Sell everything as a service. Anyone who has sat in on a conference presentation exploring the future of the office technology space is familiar with that refrain. It’s a conversation that begins, but doesn’t end, with managed print services and managed IT.
Think of these two disciplines as a gateway to the everything-as-a-service universe, one that opens the door to document management and workflow, managed voice services (phone), managed energy, facilities management and cloud services. The customer engagement lynchpin that ties them together is their ability to be monitored, measured and managed. When you consider the possibilities offered by the Internet of Things (see Konica Minolta’s Workplace of the Future platform), tomorrow is a lot closer than you think.
Both MPS and managed IT have experienced their share of growing pains—managed IT in particular—as the technology stacks have continued to morph. But there is good news for dealers who have been hesitant to enter the world of managed services, perhaps due to fruitless previous experiences. Both the technologies and processes for entry into these disciplines have improved substantially within the past five years. Given the reported stagnant growth on the hardware end, holdout dealers need to shake out the cobwebs and refocus on the opportunity to add value within their client base.
It is not only dealers who are adjusting their focus to a wider services-spectrum perspective. Just ask Doug Johnson, chief strategy officer for LMI Solutions. After all, it was only last year that LMI Solutions announced it was becoming a managed business services infrastructure company. It will provide managed print, document workflow, IT and managed energy services.
“For someone starting out in managed services, it’s almost easier now. All of the infrastructure for many of the assets and competencies outside of face-to-face selling of the solution can be found out in the market,” Johnson observed. “That reduces a lot of risk. If you’re new to managed print and even if you have your own service technicians, you now have the flexibility to start on the infrastructure of someone else and develop your competencies. Over time, you can decide which assets and competencies you want to develop yourself and which ones you want to partner.
If you’re new to managed print and even if you have your own service technicians, you now have the flexibility to start on the infrastructure of someone else and develop your competencies.
Doug Johnson, LMI Solutions
“There’s a lot better tools and capabilities that allow you to have a professional, national footprint very quickly, whereas 10 years ago, they didn’t exist.”
Diving into the IT End
There’s no dearth of tools that speak to the managed service universe. Collabrance, a GreatAmerica Company, is a master MSP that offers white-labeled managed IT solutions to the dealer channel. They offer technical support via a live-answer service desk to triage and solve IT problems. Collabrance provides a fully vetted technology stack that includes backup and disaster recovery products and services, antivirus, firewall and email—all sold through office technology dealerships. The company also furnishes business support, including hardware-as-a-project, sales training (with virtual sales management) onboarding assistance and business training.
According to Greg VanDeWalker, senior vice president of IT Channel and Services at Collabrance, the successful onboarding of a new service such as managed IT requires an upfront commitment from the dealer’s corner office to treat it as a new business. “Managed IT is not something business owners can just dip their toe into in the hopes of growing their business. It’s a very complicated business with a longer selling cycle and the issues are much more critical,” he said. “You’re managing people’s network data. When a copier’s down, you can swing jobs to a different copier. When their email is down, their business isn’t moving. As a business owner, you need to commit that this is a business you’re going to make successful. Additionally, do you have the right people in place and do you have the tools necessary to be successful in managed services?”
IT services is the calling card for Konica Minolta’s All Covered, which delivers a vast array of technology solutions that include managed IT services, cloud, application services, project support, IT security, consultation and education through its dealer program. All Covered guides dealers through the onboarding process and provides training and feedback.
The key to a successful IT services program at the dealer level entails understanding your clients’ technology and business needs, notes Andreas Krebs, head of marketing at All Covered. “It’s not just pushing technology for the sake of technology,” he said. “It is understanding how technology can help or improve a customer’s business process. Partnering with a company like All Covered can help build the capabilities to be able to provide this type of guidance for the dealer’s customers.
“A dealer needs to look at its own resources and decide what strategy’s best for them. Some have more experienced technology people to help identify more complicated technology opportunities, but they need at least two resources that can do onsite support.”
It’s not just pushing technology for the sake of technology. It is understanding how technology can help or improve a customer’s business process.
Andreas Krebs, All Covered
Print Management Tools
The Clover Imaging Group provides a complete MPS platform, ranging from device management to auto toner fulfillment and turnkey seat-based billing (SBB) programs. The firm recently launched a new custom content, vertically-driven dealer marketing program, Amplify, which encompasses marketing and training on entering the managed IT space. According to Luke Goldberg, executive vice president, global sales and marketing, the suite of user-based tools from Print Audit and the seat-based billing program are entry points into adjacent services, such as document management and workflow.
