ENX Magazine February 2017 issue

Page 1

VOLUME 24 NO. 2 FEBRUARY 2017

Connecting People, Ideas and Products in the Document Imaging Industry since 1994 Connecting People, Ideas and Products in the Document Imaging Industry since 1994

engage ‘n ‘n exchange engage exchange

PRODUCTION PRINT GROWTH DRIVERS: WHY SOME DEALERS ARE CASHING IN

DESPITE DECENT U.S. MARKET, THE OVERALL INDUSTRY SUFFERED IN 2016 WITH NO BIG CHANGES THIS YEAR

Commonwealth Digital Office Solutions’ Secret to Success in Production Print 10 Areas Requiring Change! The Value of a Technician ITEX is Better Than Ever

PLATINUM LEVEL

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rvice Exc Se

Office Technology Service Excellence Award

m Awar inu

ence Plat ell

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In This Issue

16

STATE OF THE INDUSTRY

Production Print Growth Drivers: Why Some Dealers Are Cashing In By Michael Nadeau

32

42

50 6

www.enxmag.com | February 2017

24

MARKET INTELLIGENCE Despite Decent U.S. Market, the Overall Industry Suffered in 2016 with No Big Changes this Year By Charles Brewer

32

DEALER SPOTLIGHT Commonwealth Digital Office Solutions’ Secret to Success in Production Print By Christina Kim

38

LEADERSHIP 10 Areas Requiring Change! By Charles Lamb

42

SERVICE EXCELLENCE DIAMOND AWARD WINNER Net New Spurs Growth for Hendrix Business Systems, Good Service Keeps It By Michael Nadeau

48

SERVICE MANAGEMENT The Value of a Technician By Ken Edmonds

50 52

INDUSTRY NEWS ITEX is Better Than Ever

55

PRINTER TECH TIP By LaserPros

56

DISPLAY ADVERTISERS INDEX

TECHNICAL TIP Loss of Memory in Xerox C35 Style: Dealing with NVM Failures on the DC555, WC-Pro55, WC-275, & WC-5687 Families By Britt Horvat

We Saw It In ENX Magazine


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Contributors

Staff

CHARLES BREWER is the founder and president of Actionable Intelligence, the digital imaging industry’s leading market research firm. He was an editor for Inc. magazine and ComputerWorld during the 1990s, and more recently, the managing editor of The Hard Copy Supplies Journal. Mr. Brewer’s analysis is currently featured at his firm’s website, www.Action-Intell.com.

Susan Neimes Publisher & Managing Editor

KEN EDMONDS is currently employed as a District Service Manager for a major copier manufacturer. He has an extensive background in the imaging business, having owned a successful dealership, serving as service manager for multiple dealerships, and as a Document Solutions Specialist for Sharp Electronics. He has more than 40 years of experience in the electronics and computer fields. For further information email him at Ken.Edmonds@CKE-Enterprises.biz

Michael Nadeau

CHARLES LAMB is the President and CEO of Mps&it Sales Consulting. His firm delivers proven methodologies and processes that assist dealer principals seeking a successful transformation into the managed services space. He’s created complementary solutions including Funnelmaker, Gatekeeper, and Shield IT services. For more info, call 888.823.0006, e-mail him at clamb@mpsandit.com, or visit www.mpsandit.com.

Editorial Director

TECHNICAL ARTICLE CONTRIBUTOR

Ronelle Ingram Contributing Editor

BRITT HORVAT works for The Parts Drop, a company whose primary business is providing parts, supplies and information for Xerox brand copiers, printers and fax machines. You can find more information, including many of Britt’s past ENX articles on their website www.partsdrop.com.

Stay Connected Share Your Views

Christina Kim Editor

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Susan Neimes - susan@enxmag.com Michael Nadeau - Michael@enxmag.com 10153 1/2 Riverside Drive, Suite 729 Toluca Lake, CA 91602 tel. 818-505-0022 • fax. 818-505-9972

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www.enxmag.com | February 2017

ENX Magazine is published monthly by Affinity Business Communications, Inc. Any inquiries should be sent to: enx@pacbell.net or mailed to the corporate office. Copyright ©2017 by ENX Magazine printed in the U.S.A. All reproduction in whole or part is prohibited without written permission. Cover photo from depositphotos.com

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Image shown: CT-S801

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NBS / ENX | February 2017


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Image Shown: MF729CDW

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All supplies & Parts available for prompt delivery! ENX Magazine | www.enxmag.com

All prices, rebates, and availability are subject to change without notice. Please call us to confirm.

Nuworld is not responsible for typographical errors or inaccurate specifications. Registered trademarks are properties of their respective owners.


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Michael Nadeau

State of the Industry News Briefing

Production Print Growth Drivers: Why Some Dealers Are Cashing In

G

rowth is hard to come by in today’s document imaging market. Sales of many A3 and MFP models are flat, and clicks are declining. Dealers are looking for new, complementary product lines to boost growth and margins, and some are finding success with production print systems. Production print has several points in its favor. Most dealers already have relationships with production print OEMs such as Konica Minolta, Canon, Xerox, or Ricoh. Hardware prices are high, which means a good profit is possible on the initial sale. Best of all, production printers consume supplies at a prodigious rate, ensuring high-margin recurring revenue. So why aren’t all dealers selling production print? Like any worthwhile venture, it requires significant thought, commitment, and investment. Dealers who understand the production print market treat it like a new business, not just a new product. It’s significantly different from the copier business, and dealers need to ask key questions before leaping in: Who is buying and what’s their buying process? What are the expectations for support? What market trends are shaping the production print opportunity? To help answer those questions and to explain what’s driving demand for production print, ENX has spoken with leading dealers, OEMs, and analysts in the market. What follows is an overview of what’s driving the production print market and advice on how best to leverage the opportunity.

What Is Digital Production Print?

Production printers are designed for high speed (60 ppm at the low end to 300 ppm or more at the high end), longer duty cycles, and large production runs. It’s not unusual for a single production printer to generate a million or more clicks a month. Prices range from about $20,000 to perhaps $1 million. They can be monochrome or color, with color rising in popularity at the expense of monochrome. The light to mid-range production cycle models— those most likely to be sold through the dealer channel—are mostly toner-based. High-volume cut-sheet and continuous-feed systems are inkjet-based. They are typically sold through the OEMs’ direct sales organizations due to their complexity and support requirements. “Production inkjet is still a new, emerging technology that is currently having a big impact on trans-

actional, direct mail and book publishing,” said Bob Barbera, senior manager, production solutions division, at Canon’s Business Imaging Solutions Group (BISG). “[It requires] a lot of unique experience and knowledge with paper, media, inks, and workflows, and Bob Barbera, Canon BISG the Canon Solutions America organization has this experience from selling and supporting Océ-branded production inkjet printing solutions.” Canon markets a full range of production print systems from light volume production cutsheet systems to Océ-branded continuous feed inkjet systems. “Companies are creating devices that can do a lot in a smaller investment space,” said Amy Machado, research manager for imaging, printing, and document solutions at IDC. “You don’t have to buy a Xerox iGen. You can buy the next step down Xerox and get really good finishing, good image quality, and color management. They are moving features you saw in high-end devices downstream.” Komax has been selling Konica Minolta production printers since 1999, most successfully in the last five years. Bob Maxwell, owner of Komax, attributes that in part to improvements in Becky and Bob Maxwell, the capability and quality Komax of digital production systems. Years ago, some of the manufacturers weren’t serious about production and didn’t do as good a job with it,” he said. “Now several manufacturers produce good production equipment.” “Xerox had a stronghold [in production print], but now we have alternatives,” said Barry Simon, president at Datamax. Datamax sells Canon and Konica Minolta brands, and Simon says their products compete well and are very reliable. “[Ricoh’s] Production Print Business Group started with literally zero customers and not a lot of products, and in 10 years we’ve built it to a very, very large business,” said John Fulena, vice president of Ricoh’s Production Print Business Group. continued on page 18

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Production Print Growth Drivers: Why Some Dealers Are Cashing In While Fulena credits Ricoh’s direct sales group for some of that growth, he sees a lot of opportunity for the dealer channel. He sees the annuity stream from that print volume as the most attractive part of the production print sale to dealers. “If it’s priced right, there’s a lot of upside and opportunity for the dealers.” All of John Fulena, Ricoh Ricoh’s cut-sheet and wide-format produc- Production Printing tion print lines are available to the dealer Business Group channel. Its continuous feed inkjet systems are sold direct only. Production printers are commonly sold with finishing options that, for example, coat, die-cut, or bind stock. Those options, however, are typically sourced from third-party providers, and it’s common for both dealers and OEMs to partner with those providers for sales, support, and installation.

