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It was in the fall of 2008 when Ed Crowley, founder of The Photizo
Group, recognized the convergence of markets and emergence of a
new MPS channel that required the combined competencies of a BTA/copier
dealer and IT VAR/reseller. We coined the term 'Hybrid Dealer' to
identify that special group. I think others had probably noticed
it also, as the term quickly found resonance in the hardcopy
product community of professionals. Certainly by that time the
market growth had accelerated based on growing recognition by
end-users that MPS could have significant impact to their
business. I guess you could say that the timing was right to
recognize a growing market trend. We'll revisit in this article
the original thinking behind the Hybrid Dealer concept and update
the factors that were driving the market and defined the model.
The hybrid dealer development model below described the behavior
of channel players for MPS model adoption. It is really a common
sense model which Photizo documented, indicating the relative
levels of commitment and business model change that a dealer (or
reseller) has to go through to fully adopt the MPS model. Our
data, including hundreds of interviews and online dealer
assessments, has indicated that the vast majority of dealers today
are in the early stage of adoption, either Fence Sitter or Tester
per the chart below. Furthermore, of the 14,000 or so North
American dealers (including resellers), only about 5% have become
hybrid dealers so far. We have continued to document the MPS
adoption rate by channel players and key factors that are driving
it. Additionally, Photizo is launching a 2010 study to delve more
deeply into the MPS adoption experience and factors that either
enable or inhibit dealer business transformation and market
success.
We thought it would be enlightening to take another look at the
factors behind this business model change and see if they were
still valid. The original research identified the following key
factors:
• Introduction of MFP (A4, Multi-Function Printer) technology
• The growth of Managed Print Services
• Changes in the decision maker
• Shifts in the channel
The introduction of the A4 printer MFP is probably well defined by
the introduction of the HP4345, though certainly this was in
concert with many other similar products launches by other OEM's
in the same time frame. The rapid rise of sales and page migration
from copiers and workstations to printer MFP's has been documented
by Info Trends and Lyra.
The phenomenal growth of MPS sales and market opportunity, per the
forecast by Photizo Group, is shown in the chart below. The
channel growth rate is predicted to be 25.6% CAGR from 2006-2013,
a significant trend affecting dealer sales and profitability.
Assuming that this trend continues, if not accelerates, the size
of the business opportunity begs the question about the need for
MPS adoption rate by the channel. The end-user driven market
growth will demand competent MPS dealers to provide the services
required. This factor alone suggests an urgent need for dealers to
get on board with MPS and drive the necessary changes within their
businesses to serve the growing market. There is little question
that dealers of all types will need to make significant changes to
move to a value, relationship-driven sales model, as well as adopt
a MPS business model that reflects the longer sales cycles,
infrastructure requirements and impact to cash flow. One impact
for dealers that are Fence Sitters or Testers is that being late
to the market implies potential lost sales a significant risk to
their business.
Another factor driving the need for dealer transformation to the
hybrid dealer model is the shifting of the MPS decision maker
responsibilities within end-user companies from Facilities to IT.
The most recent data shows an increasing IT ownership for MPS,
from 60-63%, year over year. In order to be successful, executive
IT relationships need to be developed over time with the CIO and
team to close the sale. Traditionally, this has been more the
domain of the VAR than BTA dealer, requiring a change to their
sales model.
Another significant factor has been the higher growth rate by the
hybrid dealer channel compared to the traditional BTA or VAR
channels. Internal data has indicated that the growth rate for
hybrid dealers equals or exceeds the rapid market growth rate
mentioned previously, far above the other channels. One
implication is that dealers must accelerate MPS adoption or lose
out on grabbing their piece of the action.
The conclusion is inescapable that the MPS market will dominate
the traditional BTA and IT VAR channels over the next five years.
If you are part of the 80% or so of dealers/resellers who are
still thinking about or testing the MPS market, then our
recommendation is to delay no more. A key reason for hesitation to
adopt MPS is indecision by the dealer management team. It is a
situation that the organization change professionals have called
the need for a 'burning platform' to drive significant business
change. If you cannot see the growing market changes and think the
risk to your current business is too high, then why jump? Why not
go slow, try it out and give your business time to adjust? The
choice is yours, but we think the signs are there. However, you
will have to convince yourself that change is required. We think
it is time to jump. u
David Cameron, PhD - Senior Consultant and Partner, Photizo Group.
Dr Cameron has over 20 years of experience in the hardcopy
industry including a range of positions from managing after sales
support, product development and business leadership positions at
Texas Instruments, IBM Global Services and Dell. Most recently Dr
Cameron was Director of Engineering for the startup of the Imaging
Systems business at Dell which quickly grew into a $1 Billion
dollar business with the fastest growth in the industry. He also
teaches in the Management department at Texas State University.