“Too often, we are still only managing device output in what we call MPS. This isn’t really MPS, it’s really managed printer services, not managed print services,” Goldberg said. “We are not managing print when we only look at devices, we’re just managing printers. User management is key to adding value contract period after contract period. Given the commoditization of the page and small declines in output, we can only stabilize profits and continue to drive end user savings by looking at user patterns, behaviors and changing workflows associated with print.”
Given the commoditization of the page and small declines in output, we can only stabilize profits and continue to drive end user savings by looking at user patterns, behaviors and changing workflows associated with print.
Luke Goldberg, Clover Imaging Group
Print Audit recently expanded upon its remote monitoring management tools for the user, device and document level with the acquisition of Neostream, a document management specialist. The move enables Print Audit to give its clients a tool to manage a page regardless of its physical or digital form, according to West McDonald, Print Audit’s vice president of business development.
One of the best strategies dealers can use for selling managed services is to not sell products but rather provide all-inclusive service. Being successful with this strategy entails escaping the traditional sales mindset. McDonald sees ample opportunities for dealers to sell managed IT to their existing customers.
“In theory, managed print isn’t something that should have taken off in our channel but it did because of the sales expertise of the copier and imaging companies in the independent channel,” he said. “The appetite for everything as a service is increasing in the world at large. What slowed them down before is they had to go after a completely different customer base. I think if they’re willing to put the sales mechanisms into place as they did with managed print, then they’ll have similar success.”
Assessing the Situation
Lexmark offers a customized solution for dealers that addresses their unique strengths, existing investments and relationships, all tailored toward the dealer’s current level of MPS engagement. For newcomers, Lexmark provides full back-end infrastructure to run their MPS operation, enabling dealers to remain front and center in their relationships with end users.
A sound evaluation practice at the beginning of any engagement is the key for dealers in sitting down with their clients, notes Greg Chavers, vice president, North American Business Channels and SMB for Lexmark. This will help guide implementation, optimization efforts and ongoing management strategies. In kind, a dealer should make an honest assessment of the firm’s own strengths and weaknesses.
“Some dealers who are proficient with the break/fix side of the business may excel at a new MPS SLA schedule, but may be challenged with in-house tools’ capabilities or expertise to perform an assessment,” Chavers said. “Wherever the dealer is lacking, they must quickly act to close the gaps. Sometimes, that may mean investment in infrastructure. But often, it is identifying and establishing partnerships with the players in the market most capable of filling those gaps, whether that be technology, logistics, or operational or industry expertise.”
Toshiba America Business Solutions offers a comprehensive MPS approach that addresses all aspects of a customer’s communication needs, including document capture and workflow, output management and digital content display. Through its Encompass process, Toshiba analyzes a customer’s business and operational requirements, such as network infrastructure, document processing (capture/management/output), security protocols and total cost of ownership to identify opportunities for improvement.
According to Kathy De Santi, MPS program manager for Toshiba, the key to properly crafting an MPS platform begins with assembling an account team that is properly compensated to encourage program sales. Once a dealer devises how to sell and price an account, it must decide whether it can operationally support MPS, or may be more suited to outsource part or all of the engagement.
An analysis of a dealer’s client list will help identify which accounts can be converted to MPS immediately.
“They may want to start locally and then expand to regional or national accounts once the processes are established and refined,” she said, adding that paper intensive verticals—legal, insurance, real estate, education and health care—are target rich in most reseller markets.
One of the manufacturing forerunners of the managed print revolution is Xerox, which for years excelled in the larger enterprise space but now sees a tremendous opportunity for dealers in the meaty middle part of the SMB sector. Jim Joyce, vice president of MPS for Xerox’s US Channels Unit, points to research that says the SMB world has seen just 25 percent penetration and existing loyalty in that space is very limited.
The lack of dealer/customer adhesiveness can be attributed to MPS programs which only provide supplies and break/fix. True, quality MPS adds layers that expand into secure authorization and analytics, which can open the door to ECM and workflow automation opportunities.
“If you’re going to get into ECM, workflow automation and even the Internet of Things space, you need a fundamental IT team and expertise,” Joyce cautioned. “If you go back to the root fundamental of the 370 architecture of the IBM machines and the root level of the ISO model for networking, everything still comes back to those things. The way software is written, the way the network architecture and hierarchies are built, and the way security algorithms are built, you have to have that expertise if you really want to provide a holistic managed service to the end client in the SMB space. That, to me, is a very attractive thing to the buyer in SMB.”