Production Print Market Drivers

To understand the total opportunity for digital production print, you have to look at the entire commercial printing market. Smithers Pira reports that the total market for printing equipment was $16.3 billion in 2016. The overall market has declined since 2007 when that number was $25.3 billion. Fewer newspapers, magazine, catalogs, and so on are being printed, and they relied heavily on offset presses. Digital production systems provide more flexibility, capability, and ease of use, so they are not only replacing offset presses for many jobs, they are being used in applications offset simply cannot do. “Eighty to 90 percent of all printing today is still offset and gravure printing. The transition from offset pages to digital pages is driving a big part of the growth we’re seeing in the market,” said Barbera. “The application range and capabilities that digital printing devices can now serve is significantly growing from a user perspective between the quality, the types of substrates and media they can print on, the types of finishing they can do, and the types of workflows they can use. This combined with the market transition to shorter run lengths, print on demand and color are all helping to fuel the transition from offset to digital.” There are two primary markets for production print: in-plant and pay for print (P4P). Companies with their own print production facilities or centralized reprographics departments (CRDs) make up the in-plant market. These organizations see in-plant operations as cost centers, but have enough volume or specialized requirements to justify their own printing operation rather than outsourcing. The decision to support an in-plant digital print operation is driven by many variables depending on the application, which might be transactional (invoices), publishing (books, manuals), direct mail, packaging, labels, or marketing/promotional material. Variables include color capability and quality, volume, finishing needs, and page rate. It comes down to whether in-plant is more cost effective and best meets the requirements—not necessarily in that order. 18

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Not just big companies have in-plant operations. Market research from a PRIMIR 2016 study “Digital Printing Technology’s Influence on the U.S. In-Plant Printing Market” reports that there are more than 10,000 in-plant operations in the U.S. with five or fewer staff running them. Barbera sees these operations as a great opportunity for Canon’s channel partners. Businesses that outsource their printing do so to a P4P service provider. These are mostly traditional print shops that are adding digital systems to complement their offset equipment. If they don’t do so, they risk losing print jobs that are too small to run cost-effectively on offset presses. The main question for P4P providers is whether digital production print will make money for them. “[For P4P], what are the applications that you have now that you can move to a digital device, and what are the applications that you currently aren’t offering but could create? It’s about finding new markets and new customers that you can go after,” said Machado. “The movements toward color digital printing and value-added services are key growth drivers within the in-plant segment,” said Lucia Perez, marketing manager, in-plant for Xerox Corporation. “However, the growth was blunted by a decline in black-and-white digital print volume. Furthermore, trends toward digi- Lucia Perez, Xerox tal communications and media, print sup- Corporation pression, and outsourcing have accelerated in the past five years, negatively influencing the transactional in-plant segment, in particular.” “There’s a four to five year cycle to in-sourcing versus outsourcing,” said Erik Holdo, senior vice president Production Print Solutions at Konica Minolta Business Solutions U.S.A. Inc. “We’re currently in a period of more outsourcing, but that’s just today. It will continue to flow back into the in-plant and the CRD as well.” Konica Minolta sells both toner-based cut-sheet and high-volume inkjet systems, all of which are available to its dealer channel. A key reason companies shut down or scale back their inplant operations is the cost to staff them with skilled personnel. “[Digital production systems] are not as difficult to operate,” said Simon. Datamax has sold to a few churches, for example, where volunteer members run the production printers with a little training. Some key market factors behind the demand for in-house digital production printers are as follows: THE ABILITY TO PRINT COLOR IN VOLUME. Dealers are finding that some customers with color copiers or MFPs are running jobs larger than what the machines were designed for. Those dealers are upgrading customers by showing how they can get cost-effective, faster, higher quality, and more reliable volume output on a production printer. Perez noted that some companies want more control over quality and color accuracy for the sake of their brand image. continued on page 20

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Production Print Growth Drivers: Why Some Dealers Are Cashing In FASTER TURNAROUND TIMES. With in-house capabilities, you can send material when it comes off the printer, and you’re not on an outside print shop’s schedule. LOWER COST. This depends on a lot of factors such as print volume, print stock, and finishing requirements, but cost per page is generally good for digital production print, especially for shorter run lengths. PRINT ON DEMAND. Digital production print allows a business to produce and stock only what’s needed. Hunter McCarty, COO at RJ Young, a Canon and Ricoh dealer, sees more in-plant customers adding digital production units for this purpose. “You print what you need when you need it, and then you don’t have a shelf full of documents you have to reprint three months later because they are outdated.” Social media is driving some print-on-demand business where people create books from their Facebook, Twitter, or other social groups using several different specialty and book publishing providers. “You can order a Facebook book that creates a book from all your postings, your pictures, the things you like, and these things run 400 to 500 pages and are bound as your social media journal. Self-publishing or vanity press, traditional photo books, and even cookbooks continue to create explosive demand,” said Holdo. INCREASED SECURITY. Having digital production in house better ensures data integrity and security. The full tracking and audit control it provides is highly desirable and needed in specific industry segments such as banking. AUTOMATION. The ability to tie digital production systems into workflows via software eliminates many manual tasks. The value of that is lower overhead in support staff. Barbera cites the example of an in-plant operation where enabling a workflow solutions that streamlines order submission through production has allowed it to do five times the volume of work with the same number of employees as before. PERSONALIZATION TO ENGAGE, INFLUENCE BEHAVIOR, AND ACHIEVE THE DESIRED RESPONSE. This is also referred to as variable data printing where the content printed changes depending on the profile of an individual or demographic group. “Folks are focusing more on using data to drive more targeted pages,” said Machado. Amy Machado, She cited banking as a vertical that uses IDC data to target customers. The ability of digital printing to do variable data printing and customize content also enables integration with digital media. “It is exciting to see new integrated communications that leverage print and digital media such as cross media programs that utilize QR codes to drive [the reader] to a website or a link to a video that has more information,” said Barbera. For example, a printed training manual might point a user to a video tutorial. “Print is morphing to complement digital communications.” Another example: Personalization has made direct mail much more efficient. “In the past, pieces were offset printed at high speed

and it was a generic message for everybody. With the ability to apply some business analytics, data mining, and consumer profiling, you can make much more intelligent choices in how you market with direct mail combined with other media to create a complete omni-channel campaign. That requires digital,” said Holdo. GROWTH OF WIDE-FORMAT PRINTING. More wide-format printing is moving from analog to digital production systems, mostly in the P4P space but also in some in-plant operations for applications such as sign printing. “We used to call it a secondary business. I wouldn’t call it that anymore,” said Fulena. “The move from analog to digital makes it much easier to produce these applications, and that’s a big driver.”

