Tech Data MPS Seminar

Tom Callinancallinan@strategydevelopment.org

610.527.3317

Agenda

• Defining MPS

• Why enter the MPS space

• How to leverage existing structure

• The value proposition

• The assessment

• Critical areas

What is Managed Print Services

• Managed print services (MPS) is defined as an end-to-end solution that provides everything a company needs to control document output costs: An initial output assessment, hardware redeployment or acquisition, pay-per-use output that includes supplies and service, through ongoing assessment of the contract and as-needed optimization.

Definitions

• Cost-per-page (CPP) is a contractual relationship with the customer that includes toner, maintenance kits, parts and labor– “Print management light”– Based on a per print charge– Usually on VAR’s paperwork

• Print management includes all aspects of a CPP agreement plus equipment– Usually written on a lease

Why MPS

• Print output is 7X copied output– In 2002 it was 2.5X

• Printers average 3,000 prints per month, $48 in supplies and service

• The average employee to printer ratio is 4:1• A 300 person office has 75 printers producing

225,000 monthly prints for $3,600 per month in recurring revenue

Why MPS

• Desktop printers are fast!• HP 4015n at as low as $1,099 (52 PPM)

• Desktop printers are convenient– Pulling output away from copiers

• Copier companies view printers and software that drives prints as their expansion market– Canon, IKON, Ricoh, Xerox

Trends mandating change: Convergence of channel players

Competition for pages is creating pricing pressure on page costs

Printer Companies Direct: HP, Dell,

Lexmark

Traditional Copier Dealers/Direct

Operations

VARs

Printer ResellersAftermarket Resellers

& Service Providers

From Co-existing in Accounts to

Competing

+Source: Gartner Group, *Source: Information Week**Source: IDC

Trends impacting printer fleets

• Organizations spend 1 – 3% of annual revenues on output technology fleets**

• Companies spend $213 per employee per year in direct hardcopy costs (toner/ink and maintenance)+

• 23% of all IT / help desk calls are printing/copying related**– This does not translate into happy customers

• 55 % of network traffic is printer related*

*Source: Information Week, **Source: InfoTrends***Source: The Gartner Group

Building the case for MPS

• Printer volumes are increasing 9% in B&W & 19% in color(11% overall) annually *– B&W copier placement declined by 9.2% in 2006 (to

1,277,346 units)**– Segment 1 had a very steep decline (45.2%) **

• 60 % of all paper documents originate at the printer***• 70% of copied documents start out as printed originals

of an existing electronic document***• 50% of imaging fleets are over five years old***

– Coupled with climbing print volumes, the demand on aging fleets requires increased service and support calls

What are the benefits of MPS

• Converts unknown variable costs into known fixed costs

• Eliminates capital expenditures• Reduces help desk calls• Reduces vendors and invoices• Reduces cost by an estimated 10% - 30%*• Reduces hardware downtime and hence

improve employee productivity*Gartner Group

How to Leverage Existing Structure

Territory design

• Start with 100 accounts per territory• Design list managed vertical territories• Mixture of current and net new accounts• Businesses with minimum of 40 printers

– 150+ employees– High volume or high color usage may require

fewer printers

Vertical Markets

Health care

Low HighDocument Intensity

Common

Specific

Graphic Arts* 1.5B Pages

*200X Size Shown

Legal

Insurance

Pharmacy

Financial Services

Business Services

CommunicationsEnergy

EntertainmentReligious/Nonprofit

Architecture & Construction

Government

Higher Education

Aerospace & Defense

Real Estate/ Mortgage

Manufacturing

Retail

K-12

Transportation

Buyer motivations & typical pain points

• IT Manager’s Pain Points– They don’t like dealing with printers– Supplies and maintenance are reactive, resulting in emergency

calls– They have no document technology strategy

• With an MPS solution, the IT Manager will be happy because:– They can outsource printer service, a nuisance area– They can improve end user experience– They free up time for more strategic projects– There is no additional cost to service

