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CONTENTS Volume 16 No. 6 G

FEATURE ARTICLES 10

Samsung’s ‘Vision’ Manufacturer hosts 2009 national dealer conference

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2010 Industry Forecast Manufacturers look to the year ahead

by Brent Hoskins Office Technology Magazine

With the message, in part, that senior management is seeking to further boost brand stature within the business community, Samsung Electronics America Inc. hosted its 2009 national dealer conference Nov. 10-12 in Las Vegas.

Compiled by Brent Hoskins Office Technology Magazine

While there will soon be a full calendar year between the economic plummet of 2008 and the present, the U.S. economy continues to struggle. However, with the arrival of the new year comes new hope. What will be among the greatest opportunities for office technology dealers in 2010?

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Fall Colors Conference BTA Southeast district hosts event Oct. 16-17

COURTS & CAPITOLS A Model for Success Plan & choose your strategy for the long term

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by Robert C. Goldberg BTA General Counsel

by Brent Hoskins Office Technology Magazine

Like most Americans, I totally underestimated the devastating changes that were ahead in the U.S. economy. As we survey the damage and search for answers, it is essential that we devise a plan that will return dealers to growth and prosperity.

Continuing with its long tradition of providing office technology dealers with leading-edge education and valuable networking opportunities, the BTA Southeast district hosted its Fall Colors Conference Oct. 16-17.

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‘Your A4 Provider’ Lexmark hosts its first national dealer meeting

SERVICE CONNECTIONS Service Profitability Making ‘knee-jerk’ decisions can be costly

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by Brent Hoskins Office Technology Magazine

by Jack Duncan Strategy Development

With company officials emphasizing an interest in listening to dealers and seeking their feedback, Lexmark International recently hosted its first national Business Solutions Dealer (BSD) meeting.

In today’s economy with equipment sales declining, it is increasingly important that service and supply departments optimize their profit contributions. In far too many situations, dealers are making “kneejerk” business decisions.

PRINCIPAL ISSUES 32

The ‘Green’ Way Encourage clients to adopt conservation measures by Randy Allen ASI Business Solutions

When looking to maintain market share during tough fiscal times, it makes good sense to play the “green” conservation card with clients, because when it comes to operating a business, every dollar counts. 4 | www.of ficetechnologymag.com | December 2009

DEPARTMENTS Business Technology Association

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BTA Highlights

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Executive Director’s Page

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BTA President’s Message

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Advertiser Index


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EXECUTIVE DIRECTOR’S PAGE

Manufacturers Share Advice, Expectations his issue of Office Technolog y features our annual Industry Forecast, with representatives of 11 hardware manufacturers sharing their thoughts on the year ahead. I appreciate the efforts of those who have contributed forecasts, and hope that all readers will find the insight and advice shared to be helpful as we enter 2010. Each year, I find myself looking for common areas of focus among the forecasts, providing a strong indication of the areas of greatest opportunity, etc. This year, prior to proofreading the forecasts, I came up with a short list of four areas that I assumed would be frequently referenced and discussed — A4 devices, managed print services (MPS), the poor economy and the environment. Hands down, the topic of MPS is mentioned most frequently, included — sometimes multiple times — in all but one forecast. Next is the poor economy, referenced at least once in each forecast (in at least a couple of them indirectly), but not as frequently as MPS. Next on the list is A4, mentioned in five of the forecasts. And finally, the environment, mentioned in four. Using this exercise as a guide, I then sought within the forecasts words of advice and expectations on the primary topic — MPS. Here’s a sampling of what I found: Canon: “… We anticipate that being able to offer a full range of managed print services will be a dynamic that accelerates rapidly into the marketplace in the coming year.” Kyocera Mita America : “… We also expect 2010 to be a significant year for the adoption of MPS within the BTA Channel.

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In preparation for this, Kyocera has marshaled substantial resources and concentration in this area. MPS is an evolutionary business issue that will transform our sector, and it represents a very strong complement to the core benefits of our product line.” OKI Data Americas: “…The right MPS program will enable dealerships to foster deeper relationships with their existing customers, in turn reaping the benefits that come with a trusted partnership: sustainable business and enduring revenue … In 2010, OKI Printing Solutions will remain a committed partner, assisting dealers in the next phase of their MPS businesses …” Xerox: “Dealers and resellers will need to broaden their offerings by thinking outside of the ‘box’ and leveraging the diverse MPS offerings available from vendors.” Given the bullish expectation among the vendors regarding the promise of MPS, the question that arises is simple: Have you developed an MPS strategy at your dealership? If not, many of the industry’s leaders are suggesting that it’s time for you to do so. Fortunately, there is plenty of help available — from the manufacturers themselves, software vendors, other suppliers (such as compatible cartridge vendors) and from BTA as well, through its education programs. I hope you, too, will seek the words of advice and expectations from our forecast contributors and give them some consideration. The 2010 Industr y Forecast is a lengthy feature, but I encourage you to at least read the contribution(s) from the vendor(s) you represent — or the vendors you would like to represent at some point in the future. In the meantime, best wishes for a great new year. I — Brent Hoskins

Executive Director/BTA Editor/Office Technology Brent Hoskins brent@bta.org (816) 303-4040 Associate Editor Elizabeth Marvel elizabeth@bta.org (816) 303-4060 Contributing Writers Randy Allen, ASI Business Solutions www.asibiz.com Jack Duncan, Strategy Development www.strategydevelopment.org Robert C. Goldberg, General Counsel Business Technology Association

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Business Technology Association 12411 Wornall Road Kansas City, MO 64145 (816) 941-3100 www.bta.org Member Services: (800) 505-2821 BTA Legal Hotline: (800) 869-6688 Valerie Briseno Membership & Marketing Manager valerie@bta.org Mary Hopkins Database Administrator mary@bta.org Teresa Leerar Bookkeeper teresa@bta.org Brian Smith Membership Sales Representative brian@bta.org ©2009 by the Business Technology Association. All Rights Reserved. No part of this publication may be reproduced by any means without the written permission of the publisher. Every effort is made to ensure the accuracy of published material. However, the publisher assumes no liability for errors in articles nor are opinions expressed necessarily those of the publisher.


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Supplies Network has everything you need to serve mixed fleets...in one program.

Supplies Network’s headquarters near St. Louis, MO. As the largest privately-owned wholesaler of IT supplies and equipment in the U.S., we are a strong fulfillment and marketing partner for serving mixed printer and copier fleets. Our total program includes: s Authorized wholesale source of OEM consumables – HP, Canon, Lexmark, Xerox and other major names. We stock 70 brands in all. s Top quality compatibles ready for your private label. s Drop shipping at no extra charge to your customers or technicians. s Standard 1 and 2 day ground delivery with 99.8% accuracy. s The best service: assigned, knowledgeable reps; personalized marketing campaigns; product/sales training. s Voted Best Value-Add Source by Recharger Magazine’s Readers. s Managed Print Services (MPS) for copier and laser printer environments. Available as a turn-key solution, or use only the elements you need. No up-front software expenses.

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BTA PRESIDENT’S MESSAGE

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2009-2010 Board of Directors

Invest in Education, Make it a Great Year am sure you would agree that 2009 was not a stellar year for th e of fice t echnolog y industry. But things are starting to improve in our economy and, as a result, for our industry. With that in mind, I know we are all looking forward to the new opportunities that are ahead for each of us in 2010. As you look to the year ahead, are you ensuring that your employees have the skill sets and tools they need to take your dealership to new heights? If not, it is important that you develop a road map that will ensure your employees have the proper training. While creating your road map, I encourage you to consider the education workshops that BTA offers. Each is full of insightful guidance and practical steps for you to implement in your dealership. They are taught by successful industry professionals who have been in the trenches and have developed a high level of expertise that they are eager to share with others. And all BTA workshops are intended to ultimately help boost your bottom line. Consider, as an example, your employees’ possibly unmet need to learn how to successfully implement managed print services (MPS). Today, factors such as the economy, end-user demand and even “going green” (if it puts “green” in the end user’s pocket) have given rise to MPS. Do you have an MPS strategy? Is your staff prepared to sell, support and administrate that strategy? If not, perhaps it is time to make an investment in the right education. In 2007, BTA launched the BTA MPS Sales Workshop (then called the BTA Print Management Workshop). The workshop’s 158

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attendees (to date) have learned such skills as presenting a value proposition, pricing an MPS contract and preparing for account reviews. There is no doubt that many of these dealerships are now ahead of the competition and enjoying new additions to their recurring revenue streams. More recently, the association launched the BTA MPS Operations & Service Workshop. As its name implies, it focuses on setting up and managing all operational and service aspects of an MPS agreement. The workshop addresses such questions as: What should be included in an MPS contract? What printers should be serviced? What are the sources for printer parts and technical support? Information for both of these MPS workshops, taught by presenters with the management consulting firm Strategy Development, can be found on the BTA Web site. Visit www.bta.org/MPSOperationsService and www.bta.org/MPSSales. Note that both will be of fered in Januar y and Februar y in Florida and California, respectively. The MPS workshops are only two among the education programs offered by your association. BTA also offers ProFinance, ProSolutions, FIX: Cost Management For Service, BTA Sales Management Workshop, BTA Service Management University, BTA Parts & Supply Inventory Workshop, BTA Business Planning Workshop and BTA Professional Services Workshop. Information on these programs can be found at www.bta.org. I challenge each of you to make new investments in the knowledge of your employees in the new year. It will pay off. Remember, BTA is here to help make it a great year for each of you through its education offerings. Best wishes for a prosperous 2010. I — Bill James

