Twenty:Twenty Series part 1

SOS

T W E N T Y: T W E N T Y S E R I E S

PA R T O N E P R E PA R I N G F O R T H E FUTURE BY LEARNING F R O M T H E PA S T LEARNING FROM THE PAST What can we learn from the last 20 years?

DECREASING LIFE CYCLES Why are product life cycles decreasing?

THE BEST AND WORST OF THE INDUSTRY Readers share their thoughts on industry changes www.dealersupport.co.uk MARCH 2012

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Q&A

WELCOME TO THE T W E N T Y: T W E N T Y S E R I E S

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elcome to the first of four Dealer Support Twenty:Twenty issues supported by KYOCERA Document Solutions UK. In this series Dealer Support will remind us of just how far we’ve all come over the last 20 years and what the future holds for the industry.

At KYOCERA the last two decades have been quite an adventure – we’ve changed our name several times; opened offices in Milton Keynes, London and Manchester to accompany our Reading HQ; and as our business has expanded we’ve grown our portfolio to include new services, solutions and apps.

Behind it all is our award-winning ECOSYS sustainable printing technology which, more than 20 years after launch, is still unique. The ECOSYS name stands for: ECOlogy, ECOnomy and SYStem printing, and with their long-life components, ECOSYS devices are designed to maximise durability and to minimise the total cost of ownership.

While all things green have gone in and out of fashion over the last 20 years, our focus on this revolutionary technology means that our customers across the public, private and third sectors have benefited from years of low running costs whilst reducing the impact on the environment thanks to our products’ adherence to Blue Angel and Energy Star standards.

To celebrate this success we changed our product naming convention earlier this year to include ECOSYS. Our ECOSYS brand now appears in front of our printers and MFPs, highlighting our heritage in sustainable printing and the famously low environmental impact and low cost of ownership of our innovative technology.

Our commitment to being 100% indirect with a dedicated team of people who focus on ‘doing the right thing for the business’ each and every day have made the last 20 years memorable for KYOCERA. We’re looking forward to the next 20.

Nigel Allen Marketing Director, KYOCERA Document Solutions UK

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TWENTY:TWENTY

Q&A

E M B R AC I N G CHANGE

In the first of our Twenty:Twenty series, Steve Mitchell, Group Product Marketing Manager at KYOCERA Document Solutions UK, shares his thoughts on how the office products industry has developed over the past 20 years and what this means going forward. Austin Clark asks the questions

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WHAT ARE THE KEY CHANGES THAT HAVE HAPPENED IN THE LAST 20 YEARS? Talking to customers and attending recent conferences, we know that partners have evolved from just selling hardware, to selling value added services and software. As a company we’ve seen a step change in our software sales, especially in the last four years where we’ve improved the portfolio and consolidated the strength of our offering.

I was chatting to one of our key customers a couple of weeks ago who had done the same thing and consolidated into true value-added packages rather than trying to sell everything to everybody, which was a knee-jerk reaction of the industry when the new service-led concept first came to the fore. Channel partners need to concentrate on what they’re good at, which are the true add-ons to their traditional market.

Q&A

For example, as a company we’re looking to launch a relationship with a scanning manufacturer – although it’s not core 2D print, it’s a value-added proposition that fits into a managed print service (MPS) solution longer term. The biggest change is looking for those opportunities that can add value and service while keeping the business in-house.

WHEN DO YOU THINK THE MOVE TO BECOMING SERVICE RATHER THAN PRODUCT-LED BEGAN? It has been talked about for a long time – well over a decade – but it has only recently become much more important. From a channel partner point of view, some have embraced the service side for five to 10 years while others are taking it up more slowly and only now entering the market. It’s easy to see who picked it up earlier as they’re enjoying the success now.

DID THE LAST RECESSION DRIVE THIS CHANGE? I’m sure. Businesses are looking to make margin wherever they can rather than subbing out services. In the last 10 years there has been a big drive by manufacturers to help their channel partners offer more to their customers over a wider area, even nationally if required because the business landscape has changed.