Buyer motivations & typical pain points

• CFO’s Priorities– ROI– Cash Flow– SG&A expense– Strategy to identify and control costs

• With an MPS solution, the CFO will be happy because:– They can maintain or reduce their current fleet without adding

unnecessary hardware– They can identify imaging and output costs and how much they

are printing– They can work with you to develop a cost reduction strategy for

their imaging and printing fleet and permanently reduce their budget for IT infrastructure

Buyer motivations & typical pain points

• Purchasing Department’s Pain Points– Reducing year over year expense– Reducing the quantity of vendors to manage– Reducing emergency orders– Reducing inventory

• With an MPS solution, the purchasing department will be happy because:– You will work with them over the long-term to reduce year over

year spending– You will substantially reduce the quantity of vendors– You assume responsibility for inventory

Steps of the MPS Sale

• First appointment / Value proposition• Objective assessment• Strategy review• Proposal• Implementation• 30-day review• Quarterly reviews• Ongoing analysis

Value proposition for MPSAreas of pain

Needs analysis of print environment

• Expense that is not quantified or managed• Multiple vendors

– Supplies – Service – Equipment

• Ad hoc asset acquisition– No consultation on printer selection– No consideration to output environment

Needs analysis of print environment

• Involvement of multiple departments that overlap output responsibility– IT has printer acquisition, help desk, software

and service– Purchasing has copiers and fax

• Copiers are connected as printers (IT)• Fax servers are replacing fax machines (IT)• Purchasing buys printer supplies

Needs analysis of print environment

• Multiple invoices – Multiple vendors– Transactional approach

• IT / helpdesk required to handle printer issues– Not viewed as value add– Not fun

Target needs analysis

• Identify and quantify total cost of operation• Reduce to one vendor responsible for entire

output fleet• Strategic approach to asset deployment and

replacement• Handle all printer related issues• Single interface to internal departments• One monthly invoice

THE NEXT STEP IS TO ASSESS THE CURRENT DOCUMENT TECHNOLOGY ENVIRONMENT

Objective Assessment

• Device populations and related monthly volumes should be accumulated by category, including printers, copiers, faxes, scanners and MFPs.

• Identify areas of inappropriate asset allocation

• Workgroups where applications do not match existing technology

• Opportunities for workflow innovation with MFPs

Objective Assessment

• Inventory toner cartridges and maintenance kits to determine value and carrying costs

• Identify hours per month IT spends on printer maintenance

• Identify vendors by name so you understand pricing and quantity

• Contractual relationships with current vendors

Mistakes during MPS learning curve

• Don’t conduct assessment without top-level buy-in • Director of IT; finance director; purchasing director

• You need an advocate and agreement on pain• Avoid enterprise-wide assessments until you gain

experience (150+ devices)• Takes too long to conduct• Extends the selling cycle• Too much change and risk• Easiest decision is to maintain the status quo!

Critical Areas

• Technicians / Service

• Marketing Materials

• Technology / Tools

• Finance / Operations

What You Need to Implement an MPS Strategy

• Understand pros/cons of OEM & 3rd party• Service and sales training• Parts source• White papers• Brochures• Case studies

What You Need to Implement an MPS Strategy

• Rapid Assessment Key (RAK)• Value proposition presentation• Digital camera• Access to printer specifications• Proposal Templates/Generator• Quarterly relationship review template• CPP Contract• Leasing/Financing

What You Need to Implement an MPS Strategy – Finance

• Relationship with leasing company that can bill CPP

• Billing system for CPP base plus overage• Dispatching program

In Summary

Critical Areas• Technicians/Service

• Marketing Materials

• Technology/Tools

• Financing

Tech Data Relationships• TD On Call (service/training)• Computer Exchange (parts)

• TD Agency

• FM Audit

• IBM Leasing– Great America Leasing– US Bancorp

Training

• BTA Print Management Workshop– www.bta.org

• Education and certification

Questions?Thank YouTom Callinan

www.strategydevelopment.org 610.527.3317