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Channel opportunities stack up in managed print services

We identify the opportunities presented by managed print services and consider the pros and cons for partners seeking to sell such services

Managed print services (MPS) has been heavily touted for a number of years by many print and copier vendors – with market research company Context stating recently that resellers are showing a growing interest in it – but how widely is it being adopted by channel partners? Just how much demand is there for MPS among enterprise and SME customers? What are the opportunities it presents and what inhibitors are there for partners seeking to adopt MPS?

The first issue to address is just how wide-ranging MPS is as a definition of a service. As Carlo Longhi, Xerox director of channels, puts it: “Nearly all suppliers will claim they provide MPS, but the specifics of what this entails can vary massively in terms of scale and the actual solution being offered.”

From his perspective, MPS has “reached a new era” that seeks to “enable more efficient workplaces and productive employees, while securing data, documents and devices”. Longhi believes it is “transcending the boundaries of traditional MPS by incorporating analytics, cloud technology, digitisation, automation and content management solutions”.

Richard Ash, national sales director for business process services at Ricoh UK, agrees, arguing MPS has gone “beyond establishing standards and delivering end-to-end management of printing technologies”, adding that it is “critical to managing the paper-to-digital transformation journey within the workplace”.

Jason Cort, director of product planning and marketing at Sharp Europe, concurs, noting that MPS has matured a lot in recent years.

“The spectrum of services offered under the MPS umbrella has expanded – from very basic print services that provide proactive consumables management, to more advanced offerings that incorporate workflow and process automation or content management,” he says.

But what about the assertion by Context that resellers are showing a growing interest in MPS? Dave Weston, head of channel UK and Ireland at OKI Europe, claims MPS is already widely used across the channel today.

“At OKI, we are seeing a growing demand for our MPS offering across our group of channel partners,” he says. “Resellers are getting wiser to the margin erosion that can impact their consumables revenues and are increasingly interested in the opportunity to add greater value for the customer and build enhanced loyalty through an MPS offering.”

Ricoh’s Ash says the message is more mixed and it’s largely down to resources. “The transition to MPS is a work in progress for many channel partners as the transformation requires significant changes to be made,” he states. “The larger service-led channel partners have invested in the resources, expertise and infrastructure required to offer and deliver MPS. Others, however, have yet to take the leap or do not have the resources to do so currently.”

“Demand is growing as customers increasingly appreciate how the running costs of printers can rapidly increase, and instead look to reduce and control printing costs and drive productivity through MPS”

Dave Weston, OKI Europe

Al Coyne, general manager for print at Exertis, agrees. “More IT resellers are starting to think about managed print as a service to offer their customers, but the majority are still selling transactionally, leaving MPS contracts to the copier dealers or larger IT resellers that offer services on a variety of IT products,” he says. “They already have the infrastructure, resources and financing models in place, so it’s easier for them to tap into the market. Many IT resellers simply lack the necessary resources and support infrastructure, and the investment may well be prohibitive.”

Moya Kelleher, head of IT channel at Kyocera Document Solutions, acknowledges that MPS adoption varies widely across the channel. “Some VARs have invested in full MPS teams with their own solutions and/or even bought servicing dealers to enable fulfilment of opportunities. Others haven’t touched it or dipped in and out,” she says.

Once again, it all comes back to resources. “I think most VARs see that there is opportunity in this space, but the investment needed to develop their own offering is prohibitive to many smaller resellers,” says Kelleher. 

Demand is real

Whatever the obstacles might be, is it worth investing in developing the MPS capability? The consensus seems to be that the demand is definitely there. And not just from enterprises.

“Demand is growing as customers increasingly appreciate how the running costs of printers can rapidly increase, and instead look to reduce and control printing costs and drive productivity through MPS, as well as addressing environmental concerns over waste and inefficiency,” says OKI’s Weston.

Xerox’s Longhi says there is “significant demand from organisations of all sizes” and demand is expected to increase over the next 12 months.

Cort at Sharp cites research from Quocirca which identifies MPS as “the prime growth opportunity for print manufacturers and their partners”. He warns, however, that more companies are offering basic print services as standard, which is “making it difficult for resellers to charge as much for them now as in the past”.

As a consequence, he says, they need to make sure they are offering services that go beyond simply printing things. “Adding workflow solutions on top of MPS can help resellers deliver tangible business benefits for customers,” he adds.

Kyocera’s Kelleher argues that the increase in the type of managed print programmes available, ranging from automated toner delivery to subscription print programmes, means more and more SMEs are looking to adopt some type of MPS for their business.

“Many MPS channel partners are well positioned to capitalise on the momentum towards cloud-based services among SMEs, by positioning MPS as an enabler of improved productivity and efficiency”

Richard Ash, Ricoh UK

Weston agrees, saying: “SMEs are increasingly getting in on the act, and looking to MPS as a way of controlling their costs, reducing waste, achieving compliance and having a clear insight into what they are printing, while at the same time knowing that consumables will be replaced whenever they are needed.”

Ash says the SME market is ideal for channel partners wishing to enhance their status as trusted advisors. “SMEs face a range of challenges in tackling escalating print costs and driving business efficiency and productivity,” he says, revealing that budget constraints and a lack of internal resources are driving many to turn to partners to better control and manage their information and digital transformation infrastructure.

“Many MPS channel partners are well positioned to capitalise on the momentum towards cloud-based services among SMEs, by positioning MPS as an enabler of improved productivity and efficiency,” he adds.