RECENTLY WE’VE SEEN THE OPENING OF NEW SHOWROOMS SUCH AS YOUR ONE IN MANCHESTER. IS THIS LEADING TO ‘REGIONALISATION’ OF THE INDUSTRY? From our point of view, because we’re 100% indirect, we’re very reliant on our channel partners. We have some really strong regional strongholds and after we opened our London Technology Suite four years ago more business was won in the South East of England. There’s always more business to be won so, to actually stop the regionalisation and make us a national company, we opened our Manchester tech suite.

Channel partners are developing into national and even international companies as they target bigger corporate businesses, so manufacturers are providing them with a base from which they can service customers located outside of their traditional areas.

A BIG CHANGE WE’VE SEEN IS THE INCREASED RATE OF PRODUCT AND SERVICE DEVELOPMENT. HOW CAN RESELLERS ENSURE THEY DON’T GET SWAMPED BY THESE? The key thing is to ensure you don’t try to sell everything. Channel partners have to be more selective in order to deliver a good service.

We are always looking to improve our portfolio but nowadays we’re

“In recent times manufacturers and Channel partners have started to work more closely together, which is one of the key changes of the last 20 years”

not adding products for the sake of it like we were maybe six or seven years ago. Channel partners need to be experts in the products they do sell.

WITH THE INDUSTRY LOOKING INTO NEW VERTICALS, DO CHANNEL PARTNERS NEED TO ENSURE THEY KNOW THESE SECTORS BEFORE THEY START SELLING INTO THEM? Yes, as do manufacturers. Most channel partners seem to suffer the same pains across the various verticals. In recent times manufacturers and their partners have started to work more closely together, which is one of the key changes of the last 20 years. There’s a huge amount of knowledge in the industry that is now being shared and collecting as much information from as many sources is crucial to success. We like to talk to our channel partners to gain information from them and vice versa.

Looking back over the years, why have certain products and services been picked up on faster than others? MPS versus document management is a prime example.

Personally I think it depends on the clarity of the argument. MPS has a clear cost-saving attached to it. It’s a black and white argument.

When it comes to document management the problem is that it affects people and the way they do business so there’s much more fear of change to overcome, especially behavioural change.

DO YOU THINK THERE’S A BARRIER OF FEAR BETWEEN RESELLERS AND A NEW SERVICE? Yes. Manufacturers need to educate channel partners about new areas to help grow understanding and then overcome the fear of change.

Lots of partners have done the same thing in the same way for 20 years, so moving into a new area is understandably scary. That’s where collaboration once again comes into play.

CHANGING TACK, DO YOU THINK CUSTOMERS HAVE CHANGED THE WAY AND THE SPEED IN WHICH THEY JUDGE RESELLERS? Everybody is a smart customer. People will go online, look around and be a savvy customer. There’s an expectation that every website should look the part and information should be instantly available. Consumers are changing – it’s called disruptive behaviour – and our industry is facing up to this as much as any other. Customers don’t want to be sold to and they believe they can make informed decisions, so channel partners need to lay out their stalls to ensure customers can have the relevant information they need. There also has to be consistency across all collateral and platforms as customers will take information from numerous sources. That’s a sea change from a couple of years ago, let alone 20 years ago.

People have got to appreciate that the world has turned, both in terms of what vendors offer and what customers expect. Everybody believes they are informed, smart shoppers these days and the channel needs to remember that. To be successful, companies need to be more dynamic and agile when it comes to dealing with customer requests and thriving in today’s marketplace. DS

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SHORTENING PRODUCT LIFE CYCLES

THE CHANGING P RO D U C T LIFECYCLE Over the past two decades product lifecycles have dramatically shortened and a new range of products has entered the office supply marketplace.

Jess Pike and Austin Clark investigate the impact of accelerating product development and look at how this has shaped the way dealers work

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n the world of high street fashion product lifecycles are notoriously short. Trends and tastes change as quickly as the English weather; no sooner is the leather brogue ‘in’ than it’s cast aside in favour of the casual loafer, a cooler alternative. At first glance, the worlds of office supplies and high street fashion may seem far removed from each other but, when it comes to product lifecycles, they’re more similar than you’d first think. Office product lifecycles have

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shortened dramatically over the past 20 years; items are developed faster, meaning that products are on the market for less time which, in turn, means that dealers are under increased pressure to make sure their offering is relevant to the marketplace.

