Sam Errigo, Konica Minolta Business Solutions
Last week’s acquisition of MWA Intelligence Inc. (MWA) may seem like a coup for Konica Minolta Business Solutions U.S.A. Inc. (Konica Minolta) and its All Covered division, and that would be accurate. After supporting MWA and channel dealers for the past three-plus years in areas such as project management, integration and data conversion, it was a very logical step to acquire MWA and their flagship FORZA enterprise resource planning (ERP) solution. This acquisition positions Konica Minolta as a full-service provider to the dealer channel with the extension of FORZA in addition to managed IT services, enterprise content management, voice over IP (VoIP), multi-function devices and industrial print.
But beyond its own interests, Konica Minolta sees the FORZA piece as a lynchpin to facilitating the consumption-based model that customers are demanding and the dealer channel is building toward, complementing its own Workplace of the Future vision. We spoke to Sam Errigo, executive vice president of sales and business development, to gain more insight into the deal and its ramifications.
Obviously, Konica Minolta has long enjoyed a solid relationship with MWA Intelligence. Can you tell us about the genesis of the M&A talks, and why it was felt that FORZA would be a complementary product that could be distributed and supported within the All Covered Division?
Errigo: We’ve been assisting MWA with our SAP integration team, helping them with consulting services, integration and data conversion. That was our role. MWA was selling and positioning the product and if they needed our support, Konica Minolta would perform those services. This was a three-year relationship that allowed us to better understand the technology and the benefits to the dealer channel. We worked with dealers that had a higher degree of complexity related to data conversion and mapping, project management and implementation. Our internal IT team has a vast knowledge of SAP and deep domain experience in the area of data conversion due to the number of acquisitions completed. Many of the acquisitions completed by Konica Minolta ran on older ERP architectures and required conversion to SAP. That’s how we got started with Mike (Stramaglio, president and CEO of MWA Intelligence), supporting MWA with resources in those three specific areas.
As far as the acquisition, we believe that customers will consume technology, products and services differently in the future. The market will move to a consumption-based model with bundled invoicing for a multitude of products and services. In order to facilitate the single-invoice concept, a new way of selling, servicing and invoicing is required and FORZA, built on the SAP Business One (SAP B1) platform is the solution for the dealer channel. In order to prepare for the Workplace of the Future, Konica Minolta is investing $25 million to update our SAP architecture to SAP HANA, delivering the required flexibility to support the future demands of a services-led organization.
The acquisition of MWA is strategic for both Konica Minolta and the dealer channel as the future of change is already in motion. Let me paint a picture of how customers will transact business in the future. The Workplace of the Future will consist of integrated and connected devices that customers will want to be supported and invoiced by a single provider. The customer experience needs to be simplified with combined services such as managed IT services, hosted applications, data storage, automated reception, conference room management and multi-function devices. The bundling of services into a single invoice will require the power of an ERP that is designed with flexibility that can adapt over time to the changing customer requirements. Unless dealers prepare their backroom infrastructure with the ability to facilitate business in a manner that customers want to consume, the inevitable decline in business will occur. Over time, the complexity of the consumption model will heighten as customers will consume in a manner similar to music or games via paid-for services. Consume what you want, when you want and the price you want.
That’s the whole concept of the Workplace of the Future. The acquisition of MWA is very strategic, not only for our dealers but for the entire dealer channel. When considering this acquisition had the interest of all dealers—regardless of whether they’re buying from Konica Minolta or not—will need to have these technologies in order to conduct business that way in order to meet the demand of where customers will want to go.
Speaking of the Workplace of the Future, how does the deal advance Konica Minolta’s vision?