President Bill James WJS Enterprises Inc. 3315 Ridgelake Drive Metairie, LA 70002 bjames@wjsenterprises.com President-Elect Rock Janecek Burtronics Business Systems Inc. 216 S. Arrowhead Ave. San Bernardino, CA 92408 rjanecek@burtronics.com Vice President Tom Ouellette Budget Document Technology 251 Goddard Road Lewiston, ME 04240 touellette@bdtme.com BTA East Todd J. Fitzsimons Network Imaging LLC 122 Spring St. Southington, CT 06489 tjfitzsimons@networkimaging.biz BTA Mid-America Ron Hulett U.S. Business Systems Inc. 3221 Southview Drive Elkhart, IN 46514 ron.hulett@usbus.com BTA Southeast Terry Chapman Business Electronics Corp. 219 Oxmoor Circle Birmingham, AL 35209 tchapman@businesselectronics.com BTA West Lokke Patrick Docutxt Corp. 11110 E. Artesia Blvd., Ste. B Cerritos, CA 90703 lokke@docutxt.com Ex-Officio/Immediate Past President Ronelle Ingram Steven Enterprises Inc. 17952 Sky Park Circle, Ste. E Irvine, CA 92614 ronellei@msn.com Ex-Officio/General Counsel Robert C. Goldberg Schoenberg Finkel Newman & Rosenberg LLC 222 S. Riverside Plaza, Ste. 2100 Chicago, IL 60606 robert.goldberg@sfnr.com


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2010 Industry Forecast Manufacturers look to the year ahead Compiled by: Brent Hoskins, Office Technology Magazine

hile there will soon be a full calendar year between the economic plummet of 2008 and the present, the U.S. economy continues to struggle. However, with the arrival of the new year comes new hope. What will be among the greatest opportunities for office technology dealers in 2010? What should be their primary areas of focus? Office Technology magazine asked representatives of various MFP and printer manufacturers to share their expectations for 2010. Eleven submitted industry forecasts. Each was asked to address several questions: What do you believe will be the greatest opportunities and challenges for dealers in the new year? What are the best sales and marketing strategies for dealerships in pursuing these strategies and addressing these challenges? What are the characteristics of the office technology dealership that is best positioned for success in 2010? What notable changes in demand/needs/expectations do you anticipate from end users in 2010? Perhaps the insight shared in the responses to these questions will help you better position your dealership for success in the year ahead.

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Canon U.S.A. Inc. Sam Yoshida, Vice President & General Manager Streamlining business operations, improving ef f iciency, reducing overall costs and increasing revenue — these have been the goals of business environments both large and small for several years. And, in the 10 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9

recent economic crisis, these goals have become increasingly magnified. Despite a universal downturn in revenues and end-user spending, we at Canon see this as a unique and tremendous opportunity for our dealers to move beyond the norm of being just hardware providers and make the transition toward becoming fullservice providers of imaging and management solutions. For dealers, it is critical to be able to offer a potential client a solution that can help achieve all of their goals. By offering a well-rounded suite of professional services such as consulting and implementation of print and facilities management services, dealerships will be able to differentiate themselves from the competition. In addition to gaining a competitive edge, transforming into a total imaging solutions provider expands a dealership’s ability to reach into vertical markets, which opens new opportunities for them and helps to expand their range of expertise. Here at Canon, we are energized and excited about this new market trend and we anticipate that being able to offer a full range of managed print services (MPS) will be a dynamic that accelerates rapidly into the marketplace in the coming year. The first step a dealership should take to transition toward becoming a full-service imaging solutions provider is to ensure it offers differentiated hardware that can support advanced print and management services. The new Canon imageRUNNER ADVANCE Series is an ideal example of a new document imaging platform that goes beyond the basic print/copy/fax functionality to offer an advanced set of features that will blend seamlessly into workflow and software solutions. Also, dealerships that are financially capable of selling and supporting production print devices such as our


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I found a consulting firm that has REAL strategic sales experience to help me launch my MPS initiative.

As the most experienced and established MPS consulting firm, Strategy Development has the skills to help you achieve success. MPS is the most important growth initiative the industry has seen in over a decade—are you going to trust your strategy and execution to anybody with a website and catchy name? The consultants at Strategy Development have experience

leading and growing businesses in the facilities management, MPS, professional services, and equipment space, and our experience is from the twenty first century. Strategy Development is the only fully integrated consulting firm in the imaging industry, so whether it is your back office operations, service, or sales strategy we can help you achieve MPS success. Visit our website to see the unmatched experience of the consulting team. At Strategy Development, the sustained success of our clients is our top priority. Contact us and join the most successful MPS companies in the industry.

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imagePRESS line will realize new net The past year has presented many The solutions approach revenue growth, which in turn will help economic challenges to our industry. to expand their aftermarket sales. However, we have observed that dealers to the business is a Additionally in the production space, who are expanding their business model critical part of helping we recognize that a dealership’s ability vision have done relatively well related customers be more to provide management and consulting to their peer group. In the coming year, efficient. We believe it is services may be limited as this is a new we will continue to bring new products a tremendous opportunity business direction for the dealership. To and solutions to help our dealers drive a for our dealers ... help, Canon offers services such as our solutions-based approach to the marimagePRESS Essential Business Builder ketplace, be it in production print or the Mentoring Program, in which our industry experts work latest in workflow platforms. The dealer channel remains a with our dealers and their customers to help them reassess vital segment of overall market strategy for Konica Minolta their current state of business and develop a new business Business Solutions U.S.A. (Konica Minolta) and we are complan around their new equipment. Such consulting services mitted to delivering the technology and support needed to not only help the customer, but also the dealer by providing help our dealers prosper in 2010 and beyond. him (or her) with a more comprehensive look at the current Over the past several years, we have witnessed a growing state of his customer’s business. awareness in our customer base of the need to develop and To help reach the goal of becoming a well-balanced, full- deploy strategies to better manage their print assets. Cusservice imaging solutions provider, it will be critical for a deal- tomers are becoming increasingly intelligent about their ership to have a well-trained sales force that knows how to print decision-making. Questions that customers ask penetrate its markets as well as a solid information technology include: How can I rationalize my print behavior? How can I (IT) team in place. Technology has evolved so rapidly that it is redesign my print strategy so I get the most efficient use of, essential for dealerships to have an IT team that is also com- and deployment of, products and solutions? How are you petent in selling situations, as it can heavily influence sales. going to prove value in terms of expense rationalization and With a stronger, well-trained infrastructure in place, dealer- how can I get more from my investment in office equipships will be more competent to provide IT managed services ment? Whether employing managed print services (MPS) or (ITMS) and MPS to their existing and potential customers. integrating MFP products into their ERP workflows, we As we move into 2010, customers will be challenging their think customers will continue to seek in-depth, consultative vendors to provide greater justification. To improve busi- approaches to addressing their needs. ness more than ever before, dealerships will have to provide The solutions approach to the business is a critical part solutions that seamlessly integrate with a customer’s infra- of helping customers be more efficient. We believe it is a structure and leverage the customer’s previous investments. tremendous opportunity for our dealers, but dealers must For sustained success, it is imperative that dealerships show now be ready to move their current relationships into they have the ability to tailor their offerings to each client’s workf low and other solutions opportunities. We are individual needs while also being viewed as a long-term investing heavily in supporting this movement with the consultative partner. Customers will be demanding their expansion of our bEST (bizhub extended solutions archivendors show them a return on their investment when it tecture) and Web browser capabilities, as well as the comes to putting toner onto paper and workflow adjust- expansion of Konica Minolta Business Intelligence Servments. Canon is confident that we ices (BIS), which offers dealers a consultative process that can provide our dealers with the analyzes data from various sources in order to provide necessary tools in order to help them meaning ful information to aid customers in making make the transition into 2010. better business decisions during rebounding economic times. Additionally, our Optimized Print Services (OPS) program gives dealers a fully customized, one-stop print Konica Minolta Business services solution for customers to better manage and Solutions U.S.A. Kevin Kern, Senior Vice President of control the efficiency and costs associated with the overall print environment. Marketing 12 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9


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our dealer partners to ensure that they Whether through MPS or a tradiMoving into 2010, are not only remaining competitive, but tional deployment, we anticipate a conal s o that th e y are ful ly cap abl e of tinu ed shift from sin g l e-function we are optimistic that offering the assessment approach along printers to solutions-enabled A3 MFP we will see improvements with the product set and solutions to platforms supported by A4 small MFP in our industry, but meet their customers’ needs. We aim to devices. As customers look to further dealers need to focus be our dealers’ most valued partner and aggregate and consolidate devices, we on the value they are dedicated to helping them achieve are al so seeing sp ecific industries offer customers. their business objectives in the coming em erge with substantial solutions year and beyond. growth potential. The legal, financial and educational segments, and particularly the health-care segment, which has significant government support to Kyocera Mita America Inc. move to electronic medical records, are offering new opporMichael Pietrunti, President & CEO tunities for dealerships to take the consultative approach. The beginning of a new year is Dealerships can demonstrate how to improve the quality always a time for review, assessment, and distribution of devices, coupled with solutions, to autorecalibration and implementation of new strategies. In the past 12 months, mate workflow and improve productivity. ever y business, large and small , Beyond services, we think there will continue to be signifprivate and public, has had to naviicant potential for dealers in production print. Our experigate the uncharted waters of a global ence is that many dealerships have become involved in this market, but not many have gotten past the traditional print- financial crisis and, in some cases, increased regulatory manfor-pay markets. As commercial printers are expected to dates and scrutiny. The bottom line is that the business envigrow their digital output by 7 percent a year over the next ronment has changed for all of us, both manufacturers and several years, there are significant opportunities to capture their dealers. The plans and strategies that we have collecnew sources of page volume. We are continuing to commit a tively implemented in the past provide no guarantee of significant level of investment to help our dealers exploit future success. Therefore, Kyocera Mita America repositioned the company at the end of CY2008 in order to this opportunity. One of the top customer concerns that dealers must be compete in this environment and to better serve our dealers. prepared to address increasingly in 2010 is the issue of This timely effort was critical to Kyocera and our dealer “green.” Customers are not only asking about specific prod- partners, as we have made significant changes to our historucts, but also the dealer’s own approach to green issues. ical approach. To achieve growth, we introduced 30 new Konica Minolta has taken a holistic, global approach to products during CY2009 — with more still to come. As a this issue for many years, from the manufacturing of the result, we have substantially strengthened our position with product, to the energy consumption in the typical cus- our dealers. Virtually every product introduced has received tomer’s office, to the recyclability of the components used numerous industry awards and accolades. In November, in the product. Dealerships themselves should not only be Industry Analysts recognized Kyocera MFPs as being “most able to present the manufacturer’s commitment, but reliable” — as rated by dealer service managers; an honor promote their own green strategies within their busi- we’ve won more times than any other company in the past nesses. This is more often becoming a bid requirement for 10 years. In addition, to mitigate some of the business risks many organizations. that our dealers face, and to firmly demonstrate our comMoving into 2010, we are optimistic that we will see mitment, all of our new MFPs are now covered by our improvements in our industry, but dealers need to focus industry-first, three-year dealer warranty. With these prodon the value they offer customers. Customers need to ucts and programs, Kyocera has gained market share, and trust that their dealers will help them address the big has achieved very stable results through the first half of its picture, which now includes not only expenses, but also fiscal year. consolidation, workflow efficiency and environmental Beyond a wider selection of products, our corporate concerns. At Konica Minolta, we work very closely with restructuring has yielded operational benefits for dealers 14 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9