The Death of Paper Is Greatly Exaggerated

On the negative side, several factors are diminishing demand for production print within certain applications. “Print suppression is real within the transaction space,” said Machado. “The number of envelopes is going down.” “There was the threat that transactional printing was going to go all electronic statements. Clearly there has been a transition, but the printed transactional statement is still one of the top page volumes applications for digital printing,” said Barbera. In fact, the rise of electronic bill presentment may have helped digital production print. As companies cut back on the number of invoices they print, it becomes less cost efficient to run them on offset presses. “Many printers are starting to go back to color and monochrome cut sheet printers where they can produce a smaller set of these statements or other transaction- Erik Holdo, al documents like explanations of benefits Konica Minolta Business Solutions in, say, the insurance market,” said Holdo. U.S.A. Inc. There has also been concern that e-books would hurt the book and manual printing business. While there might have been some effect early on, Barbera sees growth opportunity for digitally printed books. “The printed book is still very healthy, very strong and actually growing because of digital’s ability to do on-demand publishing and produce out-of-print books.” Similarly, many school textbooks have moved to tablet- or laptop-based course material, but Holdo cites research that shows more students want the traditional printed textbooks. “They want that physical book, to be able to annotate it. Textbooks are not as threatened by the digital side of things as they had been in the past,” he said. With digital production printers, publishers can print only the number needed with up-to-date

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Production Print Growth Drivers: Why Some Dealers Are Cashing In content. “That’s driving some of that publishing from the traditional publishers to the more local companies, some of which used to be in the small-run publishing business,” said Holdo. “The market has seen some interesting ebb and flow,” said Holdo. “When tablets and digital distribution of information became more popular, the death of paper was proclaimed by many. That has never held to be true. There are a few areas that have continued to grow.” One of those areas is direct mail. “Back in the 80’s, we’d see 4,000 marketing messages a week. Now some estimates put it at 5,000 messages a day in the electronic space alone,” said Holdo. “That creates clutter, noise in the delivery of your message to your target audience. Direct mail is the only thing you can do as an advertiser or brand manager that can’t be filtered out.” You can opt out of email or be on a do-not-call list, but you can’t keep marketing material from appearing in your mailbox.

Vertical Markets and Applications

Other than traditional print shops, no single vertical stands out as big buyers of production print. Dealers cited education, healthcare, financial services, and public sector as their most important verticals, in addition to traditional print shops. In truth, dealers consider any company that produces print media in volumes that would stress a high-end copier as a prospect. Machado sees verticals such as finance and insurance moving away from toner-based systems to higher volume inkjet systems bought directly from the OEM. She sees the best opportunity for dealers in government, education, healthcare, and banking (marketing materials more than transactional documents). “An opportunity for the dealer channel is selling devices that can be used for more than one type of document or application,” said Machado. For example, a print services provider might want a machine that can print both documents and packaging. A few industries that had not typically had in-plant operations are starting to buy digital production print systems including creative agencies, architectural firms, designers, and retail. “There have been some changes in the marketing and creative space that have brought some opportunities to production print,” said Holdo. “We’re also starting to see some true print-on-demand in manufacturing,” said Holdo. Manufacturers use production printers to produce labels, inserts, operations manuals, and other items that go with the products being made.

Advice to Leverage the Production Print Opportunity

DEFINE YOUR MARKET. For most dealers, that’s mainly selling small- to mid-range production systems to the in-plant market. “The P4P market always had a reputation for being low margin and very time consuming from the service side,” said McCarty. Other dealers report that print service bureaus sometimes have trouble getting Hunter McCarty, RJ Young equipment financing. 22

www.enxmag.com | February 2017

DEFINE YOUR OFFERINGS. You want to start with products that you can support and are right for your market. As you learn the technology and market, you can always move up. DEVELOP A SALES AND MARKETING PLAN. Expect most of your production print business to come from new customers. McCarty said that 60 to 70 of its production print customers were clients they had never sold to before. All the OEMs offer support to help sales have conversations around production print with both new and existing customers. HIRE OR TRAIN SPECIALISTS. This applies to both sales and service. On the sales side, you need people who think like analysts and act like consultants with clients. You’re not selling a box. You are selling a solution that includes hardware, software, and services. Your service department will be held to a higher standard than for copiers, so they need specialized knowledge and ability to respond quickly. “Most if not all our successful dealers selling production have dedicated people,” said Fulena. “To Ricoh, that’s really a prerequisite. We’re always there as a safety net, but if they are not self-sufficient, it’s very hard to maintain and grow the business.” BE PREPARED TO INVEST. The higher up the production print market a dealer goes, the greater the commitment. “It’s really up to the dealer to make the investments needed to attack the market,” said Holdo. That investment includes specialized staff, demo equipment, ongoing training, and perhaps facilities upgrades. BRING A SOLUTIONS FOCUS TO SALES. Selling production printers requires a more consultative, solutions selling approach. “The prospect is looking to the dealer for business services. ‘How are you going to help me make money with this device. How are you going to streamline my business. How are you going to improve my workflow,’” said Machado. Simon added Barry Simon, that sales need to be able to speak to things Datamax like media substrates, finishing capabilities, and color correctness. BE READY TO REACT TO NEW OPPORTUNITIES. Dealers who understand their production print customers’ businesses and workflows can often find ways to add value for them and sell more products and services. For example, McCarty said that RJ Young offers what it calls a morning walk-through where its techs test equipment every morning to minimize downtime. Other dealers have decided to offer printing services with the equipment they sell with the idea that their service customers might eventually buy equipment. RJ Young also provides facilities management for some in-plant customers who want an inplant operation but don’t want to staff it.

Future Outlook

The dealers we interviewed all expect the strong growth for production print they saw in 2016 to continue into 2017. McCarty said that RJ Young’s production print business grew 38 percent in 2016, and he sees that growth continuing for the next few years, some of that coming from copier customers. “As [customcontinued on page 23

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Production Print Growth Drivers: Why Some Dealers Are Cashing In ers] reduce the number of convenience copiers or printers they have, they start looking at jobs that should be going to higher volume or higher speed machines.” Simon expects at least 20 percent growth in Datamax’s production print business. “It could be a big number. Hit a big order and we could double our business,” he said. Fulena sees more growth potential in focusing on complete production solutions, from workflow automation to finishing options. “It’s not just a hardware play anymore. It’s software and services. So, how do you pool that all together and become that one-stop shop?” said Fulena. “And if you create a document, what happens to it on the back end? Every document has some sort of finishing, so we see growth with dealers getting more into finishing.” For Xerox, inkjet will be its main priority for production print. “We want to make inkjet accessible to all types of customers, helping them produce high-demand applications like transactional, direct mail, and catalogs,” said Perez. What will drive the production print business for dealers going forward is what’s made them successful to date: dedicated resources, providing value-add solutions to customers, and a keen eye on the market for new opportunities. ♦ We Saw It In ENX Magazine

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23


Charles Brewer

Market Intelligence News Briefing

Despite Decent U.S. Market, the Overall Industry Suffered in 2016 with No Big Changes this Year

E

ven with strong tailwinds from the United States economy, printer and copier manufacturers struggled last year. Office printing—the industry’s lifeblood—is tied directly to regional economies, so it’s no wonder that 2016 wasn’t a banner year for hardware sales. The growth of China’s GDP continues to cool and in regions that once held such promise, like Brazil and Russia, the economies have been in recession for a few years with no signs of recovery in sight. Although increasing, GDP growth in the European Union remains anemic and has been growing at less than 2 percent for the past 10 years. With GDP growing at less than 1 percent for the past several years for the three largest European economies—France, Germany, and the United Kingdom—the economies remain stubbornly stagnant. While print volumes are growing in certain market segments such as the production space, at my firm, Actionable Intelligence, we see office printing declining—especially monochrome printing. Of course, lackluster economic conditions play a role in declining print volumes but there are other forces at work here too. The biggest factor is that end users simply want to print less. Businesses are looking to generate less hardcopy in order to either keep operating costs down or to be more environmentally-friendly—or both. And people have found that in the age of smart phones and tablets,

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they don’t need to print as much as they did in the past. Hardware vendors and their channel partners have responded to the move away from printing by offering new programs and services designed to lower hardcopy output and these offerings are popular. However, the industry’s attempts to drive more printing with new mobile and cloud-based solutions have not panned out and vendors have yet to come up with the “killer app” that can meaningfully offset shrinking print volumes. With such adverse economic and market conditions, the office equipment industry now finds itself with way too much production capacity and it is changing as a result. While some changes since the Great Recession had already occurred to cope with overcapacity issues, the changes we witnessed in 2016 were the most profound that we’ve seen in decades. Last year was truly transformative and you can bet that there will be even more transformation in 2017.

Big Changes in the U.S.