Dealing with IT Challenges
The dealer channel is replete with stories of dealerships who abandoned managed services after a cluster of bad experiences. This is particularly true in the managed IT sector, where sudden and ongoing technology evolutions have created bad investments and frustration. Too often, VanDeWalker points out, dealers fail as a managed IT provider by trying to be all things to all people.
When a dealer has scaled to 80 or more customers, with varying degrees of services, keeping straight which customers are on what plan can become problematic.
By picking what technology and services you want to offer, it will mean that a certain segment of your customer base won’t be a good fit for the solutions, and VanDeWalker says dealership owners need to reconcile themselves to this fact. In the long run, managed services can bring a higher valuation for the overall business when it comes time to divest.
“For the part of your customer base where it is a good fit, the valuations on managed services are significantly higher than the multiples on a hardware-type business,” he said. “When you look at merger and acquisition data, companies on average are getting $1.33 of valuation for every dollar of recurring revenue for managed services. You don’t need as many customers in managed IT to have a $5 million valuation business as you do in the copier business. However, you need a lot more customers in the copier business because monthly recurring revenue tends to be smaller and there’s also a significant amount of hardware where you just don’t get that high of a valuation on it.”
One of the most common mistakes made by dealers is short-circuiting on the sales end. LMI Solutions’ Johnson preaches the importance of consultative selling: the uncovering of pain points and the understanding of client needs in order to create a customized solution, rather than off-the-shelf products or software. The longer managed service sales cycle—speaking to higher level executives rather than operations personnel—is part of the services engagement and a far cry from selling commodity products transactionally.
“A lot of dealers make the mistake of not investing properly in finding the right sales people and training them,” he said. “Then they have to make sure they are compensating them and incentivizing them in the right ways to sell services.”
Fear of Commitment
Commitment issues certainly plague dealers, according to Lexmark’s Chavers, and dealers who fail to adequately invest in their strategy will encounter difficulties, regardless of how much they depend on their vendors. Hiring talented individuals is part of that commitment. Dealers will probably need to look outside their organization to find personnel equipped to handle MPS and the associated workflow improvements.
“Having an experienced MPS leader oversee the new business area will be critical to delivering the results dealer owners are expecting,” Chavers said.
Part of that willingness to invest entails an all-in proposition. Dealers who shop the low-cost managed IT solution tend to regret the move, according to All Covered’s Krebs. To inspire confidence, dealers need a solution augmented by experience, time, energy and resources. A one-stop shop solution can be more efficient and economical in the aggregate than a series of managed pieces that require multiple vendors.
“It’s not impossible to do in-house, but most don’t have the resources or experience to build out the capabilities to do in-house,” Krebs said. “We have a dedicated team for security, for enterprise level redundant cloud data centers, infrastructure support, an application development team and our own managed voice offering. It’s being able to provide this seamlessly to the client is what spells the difference in whether you are going to be successful or not.”
Echoing VanDeWalker, Xerox’s Joyce notes that dealers who try to take on anything and everything are challenged from a profitability standpoint, which jeopardizes their ability to deliver value to the customer. Vertical specialization can provide a way for dealers to develop competencies within a business sphere. The expertise this specialization yields can allow the dealer to become more efficient and capable.
“I have found in a number of cases that some of the channel partners are reluctant to specialize,” Joyce noted. “It’s no longer just selling a copier or printer in the general market, it is more laser-focused.”
Careful planning and an organized structure go a long way toward minimizing failures, according to Toshiba’s De Santi. If not done properly, change management—adding, moving or removing devices—can impact service, supplies and customer satisfaction. She also pointed out that non-networked devices limit program capabilities, whereas networked devices enable proactive monitoring to automate supply replenishment, error alerts and meter reads. Connecting customer printing devices to the network maximizes device utilization and program benefits.
Charting the Objections
Whether they’ve failed themselves or have heard anecdotal horror stories, dealers still harbor objections toward managed services. Some dealers avoid managed IT because they tried it previously but discovered they were ill-equipped to be successful, according to VanDeWalker. Particularly those dealers who bought IT specialists, then found they were unable to deliver just on the break/fix proposition.