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year where the existence of successful selling our products as well. In light of We see 2010 as a time dealer/manufacturer partnerships — global economic pressures, which we defined by a mutual commitment to expect to continue throughout 2010, we for investment and invest and grow the vibrant BTA Chanhave streamlined Kyocera’s logistics growth, and we’ll seek nel — will fuel the greatest innovation capabilities to better support the just-inexpanded channel and growth. It is this fundamental untime demands of our dealers who need partnerships along with derstanding that remains the key differto balance cash flow and inventory more the expansion of direct entiator between Kyocera and our comthan ever before. We truly understand sales operations ... petitors, and we will use 2010 as an the state of business for our dealer partopportunity to further enhance our ners, and will continue to take proactive and impactful measures that will help Kyocera achieve the communication activities and strengthen our power of highest level of dealer satisfaction among all other docu- dialog to win back BTA partners and achieve the highest level of dealer satisfaction in the industry. Kyocera’s Dealer ment solutions providers. We also know that end-user customers will still face chal- Advisory Council is leading this important initiative, and we lenges when it comes to expenditures for office equipment. have been working collectively to identify and address the Obtaining lease approval will continue to be arduous. The needs of all dealers. This council has yielded strategic rate and tolerance of obtaining lease approvals may even insights into the business operations of all dealerships, thus evolve into a new routine as increased scrutiny becomes the enabling Kyocera to adopt the most valuable strategies for norm. We also know that most end users are listening more our channel partners, such as a strong MPS program and a closely than ever about ways to streamline cost infrastruc- broad range of product solutions, which will fuel success in 2010 to Kyocera and its dealers. tures and achieve cost elimination. Kyocera is a company that is here to stay and our loyal Understanding these dynamics has never been more imperative for dealers who expect to successfully compete BTA partners should be confident in knowing 2010 will be a in the evolution of new business model trends. With that, we year where we will relentlessly commit the resources and also expect 2010 to be a significant year for the adoption of support needed to facilitate growth for our collective, mutual success in the North American market. managed print services (MPS) within the BTA Channel. In preparation for this, Kyocera has marshaled substanLexmark International Inc. tial resources and concentration in this area. MPS is an Phil Boatman, Manager, evolutionary business issue that will transform our sector, BSD Program Development and it represents a very strong complement to the core benThere are three main areas that efits of our product line. Our hallmarks of ultra reliability, will provide dealers with the greatest performance, superior image quality and low total cost of market and product opportunities: ownership will have a direct impact on the bottom line of A4 MFPs replacing aging single-functhose dealerships that succeed in delivering MPS solutions tion printers; device-based solutions; to end users. and managed print services (MPS). As we look ahead, Kyocera will be executing against its Dealerships have the opportunity to target existing and strategic plans to substantially increase its brand presence in the North American market. We see 2010 as a time for new customers with this solutions-led strategy combined investment and growth, and we’ll seek expanded channel with an A4 MFP platform. They can expand their existing partnerships along with the expansion of direct sales opera- customer bases with A4 MFPs and go after new customers tions in geographical areas that will complement our key with the A4 MFP strategy. Since most customers have four or more printers for every MFP, these present easy targets dealers’ locations. There is substantial change on the horizon for Kyocera for dealerships to expand their reach. Additionally, dealerships can use solutions and the benefits and our industry and, indeed, the global business community at large. Despite this, there are also a few trends that I of a small A4 footprint to attract small and medium-sized businesses impacted by the economy. With downsizing believe will remain constant with years prior. Perhaps most importantly, 2010 will mark yet another becoming commonplace in 2009, businesses are challenged 16 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9


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more than ever to get more work done Muratec With downsizing with fewer knowledge workers in smaller America Inc. spaces. Dealerships can leverage soluJim D’Emidio, becoming commonplace tions in 2010 to answer mission-critical President in 2009, businesses are workflow issues at the point of the user. “Stay focused challenged more than MPS provides a new opportunity with on A3. Add profit ever to get more work the inclusion of A4 MFPs. Providing cuswith A4.” That’s done with fewer tomers with the proactive management the Muratec mesknowledge workers ... of supplies, service and appropriate sage to independtechnology upgrades affords dealerships ent dealers for 2010. Based on the positive strengthened relationships with their customers. economic indicators we’ve seen in the past quarter, I believe a Even with these opportunities, dealerships will be faced with renewed investment in document technologies will take place the trailing effects of an economy on the rebound. Lexmark is in 2010. As companies unfreeze spending to upgrade techpositioned to help the agile dealership take advantage of an nology, dealerships that have embraced managed print servoutput industry in need of attention. Customers will continue ices (MPS), A4 MFPs and decentralized scanning will be to need new technology in 2010. Dealerships that seek a bal- well-positioned to capture new opportunities. But we’re not recommending a complete shift of focus away anced approach with their technology portfolios will best address end-user requirements. A balanced approach will be from A3 copier-based products. We advocate keeping a strong one that considers traditional copiers, A4 MFPs and single- focus on the high-profit opportunities that A3 products provide. However, it’s critical that your dealership captures the function printers. In 2010, we will see an even greater focus on environmental service, supply and optimization opportunities that a fleet of concerns, business downsizing and aging fleets of devices. standalone printers and workgroup MFPs represent. In an effort to achieve profitability in 2009, many compaThese end-user demands and needs will require dealerships to differentiate themselves from their competition with a nies took dramatic actions to reduce expenses including better story than in 2009. Customers of 2010 will likely “want slashing headcount, reducing capital expenditures and it all” — the best technology with the right functions, the right delaying technology investments. While the bottom-line performance and the right solutions at the right value. goal was achieved, those who managed to retain employThose dealerships that partner with Lexmark will be well ment faced increased workloads while utilizing an aging equipped to address the new technology requirements that technology infrastructure to get the job done. As technology answer the environmental concerns, business downsizing and spending increases, these companies will become prime aging fleets of devices. The newest offerings put individualized targets for MPS programs and decentralized A4 MFPs that power at the fingertips of end users with the potential for sig- provide convenient document on-ramping and delivery to nificant cost savings over the output strategies of yesterday. the overburdened workgroup user. Dealerships must position themselves as a source of Thanks to the efforts of printer manufacturers, remanutrusted advisors who are well-versed on a balanced tech- factured toner suppliers and enterprise service organizanology portfolio and are in tune with meaningful business tions such as IBM and HP Enterprise Services ( formally requirements for their end users. Having a solid under- EDS), companies are more educated regarding the cost and standing of new customer purchasing tendencies will allow burden of document imaging and are turning to MPS dealerships to separate themselves from “box pushers.” providers for solutions. Some of the common issues being Technology purchasers of 2010 will be better educated, faced within companies include: more savvy and will be looking for a new definition of value.  “We had to reduce our IT staff and it’s critical that they Dealerships must also invest in their sales forces through spend time working on our business management software training and education. In 2010, the well-trained sales rep or customer service programs, not fixing printers. How will move beyond “box pushing” and into customer-focused much is it costing us if 30 to 40 percent of their time is spent objectives that will help dealerships grow revenue and gain troubleshooting printing issues?”  “If each department is responsible for obtaining its own market share. Profitable revenue growth and customer-base expansion is on the 2010 horizon for the independent dealer. printers, supplies and service, can we accurately track our 18 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9