Janis Kemers, vice-president of print and supplies for Europe at Tech Data, says there is still some way to go for MPS in the SME market. “It is hampered by the complexity of its delivery through the broad channel, and the fact that high-performing MPS are not yet readily available through the channel,” he says, “SME demand is also weak due to lack of clear value proposition and business model transparency for the final customer.” 

Channel opportunities

There is a strong consensus that MPS can deliver a number of opportunities for channel partners.

Longhi says it offers “a clear differentiation” from traditional box-shifters. “MPS can be scaled to meet the customer’s specific needs, which provides a lot of opportunity for channel partners to secure additional revenue and build long-lasting relationships,” he argues, adding that it can often generate further sales “as a result of the channel partner identifying areas for improvement and working closely with the customer to deliver this over time”.

Kelleher suggests that MPS gives resellers the opportunity to address a revenue stream that has typically not been part of the IT domain. “MPS contracts can be lucrative, ensuring a quarterly gross profit and give resellers a sticky sales approach – and as trusted advisors they can offer their customers a single point of contact for support,” she says.

“MPS creates a closer engagement with the customer and can lead to further opportunities in document management and additional services outside of print”

Al Coyne, Exertis

It also goes well beyond print. “The life of a document within a business is changing and MPS solutions can start to address business processes and document storage, opening up even more potential business opportunities for the reseller channel,” adds Kelleher.

According to Weston, the biggest opportunity that MPS presents is that it enables resellers to protect their margins. “We are in an environment now where margins are being challenged every day. MPS gives resellers the peace of mind of knowing they have a contracted source of revenue over a defined period of time,” he says. “With a contract in place, they can start to simulate the profit they are likely to achieve over the lifetime of that agreement.”

Ash’s response is similar, saying MPS is attractive to channel partners as they seek to protect and grow future revenue against hardware commoditisation and shrinking margins. “By accelerating the shift to a services-led business model, channel partners can increase the proportion of their business not just from hardware and recurring print revenue, but also from other services,” he says.

Coyne at Exertis agrees that MPS gives resellers the chance to create further, longer-term margins. He believes that MPS creates “a closer engagement with the customer and can lead to further opportunities in document management and additional services outside of print”.

While the enterprise market is more engaged with managed services, he says SMEs still present an opportunity as the productivity benefits remain the same.

Obstacles to jump

There are difficulties that need to be overcome, however. Ash observes that despite the benefits of MPS, it isn’t as widely deployed as expected by all channel partners. “The more services-led partners are making inroads into this market, but smaller partners tend to stick to what they know,” he says.

Tech Data’s Kemers says the high complexity of MPS can be an inhibitor, along with the investment needed to build and provide MPS and the feasibility for print-dedicated resellers to generate the required return on investment (ROI) in a declining printing market.

There’s a further challenge in the limitations of current print vendor programmes, he says, and the “availability to facilitate contractual business competitiveness and channel multi-vendor MPS offerings”.

Longhi says one of the major inhibitors is “the partner’s own desire to embrace MPS and whether they perceive this to be of real value – being able to talk to the benefits confidently is key for driving business with customers”.

“Ensuring back-end systems can cope with annuity based, contract billing is another requirement that can make it difficult for partners looking to move into MPS offerings”

Moya Kelleher, Kyocera Document Solutions

Kelleher acknowledges that selling MPS is very different to selling a transactional solution. “You are dealing with different divisions within a business such as finance, and a contract needs signing so the process typically takes much longer and reseller salespeople don’t typically work on these type of contract sales,” she says, “so ensuring the right people can support the account teams is important.”

Kelleher adds that ensuring back-end systems “can cope with annuity based, contract billing is another requirement that can make it difficult for partners looking to move into MPS offerings”.

Five years ago, as Weston points out, traditional copier dealers were prominent in the managed service space as they would have their own service engineers, service desks and fleet management systems. “That meant smaller IT resellers, which perhaps did not have print ‘as their first language’, could not really play in the market because they did not have the capability from a service and maintenance perspective,” he says.

Nowadays, vendors make it much easier for resellers to compete in the managed service market because they can provide the complete management and service element of MPS themselves, enabling resellers to focus their attention on making successful sales and driving up their margins. “This means there are very few inhibitors to channel partners entering the market, no matter how large or small they may be, or what precise capabilities they have got,” he adds.

That may be true but traditional office equipment resellers face their own challenges, according to Cort, who argues the next generation of MPS will force them to become more IT-centric – something Sharp has been encouraging its partners to do for some time.

Selling MPS alongside workflow solutions or a content management services requires a consultancy-based selling approach, he says, which calls for a different set of skills.

Cort believes this makes it “vital for the office equipment channel to develop or acquire the right talent, either through upskilling existing employees or perhaps through collaboration with new, innovative businesses within the IT channel”.

Longer term, things may become even more complicated, according to Mike Davies, vice-president of business partners at Quadient, who says MPS is evolving into a wider managed communications services space with the digitisation of paper-based processes. He believes MPS providers will need to “respond to the demand for a digital, omni-channel and always-on experience, or risk being outshone by the competition”.

Quadient is a case in point, having started from a print background and evolved to help businesses communicate with their customers across a range of channels, from mobile and wearables to instant web chat. “MPS providers need to do the same if they want to stay relevant – and keep their customers,” warns Davies.

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