I doubt that many would argue that two of the hottest trends sweeping the office technology industry of late are mobility and the cloud. Little wonder because they go hand in hand.
The two big questions circulating through the dealer community about selling cloud-based solutions and services is how to make money off the cloud, and to a lesser extent, what exactly is being sold here?
The response to the latter might depend on whom you ask. One may say it’s a component of Managed IT Services, another may label it as a cloud-based document management or workflow solution such as those offered by a DocuWare, Protected Trust (formerly DocuLex), or Square 9, or even Sharp’s new cloud offering. Then there’s power protection companies such as Innovolt with its Innovolt-as-a-Service electronics management solution. The thing is, they’re all right because the cloud has become increasingly pervasive and we’re likely barely scraping the surface with these examples.
Right or wrong, not everybody in the dealer community is gung ho about the cloud, mostly because it’s new, unproven, and the rewards still somewhat unclear. Last month, Darren Metz, CEO of NovaCopy mentioned in ENX’s Dealer Spotlight interview about the cloud computing company he founded in 1997. “It was a failure and I lost a fortune on it,” recalls Metz who acknowledges that the cloud is definitely having more of an impact today. “The question becomes how do I make money and how am I relevant to it?”
At Woodhull, LLC in Springboro, OH, President Susie Woodhull has found the concept of mobility and the cloud increasingly relevant within her organization, at least as a topic of general discussion. “It seems like it’s going to be very important. When we have sales meetings our reps are always talking about this free app that allows you to print from mobile devices.”
As a Ricoh dealer, Woodhull references Ricoh’s Integrated Cloud Environment (ICE), an interface that connects mobile workers to cloud services for document storage, management, and printing using Ricoh MFPs. ICE offers connectors for 16 cloud services, including Google Drive, Ricoh DocumentMall, Dropbox, and Evernote. One might argue that an app like this is more of a value add as opposed to a revenue generator. Either or we’re still talking about the cloud.
Konica Minolta’s All Covered network sits squarely at the forefront of what’s happening in the cloud from an IT Services perspective. Nick Pegley, VP of marketing for All Covered, feels what’s happening in the customer environment, particularly SMB, is a harbinger of a bright future for cloud-based solutions. Let’s look at a couple of his reasons why SMBs, a sweet spot for the average office technology dealer, might find the cloud attractive.
“You can get out of the game of having to justify a lot of hardware to run your business,” explains Pegley. “Every three or four years SMBs have to buy new servers for their company and these are expensive and require a lot of maintenance. If you go to a cloud-based service, that becomes a monthly cost for your business and is also flexible. As your business grows or shrinks, you can adjust, something you can’t do with your own hardware. That’s one of the main reasons clients are looking at the cloud.”
Another reason for the cloud’s appeal to SMBs is the protection and security they receive from business data being stored in the cloud as opposed to being on a server where someone might forget to run a backup or neglect to store the backup in a safe place off site.
With interest in the cloud gaining momentum, All Covered has been helping Konica Minolta dealers bring their clients into the cloud.
“We’ve built a cloud environment around some high end data centers and equipment and packaged them at an SMB type price point,” states Pegley. “The capabilities are there for the dealer to resell that monthly recurring cloud service without having to build the infrastructure and provide support for it.”
Asked about the margins from selling cloud-based services, he feels the margins are good, particularly when one considers the All Covered approach doesn’t require a capital investment. “It’s just straight resale,” says Pegley. “I don’t have exact numbers, but when you look at the cost of getting into this business, it’s low. We’re providing infrastructure and support and they’re able to represent and sell those solutions to their customers and package it with other things. A typical cloud deployment for an SMB is going to be somewhere between $1,000 and $2,000 a month.”
Plus every month the dealer is going to enjoy that recurring revenue. “Multiply that by 12 months a year over four or five years and that’s a significant uptick in revenue,” says Pegley. “And that’s just one client; imagine if you had 50 clients.”
If you ask Vince Janelli, associate director, applications & partners for Sharp Imaging and Information Company of America, about how a dealership can leverage the cloud, he’ll talk about Sharp’s Cloud Portal Office, a new software solution designed for mobile workers where companies need to share information while maintaining control and security over their documents.
A simpler way of describing it is that it’s a combination document management and collaboration application. “It allows the dealer to provide a multifaceted value package, if you will, to their customers,” explains Janelli. “We built this for the channel, a channel that sells to businesses so it’s really built for B2B.”