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document imaging costs as a company? model is now a necessity to drive sus... Once the dealership And when the department makes a purtainable growth. In addition, IT spendchase, is it choosing the most cost-effecing continues to be impacted by poor has successfully overtaken tive supplier, or the most convenient?” access to credit, frozen budgets, exthe company’s print Dealerships that have invested in MPS tended hardware lifecycles, delayed environment, it will replacement activity and little new training, formed dedicated MPS teams become the consultant investment. The need to create new IT and partnered with vendors that can for all future printer and sales opportunities that can provide preprovide the various components of an copier/MFP placements. dictable, recurring revenue streams is MPS program will be well positioned to critical for the dealer. assist companies in addressing these A managed print services (MPS) program will be one of issues. In addition, once the dealership has successfully overtaken the company’s print environment, it will become the the best assets to dealers in the coming year and beyond. consultant for all future printer and copier/MFP placements. According to industry market research firm Gartner, by Basically, once you control the workgroup A4 printers and 2012, 70 percent of businesses with 250-plus employees will acquire print as part of an MPS contract (“Gartner Predicts MFPs, you will control the A3 copier placements as well. And what about those overburdened workgroup users 2009: Print Technologies Enable Cost Savings and Revenue whose workload increased in 2009? Muratec dealers can help Growth”) with the economic turmoil being the key acceleralleviate their burden with an innovative fleet of A4 MFP ator. By offering a complete outsourced print solution, solutions. Muratec differentiates its products by delivering dealers are eliminating the hardware burden on the cusinnovative, intuitive scanning to the workgroup. With tomer, while creating a repeatable and consistent revenue minimal key-op training, a key selling point in today’s work- stream with each signed contract. In addition, the right MPS program will enable dealerships place, workgroup users can initiate document workflows by scanning documents from their desktop MFP directly to an to foster deeper relationships with their existing customers, e-mail address, PC folder, collaboration site or document in turn reaping the benefits that come with a trusted partmanagement system, all at the touch of a button. And when nership: sustainable business and enduring revenue. Without a comprehensive MPS program, dealerships will you combine Muratec’s reliability, warranty and cost-perprint, you have an A4 MFP series that can be profitably inte- not be able to respond to or meet the changing IT purchase habits of their customers. Many competitors are focusing on grated into an MPS program. Again, don’t shift all of your focus away from the A3 copier short-term tactics to make it through the current economic side of the business. Stay focused on A3, add profit with A4. downturn. But with every recession there has been a shift in the industry that cannot be addressed with a quick fix. It will be necessary for dealers to reevaluate their businesses OKI Data Americas Inc. and rethink their strategies. Jackie Paralis, Senior Marketing To help dealerships make this transition, OKI Printing Manager, Channel Development Today’s technology market con- Solutions recently launched Total Managed Print starting tinues to face a challenging and with the rollout of PageStart, a turnkey program that allows uncertain economic climate, with solution providers and dealerships to begin fulfilling their consumers and corporations fo- customers’ outsourced print and imaging needs immedicused on reducing costs and in- ately. The Total Managed Print solution includes a simple, creasin g ef fe ctiven e ss throu g h yet comprehensive assessment tool that will capture an planned changes in their strategies and goals. Specifically, organization’s true printing costs and identify strategies for organizational CIOs are being tasked with delivering the potential savings, continuous improvement and long-term improvements needed to raise organizational effectiveness productivity improvement. With PageStart, OKI Printing Solutions is committed to while managing resources and performance. As a result, dealers and vendors are being forced to helping dealerships become MPS-ready quickly, so they can rethink the way they do business as the need to transition begin to expand existing customer relationships, identify new from a “hardware-centric” to a “service-centric” business and incremental business opportunities, and establish a 20 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9


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GE Capital Office Imaging

Total Image ™ Management It’s how GE enables you to deliver complete cost-per-copy solutions on a silver platter Total Image Management™ from GE lets you take full advantage of your cost-per-copy opportunities. It helps evaluate customers’ requirements and makes it possible for you to respond with a custom solution. Our web-based tools — the fastest and most accurate in the industry — automate the time-consuming tasks of meter reads, billing and collecting, allowing you to focus on growing your customer base and your bottom line. You can even utilize online CPC sales lead reports to identify new opportunities. To find out how GE can polish your image, log on to ge.leasingsource.com/CPC or e-mail us at OfficeImaging@ge.com.

Cost-Per-Copy Products ~C^cP[8\PVT<P]PVT\T]c‚ ~64;TPbTfXcW<PX]cT]P]RT ~?aX]c<P]PVT\T]c ~BTaeXRT1X[[X]V4g_aTbb

Cost-Per-Copy Services ~CaP]bXcX^]P[1X[[X]V ~0]]dP[APcT8]RaTPbTb ~BTaeXRT>][h0bbTc1X[[X]V

Online Portfolio Management ~<TcTaaTPS\P]PVT\T]cP]SR^aaTRcX^]b ~<TcTaWXbc^ahP]S_^acU^[X^aT_^acX]V ~BTaeXRT_Ph\T]caT_^acX]V ~;TPSVT]TaPcX^]c^^[b

© 2009 GE Capital. 0[[aXVWcbaTbTaeTS 0[[caP]bPRcX^]bbdQYTRcc^RaTSXcP__a^eP[


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Now the difficult, down-cycle year recurring revenue stream business model. In 2010, OKI Printing that was 2009 is behind us and 2010, a To position a dealership for success, year of projected recovery and regeneradealers will need to build long-term Solutions will remain tion, lies ahead. What opportunities partnerships with customers. Entering a committed partner, does this climactic change offer distribinto an MPS agreement can be daunting assisting dealers in utors and dealers and how does Panafor the end user. By engaging them in a the next phase of their sonic intend to help them maximize program they feel comfortable with and MPS business and their profit from those opportunities? tailoring the MPS program to fit their educating new players ... Let’s begin with a reality check. The needs, the dealership is cultivating a economy today is in recovery; it is not — true business partnership. Working with all end-user customers, meaning that no opportunity is con- by any stretch of the imagination — recovered. Equally true, sidered too large or small, demonstrates the dealership’s many companies that “downsized” in the past several years willingness to work with customer budgets, needs and are not now ready — and may never be — to pork back up. They have leaned out and learned how to operate at maxexisting technologies. In 2010, OKI Printing Solutions will remain a committed imum efficiency with a reduced workforce using faster, partner, assisting dealers in the next phase of their MPS enhanced-productivity machines; not more machines, necbusiness and educating new players in the MPS market on essarily, but better machines. This puts companies still dependent on past-generation, the implementation and involvement level best suited for them. You can expect more when you partner with OKI limited-capability hardware at a competitive disadvantage Printing Solutions, the vendor that is committed to making in both productivity and ROI. That gives Panasonic, the largest core manufacturer of office machines in the world, you feel like a partner again. and its channel partners tremendous upside potential in the Panasonic System Networks “refresher” end of the market. Company of America What about customers who have already deployed our Nick Miyake, Vice President of Sales state-of-the-art scanners, printers, MFPs, fax machines What’s new? New year, new decade, and Panaboards? What should they expect from Panashiny-still-newish millennium, new sonic and its dealers in 2010? The answer: Simplified onetechnology, new products, the annual source procurement. dawning of a new world — perhaps Our recent re-branding as Panasonic System Networks not as brave as some, definitely not as Company of America involves more than a letterhead and fearful as others — in which we and, business card redesign. It reaffirms our long-standing commore importantly, our channel partners and their customers, mitment to providing fully networked enterprise-in-a-box must confront the never-changing-but-always-dynamic chal- solutions to business America by significantly expanding lenges inherent in our industry. our product line. The eternal imperatives are to increase productivity, maxExpect end users to have more money to spend in 2010 imize return on investment, minimize total cost of owner- than they did in 2009. Expect them to be more particular ship, reduce operating expenses, expand our customer base, about how they spend it than ever before. Expect them to accomplish more with fewer people needing less training have reduced tolerance for sales calls from one-trick-pony and, most of all, improve bottom-line performance. vendors. Expect them to demand integrated hardware/ Last year in this space I said that the major challenge software solutions from companies with long histories of facing all of us in recessionary times was convincing “new technological innovation and manufacturing excellence. customers that our products will produce sufficient ROI, Expect Panasonic to meet the demands of our dealers efficiency and productivity benefits to justify making a and their end users with a full range of high-performance, capital expenditure.” I also predicted that “we will be chal- ultra-reliable equipment for front offices and back offices, lenged to persuade existing end users who require product healthcare providers and record centers, schoolhouses and refreshes that delaying their reorder until 2010 or beyond is warehouses, transportation terminals and insurance comnot the most cost-effective solution.” panies, insurance agents and public service agencies. 22 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9


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the immediate impact will be on the independent dealer and IT reseller, from fewer product offerings to thinner inventories and reduced profit margins. These acquisitions reflect the growing trend of leading hardware companies evolving into solution providers; helping to shape and manage the entire information environment, which includes managing the printed space. This includes device consolidation, document and imaging management as well as managed print services (MPS). The other outcome from this consolidation is a shrinking manufacturer base that doesn’t go direct. This trend will push dealerships to compete in the same market with their manufacturer “partners,” forcing them to work on smaller margins and increasingly on business they had already worked hard to create. Under this dynamic, it is important to have a partner that is willing to invest in the dealer community in order to survive during these challenging economic conditions. The second factor, IT migration, is largely being driven by

We are already seeing signs from an increase in factory orders, an uptick in business confidence and a decrease in product inventories.

