Copying and printing can cost up to 3% of a company's revenue -
equivalent to the average IT budget - so don't overlook services
that could help to reduce that outlay
Motor manufacturer Ford has saved between 1% and 3% of its annual
revenues by outsourcing its printing and copying.
Ford has joined the growing list of companies that have signed up
for Hewlett-Packard's Total Print Management service. This is a
combination of hardware, software and services that is expected to
save companies such as Ford 30% in printing, copying and fax costs.
Printing is an under-appreciated, under-recognised, boring
technology that everybody depends on. But chief information
officers and chief financial officers looking for some easy cost
savings may want to take a closer look at what it really costs to
process all that paper.
Industry estimates peg printing costs at between 1% and 3% of a
company's annual revenues. To put this into context, the average
company's entire IT budget is 3% of revenue. With all of the focus
on cost savings during the past few years, it is surprising that
most companies have ignored these hidden expenses. Reducing those
costs by 30% amounts to a lot of cash.
Suppliers such as HP, IBM and Xerox all agree that few companies
know what it really costs to print, fax and copy documents each
year. Fewer still are actively managing those costs. HP estimates
that the average company's printing costs amount to £436 per
employee per year. Hardware costs pale in comparison.
Consumables
Most companies focus their buying criteria for printers based
almost exclusively on the cost of the hardware, yet the printer
itself represents only 5% of the total cost of ownership.
The cost of printers has fallen dramatically in the past few years,
resulting in a proliferation of devices within the enterprise.
Printers are so cheap that end-users can often put the £100 to £300
in hardware costs on expenses, adding to the growing inventory of
printers, copiers and fax machines.
Worse still, few companies have established standards for all their
output devices. In fact, if standards do exist, they are likely to
be for network-attached devices only.
Operational costs amount to 45% of total cost. Toner cartridges,
drums, ink and paper, otherwise known as consumables, cost
companies almost 10 times the cost of the printer over the life of
the asset. And for companies without printer standards, costs are
even higher.
Consumables are manufactured for the specific devices, and it is
rare that a cartridge made to Þt an HP printer will run in a
Lexmark. This means that purchasing departments are required to
keep supplies on hand for every printer, copier and fax machine in
the enterprise.
Operational costs also go beyond just consumables. Increasingly
robust environmental policies are forcing companies to dispose of
printer cartridges in an approved manner or pay someone to do it
for them.
Some companies have recycled toner cartridges to cut down on this
expense, but suppliers such as Lexmark are now building proprietary
technologies - also known as "killer chips" - into the cartridges.
Killer chips are controversial because they discourage recycling
and also make it more difficult for the customer to purchase
cartridges from other, less expensive suppliers.
Support
An enterprise will spend 50% of its costs for printers and copiers
on support. Many companies purchase maintenance contracts to avoid
expensive downtime and even more expensive service calls.
But these contracts are often tiered, based on printing volumes and
service levels, so the more heavily these devices are used, the
more expensive the support.
As with operational costs, support is more than maintenance. Calls
to the helpdesk for printer jams, "out of toner" messages and
broken machines are adding to the cost of running these devices.
Service calls for devices without maintenance contracts can easily
cost more than £100 per call.
Document outsourcing
Ford has become the largest customer to date for HP's Total Print
Management service. It comprises hardware, software and services,
allowing Ford to upgrade its print, copier and fax machines to new,
multifunctional, networked devices and shift the ownership and
management of these devices to HP. The three-year deal is worth
between £55m and £80m.
Research by Cap Ventures has suggested that the document
outsourcing market is expected to grow by 4.1% over the next three
years.
One of the attractive features of HP's Total Print Management
service (and IBM's Output Management Service) is that they are
constructed to Þt into an organic IT implementation.
Suppliers bill customers based purely on use, and the devices are
shared and allocated or de-allocated via the network, on demand.
This allows companies to align their printing costs with the growth
of their business.
Total Print Management fits into HP's Adaptive Enterprise strategy,
the HP approach to organic IT - and HP is not alone. IBM's
Workplace On Demand services are designed to manage the entire
end-user computing environment based on on-demand philosophies, so
eventually users will share computing capacity, storage, print,
copy and fax services via the network.
The key to a successful deployment of document outsourcing is to
understand how employees actually use these devices. It does little
good, for example, to remove a desktop printer from the admin desk
only to discover that staff are spending half their time waiting in
line for the network printer to produce their documents.
Clearly, users who are accustomed to having a local printer
available when they want will feel a loss if their printer is
removed in favour of a shared one.
Before making these kinds of decisions, companies should assess
their need for privacy and confidentiality, the volume of documents
produced by employees, business cycles for document production, the
physical locations of those employees and the type of printing and
copying required to support the needs of the business.
A phased implementation of new document management processes is
best. Even though there are tremendous financial benefits; Ford,
for example, is deploying the HP service on a business-by-business
basis.
This deliberate, planned implementation allows Ford to assess
business needs, communicate changes to the employee base, minimise
disruption, use up any consumables in the inventory, and iron out
problems that may be associated with this change.
This approach could be best practice for many other
organisations.
Julie Giera is vice-president of research at
Forrester Research.