The development rate of fax technology versus tablets is a great example. When fax was first introduced dealers could afford to take a step back, watch the technology develop (which it did over two decades) and then get on board when they were comfortable. The

SHORTENING PRODUCT LIFE CYCLES Q&A

RETHINKING YOUR OFFERING In the same way that cassette tapes are now considered a relic of a bygone age office products once considered indispensable are now half-forgotten. Take, for example, floppy discs and lever arch files: banished to attics or long thrown out after a spring clean. Not all products lack staying power though, as Graeme Chapman, MBE and chairman of the BOSS Benevolent Fund, points out. “Some traditional products such as post it notes, clipboards, rubber stamps and inexpensive pens and pencils may be around for ever whereas items like blotting paper, filing spikes and floppy discs/boxes hardly figure in today’s office or home!”

As a result of shorter development time today’s dealers must be more adept at working within shorter lead times and avoid tying up cash in stock that will ultimately remain unsold. Forward buying of irrelevant stock is a definite no-no.

Office stationery certainly doesn’t fall into the category of ‘irrelevant products’ (at least not yet, anyway) but, as a result in this shift in development time, dealers are having to consider where else to focus, product-wise. Chapman points out that the ‘paperless office’ is now not such an inconceivable reality. “In the early 1980s, Acco worldwide senior executives met in Washington to discuss the ‘paperless office’. The most optimistic view from various professionals was that the paperless office would be in most western countries within 10 years,” he says.

While that didn’t happen and the paperless office is still some way off, the way people work and the way they print is changing. A paperless way of working clearly has a huge impact on office supplies, with products like binders, files, staplers, paper clips and filing cabinets becoming less prevalent. So what’s the impact of such a trend?

GENERATION Y In recent times there’s certainly been a greater focus on consumable ICT items, which have a much shorter product lifecycle than they used to. “Many dealers, recognising the decline in traditional stationery, have increased their emphasis on areas such as office furniture, electronic office supplies and facilities management,” says Chapman.

Facilities management items include cleaning items and tea and

Product Lifecycle

20 years ago Present day

Sales Volume

industry had plenty of time to prepare as manufacturers made machine improvements. Today dealers are expected to be ready to move with new technology much faster as product development is much quicker.

New innovation is entering the marketplace much faster and upsetting the status quo much more – think how rapidly tablets and smartphones have changed the way we work – with the office products sector shaped by products that simply weren’t around three or four years ago, let alone 20!

According to Steve Mitchell, Group Product Marketing Manager at KYOCERA Document Solutions UK, software has really driven change and the movement of technology is tireless. “Hardware now has to catch up with software development as it needs to be capable of handling the software which users require. Dealers can do better by understanding the vendors they are working with and check out the pedigree and track record of manufacturers. They need to assume product development is happening as a matter of course and see what other support vendors will offer. To manage risk dealers should consider a managed portfolio of products so that they can genuinely offer their customers best of breed.”

Introduction

Growth

Maturity

Decline

“Office furniture and print have to be purchased from someone…why not the office product dealer” coffee – products that Chapman believes could have much longer lifecycles (as long as traditional stationery products, at least). “Areas like facilities management must be exploited,” he says. “Office furniture and print have to be purchased from someone…why not the office product dealer?”

FM products are far from immune to the increasing pace of product development. Instant coffee, for example, is undergoing more product innovation than arguably at any other time, ensuring dealers have to keep up with trends. The arrival of ‘whole bean instant’ and ‘barista-style’ coffee, developed to keep pace with rapidly developing consumer trends, means that the days of dealers offering bland ‘no-brand’ standard coffee are long gone. Dealers need to be experts in all of these areas, suggesting that salespeople possibly need to be given specific areas of expertise to look after.

When it comes to learning, Mitchell adds: “More dealers should look for vendors with training programmes and teams who will offer support. For instance KYOCERA has its KYOAcademy, which trains engineers on products and also supports them with the KYOCERA Service Network.”