Samsung Electronics America Ken Colby, Director of Printer Product Marketing Despite the market challenges of 2009, 2010 is showing signs of being a good year for the office technology industry. We are already seeing signs from an increase in factory orders, an uptick in business confidence and a decrease in product inventories. In addition to this dynamic, there are three other factors that will lead to this growth — industry consolidation, IT migration and environmental responsibility. In 2009, there were no less than three high profile mergers and acquisitions that will invariably redefine the copier and printer industry. Although it’s too early to know for certain what this new market may look like, it is clear

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essary just a few years ago. They must IT managers upgrading their aging user Salespeople must be become versed in the total solution enequipment in order to take advantage of vironment, where software is becoming the capabilities of Microsoft’s Windows willing to adapt to this an increasingly important component 7 and the upcoming MS Office 2010. changing environment of the sale. They should take the time to Although its predecessor was largely and learn new participate in training and seminars panned, this version is proving to be technologies and skills being offered by their company partwhat Vista was supposed to be. Hownot necessary just a ners and incorporate account manageever, in order to take full advantage of few years ago. ment tools such as Salesforce.com, Act the new features, including enhanced or other account management software security, IT managers will need to not only upgrade laptops and desktops, but connected devices, to ensure regular account contact, as well as time and terrisuch as printers and workgroup MFPs. The unfortunate side tory management. Additionally, dealers and their salespeople must carefully scenario: IT budgets are going to remain tight in 2010, manage their customer’s mindshare at each of the touch leaving limited room for capital expenditures. The third and final factor, environmental responsibility, is points to ensure consistent communication, whether it’s in becoming increasingly more important to the IT manager at e-mail, in-person visits or telephone calls. This ensures the both big and small companies, as are adopting eco-policies dealership is top of mind, keeping abreast of the changing to reflect growing consumer sentiment, but also in an needs of end users, whether it includes a printer, monitor, attempt to stay a step ahead of possible government regula- LFD or laptop. Without this link, it is possible the dealership’s tion. A recent example of this is when President Obama customers can be courted by an IT reseller or even the manusigned Executive Order 13514, which pushes federal agen- facturer directly to provide this solution. No matter the situation we may be facing in 2010, it is cies to reduce energy consumption, increase reliance on renewable energy sources, decrease their printing volume important to work with a partner that is committed to the and increase their use of uncoated paper with at least 30 growth of the channel and your business — a partner that is able to adapt to the changing needs of the marketplace percent post-consumer fiber. These trends offer an immediate opportunity for dealers and is able to offer a diverse product portfolio. It is also to work with their existing and potential customer bases to important to know that you have the commitment, reintegrate smaller, energy efficient and lower-cost A4 MFP sources and support of your manufacturing partner. The products, from the workgroup color single-function lasers to challenge is to look beyond the “box” and be open to ementerprise-class MFPs. And with speeds and features com- bracing solutions. Otherwise, the risk is to lose these parable to that of their larger counterparts, IT managers can accounts to the IT reseller. strategically place these units while still managing to reduce Sharp Imaging and their total cost of printing. Information Company Dealerships must also have a comprehensive MPS strategy of America that is designed to manage costs but also includes the flexiEd McLaughlin, President bility of A4 MFP machines in order to address specific, more Throughout 2009 and looking tailored end-user solutions with a customized user interface ahead to 2010, one of the biggest as well as the ability to integrate “intelligent” software prochallenges — aside from the credit viding better control of their print environment, from secucrunch — has been th e massive rity to remote management. Dealers may also want to look at reduction in the U.S. workforce. including a product offering beyond printers, as the IT reseller channel begins to incorporate more printer solu- There has been a very sharp decline in the amount of docutions, including managing the entire print process as well as ments being produced and, as a result, a decline in the managing the account’s fleets. These items will be key to post-sale revenue for many of our dealers. There simply isn’t the volume there once was; so dealers have had to expanding growth in 2010. Salespeople must be willing to adapt to this changing work much more diligently to understand their customers’ environment and learn new technologies and skills not nec- needs and provide a solution set with a tangible value 24 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9


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proposition. Unfortunately, this is a GUIs and functions that take advantage ... Dealers have more trend that will be here for a w hile. of a large display and pull-out keyboard; Dealers will have to adjust their busiauthorization programs that give end opportunities than ever ness models so that they recognize this users better control over their pages; to capture business on change in post-sale revenue. and fully integrated applications that machines they might To that end, with slimming budgets leverage not only the print capabilities not have considered and cost-conscious IT managers, dealof our products, but also the copy, epreviously or might not ers have more opportunities than ever mail, scan and fax capabilities. have sold originally. to capture business on machines they In 2010 we plan to build on that by might not have considered previously or providing a new version of Sharp OSA might not have sold originally. This past year Iâ&#x20AC;&#x2122;ve heard technology, welcoming more developers and dealers into our quite a few companies talk about managed print services Authorized Integrated Partner program, and making even (MPS) as the silver bullet to accomplish this. Thereâ&#x20AC;&#x2122;s merit to more certified applications available to all of our dealers. This that, but the fact remains that what it really takes is getting means that dealers will have even more options available to closer to your customer to understand what it is exactly that them when working with their customers. they need to do business more effectively, and being able to Of course, offering customers the right hardware is just as offer the products and services needed to accomplish this. important as the right application. To that extent, we feel Sharp dealers did a good job of that this year, utilizing the that A4 has been, and will continue to be, the greatest Sharp OSA development platform to create customized market and product opportunity for dealerships. Numbers

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have shown that A4 has experienced appear bleak. In this tough environment, tremendous growth in the past few years In this tough environment, the most as companies look for ways to reduce important opportunity is understanding the most important costs and supplement other high-proyour customers and solving their busiopportunity is duction units they already own. ness needs with tangible cost savings understanding your and benefits. In 2008, we promised to provide our customers and solving Five years ago, Toshiba was the first dealers with the most robust line of A4 their business needs with to develop Encompass™ MPS (managed products available, and I think we have tangible cost savings ... print services), helping dealers not only successfully delivered on that promise. deliver outstanding products, but also a Although we have more models planned for our Frontier Series, we now offer one of the broadest solution to meet customers’ needs for process improvement ranges of color and monochrome A4 products available. and reduced expenses. As the economy falters and busiFrontier provides our dealers with a product line that fits nesses struggle, demand for MPS is greater than ever and the requirements of many office settings and a distinct com- Toshiba is ideally positioned to deliver a proven-successful petitive advantage over desktop printer products. Our expe- and fully-integrated solution. Launched this summer, Encompass MPS 3.0 allows rience with A3 and higher output devices enables us to provide features and functionality that simply cannot be dealers to purchase services from TABS at three levels, from found in a typical multifunction printer, and we think that is basic to advanced, as CPC. Other enhancements include: the availability of all TABS’ products (including key thirda great market opportunity for our dealers in 2010. One of those features that we debuted at our 2009 party products), services and capabilities to the dealer; National Dealer Meeting in Washington, D.C., was our improved e-commerce capabilities; automated supply ScanPro technology built into new Frontier models. This reordering; a national dispatch for all devices; integrated new technology is designed to meet the needs of a scan- meter-read collection; new Encompass Impressions toner; centric office and provides an enhanced dual-head scanner and printer parts available through the Toshiba iStore. and document feeder. It will also enable a number of dif- Another Toshiba MPS dealer benefit is the ability to create ferent new features such as the ability to scan two-sided ID opportunities for new equipment sales through right-sizing. While businesses grapple with the economy, new regulacards in a single pass. We have a number of other new products planned for tions have created demand for improved document secu2010, but we are focused on ensuring that our dealers are rity. Many businesses are uncertain about how to satisfy fully supported with innovative products and the under- these requirements. It’s reported that U.S. companies lose standing of how Sharp software and hardware can be fully $600 billion to fraud each year, and MFPs and printers are aligned to realize its maximum potential. a critical point of vulnerability due to the retention of sensitive data. Toshiba America Business Today’s dealer must be able to provide customized secuSolutions Inc. rity solutions. Toshiba’s MPS dealers are armed with an inteMark Mathews, President & Chief grated security program known as SecureMFP. The EnOperations Officer compass Security Vulnerability Assessment is the program’s One year ago, the biggest chal- first essential step in identifying risk and outlining a strategy lenge facing dealers was the uncer- to cost-effectively fortify document management. Another customer concern that has increased despite the tainty of the economy. Market volatility created anxiety and dealers economy is the environment. Not an RFP passes my desk that treaded with caution. What we expe- doesn’t include a sustainability question. “Green” services can rienced this year was the continued stagnation of the create new revenue streams for dealerships by helping them economy, and that is the challenge that lies ahead in 2010 as assist in executing a customer’s environmental initiatives. In addition to our green product features and recycling well. Unemployment rates remain high with a direct negative impact on document copy volumes. Add to that the programs, we recently introduced the Encompass Green slow recovery of the leasing market and the picture can Report, which accurately measures energy consumption, 26 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9


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knowledge to ensure it is implemented carbon emissions, paper usage and With a strategic business effectively, handle contracts and set solid waste. Unlike online widgets that profitable margins. only estimate a company’s eco-footplan in place and a good Training your sales staff members print, Encompass customers receive a understanding of how to will be imperative to ensure they explain customized analysis that pinpoints execute beyond the ... the benefits of MPS and understand how opportunities for reducing environbox approach, dealers it’s implemented. As part of Xerox’s mental impacts while simultaneously and resellers will be ready PagePack 3.0 program, a comprehensive reducing costs. for an exciting 2010. accreditation and mentoring course In the end, there is one simple key to covering areas key to an MPS deploysuccess: the customer relationship. Do you truly understand your customers’ issues and concerns? ment, such as assessment, design, implementation and Robert Stephens, founder of the Geek Squad, said it best this management, is available. From a product perspective, we expect the demand for summer when he simply stated to our executives and dealers, “A desire for relationships never goes away.” You, the desktop color and black-and-white printers and MFPs to dealer, are our customer. We are committed to your success continue in 2010. Desktop products offer more advanced feaand look forward to strengthening relationships in the year tures than ever, yet prices continue to fall. While the revenue from these products can be lower than their larger hallway ahead and helping you do the same with your customers. MFP counterparts, dealerships can be creative in reducing Xerox Corp. costs in other areas and leveraging post-sale opportunities to Edmund Guerrero, Vice President, Advanced MFP Channel maintain profitability and grow their business. In addition, Partner Programs dealerships can leverage current trends — security threats We are all aware that the industry is rapidly changing and and sustainability benefits — to market the products and with this, the demands of customers have evolved. The services they have available. dealer community’s culture for many years was based on Going into 2010, we expect dealers and resellers who not price and transactional activity, but customers are starting only embrace the solution provider approach and service to request services and solutions far beyond the purchase of mentality, but fully ingrain themselves in their customers’ a printer or MFP. businesses to be the most successful. To supply the best posThis shift in mindset provides a remarkable opportunity sible experience and service for their customers, dealers need for dealerships and solution providers to grow their busi- to ask the important questions during pre-sale conversations: nesses in 2010. Dealers and resellers will need to broaden What are your goals? What applications are you using? What their offerings by thinking outside of the “box” and lever- are your expectations? What efficiencies would you like to aging the diverse managed print services (MPS) offerings accomplish? By setting expectations and agreed-upon dates available from vendors. According to Gartner, implementing for completion before the sale and obtaining knowledge of a comprehensive MPS strategy can save companies 30 the customers’ true requirements, dealerships can position percent annually on printing services. However, most busi- themselves as business partners and create relationships that nesses do not have the document management knowledge will help them outpace the competition. internally to handle print solutions without outside help — Xerox will continue to provide extensive training programs creating a perfect opportunity for dealers and resellers. to educate dealers about our products, solutions and servXerox recently rolled out PagePack 3.0, a suite of three ices, how to capitalize on click charges and market trends like MPS programs that help partners manage their customers’ cost savings and efficiency, and how to become more astute printing infrastructure and reduce costs. It’s the first about end-user requirements. In addition, we have impleprogram that offers the ability to manage an entire fleet of mented flexible financing and payment options to help soluprinters and MFPs, regardless of brand. tion providers and their customers handle tighter budgets. Dealerships that are smart about MPS will be profitable. 2009 has been a roller coaster ride for most. With a It’s not enough to just have these offerings in the portfolio. strategic business plan in place and a good understanding of Dealerships should consider bringing an MPS expert on how to execute beyond the transactional or box approach, board who has the leadership skills and operational dealers and resellers will be ready for an exciting 2010.  w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9 | 27


