrying the entire economy for the last 30 years, how do dealers take advantage of it?   If they figure out how to package things for smaller customers they stand to do very well.  Partnering with companies like HP is going to be important as they have such a dominant position in the small office.

West:  One of the reasons that we bought PlacePoint as a document management offering was the fact that the solution is built on SharePoint which is the world’s leading solution out there.  If a Microsoft product is in every office then it makes sense to partner with them for related services.

Norm:  The last thing I have to say is how important an online option is for customers, even if we know the customers well.  Can’t be visiting them all the time to get a contract, it has to be a lot easier.

West: Yeah, it must always feel easy.  It can be complicated in the background but customers want solutions to feel easy.  Any closing thoughts Norm?

Norm: I want dealers to know that I think the future looks very positive for them provided they expand their offerings.  For those dealers that just want to hunker down and weather the storm, the storm is only going to get worse.

To listen to the podcast in its entirety and to hear more commentary visit: www.printaudit.com/podcasts

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Topics: Managed IT, managed print, Managed Print Services, Office Equipment Dealers, SBB, seat based billing, office equipment, SBB Road Show, print industry, office equipment channel

West McDonald

Written by West McDonald

West McDonald is Vice President of Business Development for Print Audit.

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