CHANGING PURCHASING PATTERNS The way in which customers purchase products is also changing, particularly given the all-consuming nature of the internet. As a result, dealers have had to become much more digital in their outlook. As featured in our interview with Of-Is in this issue (see page 44), dealers are now beginning to launch dedicated office product apps, alongside already popular websites as product catalogues give way to dynamic websites. This is a trend that’s set to continue as people increasingly look for innovative, ground-breaking ways to showcase their products. It’s all about Generation Y demanding new methods of working, which in turn has an impact on the products dealers sell.

What’s certain is that many office products are facing extinction and the only option open to dealers who want to embrace these changes is to keep thinking ‘outside the box’ and look for products (and indeed whole product sectors) that will appeal to new generations of customers.

However, while certain products are fading into obscurity, the office supplies industry is far from dead: it’s just undergoing a radical makeover. Dealers have no option but to get on board! DS

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READERS SAY…

T WO D E CA D E S O F I N D U S T RY C H A N G E What has changed over the past 20 years and how have dealers evolved to survive? Austin Clark finds out

SAM ELPHICK, Lex Business Equipment, Manchester “Increased competition from contract stationers and online retailers means that resellers are having to fight harder and harder for every order. Business has also become much more service-led rather than simply being about shifting boxes, hence the introduction of print audits and document management solutions.

“To survive, resellers have had to become as agile as possible in order to adjust to change and offer customers the best possible levels of service. For example, if a customer has a problem with a machine, we aim to get to them within four to six hours.

Independent resellers have a huge advantage over the manufacturers in this respect, proving that while the industry has definitely changed local can still be the best.”

TONY LONG, Copy Right Systems, Abingdon “There has been a massive increase in the use of MFDs for scanning, while the introduction of software and the ability to connect with MFDs has moved forward. There is also an increased market acceptance of the MFD to replace several high running cost desktop printers. Product reliability has also increased. Finally, dealers are now selling solutions rather than selling a box.

“The MFD marketplace has suffered from manufacturer direct sales to end-users. Manufacturers should support the dealer channel rather than sell direct and undercut their own dealers. This has led to a dog-eat-dog mentality which has not benefited either party.

There’s no brand loyalty generally and we are now experiencing dealers turning to compatible toners in an effort to maintain margin on service and bring benefits at the tender stage. This results in less reliable equipment and no long-term benefit to anybody.”

MARK DAVIS, Office Gold, Guildford “The merger of the large contract stationers to become a global force, the wonders of e-auctions and the pricing models of the contract stationers combined to price small dealers out of the market.

The rapid decline in the purchase of true office supplies means more dealers are moving towards areas such as IT products and consumables. Better marketing support from manufacturers and the understanding that they need to support the dealer community has helped dealers with this.”

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ANDREW JONES, 1st Office, Bath “The single largest change to our industry in the last 20 years has to be the introduction of changing technology from analogue to digital and all of the pain that brought to conventional ‘copier’ dealers. Those that have successfully survived the transition and grasped the new technology have transformed their businesses so that they are able to compete in the IT solutions arena.

“Generally speaking there has quite often been a shortfall in understanding between newly launched technologies and the ability to communicate these to the market. Ultimately this requires consistent training at all levels, sales, support and IT to competently introduce these technologies to the end user.

Finding the right balance between training time requirements and profitability is, and will always be, a challenge for any fast moving industry. We have learnt to adapt and be flexible if we are to stay ahead of the game.”

AARON WARHAM, NAPPS “The biggest change to the industry has been the movement towards a service-based business model. Both manufacturers and their dealer channels have realised that the customer must always be placed at the centre of every decision they make, and that the most successful companies are the ones who base their decision-making on maximising their customer’s returns, rather than their own. From our position we see that companies within the industry continue to repeat the mistakes of the past, misleading customers on lease contracts, exploitative service contracts and the mis-selling of sub-standard equipment. With the push for greater professionalism, a strong IT focus and a sales process based on consultation, these “processes” really should be a thing of the past, but their continued prevalence means that the industry’s reputation continues to be soured by a small number of companies.” DS

“To survive, resellers have had to become as agile as possible”