Nowhere has the transformation of the office-imaging industry been more profound than in the United States. After years of difficulties operating in the global down market, all three U.S. OEMs—Hewlett-Packard, Lexmark, and Xerox—have radically changed their respective businesses and operate very differently than they had ten years ago. After being separated from HP Enterprise in 2015, HP Inc. completed its first fiscal year We Saw It In ENX Magazine

on October 31, 2016 and the results were not great. Total sales were down 6.3 percent in 2016 as printing revenue slipped 14 percent. At $18.3 billion, HP’s printing business reached a 17 year low during the last fiscal year. The firm announced in 2016 that it will take bold steps to grow its printer business and invest heavily. In September, HP President and CEO Dion Weisler said the firm will spend $1.04 billion to purchase Samsung’s printing assets in an attempt to grab market share in the A3 copier space. In addition to marketing A3 machines based on Samsung technology, HP will also roll out an assortment of A3 inkjet devices this year. The firm also said it will invest what amounts to approximately $450 million to reduce channel inventory of ink and toner cartridges. According to Mr. Weisler, the move allows the firm to transform its supplies business model from “push” to “pull.” Consumables sales suffered last year as a result but they are expected to stabilize by the end of 2017. Xerox started last year by announcing that like HP it, too, will split and on January 1, 2017, the company was divided into two public companies. As a result, an $11 billion document technology company was launched that retains the Xerox name along with a new $7 billion Business Process Outsourcing company called Conduent. While the move is a radical departure from the path the firm had been on since acquiring Affiliated Computer Services (ACS) in continued on page 26


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Despite Decent U.S. Market, the Overall Industry Suffered in 2016 with No Big Changes this Year 2009, it really re-establishes Xerox as technology company. Incoming Xerox CEO Jeff Jacobson told investors at the end of 2016 that his firm’s strategy “builds on our solid financial foundation to drive strong cash generation and margin expansion while improving our revenue trajectory over the long term.” Xerox says that it will initiate the largest product launch in the firm’s history in 2017 and expand its channels into what the company terms “the $20 billion multi-brand reseller space.”

Didn’t See that Coming!

In a year full of surprises, I cast my vote for Lexmark as the firm with the most surprising news in 2016. Following months of chin wagging and rumors over potential buyers after Lexmark said late in 2015 that it was exploring the possibility of selling off parts of the company or the entire firm, Lexmark announced last spring that it would be acquired by a group of Chinese investors. We learned after the news broke that several OEMs had expressed interest in the firm. Lexmark, however, opted to accept a generous $3.6 billion all-cash offer from a consortium from China led by Apex Technology, PAG Asia Capital, and Legend Capital. After being scrutinized by U.S. regulators and their counterparts in the People’s Republic, the deal was finalized on November 29 and shares of its stocks

stopped trading on the New York Stock Exchange. Paul Rooke stepped down as president and CEO and was succeeded by David Reeder. The new owners say the company will remain U.S.-based, although many speculate that at least some of Lexmark’s production will move to China. After the deal was completed, Lexmark announced it will be separating its Enterprise Software group and selling it off under the Kofax brand. With its new owners, new Asian markets are expected to open to Lexmark including China, where the firm had little or no access prior to the acquisition. Moody’s Investor Services and Fitch Rating lowered their ratings on Lexmark’s debt suggesting some are a bit skeptical of the newlywed’s ultimate success. Chinese investors seem a little leery too. The share price of Apex stocks, which are traded on the Shenzhen bourse, declined about 10 percent in the weeks after the deal closed. Although they have not regained all their lost ground, Apex shares rallied in the ensuing weeks and were trading at CNY28.81—about $4.20—at the time of this writing, which is considerably lower than the price Lexmark shares traded at on the NYSE. After flirting with the $50 mark in 2014, shares carrying the LXK ticker symbol had a 52-week price range between $24.11 and $40.50.

HP Printer Business Revenue Fiscal Years 1998-2016

Source: Actionable Intelligence

Japan’s Industry Sputters

The industry in the U.S. has experienced the biggest changes because it has been the most stressed. In Japan, conditions have been better. With the yen weakening for the past few years, Japanese manufacturers had managed to grow revenue even in the down market and so avoided the pain their American competitors were feeling. This changed in 2016, however, as the yen strengthened. Although the yen-dollar exchange was about the same at the start of 2016 as it was at the end of the year, there were times during 2016 when the yen’s value was up 20 percent compared to the dollar. The yen also strengthened against the euro, although it slipped in the closing weeks of 2016 as it did against the dollar. With the exception of Canon, the Japanese companies that we follow have a fiscal year that begins in April and closes at the end of March. Because the yen strengthened for most of the first part of the Japanese fiscal year, all the firms that we cover attributed their declining revenue to adverse exchange rates during the first part of their fiscal year, although some managed to improve their profitability. Canon’s fiscal year runs from January until December and the company reported that it was adversely impacted by the stronger yen. During the first nine months of 2016, Toshizo Tanaka, executive vice president and CFO of Canon, said that compared with the year prior, the yen’s appreciation negatively impacted net sales by ¥330.3 billion and operating profit by ¥129.1 billion. Macroeconomic conditions also contributed to Canon’s declining business and the firm expressed concern about the European economy following Brexit. Demand for cameras continued to decline in the third quarter of last year along with sales of products in various hardware categories including inkjet printers, laser printers, and monochrome multifunction devices (MFDs). Although unit shipments were up in the third quarter, revenue from copier MFDs dropped, indicating that continued on page 28

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We Saw It In ENX Magazine


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Despite Decent U.S. Market, the Overall Industry Suffered in 2016 with No Big Changes this Year sales prices are slipping on Canon color copiers. Laser printer consumables sales also slumped because end users printed less and Canon lost sales to third-party supplies vendors. It is possible that some of the decline in laser printer consumables revenue was due to its partner HP’s move to reduce excess inventory in the channel. After reporting its third-quarter results, Canon lowered its financial guidance for the third time in as many quarters. While the company’s performance may benefit from the weakening of the yen at the close of the year, we expect its total revenue will be down at least 10 percent. At the end of the third quarter, Canon estimated that its laser printer revenue would be down more than 24 percent with sales of monochrome and color copiers dropping 12.7 percent and 7.6 percent, respectively. With such significant declines expected, it seems that Canon’s office-equipment sales will be down in 2016 even if the numbers improve some because of the weakening of the yen at the end of the year.

Other Japanese Vendors Struggle

Ricoh also lowered its forecasts for the fiscal year, which ends on March 31, 2017. The firm blamed its poor performance on the yen strengthening

during 2016 and on drooping sales in Ricoh’s Imaging and Solutions group and Industrial Products segment. During the first six months of its current fiscal year, the firm reported that its Imaging and Solutions business declined 14.4 percent year-over-year. The firm blamed the falling revenue on declining sales of MFPs in the Americas. At the beginning of the fiscal year, the firm projected that net sales would be down 1.8 percent year-over-year, operating profit would decrease 24.7 percent, and net profits would decline 30.1 percent. Ricoh, however, has been forced to lower its forecast twice during the current fiscal year, the most recent revision coming after its poor Q2 performance. If the firm hits its revised targets for the year, it would represent a 9.0 percent year-over-year decline in total sales, a 60.9 percent drop in operating profit, and a 71.4 percent net profit decrease. With revenue down almost 11 percent during the six months between April 1 and September 30, OKI Electric Industry Co. is another Japanese firm that had trouble coping with market conditions and exchange rates in 2016. In addition, OKI was impacted by an extraordinary loss of ¥2.5 billion during the second quarter stemming from an investigation by the Japan Fair Trade Commission into whether sales of firefighting wireless sys-

Printing Business Revenue for Japanese Hardware Manufacturers Fiscal Years 2013-2017*

Canon Office Business**

Ricoh Imaging Solutions

Konica Minolta Business Technologies Business

Brother Printing & Solutions

Source: Actionable Intelligence *FY 2017 projections take from firms’ H1 earnings reports **Fiscal year results for Canon ended December 31