“(Collabrance’s) offering has evolved quite a bit from the time when many dealers were getting into managed services five or six years ago,” he said. “We’ve got the formula down, proven processes and are able to coach our partners in what they need to do in order to be profitable in this business today.”
The inability to understand pricing models can provide wide-eyed moments for dealers. Krebs recalls several customers who sought out cloud solutions, only to find that the actual price was much different than that “quoted” by online tools.
“A lot of times it goes by data usage and how much of a pipe you need,” he said. “The costs can quickly skyrocket. It’s not just on the cloud but with other services as well. In the dealer channel, there’s so much that needs to be thought through in building a program.”
One of the primary roadblocks dealers erect themselves is in not making the leap from the current curve of the business model they’re on to the next one, Johnson points out. When their core business experiences a downturn, dealers often don’t have the resources to move into an adjacency. In truth, the investment to ramp up need not be so great.
When you look at merger and acquisition data, companies on average are getting $1.33 of valuation for every dollar of recurring revenue for managed services. You don’t need as many customers in managed IT to have a $5 million valuation business as you do in the copier business.
Greg VanDeWalker, Collabrance
One issue Johnson sees is that some dealers try to build all of their managed services competencies themselves, as opposed to relying on a third-party provider. “You don’t have to build your own plane in order to learn to fly,” he said. “That’s why we spend a lot of time on education. They should determine what they need today, partner for what they don’t have, and figure out which things they want to bring in-house long term and which they want to partner. But open your eyes in the market to the broader things.
“You can buy a wholesale page today that you can mark up. You don’t need any operational competencies to do that, whereas if you’re building everything with your own components—your own data collection, proposal tools, analytics—it takes a while to do. A lot of companies will fail with that before they get any traction.”
Goldberg chalks up much of the reluctance in adding managed services as a matter of bandwidth and expertise. In the early days of MPS, he notes, dealers were challenged in converting hardware sales representatives into managed print reps. This remains an issue as dealers still struggle to devise compensation models and change the mindsets of hardware reps familiar with shorter sales cycles and immediate gratification.
“In order to branch into other services, you need to hire, train and assimilate yet another sales and service team which comes at great investment with fairly long, or in some cases, no ROI,” Goldberg added.
The Internet of Things to Come
Whether or not dealers are advocates of managed services, it is clear that many experts see a continuing diversification toward everything as a service, particularly as the age of the Internet of Things opens up the ability to monitor, measure and manage virtually any cost center within a client’s operations.
Some naysayers may scoff at looking too far into the future when dealers are still struggling with MPS and managed IT. To quote from The Simpsons, “Why make 31 flavors when you can’t get vanilla right?” But VanDeWalker sees a rich future of possibilities for managed services, particularly as IoT enables more remote monitoring possibilities.
“When I look at some of our most progressive partners that we do business with on the [GreatAmerica] leasing side of our business, they’re doing managed IT, print and security, which has so many elements to it, including perimeter cameras and sensors. When you think of the connected office with touch screens and video conferencing, we’ve got partners that do all of that. When you think of how complex it is to manage all of it, that’s kind of where we’re going. To stay ahead of competitors, dealers must proactively take strides to becoming a holistic solution for their customers.”
There’s an old adage that customers are continuously seeking “one throat to choke.” In a layer of multiple services that diversify beyond print, Goldberg cautions against the dangers inherent in becoming a jack-of-all-trades, but a master of none. However, he sees much movement in the dealer community toward print security, which he feels is a hot-button issue. He believes more third-party providers will offer wholesale turnkey solutions, just as Collabrance and All Covered do for dealers seeking to enter the managed IT space.
Xerox’s Joyce is another proponent of following the IoT movement and the opportunities around specialization, particularly for environmental measures including air and sound quality—an area where companies have already devised software solutions. “For our partners, it’s walking a path where getting documents and managing print effectively creates an economic opportunity in the platform. Then they can move into managed content services,” he said. “Content then lends itself very effectively to the world of IoT. We refer to that as the agile workplace.”
Cloud services will be another avenue for dealers to monitor as a potential services outlet, according to McDonald, but the options are abundant and many of them market directly to users. Server-less computing has been in the news, and as is the case with many aspects of the service world, it becomes more about capabilities and deliverables, and less about physical products.
“The strategy a dealer will have to adopt is to change the way they sell things, but in the copier channel, it will take a long time before that changes,” McDonald said. “As we know, our channel’s not going to do anything until it starts to hurt. The hardware sales model isn’t working for the OEMs, either, so how can that not change?”