Errigo: It’s a consumption model. Today, a customer buys, leases or rents a product. Netflix is a perfect example of what the future looks like. You pay $10 a month and you get something with that service that’s included in your $10. But you consume what you want, when you want, and you pay for that. We have no way to do that in the dealer channel. We can install a multifunction device with software and charge X amount, but if the customer wants to add some new software or capability that they’re only going to use for 30 days, there’s no way to facilitate that business. How do you get your invoices correct? Or, how do you even sell that? We envision that with this architecture, you should be able to bill— in units of measure, not just dollars—whatever you want to bill, such as total managed services, number of end users consuming, number of devices with bundled services and ways that are not even thought of today. Whatever ERP framework is selected, you should be able to invoice and manage your business long term. We’re looking out over the next five or ten years and thinking about technology and the associated impacts on our industry. The FORZA architecture is built on the SAP B1 HANA (in-memory database) platform and will allow you to bill in whatever level of currency you want. This is the future and we all need to be prepared.
How will this deal impact the MWA dealers that are not currently working with Konica Minolta? How are you handling the competitive concerns regarding MWA customer data?
Bob Goldberg
General Counsel
Business Technology Association (BTA)
Errigo: We’ve engaged with (BTA General Counsel) Bob Goldberg to assist with the language within our dealer agreement specific to the ERP offering. We already have a dealer agreement in place because of All Covered and the services we deliver on behalf of our dealer that Bob has approved. The agreement is ironclad and errs way on the side of the dealer in terms of data protection. We have absolutely no concerns about the agreement, as this is more about how we help dealers face the new challenges of running their business. Our desire is to minimize any concern a dealer may have about utilizing the FORZA platform. The MWA team will report into All Covered, as they have a proven track record and a foundation of trust within the dealer space. We view the FORZA product as an extension of our current managed IT portfolio. We’re doing a lot of things with the imaging channel to help them expand services and retain their customers via new capabilities in the managed IT space. If you’re not a KM dealer, you’re going to ask questions. We’ll give all dealers the necessary protection to do business with Konica Minolta. Our commitment, and frankly, Rick Taylor’s reputation, my reputation and Bob Goldberg’s reputation in the marketplace has proven we’re going to do the right things for the industry.
What are your immediate and long-range plans with the FORZA product? How do you see it evolving in the future?
Errigo: Right now, the initial focus is going to be on the dealer channel. There’s so much opportunity in this space and we want to accelerate the FORZA platform due to the demand for change. I do believe there are industries that are similar to the dealer channel that would be great vertical markets to expand as a follow on our initial deployment. We’ve identified four vertical markets that are a good fit for the FORZA platform. Our model is to take what we’ve created, leverage the same type of source code and make this applicable to those industries. This verticalization is something we are actively reviewing and researching. This strategy aligns with the vertical markets we support within Konica Minolta. There are synergies and adjacencies to our hardware and technology business that will provide new revenue streams based upon existing relationships.
With the anticipated launch of the Workplace Hub, we are planning to offer both on-premise and hosted applications to address our target vertical markets, which could be a small SMB or midmarket type of account. You could sell a Workplace Hub that’s verticalized for health care, legal, automotive, etc., and embedded within the architecture is their FORZA ERP platform running all aspect of their business. The Workplace Hub will include all necessary components to run their operations, ranging from hosted to on-premise support, back-up in the All Covered cloud, multi-function capabilities and service support.
Do you have any final thoughts?
Errigo: Change is inevitable and necessary if you truly embrace innovation and have a desire to be a market leader. Knowing the dynamics of the market are changing and the fact that customers will consume technology very differently in the near future should excite our industry. The change upon us requires action by the entire imaging channel on how we sell, support and manage during this transformative period. Doing nothing is not an option. Dealers need to plan for the future, they have to think about where their customers are going and the back-end systems and requirements have to meet those demands. Actively engage with your ERP solution provider to understand their roadmap and business model as this is a major investment, but could also be a huge competitive advantage if done correctly. Konica Minolta acquired MWA and the FORZA product because we believe it will meet those demands in the future. We intend to invest in the product to keep pace with the evolving feature set necessary to meet customer requirements and add human capital to support product expansion. The headline is much bigger than “Konica Minolta Acquires MWA” and enters the ERP space. This is about our entire industry and stepping up to innovate and lead with products and services that will shape our future. We are breaking down the “manufacturer” barriers and opening up to the entire dealer network and delivering the best ERP platform for their business. That’s big news.