Toshiba Tec Printing Solutions Business

OKI Printers

tems violated the country’s Antimonopoly Act. The company missed all the targets that it had set for the first half of the year and lowered its outlook for the full fiscal year ending in March 2017. For the first half, OKI’s Printers group sales were down 8.1 percent from the year prior and well shy of the ¥64.0 billion OKI had expected in Printers revenue. The firm has slashed its full-year forecast and now expects net sales to decrease 5.2 percent compared with the year prior, while operating and net income is expected to shrink 19.4 percent and 54.5 percent, respectively. Printer revenue is predicted to fall nearly 8 percent and produce an operating income of ¥0. Konica Minolta’s total revenue was down almost 9 percent during the first half of the current fiscal year. The firm revised its guidance downward after the first quarter but it maintained the revised numbers as the first half of the year ended. Sales of office imaging devices, supplies, and services along with production hardware and other printing products marketed by its Business Technology unit are forecast to fall more than 9 percent. The company blames the slumping revenue solely on currency fluctuations and said its revenue and profits would have actually improved during the first half compared to last year if the FOREX impact were excluded. Konica Minolta reported growing sales in China and other emerging countries and said sales volumes were up in all four of its regions (Japan, the United States, Europe, and others). The firm credited sustained demand for its midrange and higher segment color devices for growing unit sales, higher print volumes, and sales growth for consumables. The company indicated that by combining sales of MFP equipment with IT services, it is seeing gross profits improve and higher sales than with conventional MFP sales. The firm claims to have successfully driven color print volume growth, which in turn led to growth of non-hardware sales. Like the other vendors, Brother was impacted adversely by the stronger yen continued on page 30

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Despite Decent U.S. Market, the Overall Industry Suffered in 2016 with No Big Changes this Year and both total revenue and revenue from its Printing and Solutions business declined. However, Brother’s efforts to cut costs and improve efficiencies in its Printing and Solutions unit bore fruit. Profits were up significantly from this business group, which resulted in an upturn in profits for the entire company. For the first half of the year, Brother’s revenue experienced a 9.2 percent decline from a year ago and revenue from the Printing and Solutions unit was down 9.7 percent. Brother reported that sales of printing equipment remained robust, especially in the United States and China. The firm saw unit sales of monochrome and color laser devices grow year-overyear. While Brother’s inkjet unit sales were down compared with the year prior, the firm said that product mix improved to shift toward machines with super high-yield ink tanks, which also contributed to the firm’s improved profitability. For the six months of its fiscal year, Toshiba Tec Corp., the publicly-traded subsidiary of Toshiba Corp. that markets office and retail equipment, saw its total revenue slip 8 percent. Like its Japanese rivals, the firm said revenue suffered as the yen strengthened but its operating income soared over 98 percent thanks to gains the company made in its Retail Solutions Business Group in overseas markets. Sales for the Printing Solutions Business Group dropped just over 22 percent during the six-month period from April to September as compared to the same period in 2015. After closing the books on its tough first half, the firm revised its outlook for the year downward, which was the second time that Toshiba Tec was forced to cut its forecast during the current fiscal year. For the year ending on March 31, 2017, the company now expects total revenue to drop 8.7 percent as sales from the Printing Solutions Business Group fall 16.5 percent.

So What About 2017?

With 2016 now in our rear-view mirror, the focus is on the New Year. Unfortunately, we don’t see a huge turnaround in the world markets this year but things 30

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may get a little better. Japanese firms should have a better time of it as they close out the current fiscal year and move into the next. While the yen may not weaken as it did a few years ago, it now seems unlikely it will strengthen like it did last year, especially if the Japanese government has its way. Japan’s monetary policy under its current prime mister Shinzo Abe has relied on a weaker yen to grow the economy and Mr. Abe is expected to remain in office until next year. Economists now forecast the yen-dollar exchange rate will stay at about its current level through the summer. With the Dow soaring, more than six years of constant employment growth, and wages up modestly, the U.S. market should continue to be the industry’s best performer this year. Although after the U.S. presidential elections many economists said they expected to lower their GDP forecast for 2017, most have continued to say the U.S. economy will grow at between 2 and 2.5 percent. Consumer spending is also expected to rise. On the employment front, things look good. According to the most recent ManpowerGroup Employment Outlook Survey, which is based on interviews of more than 11,000 U.S. employers, 19 percent of those surveyed expected to increase staffing while 73 percent expected no change in their hiring activity. Only 6 percent of those surveyed said they would cut employment levels during the opening months of 2017. The rosy outlook was shared across industries and the percentage of U.S. employers looking to add jobs during Q1 2017 was in the double digits for the majority of industrial sectors. For printer and copier vendors,

the survey held particularly good news because a healthy percentage of employers from industries associated with high print volumes expected to add staffing this year including Professional & Business Services (20% to add staff), Leisure & Hospitality (30% to add staff) and Financial Activities (19% to add staff). But there is plenty of uncertainty both at home and abroad. Surprising events like the election of Donald Trump and Brexit have left economists puzzled as to how GDP will grow in the established markets this year. Some say that the new Trump administration and Britain’s exit from the E.U. will spell trouble with regional economies. The European Commission warned that the E.U. would slip into recession this year but better-than-expected economic news out of the region after the Brexit vote suggests otherwise. In the U.S., some on Wall Street predicted a Trump election would stymie economic growth. Forecasts have yet to be cut, however, suggesting that Mr. Trump’s election may not cause big trouble for the domestic economy, an opinion that seems to be borne out by the employers participating in the ManpowerGroup survey noted above. We’ll be following all the news closely and providing industry analysis in real time. Honestly, who knows what will happen next? What will happen to Canon now that HP has purchased Samsung? Will Lexmark be able to thrive in Asia? Will Xerox be successful in its attempt to push further into the reseller channel? For the answers to such vexing questions and more, all I can say is: “Stay tuned!” ♦

Nominate Your Candidates for the Industry’s Difference Makers Who are the individuals making the key contributions to the industry or to your organizations? Email your recommendations along with a couple of sentences as to why and how they are making a difference. Nomination deadline: February 28, 2017

Submit Your Nomination at www.enxmag.com or email to: susan@enxmag.com We Saw It In ENX Magazine



Dealer Spotlight

Commonwealth Digital Office Solutions’ Secret to Success in Production Print

C

ommonwealth Digital Office Solutions began in 1977 in a little warehouse in Manassas, VA, with 1,250 square feet of space and no central heat or A/C—it was rough. Today they are exclusively a Konica Minolta dealer servicing the Washington-Baltimore metro area with a 35,000 square feet facility as well as an office in Greenbelt, MD. While most dealers find production print intriguing, Commonwealth Digital has dived deep into this segment, building up its production print business over the years, gaining new customers and providing exceptional service. What makes Commonwealth Digital unique in production print is that they go the extra mile for their customers. They have a guarantee that if the customer’s machine isn’t up and running in four hours, they will print whatever job they have on the same machine for free. In one case, a customer’s machine wasn’t broken; they were simply overloaded. Commonwealth Digital printed their overload for them at no extra cost. The company’s website has two video testimonials from production print customers attesting to Commonwealth Digital’s remarkable level of service. With a record year in 2015, and overall sales up 8 percent

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and profits up 32 percent in 2016, Commonwealth Digital Office Solutions is well positioned for 2017. The company is a debt free company, owns its building, and has its own leasing company. To gain better insight into what makes Commonwealth Digital so successful, we spoke in depth with Mike Sarelson, president and owner, about how business is going, company values, and all things production print. What does Commonwealth Digital Office Solutions pride itself on? SARELSON: What we do here is actually speak to the customers. Over the years we talked to customers and we’ve developed everything we have around the customer’s wishes. We customize plans for each and every customer if there’s something they want. We give their money back if they’re unhappy, and we haven’t given money back in over ten years. How is business this year? Where do you see your greatest opportunities for growth? SARELSON: This year was the best year we’ve ever had in business. On the production print side, in 2016 there was a 73 percent increase in equipment sales and the amount of meter clicks was up 48 percent over 2015. And we didn’t have to hire any extra technicians or sales people. This was all done with one specialist and our telemarketing department. 85 percent [of production print] was new business. Why did you decide to go into production print? We Saw It In ENX Magazine