What makes Cloud Portal different from other cloud-based solutions according to Janelli is its versatility. It allows users to add hard copy documents into the same repository as electronic data, providing them with the same benefits, collaboration for instance, as if working with electronic data.
“We have a front end via OSA that’s hosted in the cloud and you can scan in or pull print from the device, and there’s a capability to add meta data or an index field to the document, which is the basics of document storage,” explains Janelli.
Another difference from other cloud-based solutions is Cloud Portal’s integration with Sharp’s Aquos boards. “Our Aquos board connector allows someone to walk into a meeting room and not have to worry about bringing a laptop; they can access their information directly from the cloud,” states Janelli.
This is the first service of a broader cloud strategy for Sharp, which also includes Cloud Portal license manager, which is designed to support multiple services. Cloud Portal Office is sold by dealers via term licenses, which are more like a monthly subscription. There’s a dealer price and an estimated street price, which is approximately $9.95. There are price breaks when adding more users. In the basic version, each user receives 10GB of storage. There’s also 10GB and a 50GB upgrade options at $4.99 and $14.99, respectively.
It’s not just the large OEMs who are taking the cloud seriously. Even smaller players such as Muratec and Lexmark are looking at ways to help their dealers leverage the cloud. Besides being a DocuWare partner on the enterprise side of document management and cloud storage, Muratec entered into a partnership with Intellinetics earlier this year to sell a cloud-based document management solution for SMBs to its dealer channel.
“They may have software today that addresses the enterprise or larger businesses; however, the price point of that software is too high for a lot of customers and they’ve had to walk away from business,” observes Lou Stricklin, vice president of marketing. “We see opportunities on the cloud side where you don’t have the infrastructure requirements of a dedicated server and licenses. The ability to offer a virtual solution for document management can bring the cost down and make it a solution that dealers can target 90 percent of their customer base with.”
Asked if dealers can realize decent margins by selling a cloud solution, Stricklin says, “Absolutely. The beauty of the Intellinetics solution is that it fits the dealer’s traditional business model.”
This is a small device that sits in the customer’s facility and communicates between the customer’s network and the cloud.
“It’s preconfigured, the dealer sells it and installs it, and it’s a one-time payment,” says Stricklin. “Let’s say they sell it for $3,000, it’s sold like a finisher or an option; it’s a checkbox that can be bundled into a lease. The sales rep can make money up front and the dealer makes a little profit. Then, the actual document storage in the cloud is sold as a consumable so for every gigabyte of space the customer uses they’re going to be paying a monthly fee for that storage. It’s almost like you have your cost every time you hit the file print, now every time you scan your document and it goes up into the cloud, it’s eating up some of the storage and there’s a cost associated with that.”
Meanwhile, Lexmark views the cloud as an enabling platform for partners driving a higher-value set of solutions to its customers.
“Cloud-based solutions will provide partners with a more efficient deployment and customer maintenance experience, by significantly reducing or eliminating the premise-based implementation aspects of installation and setup,” notes Doug Frazier, manager, solutions engagement, North American Channel, Lexmark International, Inc. “This efficiency allows opportunities for partners to drive more placements at a lower cost basis, resulting in higher overall margin all while further strengthening the strategic relationships with their customers.”
From his perspective, Frazier thinks small and mid-size customers view cloud solutions as a path to ‘hands-off’ or simple to keep up with; translating in less resources needed to accomplish a specific goal or resolve a workflow issue.
Even though much of the dealer channel is still looking to gain a foothold in the cloud, Stricklin has no doubt that it is gaining momentum in the channel. He likens it to MPS and Managed IT, which have taken time and are still taking time for dealers to embrace. “Based on initial conversations with dealers, the feedback is very positive,” says an optimistic Stricklin.
All Covered’s Pegley is equally optimistic. “It’s going to grow quickly this year as it did last summer when it moved from being a discussion topic with clients to something they’re ready to engage around. A year from now, it’s no longer [going to be considered] leading edge, it will be mainstream for general business.”
He foresees other changes too. “The next level of sophistication is going to be around a broader range of services in the cloud, in particular vertical specializations,” predicts Pegley. “Moving to the cloud is a little different if you’re a doctor’s practice, a law firm, or a manufacturing company. Right now people are looking at it fairly generically, but we know there are dealers that specialize in certain verticals and we’re doing more of that in the core part of our business. In a year’s time there will be people specializing in cloud environments for particular verticals. That will be the next big phase.”