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Fall Colors Conference BTA Southeast district hosts event Oct. 16-17 by: Brent Hoskins, Office Technology Magazine

ontinuing with its long tradition of providing office technology dealers with leading-edge education and valuable networking opportunities, the Southeast district of the Business Technology Association hosted its Fall Colors Conference Oct. 16-17. The event was held at the Waynesville Inn Golf Resort & Spa, Waynesville, N.C. “As always, our Fall Colors Conference proved to be a very relaxing event providing attendees with insight and guidance to help them in their dealerships,” said BTA Southeast President Mike Upchurch, president of Business Machines Inc., Raleigh, N.C. “We are pleased that so many joined us to make this a very successful conference.” The schedule included three education sessions, various networking opportunities and time to visit with the conference’s exhibiting sponsors: Color Imaging Inc., Falcon Technology Solutions, GreatAmerica Leasing Corp., Kyocera Mita America Inc. and West Point Products. Sentry Insurance was also a sponsor. New this year, a round-table open discussion, led by Upchurch and BTA President Bill James, who serves as BTA Southeast secretary/treasurer, allowed attendees to learn from Upchurch, James and one another about business strategies in three keys areas: disaster recovery, accounts receivable and leasing. The conference’s education sessions provided a range of topics. The education lineup: “Value-Driven Negotiations,” with Jeff Westerberg, Westerberg & Associates Consulting; “The Most Important Sale You Can Ever Make: Your Next Employee,” with Sally Brause, GreatAmerica Leasing Corp.; and “Branding Your Dealership,” with Jim Kahrs, Prosperity Plus Management Consulting Inc. In addition, BTA’s FIX: Cost Management for Service workshop was held as a front runner to the conference. A sampling of comments from attendees captures the value of the conference:  “The BTA Southeast conference was more than I

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Clockwise from top: The Fall Colors Conference offered three education sessions; presenter Jeff Westerberg of Westerberg & Associates Consulting; the schedule included opportunities to visit with the various exhibiting sponsors.

BTA Southeast Sponsors


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exp e ct ed . I was “The ... conference was ver y impressed with the industry more than I expected. I know ledge poswas very impressed with sessed by the indithe industry knowledge v i dual s l ea din g possessed by the and attending the individuals leading and event. I learned attending the event.” that other business owners have experienced what I am facing and they were able to provide proven solutions that helped their companies prosper. Since the conference we have implemented new policies for our AR and service and sales departments that have already shown improvements. I highly recommend this event for companies in our industry — except my competitors!” — Lincoln Nunnally, business consultant, Consolidated Office Solutions Inc., Conyers, Ga.  “The BTA Southeast Fall Colors Conference combined the best of both professional information and personal serenity. I came away from this conference not only motivated by ideas that could immediately impact our business, but with a sense of peace that comes from being surrounded by nature at its best. The session on recruiting and maintaining good employees was helpful as were the ideas learned from the group meeting on how to cut invoicing costs by implementing ‘paperless’ invoicing via e-mail. Those are only a couple of the great ideas learned while attending, but there are countless others. I’m glad I made the trip and look forward to attending the Waynesville event next year.” — Debra Dennis, general operations manager, CopyPro Inc., Greenville, N.C.  “As usual, the Waynesville conference was a big hit for myself and the other members of our organization. This year we had myself, representing sales, our head of IT and our hiring coordinator all in attendance. We always leave with something that will be implemented ... And, of course, the venue is breathtaking. Our group looks forward to this event every year.” — Lonnie W. Gordon, director of system sales, Hendrix Business Systems Inc., Matthews, N.C. The next BTA Southeast conference will be held June 16-17, 2010, in Orlando, Fla. Watch www.btasoutheast.org and www.bta.org for details.  Brent Hoskins, executive director of the Business Technology Association, is editor of Office Technology magazine. He can be reached at brent@bta.org.

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Clockwise from top: Ronelle Ingram leads the front-runner education workshop, FIX: Cost Management for Service; presenter Sally Brause of GreatAmerica Leasing Corp.; attendees during one of the conference’s education sessions; Gino Chavis, of exhibiting sponsor Kyocera Mita America Inc., addresses attendees; the round-table discussion provided the opportunity for attendees to learn from one another.

Left: The Waynesville Inn Golf Resort & Spa’s historic main lodge. Right: BTA Southeast President Mike Upchurch. w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9 | 29


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‘Your A4 Provider’ Lexmark hosts its first national dealer meeting by: Brent Hoskins, Office Technology Magazine

ith company officials emphasizing an interest in listening to dealers and seeking their feedback, coupled with a focus on its A4 products and software-based solutions/applications, Lexmark International recently hosted its first national Business Solutions Dealer (BSD) meeting. The two-day meeting, held Oct. 13-15 at the company’s international headquarters in Lexington, Ky., drew 75 attendees from 55 different companies in 27 states. The agenda included various presentations by Lexmark senior management and a tour of the company’s Printing & Solutions Showcase — a permanent display of hardware and software stations demonstrating its full range of vertical applications. It also provided the opportunity for dealers to ask questions and candidly offer their feedback in panel sessions hosted by Lexmark personnel representing three key areas — development, sales/programs and solutions/MPS. “We have two separate goals for this meeting,” said Mike Johnson, vice president of North American Business Channels & SMB, as the meeting got underway. “We are here to listen and get your feedback. That’s a very important goal. The second goal is this: We want you to leave here knowing that Lexmark is your A4 provider.” Johnson told attendees that there is “no more strategic area” of distribution for Lexmark than the dealer channel. “This is a fundamental shift for us at Lexmark,” he said, referencing the company’s new focus on building a dealer channel. “We see this channel moving right to our strengths — A4 and solutions. We see a move right to where we are and we want to capitalize on this. We are fully committed to this channel. This is where we’re going to win and we want to win with you.” Following Johnson’s opening remarks, Kevin Goffinet, vice president and general manager of Global SMB Sales and Marketing, provided attendees with an overview of the $4.5 billion company and its approach to the market. He began by explaining Lexmark’s core purpose. “We are a

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Clockwise from top: Attendees of Lexmark’s first national dealer meeting; one of several company executives address attendees; attendees share feedback during a panel session; and Kevin Goffinet, vice president & general manager, Global SMB Sales and Marketing.


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are distributed. They are demanding focused provider of output solutions,” he “Customers are easy access, getting output as close to said. “We pride ourselves in working in the end user as possible.” the output space. That is what we do. If we demanding devices The market dynamic points to the are not successful at that, then we are not that are distributed. rising demand for A4 products, ideally successful as a company.” They are demanding suited for a distributed environment, Goffinet referenced the heritage of easy access, getting said Goffinet. He added that today, Lexmark, once the manufacturer of IBM output as close to the there exists an imbalance between A3 Corp. typewriters and keyboards, later end user as possible.” devices and the usage of tabloidtransitioning to laser and inkjet printers sized paper. In his presentation , and, ultimately, to MFPs as well. For many years, he said, Lexmark sold its products through traditional Goffinet illustrated the imbalance by comparing the fact IT channels, though the strategy proved not to be a good that only 2.35 percent of paper consumed is tabloid size (in match for the company’s core value proposition. “That 2006, based on a NewField IT report) and 24 percent of proposition being solutions differentiation, understanding placements are A3 devices (in 2008, based on an IDC the customer and maintaining that customer for life,” he report). “That percentage is swinging more to A4,” he said. explained. “IT resellers basically sell the product and then “We are seeing more and more users [opting for] A4 devices move on to the next product. That’s why we find the dealer producing A4 output.” Phil Boatman, manager of BSD Program Development at channel the most strategic channel, because of the alignLexmark, continued with the message in a presentation ment it has with our core value proposition.” Another key aspect of the company’s heritage is its focus later in the day. “That imbalance means there is an opportuon placing products in mission-critical areas, said Goffinet, nity to capture pages [with A4 placements],” he said. “And, citing usage of Lexmark products in retail businesses, phar- when you capture more pages, you capture more revenue.” Boatman emphasized that no one at Lexmark is saying macies and banks as prime examples. “If you go to top pharmacies, they are fulfilling their prescriptions based on the there is not a need for A3 devices in the workplace. In fact, he output of Lexmark printers, and at leading retailers they are noted that among its dealer-unique models, Lexmark itself changing their pricing and signage based on output that is offers five A3 devices alongside nine A4 devices. “We are coming from Lexmark,” he explained. “We are focused on saying there is a need for balance,” he explained. “There is a need to have other devices closer to the end users with high high-usage areas.” Looking to the market today, Goffinet harkened back to performing functionality that gives them the ability to get the predictions in the 1970s and 1980s of an eventual paperless job done faster, while saving them time, money and space.” That balance, said Boatman, is best realized through a office. “The reason we are here today is because there is no paperless office in 2009, nor do we see that at any time in the distributed approach, as opposed to a decentralized future,” he said. “But, there are key dynamics going on with approach, where “devices of all sizes and shapes are spread devices and with paper that we need to understand to be in throughout the organization,” or a centralized approach, where there are “just one or two devices in the whole office.” a good position for the future.” Among the dynamics, said Goffinet, is the transition of A distributed approach, he said, “means placing the right paper output from commercial presses and print centers to balance of A3 and A4 devices” giving people “access to the departmental MFPs and distributed network devices in the technology they need to get things done during the day.” Boatman told attendees they are perfectly positioned to general office. “Information is moving from paper-based to digital-based,” he said. “It is very obvious that this is driving take advantage of the A4 opportunity as they pursue the disa key dynamic of taking centralized prints and pushing tributed approach. “Everybody in the industry is talking about A4, but who’s winning with A4?” he asked. “Our dealers are them into a distributed environment.” A related dynamic, said Goffinet, is revealed by the esti- winning, because of our full product lineup, our solutions, our mate that more than 80 percent of print jobs are three pages training and the feedback you are giving us.”  or less. “Why is this relevant to us?” he asked. “Because if 80 Brent Hoskins, executive director of the Business Technology percent of the print jobs are three pages or less, that’s a lot of Association, is editor of Office Technology magazine. trips to the printer. Customers are demanding devices that He can be reached at brent@bta.org. w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9 | 31