Mike Sarelson, president and owner SARELSON: Production print is where the money is. Production print makes up 10 percent of the business, but if you sell two production units a month and they average around $100,000120,000 each, that’s about $2.5 to $3 million a year in production print in machine sales. It’s the only product you can sell that brings in more [aftermarket] revenue than for the equipment itself. One of our customers runs 24 million B&W prints a year. The amount of return on a customer is phenomenal. We have no government sales; all our business is corporations and associations. Some dealerships twice the size of ours make the same money we do. Why take on that extra work and effort? To us, it’s about profitability. To what do you attribute your success in production print? SARELSON: We put on a specialist about two and a half years ago and built a list of production print accounts. We had our telemarketing department for 25 years, but if we sold a

continued on page 34



Commonwealth Digital Office Solutions’ Secret to Success in Production Print production print machine prior to when we put the specialist on, it was by accident. The telemarketer had no clue who the customer was, and the sales person when they went there found out it was a production print machine. But it wasn’t targeted. The difference is now we have a specialist so we can target the customers we want. Do you have any tips for other dealers looking to go into production print? SARELSON: One thing we do with production print that’s so important is, since we have our own leasing company, we run a credit check [early in the sales process]. A lot of printing companies can’t get lease approval. If you don’t, the sales rep will spend a lot of time running after the customer. If the company can’t get credit approved, the rep shouldn’t start the process. How do you view the industry changing in the future and what are you doing to adapt? SARELSON: I don’t really think about that. Most of the major manufacturers, in our case Konica Minolta, spend money on R&D and research exactly where the marketplace is going to be. I’m busy enough running a business. We’re already in IT services, network services, managed print services, document management services, printers, MFPs…I can’t imagine much else. Where the market goes, the manufacturers will go, and where the manufacturers go, we’ll go. Being a dealer, that’s what we’ve always done. We’ve adapted to what we needed to. What was your dealership’s most significant accomplishment this year?

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Konica Minolta Certified Production Print Technicians

SARELSON: We grew our new business. Our telemarketing efforts were geared towards specifically non-Commonwealth customers for two reasons: a) to sell them document management, and b) after the sales was made we could bring in the staff for our MFPs. 26 percent of our overall sales was new customer business in 2016, which was good for us. For instance, we sold a document management system to a customer. It wasn’t a big sale, but we also sold that customer 12 MFPs. And we never would have if we didn’t sell that customer a relatively small document management system. What was one of the biggest challenges of this year? SARELSON: The biggest challenge was bringing more awareness to new customers and also to our existing customer base about our IT services and document management. We put on special telemarketers just for that, with separate marketing efforts, from snail mail to email, and in house shows, and we’re building on that in 2017. What was one of your biggest wins this year? SARELSON: We had one customer that our telemarketing department reached for us. They already had

two production print machines from somebody else. We took over the account and sold them four more production print B&Ws and a color unit, so they have a total of six B&Ws and one color unit. They run 2 million B&W prints a month, and they run 200,000 color prints a month. Those are the customers we’re looking for, and there are more of them out there. Who do you see as your biggest competition, and how do you differentiate your company from the rest? SARELSON: When we give a proposal to one of our existing customers, the field of competitors is not as crowded. There might be two others, or it might be none. When we go into a company that is actively looking to change vendors, there could be seven, eight, nine different companies in there looking to get their business. We’re in a major metropolitan area, so it’s crowded with dealers and [direct] branches. But the good side is that there’s a lot of business to be had. Our sales department’s experience is the big differentiator. We don’t have anybody in our sales department that has less than 20 years of experience of selling copiers and MFPs. When our sales reps go out, they know exactly what they’re doing and what they’re talking about. What is one business marketing innovation that you feel exemplifies your company culture and values? SARELSON: That would have to be our telemarketing department. They set

We Saw It In ENX Magazine

continued on page 36


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Commonwealth Digital Office Solutions’ Secret to Success in Production Print all the appointments for the sales team, which enables us to keep the best while allowing us to write the volume that we write with just 14 reps. We have 12 reps that sell hardware, the others software and IT services. We email, have in house shows, and follow up with our telemarketing department. We have people that come in here for a demo and I tour them around the facility and when I walk them through the telemarketing department, the first thing they say is, “I want to see Mary. She’s been calling me for three years. Which one is Mary?” and go right up to the telemarketer, and it’s like old lovers. It helps us in every single area— retention, quality, customer contact, and appointments—and drives sales. That’s our big marketing innovation, the same one we’ve had for 25 years, just making it better every time. Is there a product or solution that you are looking to provide in the future? SARELSON: I would like to market the very high-end production print units, the million dollar machines, for the same reasons as production print—low expenses, high profitability. I know Konica Minolta has them, and showed them in Europe at the drupa show. That machine prints on cardboard, even on packages. What do you look for in your employees? How do you recruit and retain good ones? SARELSON: We pay them, that’s how they stay. And they don’t have to do any of the dirty work. The sales people don’t set any of their own appointments; the telemarketers set all their appointments for them and do the follow up for them.

Workshop for equipment setup and installation 36

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We just want them out in front of the customer. You have to treat people right, like they’re family. We only hired two people in the last 15 years for sales and for admin. We don’t turn people over. Our average tenure for Showroom the company is 27 years and our average tenure in telemarketing is 12 years. I don’t hire a whole lot of people, but when I do, the first thing I want to know is–are they a family person? If you don’t care about your family first, you’re not the type of person we want to work here. Everything else we can teach you, but if you’re a rotten S.O.B., that’s not going to change. What keeps you motivated and excited about the work that you do? SARELSON: This business is like a crossword puzzle. It’s fun putting all the pieces together and working through the challenges. Working through the situations in the economy, like our leasing company, which we didn’t have before the crash of 2008; when we couldn’t get approval for anybody no matter who they were. We had to form our own leasing company by circumstance, but it’s worked out great. All these crazy things come up, but you just adapt and it keeps my brain awake. I like to do it. What is your least favorite thing about your job? SARELSON: The commute from my house to work and back. That’s what I hate, two and a half hours on the road a day. It used to be 30 minutes coming in and 30 minutes going home, but traffic is just crazy here

in the Washington D.C. metro area. They say after Los Angeles it’s the worst in the country. Outside of work, what do you do for fun? SARELSON: I work every single day except for five weeks during the summer. I have a camp in the Canadian Arctic, 150 miles below the Arctic Circle. There’s no Wi-Fi, no phone except satellite phone, no TV, just satellite radio. No one around for 96,000 square miles. I have an Eskimo family that takes care of the camp for me. I have six bedrooms and five people come up with me initially. And every week, I have five come up, five go back. I‘ve had wounded vets, terminally ill people, and all my sales reps and their kids. Next year I have firefighters that have been hurt and police officers. These are people I meet, hit it off with, and I just invite them. Everybody turns out to be great people. For me it’s a blessing. I don’t call the office once in five weeks, and when I get back, everything is perfect. What are you looking forward to the most for the year ahead? SARELSON: Doubling our efforts in production print, and improving our IT and document management departments. Other than that, it couldn’t be better. Our MFP sales are through the roof. We’re not looking to add any more expenses. Our sales people are telling me the whole mood of business is better. They’re looking for Trump to do away with regulations and lower business taxes. They feel like it’s going to be a booming economy in 2017 and I’m all for that. ♦

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Charles Lamb

Leadership News Briefing

10 Areas Requiring Change!

A

t the turn of the year I met with my team as I always do to review our 2016 engagements. I wanted us to actually document and analyze anything that stood in the way of launching an effective sales and marketing strategy. We discussed many topics but specifically I wanted them to document any behavior, activity or habit that had a negative impact on our efforts. I opened the scope of consideration to include all players: the dealer principal, sales leaders and the sales rep. I even said they could cite cases if the company’s brand itself was the problem. Below is just a sampling of the list we produced: 1. The company has no objectives, focus or direction. 2. The sales leader refuses to, or is incapable of, LEADING the reps to success. 3. The owner doesn’t support the sales manager and allows the reps to do an end-around on the sales manager. 4. A great sales leader is stuck beneath a not so great owner. Chaos! 5. The owner is out of touch and lost their desire to compete or be flexible. 6. Upper management doesn’t like confrontation so nothing gets done or solved. 7. A named accounts list vs. open territories prevents reps from proper canvasing of the marketplace. 8. The company sells managed I.T. but the dealer’s technology and network is behind the times. 9. Constant turnover in the sales department prevents execution or momentum.

