MPS MYTH VS. FACT It seems as though every article in the current trade publications references Managed Print Services in one form or another. Yes, even we at Industry Analysts have been known to jump on that editorial bandwagon more than a few times. But I’ve seen so much hype on the subject that I feel compelled to dispel some myths and express a few serious concerns. For those living in a cave Managed Print Services (MPS) is said to be the “next big thing” for dealers. Read the blogs and you’ll find profits are huge, you’ll lock out competition, you’ll be the best buddy of the IT manager, you’ll build an annuity, new software has simplified the process, etc., etc. Let’s take a closer look at some of the assumptions surrounding these programs. Myth or Fact? I can integrate an MPS strategy into my existing sales force. They’ll appreciate the extra commission opportunities. Myth: Dealers using dedicated sales reps specifically for MPS report significantly higher rates of success than those attempting to force the existing reps to wear two hats. The primary objective of your current sales force is to place boxes – period. The objective of the MPS rep is to generate pages. An MPS engagement can run its entire course without a single hardware sale. You’re building a goal conflict when you ask the same rep to wear two hats. MPS is nothing new. We used to call it a CPC program. I don’t understand the hype. Myth: MPS could not be more different from the CPC plans we all know and love. The most significant difference lies in the fact that a CPC plan bundles service, supplies and hardware for equipment sold by you. MPS plans bundle service and supplies of a hardware fleet generally sold by someone else. In addition, MPS engagements include other activities not normally included in a CPC contract, such as fleet consoli-dation, workflow assessment, mapping, etc. The fact that the fleet you are about to service has been sold by someone else means that you are likely to face pushback from the original sales organization. This may be lurking, waiting to rip your throat out at the last possible minute. MPS is nothing more than selling supplies and providing service to an existing fleet of printers. Myth: Providing printer service in exchange for supplies is only the first step. Next, you want to right size the fleet in order to reduce the amount of (hopefully competitive) hardware installed. In theory, less hardware means lower cost. In the third phase, you’ll have to be prepared to adjust existing workflows to increase efficiencies. I can avoid complexity by finding prospects interested in just the first phase. After all, that’s where instant savings reside. Fact: Yes, you can sell only the initial savings associated with the implementation of an MPS program. But, if you’ve sold the contract on the basis of price, with no value add, you’ll probably lose it on that same basis at the end of the contract. Someone will always be there to sell for less. One of the best parts of an MPS engagement is predictable cost for both the customer and my dealership. Myth: Yes, your customer’s cost is predictable. But yours is not. When you calculated the original contract, did you factor in the cost of refreshing the fleet? What about the additional cost of supplies and service when the customer begins to produce pages with a higher coverage than originally assumed? Your costs will tend to escalate throughout the course of the contract. Be certain you have considered these at the outset. If the customer chooses not to renew the contract, I can simply walk away. HUGE Myth: We hardly see this discussed. Yet the issue sits there like a ticking time bomb. When you initially took over the fleet, all of the equipment belonged to the customer. Gradually, over the life of the contract, you have probably refreshed all or part of the fleet. So, here’s the big question. Who owns the new equipment? Has this been called out at the time the contract is signed? If another vendor takes over the contract, does your equipment pass to them and if so, at what cost? Gross margins for MPS contracts tend to be higher than the blended margin for hardware, service and supplies. True (for now): Yes, our research indicates that current MPS margins are considerably higher. But, as more vendors enter the field you can expect those margins to narrow. Your best bet might lie in adding value such as workflow analysis to tie you to the account for a longer, more profitable period. Lou Slawetsky is CEO of Industry Analysts, Inc., a marketing and management consulting firm for the office automation industry. Much of the company’s research and testing results can be viewed on their website www.industryanalysts.com.