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PRINCIPAL ISSUES

The ‘Green’ Way Encourage clients to adopt conservation measures by: Randy Allen, ASI Business Solutions

hile the economic landscape is beginning to revitalize, most industries, including the office equipment industry, remain more cautious than optimistic about prospects for the near future. When looking to maintain market share during tough fiscal times, it makes good sense to play the “green” conservation card with clients, because when it comes to operating a business, every dollar counts. And the more you can help your clients save, the more business they will likely send your way. Having the “green” discussion may encompass a number of different components. It typically starts by encouraging business clients to adopt conservation measures now that will save them on the cost of their equipment. While it is often tempting to push product first, leading with conservation is an attractive strategy for several reasons. First, it is the right thing to do, environmentally. Second, it positions us as trusted advisors rather than equipment salespeople. When we educate clients, we build trust. Part of the education process is keeping present and prospective clients informed about the technological advances our industry has made in practicing conservation. Our industry has evolved from analog to digital, from price-perunit to price-per-page thinking, and from one that really did not practice conservation to one that recognizes the importance of doing so now. In part, those who design and manufacture our equipment have already taken some of the necessary steps toward conservation with the introduction of more costefficient equipment. Our role is to build on these advances by educating clients on how they can conserve even further. A practical way to start that educational process is with evaluations of our clients’ operational costs, coupled with suggestions for savings and areas where conservation could help. Many of our client business owners might be surprised to learn that paper accounts for 70 percent of what is classified as “office waste.” The simple steps that we take for granted could be real eye-openers for clients who are often too busy in their daily routines and used to doing things a certain way — such as recommending double-sided copying and printing to significantly reduce waste, supplies costs, filing space and mailing costs. Part of the “green education” is helping our clients make

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more informed decisions when selecting cost-efficient equipment. By speaking with them about the cost of operation in addition to the unit price of equipment, a more complete financial snapshot is revealed and more informed decisions can be made. But before they even make that purchase or complete that lease, we would do well to provide them with as much practical conservation advice as possible. Even what we might take for granted — like suggesting workers single-space rather than double-space documents or reduce the typeface and adjust the margins to avoid pages with just a line or two — can translate to savings for them and help build our image as problem-solvers. If we encourage our clients to adopt an “edit before you print” company policy, they will be amazed at the reams of paper that can be saved each year. Also on that practical “green education” list should be a reminder to carefully evaluate quantities of paper needed for


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Part of the sales cycle that does proreports and publications to avoid dismote conservation is encouraging clients carding extras. Also, the periodic updating Encourage clients to to purchase products and equipment that of mailing lists will reduce duplication and recycle as often as will last. By spending a little extra money returned mail. Coupled with the use of possible. That goes for on high-quality products, clients will interoffice e-mail and staff meetings, cenoffice paper, old enjoy lower repair bills and increased trally located bulletin boards or chalkcorrugated containers ... product longevity. boards for communicating will go a long If they recycle it at home, In the end, by urging our clients to way toward conservation. If a hard-copy why not at the office? adopt a few changes that require comparmemo is necessary, recommend circuatively little effort, they can transform lating one or two rather than making multheir office into a healthier, more fiscally and environmentally tiple copies. Yes, this may seem simplistic to us, but these cost-savings responsible workplace. And in leading our clients in this directips can form the basis of a good sales and marketing strategy. tion, we will help them save money. In turn, that will result in Here is more interesting data: Studies have shown that increased loyalty and sales, and make the comindustry is responsible for more than 67 percent of the non- petition â&#x20AC;&#x153;greenâ&#x20AC;? with envy.  hazardous waste generated in this country, yet very few com- Randy Allen is vice president of marketing at ASI Business Solutions, a Dallas provider of office panies have invested in waste reduction technologies or implemented pollution prevention policies. Regardless of the equipment and technology. He can be reached at (972) 888-1500. Visit www.asibiz.com. number of employees a company maintains, pollution prevention is an achievable goal with long-lasting benefits. We can provide leadership for our clients by recommending a conservation/pollution prevention program that begins by looking at the operational costs of high-priced equipment. Durability and ease of repair are key elements when investing in office equipment, as we all know. We should strive to make our clients aware that by insisting their service provider perform periodic preventive maintenance, they may be able to extend the life of costly equipment. That extension theory can be taken a step further by encouraging them to donate old equipment to a school or non-profit near them. This carries with it some tax advantages for the client, not to mention a good public relations opportunity for them. We have found that the introduction of and emphasis on print management and managed print services has gone a long way toward helping educate clients about how better managing their fleets of equipment can positively impact their bottom lines and the environment. A conservation primer can include a number of additional basic measures that, in fairly short time, can result in significant savings to both the client company and the environment. For instance, advise clients to target for reduction those materials that regularly appear in their company waste stream, have a low product-to-package ratio or are known to have a negative impact on the environment. Encourage clients to recycle as often as possible. That goes for office paper, old corrugated containers, plastic, foam, aluminum and glass. If they recycle it at home, why not at the office? w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9 | 33


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PRINCIPAL ISSUES

Samsung’s ‘Vision’ Manufacturer hosts 2009 national dealer conference by: Brent Hoskins, Office Technology Magazine

ith the message, in part, that senior management is seeking to further boost brand stature within the busin ess c ommunity and that th e c ompany remains committed to the dealer channel, Samsung Electronics America Inc. hosted its 2009 national dealer conference Nov. 10-12 in Las Vegas. The conference, themed “Vision,” drew approximately 165 attendees representing 130 Samsung authorized dealerships. In the opening General Session, referring to Samsung’s dealers as “partners,” Douglas Albregts, vice president of sales and marketing for Samsung’s Information Technology Division, reminded dealers of the vast size of Samsung and its level of worldwide success. He reported that the $108 billion company achieved $30 billion in sales in the third quarter of the current fiscal year with $3 billion in profit. “We are really managing this business well and I think that is important from a partner standpoint,” he said. “If we are not managing this business well and we are losing money, then we can’t invest in all of the things that made us very good, we can’t continue to sustain growth and we can’t continue to be cutting edge with innovative products. From a partner standpoint, that is important for you because I think that at the end of the day we can mutually share in that success.” Largely known for its consumer products, Samsung is seeking to increase its brand awareness in the business community, said Albregts, who joined the company in mid-2009. “I think a lot of people think of Samsung as a consumer electronics company,” he said. “How many of you have a Samsung product in your home today?” Albregts said the vision is for Samsung to be known at the same level of stature in the business community as it is in the consumer market. “Our number one goal is quite simple,” he said. “It is to turn Samsung into one of the most beloved business brands in North America.” Getting there, he said, requires ensuring that Samsung becomes “very familiar” as a business brand, which can be achieved by building trust among business users. That trust can be won, in part, through “passionate partners,” said Albregts. “It really boils down to that.” Given the importance of its dealer channel, Albregts said Samsung is striving to further enhance its relationship with

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Samsung dealers attend the opening General Session of the national dealer conference, held Nov. 10-12 in Las Vegas. its dealers. “One of the things that I’ve been talking about to our team is that we have to start looking at you, the partner, from your view to us,” he explained. “I think that one of the things we’ve done in the past is we have looked at it from the Samsung perspective — out to you — thinking we know what is best for you.” Albregts encouraged dealers to share their candid comments with Samsung executives during the conference regarding the areas where the company needs to improve. Some attendees at the Welcome Reception the evening before said they “didn’t want to open up that can of worms,” he said. “We absolutely want you to open up that can of worms because we want you to have a remarkable customer experience. “Why is the dealer channel important to us?” asked Albregts. “It’s really quite simple. There are a lot of things that you can do that we will never be able to do, and I can assure you that as long as I’m here we are never even going to try to do.” The General Session also included presentations by several other Samsung executives. In addition, the conference featured a Technology Showcase and seminars on managed print services, the Samsung color product lineup and four key vertical markets — education, legal, medical and government.  Brent Hoskins, executive director of the Business Technology Association, is editor of Office Technology magazine. He can be reached at brent@bta.org.