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10. The company claims double-digit growth indicating an excellent business position. However, you find that just a few clients are responsible for the growth. I’ve seen micro managed sales teams fail and barely managed teams succeed. It’s all about motivation and positive momentum. It would be easy to say that it’s magic, but it’s not magic at all. Like a triple play in baseball, when it comes time to execute, they only throw out the runners if they’ve prepared for that play. When a sales team from top to bottom is practiced, prepared and ready, success usually happens. Let’s take a look at the above list and discuss each of them a little deeper. 1. The company has no objectives, focus or direction. We’ve discussed this many times: a company that wanders through each day creates a team that wanders. Without growth or sales objectives most companies produce way less wins than if they do define their objectives. Without focus or direction, it seems that many of the deals are price driven and on the lower profit side. If you plan your way to success and put all of the necessary effort into it, most likely you’ll get there. The secret though for those who are really in bad shape is NOT to wait too long to change course. 2. The sales leader refuses to, or is incapable of, LEADING the sales reps. Let’s talk about the incapable side first. This is so popular I hate to even bring it up. Many dealerships promote a current sales rep to the sales manager position just We Saw It In ENX Magazine

to keep them from leaving. I’m not saying it can’t turn out well; I am saying, it seldom does. A sales leader should have solid experience in leading a sales team to success and it’s not crazy to expect a candidate to share their leadership successes. On the other side, a sales leader who refuses to lead their team most likely has some issue with the owner and, like any other position, what you expect from them must be crystal clear and boundaries and accountability must be set. 3. The owner doesn’t support the sales manager and allows the reps to do an end-around on the sales manager. One of the hardest things to nail down is chain of command. Empowering your sales leader to actually be the leader is a hard thing to do, especially in smaller companies. The owner is used to being the “buck-stops-here” person and often continues to deal with sales reps’ questions instead of sending them back to the sales leader for direction. Often they get different answers and they learn quickly who to ask to get what they want. If you have a sales leader, train them in what you want and then hold them accountable. Of course your door is always open, but before you give answers to any questions, direct them to their sales leader first. 4. A great sales leader is stuck beneath a not so great owner. Chaos! This is a number one cause for sales leadership turnover. If sales reps pick up signals that the sales leader is being stifled, it can look to them that their income is being stifled as well. It’s bad medicine, continued on page 40


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10 Areas Requiring Change! and when you think about it, the only cure for this is either the owner changes or the sales leader leaves. Hint: Owners don’t seem to change very often. 5. The owner is out of touch and lost their desire to compete or be flexible. It’s not everyone, but there does seem to be a level at which some owners check out of the fast lane and their pace slows dramatically. Some mention “Quality of Life” as the reason, with which I have no problem. However, the office technology world is a fast-paced, demanding industry and if the top of the house is not 100 percent in the go mode, the company will most likely be less relevant in the marketplace. 6. Upper management doesn’t like confrontation so nothing gets done or solved. There’s nothing more frustrating than not getting answers in a timely manner. This drives consultants crazy as well. CHANGE is a necessary part of winning and growing your company. There is a profile out there where the owners are uncomfortable with confrontation and when you have a sales rep demanding one thing and the sales manager standing on policy or principle. It’s almost always the one that yells the loudest that wins. This always has a loser and if that is your sales leader, they usually leave. 7. A named accounts list vs. open territories prevents reps from proper canvasing of the marketplace. Named accounts vs. open territories. I don’t see it very often today but occasionally do run into a company that has trapped their reps into a named account list only. Usually a few hundred contacts and they can’t call on anyone else. I’m told they can add new contacts to their list by retiring some of their existing contacts with a disposition that eliminates them as a prospect. I understand why they do it, or at least why they say they do it. They want a focused effort by each rep to penetrate their own list. I have seen few companies succeed with a named account only list. The difference between canvasing and target40

www.enxmag.com | February 2017

ing is clear. Canvasing covers a marketplace to hopefully discover “right now” opportunities, calling anyone and everyone within one’s territory. Targeting is more specific and more in line with the named account strategy. One has a focused effort to penetrate specific accounts and the other actually covers the marketplace to find other deals going down. You need both! Reps can only stand so much rejection, then they move on. If you don’t manage your rep’s activity, I could see a named account list as a great babysitter; if you do manage your rep’s activity, then you could manage both the penetration of their named accounts and the canvasing of a territory, which is a more comprehensive coverage of a marketplace. 8. The company sells managed I.T. but the dealer’s technology and network is behind the times. There is nothing more frustrating for a sales rep than when they only have a desktop computer and not a laptop. They have to be on the go, they should be as mobile as today’s technology requires. If they do have a laptop and no hot spot, that’s a problem as well. Their network, screen changes and email are all too slow. The sales department of a technology company should have up to date technology and the knowledge to use that technology. You have to eat your own cooking! You sell the latest technology; your team should use the latest technology. 9. Constant turnover in the sales department prevents execution or momentum. This isn’t an easy one, as it requires a deep assessment as to what’s causing the turnover. However, we often find that constant turnover almost always comes from compensation and expectations; what you pay someone to do versus what you expect him or her to do. A big disconnect here is many owners believe and say, “They know what they need to do!” when in fact the expectations are not clear. Additionally, the financial picture was painted way more plentiful than reality. Define the job and compensation fairly, then build a career opportunity and the right folks will apply for the job.

10. The company claims double-digit growth indicating an excellent business position. However, you find that just a few clients are responsible for the growth. Why is this a bad thing? It’s not really bad, but it can be misleading, especially to less experienced owners who believe that because they show double-digit growth their company is healthy and in an excellent position. None of us would turn down those bigger deals, but if your client portfolio contains a few gigantic clients and very little new business is coming in, YOU ARE VULNERABLE. Build a new business strategy today! If you could sit in my chair and hear once or twice a month from a distressed owner asking me how to save the relationship of a large client who represents 20 percent of your annual sales, you can easily see why building a diversified client portfolio is important. Although one might think our discussion will circle around new issues or topics, it seems year after year we discuss the same things. Small companies, large companies, direct sales or independent dealers, they all seem to deal with the exact same issues. We’ve chosen only 10 items; however, as each new engagement starts we begin to see very similar reasons for why things are the way they are. The fact is, businesses win or lose because of their leadership. Most importantly you must be flexible, out think the competition, ensure that your sales team is well trained and the best as it relates to product and services offered in the office technology world. Recognize the need for change and follow through! ♦

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Service Excellence Platinum Award Winner News Briefing

Office Technology Service Excellence Award

PLATINUM LEVEL

Net New Spurs Growth for Hendrix Business Systems, Good Service Keeps It

I

n an industry where 10 percent annual growth is considered good, more than 50 percent is nothing short of phenomenal. That’s what Hendrix Business Systems achieved in 2016, growing from $8.1 million to $12.3 million. Much of that growth (73 percent) was the result of new business driven by the company’s solutions and production print sales. When you factor in the 96 percent retention rate that Hendrix Business Systems has achieved, you can see that this dealership has a bright future. That retention rate is no accident. Hendrix Business Systems attributes it to the excellent service it provides. “We have run our business and we will continue to run our business as a people organization,” said owner Roger Hendrix. “You deal with a real person. You deal with an employee that has the ability to make decisions for the particular customer.” “We tailor our solutions to solve the customer’s problem. If a customer is round, we will create a round solution for that customer. If a customer is a rect-

Hendrix Business Systems 42

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angle, we’ll create a rectangle solution for that customer. Whatever the shape is, we will change ourselves to make sure we can fit the customer’s need.” The results Hendrix Business Systems has achieved with its service has earned this month’s BEI/ENX Service Excellence Platinum Award. Hendrix Business Systems was founded in 1976 as a typewriter and calculator dealer. It became one of the first Canon C-Series copier dealers in the early 1990s. Since then, it has been primarily a Canon dealer, having added Xerox when it acquired another dealer last year. “We changed over to full-line Canon about eight and a half years ago,” said owner Roger Hendrix. “Since then, we’ve doubled almost three times.” During that time, the company has grown from 10 to 56 employees and from one to four locations. “We do very well with downthe-street, 50-employee or less businesses, because that’s where we came from, but we also are doing extremely well with the more major account sized businesses and the national accounts,” said Hendrix. “We’ve progressed up through the ranks all the way into production now.” The company started selling solutions and production print about four years ago. Hendrix says most of the growth is coming from production print, selling mainly to centralized reprographic departments (CRDs). Solutions sales, mostly of Canon’s uniFLOW, are important in We Saw It In ENX Magazine

Roger Hendrix, Owner/President

part because they are driving sales of machines. Director of Service Jeff Whitlock estimates that Hendrix Business Systems placed 300 machines in 2016 because of solutions sales, bringing the total number of machines under contract to 3,500 in 2016 and building to over 4,000 in early 2017.

