It’s the greatest thing to hit the dealer channel since the invention of moveable type! Able to leap tall quotas in a single bound! Faster than a speeding digital press! It’s a bird. It’s a plane. No, it’s Managed Print Services!

I’ve given up. Every trade magazine contains at least two different articles concerning Managed Print Service (MPS) strategies. Every industry trade show has become totally focused on these strategies. OK, I get it. MPS is good. But, with all of that emphasis, one would think that:

1. We have been able to develop a common definition for MPS strategies upon which most can agree.
2. Either the vendors, dealers or analyst community have done some rudimentary risk assessment. After all, MPS strategies can’t be without some risk to some group.

Well, I’m disappointed to report that neither of these issues has been addressed. We have no common definition. Furthermore, we continue to promote this strategy as though it were risk free. Unfortunately, this is not the case.

So, how do we define an MPS strategy? It can be as simple as supplying service and supplies to an existing fleet of printers and MFPs – not much different than the fleet management programs of a few years ago. Of course, this is harder than it sounds. How will you train your service reps? Where will you obtain parts? And, perhaps most importantly, how will you provide service for multiple brands of MFP products? You can’t simply target Hewlett-Packard or Lexmark printers, despite the fact that they constitute the majority of the installed printer base. Incidentally, this fact seems to have eluded one vendor who began their support with Brother supplies and service. We like Brother too, but would hardly call them the top target for departmental printers.

In any event, you can’t ignore the sheer volume of pages produced by MFP products – especially those of your competitors. Leave service and supplies to your competition and you risk the entire account – even the printers you’re attempting to control.

Some take the MPS strategy to the next level and encompass asset consolidation, load balancing, and hardware “mapping” to determine alternate locations for printers and MFPs that might be more efficient. Finally, you might include a complete document workflow assessment to determine the flow of information through the organization in an attempt to increase productivity. Each of these steps takes considerable time – time which dealers are rarely compensated for. In fact, some of these steps actually reduce print volume. Are you ready for that result?

What about risk for the vendors? I wonder how much thought they have given to the fact that they are promoting non-OEM supplies and parts for their own MPS programs. Clearly, there is a mixed message here. While they actively discourage the use of non-OEM sources for their own products, it appears to be OK for competitive systems. Without these sources, it becomes difficult for the dealer to earn the margins they require to continue this strategy. So, it’s OK for these products, but not for ours? That makes no sense. I understand that your margins are dependent upon a source of lower priced parts and supplies. You have to remain competitive. But, doesn’t your primary vendor risk your allegiance switching to non-OEM sources for their products as well? There’s obviously an impact for them. Is there a hidden cost for you (rebates, quotas, discounts, etc.)?

How about risk for the dealer? Do you really know how much it will cost to maintain the fleet of printers and MFP products, none of which you initially sold? I would suggest a visit to our website (www.IndustryAnalysts.com) to access our new cost per page calculators for printers and MFP products. It’s free and, at the very least, gives you a starting point for your cost calculations.

Have you adjusted your compensation plans to provide sales reps with an incentive to sell pages rather than boxes? That’s the goal of any MPS program. Why not pay them accordingly?

And, speaking of boxes, how will your primary vendor respond when you begin to refresh the printer fleet with rebuilt printers of the same brands – an approach that many dealers tell us yields the greatest margins. Will this impact your rebates? How might your vendor respond?

Some vendors require that you forward meter readings to their secure servers so that they can generate invoices for you. Who owns the customer information when this happens? Vendors, including the largest, are moving steadily in that direction. Are you any more comfortable sharing customer data with them today than you were 10 years ago?

Finally, we note that there is risk to the customer as well. Most MFP contracts are for multiple years. A three year term is typical. A five year term is not unheard of. What about technology changes over the course of the contract? How would you like to have had a printer fleet under management
when Microsoft launched Vista and made much of the installed printer base obsolete? What would that have cost you?

So, where are we? Definition is critical to the sale in that you and your customer must be talking about the same thing. To have them buy something other than what you might be selling is a recipe for disaster. Further, you simply cannot ignore the risks associated with this strategy. Having said that, MPS represents huge potential for dealer revenue and margin streams but approach this market with a well thought out plan. The time to strategize is before you begin. Do not play this one by ear. Yes, the potential rewards are significant. So are the risks. Understand them both. 


Lou Slawetsky, CEO of Industry Analysts, Inc. - a marketing and management consulting firm for the office automation industry. visit their web site – www.industryanalysts.com.