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COURTS & CAPITOLS

A Model for Success Plan & choose your strategy for the long term by: Robert C. Goldberg, General Counsel for the Business Technology Association

ast fall, I offered my perspective of the office equipment leasing industry (Office Technolog y, October and November 2008). In that two-part article, I laid out my analysis of what had happened, why it had happened, and what a dealer/manufacturer should do about it. Well, like most Americans, I totally underestimated the devastating changes that were ahead in the U.S. economy. As we sur vey th e damage and search for answers, it is essential that we devise a plan that will return dealers to growth and prosperity. In this issue and the January issue, I offer you my assessment of the past year and a suggested road map for the days ahead. Hopefully this article will help you plan and choose your strategy and relationships for the long term, bringing overall success to your business.

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The Eye of the Storm From September 2008 through March 2009, we witnessed the failure of Lehman Brothers, AIG, Fanny/Freddie, WaMu, Wachovia and Merrill Lynch (to name just a few). We watched billions in market value evaporate before our eyes, some of it in our own retirement plans. As the economy tanked and the credit markets froze, our industry lost 20 percent of its new equipment placements and aftermarket revenues. Many dealers responded with painful rounds of layoffs, deep expense cutting and a heaping dose of pessimism. Office equipment leasing companies were no exception, with more than 60 percent either shutting their doors or significantly reducing their capital commitments to our industry. Some merely raised rates to unattractive highs. Those that remained offered us 20 percent lower approval percentages and reduced their service levels due to the influx of new business. “Wow,” is about all one could possibly say. There is Hope I remember a movie about the day after a nuclear holocaust where the survivors walked around aimlessly looking for signs

of life. While the metaphor is admittedly drastic, I think we can all agree that the past year is certainly the worst economy that we have experienced in our careers. Yet, through it all, I know of countless dealers who say they are “having record years,” “things are great” or “at least we are holding our own .” In the challenged economies of Detroit, Rochester and Northern California, I know dealers who have maintained 80 percent-plus lease approval percentages and have experienced aftermarket revenue growth. Now, I know that it is just not possible for everyone to achieve such success — after all, no matter how hard I try or how many lessons I take, I cannot play golf like Tiger Woods. These businesses (I like to call them “Eagles”) have remained disciplined to a common model that has helped them to achieve stunning success in the face of adversity. Understanding this model and laying out a detailed plan of education and execution is the foundation of our industry’s recovery. The Credit Gap Despite the credit challenges, our industry still leases about 80 percent of the equipment it sells. With the exit or withdrawal of many top-tier leasing companies, more than $1 billion of available credit has vanished. The balance sheets of our customers and prospects are stressed with increasing debt and shrinking revenues, making it difficult for the remaining leasing companies to say “yes.” Also, the list of restricted industries (mortgage, real estate, etc.) is still growing due to escalating delinquency and bad debt. So, with industry-wide approval percentages near 60 percent, how does a dealer in an economically challenged marketplace maintain approval percentages of more than 80 percent? The key lies in customer selection and detailed prequalification. Next month, we will take a closer look at two strategies for success.  Robert C. Goldberg is general counsel for the Business Technology Association. He can be reached at robert.goldberg@sfnr.com. w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9 | 35


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BTA HIGHLIGHTS The following new members joined BTA during the month of October:

Dealer Members AAA Business Systems Inc., Fayetteville, AR DocuTEAM Inc., Alpharetta, GA Eaton Office Supply, Amherst, NY Etelligent MPS LLC, Montclair, NJ Friends Service Co. Inc., Findlay, OH GFI Digital, St. Louis, MO Marco Business Products Inc., St. Cloud, MN Monterey Bay Office Products, Salinas, CA Preferred Copier Systems Inc., Kent, WA Western Office Plus, Norfolk, NE Service Associate Members BERTL Inc., Fairfield, NJ Outlaw Group Inc., Mt. Pleasant, SC Strategic Business Solutions Inc., Cincinnati, OH Vendor Associate Member emFAST Inc., Bridgewater, NJ For full contact information of these new members, visit www.bta.org.

Paychex Payroll Preparation Paychex is a service specializing in costeffective small business payroll preparation, automatic payment of payroll taxes and filing of quarterly and annual tax returns, as well as other services. BTA members receive at least 25 percent off payroll processing charges and selected human resource charges. To take advantage of this opportunity, contact Lynzee Frenzl at (913) 967-9487 or by e-mail at lfrenzl@paychex.com. For more information on BTA member benefits, visit www.bta.org.

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For the benefit of its dealer members, each month, BTA features two of its Vendor or Service Associate members in this space. BTA Service Associate member b2b sales coach is a small team of sales training consultants who specialize in the office imaging industry. In its quest to provide the most practical and cost-effective sales training solution for business owners, b2b sales coach has developed the “Selling Outside the Box” sales books. These easy-to-follow guides assist salespeople to develop the right mindset and to follow work processes that will help them consistently succeed. From introductory material in Part 1, to advanced selling techniques in Part 2, these industry-specific sales guides teach salespeople how to sell more products more profitably and more often. www.sellingoutsidethebox.com BTA Vendor Associate member Digitek Computer Products is a wholesale distributor specializing in printer and copier supplies, magnetic media and accessories. The company offers online ordering, XML interface, same-day shipping, blind drop shipments and personalized sales consultants. Distribution centers in Virginia, California and Illinois provide for quick delivery and help meet every customer’s demands. www.digitek.com A full list of BTA Vendor and Service Associate members can be found online at www.bta.org.


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SERVICE CONNECTIONS

Service Profitability Making ‘knee-jerk’ decisions can be costly by: Jack Duncan, Strategy Development

n today’s economy with equipment sales declining almost everywhere, it is increasingly important that service and supply departments optimize their profit contributions. In far too many situations, I see dealers making business decisions that can best be described as “knee-jerk” reactions. Sometimes these decisions can be catastrophic as well as costly. A perfect example of a “knee-jerk” decision occurs when a dealer makes a snap decision to reduce available parts inventory to minimize cash in parts on the shelf and in car stocks. On the surface this may sound like a good plan; however, if an effect of this decision is a “hold for parts” rate approaching or exceeding 20 percent, you end up throwing labor at a parts problem. In other words, you are now expending incremental labor and associated costs on additional, mostly avoidable, service calls to replace parts. To make matters worse, you will undoubtedly incur incremental emergency order expenses that can drive the cost of a $20 part to $100 or more. The opposite of the prior example occurs when a dealer is not using his (or her) ERP system to effectively order parts and supplies. By not having the system properly set up and tracking purchases versus consumption, I have seen as much as $250,000 in excess parts and supply inventory — excess inventory that can tie up cash, impact available credit lines and ultimately result in aged inventory write-offs. Inventory write-offs are indeed flushing bottom-line profits down the drain. Another common “knee-jerk” decision is hiring additional technicians based on symptoms — increased response times and resultant customer complaints — versus actual/benchmark workload. Before any staffing decision is made, it is imperative to properly assess the true workload requirements of the existing service base. Data can be used to establish a projected

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number of service calls by model and rolled up to a total number of calls by month. Multiplying the projected calls per month by the average repair and travel time will provide the total number of workload hours required to maintain your current service base. Generally speaking, a technician should be able to support, on average, 130 to 140 workload hours per month, which is an accepted industry benchmark. Dividing the previously calculated total workload hours by the benchmark workload hours per technician per month (130-140) will provide you with a pretty good idea of the required number of technicians you need to support your current service base. Once this number is calculated, you need to compare it to how many technicians you actually have on staff. More often than not, dealerships today have excess capacity (overstaffed), which is difficult to justify without click growth. Another quick check is to look at your average reported productive hours (repair + travel) per active technician. A low number of productive hours per tech is a reliable indicator of an overstaffed situation — not enough workload to keep everyone busy. Of course, there is the flip side where everyone is busy — but are they really productive? This takes us back to the importance of determining what your true workload is. While not necessarily in the category of “knee-jerk” decisions, a common practice that works against maximizing service margins is poor equipment placements. That is, the placement of equipment without regard for volume considerations. Equipment is designed to operate optimally (lowest cost/click) within defined volume ranges. In a recent article by w w w . o f f i c e t e c h n o l o g y m a g . c o m | D e c e m b e r 2 0 0 9 | 37


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Wes McArtor of BEI Services, McArtor achieve a 52 percent-plus service margin, states that placing a machine in a much they must fully understand the ERP being ... I would suggest that lower volume range than the machine’s used, as well as have the ability to validate sustained, benchmarked designed “sweet spot” can result in parts its service setup and accuracy of the inforservice margins will only and labor costs that are 400 percent higher mation being reported. occur when enabled by than benchmark costs. Keep in mind the In summary, I would suggest that sussolid business decisions importance of the service margin contritained, benchmarked service margins will based on meaningful bution stream to your company’s bottom only occur when enabled by solid business and accurate data. line: It keeps on giving, or not. decisions based on meaningful and accuDriving service margin improvement rate data.  through “knee-jerk” decisions may deliver a short-term result, Jack Duncan, a consultant with Strategy Development, has more than 30 years experience in all aspects of field service but the improvement will not be sustainable and there can be operations. Duncan has served in positions from service unintended consequences in terms of customer and emtechnician to vice president of service, as well as several years ployee satisfaction. Sustainable margin improvement is working with a major manufacturer. He has also served on driven by optimizing all aspects of your service operations, advisory boards for several software providers and dealer starting with staffing levels, technician productivity and councils. Duncan is recognized as an “industry guru” on both machine performance. predominant software platforms in use today. He instructs BTA Increasingly, dealerships are engaging consulting firms to Service Management University with Mike conduct service department assessments that can yield solid Woodard, as well as instructs the BTA Parts & results. However, I will state that any assessment that does not Supply Inventory Workshop. include an evaluation of the dealer’s ERP system setup and He can be reached at accuracy in order to validate data integrity may provide “kneejduncan@strategydevelopment.org. jerk” recommendations that can prove costly and damaging if Visit www.strategydevelopment.org. followed. In order for any consulting firm to help a dealer

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