MPS is Dead: Long Live MPS Is there anybody who is not an MPS expert today? Six years ago, when Strategy Development started consulting in the space, we were the pioneering consulting firm, virtually without competition. Now anybody who replaced a toner cartridge is an MPS expert. Six years ago there were a handful of companies in the country that called themselves MPS companies. Today, you cannot find a copier dealer or facilities management company; they’re all MPS companies. Sales reps don’t sell copiers, printers, or toner cartridges—even if they work for a copier company, printer company, or recharge company—they sell MPS. It seems that every end user company in the country has an MPS contract at this point. It seems like MPS has reached 100% penetration faster than the DVD, e-mail, or the cell phone. Time to move onto the next growth strategy: MPS is dead! Then again there seems to be a busy and vocal group who are still arguing over the definition of MPS so maybe there is hope that all isn’t lost—it will just be redefined. One “research firm” has their four phases of MPS but when you read them it certainly looks like a copier company from the turn of the millennium focused on output and professional services: “Hard copy” has been redefined as MPS. The old is new again only now we call it MPS. Remember the threat from the VARs, MSPs, and who knows who else that somehow, someway were going to be better at “MPS” then the copier dealer? Guess that threat went the way of the IT networking companies that were going to put all of the copier companies out of business in the mid 90’s. Want to go to an MPS Conference? There’s one every month so book your travel and get ready to earn elite status on the airline! Oh wait, look at the sponsors and vendors…..they are the same companies that used to be in the “copier” space but now they are MPS companies. It is just phenomenal how the entire industry has transformed overnight! Do you need help transforming? Don’t worry—new experts are minted in that space every day as well; yesterday a copier sales person or a printer marketing manager and today a business guru! This MPS thing truly is magical…it imparts knowledge that most people only obtain through years of high-level executive assignments. Wait a minute: Did you know that the revenue from laser office printers is five or six times the revenue from office copiers? To make that more poignant, if your roots are in the copier industry and your service and supplies revenue (aftermarket) was $5 million before you transformed your company into MPS your aftermarket should be $30 - $35 million today, if you simply had the exact same market share in printers as copiers. To put it another way, if your copier aftermarket is $5 million per year and you are recognizing $500 thousand in MPS revenue your printer market share is approximately 2% of your copier market share ($500K/$25M). That doesn’t even take into account any associated MPS software sales. My concern for the industry is that the victory flag has come out after one lap of the MPS 500. Wait a second; maybe MPS isn’t dead after all! Do you know many copier companies that have grown by 500% in the last few years? Before you dismiss my 500% question let me explain my simple calculation. In the office space (segments 2 – 5), printers produce 2.5X to 3X the output of copiers, depending on what research report you read. If you asked 20 people that have sold MPS contracts—those that included both copiers and printers—I think you would find it unanimous that the revenue per image on a printer is 2X that of a copier (the CPP to make a print on a printer vs. a print on a copier). Simple math will demonstrate that 2 * 2.5 = 5 (2X revenue per print * 2.5X volume) and 2 * 3 = 6. Therefore, the aftermarket on printers is 5X to 6X copiers. Does that make sense? Is your “MPS” revenue 5X – 6X your copier aftermarket revenue? Close to 5X – 6X your copier aftermarket? 20% of your copier aftermarket? Are you really in MPS? Regardless of what you think at this point I am not trying to make you feel bad; I am trying to clearly show you how to measure your MPS success. Those of you that have followed my writings know that I am a practical businessperson that avoids hype or “big bang” theories, taking the much less glamorous approach of execution and logical growth (Did you read Jim Collins new book “Great By Choice?”). If you want to grow your business and you are not recognizing 5X in MPS then focus on execution rather than on hype. You can go to those MPS conferences but go because of the great networking opportunities they provide and not because you think you’ll learn something (focus on the events with the most participants not the most hype). When you do go and you run into somebody you haven’t seen in a couple of years and they tell you they are doing great at MPS, just ask them one simple question “What are your monthly aftermarket revenues from MPS?” If they tell you they manage 60 million prints (that’s 1 million a month multiplied by some fictitious 60-month average contract length. 1 million prints per month at an average of $0.0235 per print—blend of 10% color and 90% B/W—means they are realizing a whopping $23,500 per month….they are a $300 thousand business. Suddenly 60 million sounds a lot more impressive, but they also neglected to answer the revenue question you asked) act a little surprised and with emphasis simply say “Per month?” I’ve played this out a dozen times (okay, now you know my game) and I get a sheepish, “No, that’s over the contract,” to which I rejoinder, “So 1 million per month?” I usually get a “Yes.” Help me to help your peers to start measuring their MPS business the way every other business is measured in the world—revenue and profits. Let’s end the bravado. But wait Tom (that’s me), you said your goal isn’t to make us feel bad yet you keep “piling on.” I am trying to shock you, the reader, into realizing how big of an opportunity you are missing because the industry seems caught up in more hype than I have seen since Y2K! Everybody seems to want to say they are winning the race when they’ve simply completed the first lap. Put away the checkered flag and focus on how you are going to make it around the track 499 more laps and finish at the front of the pack. There is great opportunity in MPS for you the copier dealer, or virtually any industry other than the office supply companies. MPS is causing the office supply companies to lose their customers faster than cell phones eliminated the pay phone industry. The risk is not the VAR or MSP; the risk is that you allow hype and ego to cloud your perception of your actual market share in MPS. Focus on 5X and put together plans to achieve your goal. I’m not suggesting it will occur overnight, but I am saying there is no reason why you cannot achieve this goal. I’d also state—at the risk of raising some ire—that if your aftermarket in printers is not at least equal to your aftermarket in copiers you are barely in MPS. Think about that, if you had 10% market share in the copier space and your printer aftermarket was equal to your copier aftermarket you would have 2% of the office printer market share (Since printer aftermarket is at least 5X copier aftermarket just use the equation 10%/5 = 2%). Is 2% being in the business? Maybe in Manhattan, but not in Topeka (I am writing this on a plane having just left Kansas so it seems like a good example). So MPS is not dead; hype and ego may be trying to kill it but I am a firm believer in the resilience of the dealer community and I know many will see the real opportunity in MPS and develop true growth strategies to capture their fair share. If you feel you want help in accelerating your success give me a call. Strategy Development will absolutely keep you focused on real success in MPS! Long live MPS: It’s the best strategy we have for growth, provided we don’t let it wither away. Tom Callinan is the founding principal of Strategy Development, a management consulting firm for the technology and outsourcing space, and the leading MPS consultancy specializing in business planning, sales effectiveness, advanced sales training, and operational and service improvement (www.strategydevelopment.com). From 1998 – 2005, Callinan was an executive with IKON Office Solutions, most recently vice president and general manager of IKON’s largest business unit with a revenue of $1.4 billion. Prior to IKON, Callinan was the founder and CEO of Copifax, Inc, a copier dealership that was recognized with numerous awards including inclusion on the INC 500 list of fastest growing private US companies. Copifax was acquired by IKON in 1997. Callinan graduated with high honors from The Wharton School, University of Pennsylvania. Tom can be reached at callinan@strategydevelopment.com or 610.527.3317