Service Is Job #1

Regardless of what Hendrix Business Systems sells, both Hendrix and Whitlock consider service the company’s main business. “We’re in this business because of the service. Service is the driving engine for this industry, and that’s why we’ve put all the resources that we can into continually upgrading and extending ourselves to provide more from the service standpoint for our customers. We want to become as much of a consultant with them as we can.” “Service techs see your customers the most and communicate with them the most,” said Hendrix. “They’re almost like our customer service representatives. [Customers] know they can count on them, and that’s important.” continued on page 44



Net New Spurs Growth for Hendrix Business Systems, Good Service Keeps It Providing that kind of service requires extra attention to the company’s bottom line. “Our biggest challenge is getting that balance between providing premium service and maintaining profitability. We seem to handle that very well,” said Whitlock. He noted that production print customers are more demanding in their service expectations. Hendrix said it is a struggle to stay relevant and make a profit when the market cost per copy (CPC) continues to go down. “The manufacturers are coming out with machines that operate at a lower CPC, but it’s also been our experience that the direct operations continue to drop those CPC prices in the field,” said Hendrix. “That’s the reason I give Jeff a lot of credit. You have to look at parts more closely. You have to look at truck inventory more closely. You have to look at the rolling stock of drums and toner more closely, ordering more often but ordering less so that you’re not tying up too much cash on the shelf. You can’t afford to do that anymore.” He added that they’ve closed some large service deals where their bid was actually higher than the closest competition because the customer saw the value-add. “We work real hard to make sure the customer understands our value-add proposition,” said Hendrix. Both Hendrix and Whitlock agree that a positive company culture makes a difference with the quality of service. “It’s more of a familytype atmosphere, which leads to better employee morale,” said Whitlock. Service techs are also empowered to make their own decisions in the best interest of the customer. “If an employee feels like they’re not valued and that their hands are tied, then they can’t do their job properly. We appreciate our employees.”

Charlotte NC Showroom 44

www.enxmag.com | February 2017

That data has also “Some of the strongest provided insight that and best attributes as a has improved the way company that we have Whitlock coaches his come directly from our service techs. “When employees. I would like we do our oneonone to say it was all me, but it meetings with our techwas almost none me,” said nicians, we have the Hendrix. “That’s what I data that we need right give Jeff a lot of credit for. there in front of us to When he sees a service discuss what their peremployee or any employformance was for the ee in his department that last month. BEI also has shown the ability to allows us to see how make good solid deciJeff Whitlock, Director of Service our technicians and sions, then he gives them the our equipment are performing compared room to make more of those decisions.” to the world. That’s an invaluable tool Measuring for Better, Profitable to me because that helps me judge how Service we’re doing as a service organization.” The desire to better serve customers Because of the process efficiencies and while remaining profitable was a key coaching, Hendrix Business Systems has reason Hendrix Business Systems imbeen able to grow without adding a lot plemented BEI. “We specifically needed of service techs—essentially just the two help with increasing our FCE (first-call service techs that came with the acquisiefficiency) and getting our parts usage tion. That brought the total to 15. “Here under control. Our incompletes and our was the big thing with BEI,” said Hencallbacks were through the roof. Our drix. “It helped us take the service team parts spend was astronomical before that we had and accomplish more with we started with BEI,” said Whitlock. them. Plus, we have plenty of bandwidth BEI has met those expectations, and as to accommodate further expansion.” a result the company has met its goal Another big plus is that Hendrix Busiof higher customer satisfaction and surness Systems customers are confident passed its profitability goal. that they are going to get good service. “In these days and times, there’s not “They really appreciate us getting their enough room to be sloppy anymore,” issues resolved the first time that we visit said Hendrix. “BEI has been extremely them. They also like that after we perhelpful with showing us where we’ve form our total call procedure, they know been and, better still, where we need to that they’re not going to see us again for go. It also helps us understand all this a while.” data that we have in ECi eautomate. We Although Whitlock said his service spend hours upon hours putting data techs were hesitant about BEI at first, into eautomate, but then it’s almost imthey quickly came around once they possible to ascertain anything from it in realized how the company was using it. a timely manner without the help of a “Again, I use it to coach them to be betcompany like BEI.” ter technicians, not to say, ‘Oh, you’re a bad technician. These are your numbers. You need to get these better.’ “One of their biggest concerns was that they would lose that ability to make decisions in customers’ accounts when something needed to be done in their opinion,” said Hendrix. “Jeff assured them that that’s not the way we were gocontinued on page 46 We Saw It In ENX Magazine


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February 2017 | www.enxmag.com

45


Net New Spurs Growth for Hendrix Business Systems, Good Service Keeps It

Morrisville NC showroom

ing to use it. We were going to use it to learn where we’ve been and to map out where we need to go.” BEI will continue to be an important tool for Hendrix Business Systems going forward. “We would always be interested in anything new that BEI comes out with because it’s been a proven product. We made an acquisition in 2016. Jeff implemented the BEI pieces up there also for the techs and for the service department. That’s run smoothly. Without question, BEI is a longterm partner for us.” Hendrix is proud of the respect his company has earned with Canon due to its focus on the customer and service. “There are things that we do not do or products that we do not service, but for what we choose to do, we’re always going to work to increase our ability to make it the best service that’s available. That’s why Canon USA will use us to alpha and beta test in the field.”

Looking Ahead

Hendrix sees no reason why his current business model won’t be

About the Dealership: • President/Owner: Roger Hendrix • Director of Service: Jeff Whitlock • Number of Techs: 15 • Number of Devices Serviced: about 3,500 46

www.enxmag.com | February 2017

We Saw It In ENX Magazine

just as successful in 2017. The company hopes to expand geographically with another acquisition, and that means expanding service as well. “Jeff is always looking at new talent to bring on board to expand the service and IT departments,” he said. The company is also building out its current facilities. “We’re expanding our production showrooms in uptown Charlotte. We’re expanding our production showroom in Raleigh, and we’re creating a production showroom in Greensboro, North Carolina,” said Hendrix. “That’s an exciting piece, because we’re providing something different than a lot of other places.” He noted that having a production lab allows customers to be involved in an actual working environment. “That has been very successful for us.” Wherever the market takes his company in the future, Hendrix believes it will be interesting. “That’s the one thing I like about the industry. There’s always something new. It always will take a 90 degree turn and tear off on a tangent on you if you’re not careful.” ♦

Why They’re a Platinum Award Winner: • First-Call Effectiveness: 68% • Call Back Rate: 17% • Hold for Parts Rate: 15% • Ranking: 11th overall of the 170+ dealers



Ken Edmonds

Service Management News Briefing

The Value of a Technician

A

t one time or another, every service manager has to deal with a technician wanting more money. The service manager is faced with a difficult situation when senior management resists. When I was a service manager in California, the dealer I worked for would let a technician leave when a $.10 per hour raise would have kept them with us. As a service manager, it was very frustrating, and to combat that, I sat down and worked at computing what it costs to hire and train a technician. Every service manager should work through this exercise.

Cost of Hiring Recruiting Cost The first cost associated with hiring a replacement is the cost of recruiting. This would include the cost of advertising, using an outside recruiter, and cost of the manager’s time to review resumes and interview applicants. Research shows that this cost can run from $2,000 to $5,000 dollars or more. To be conservative, we will use a cost of $2,500. Onboarding Cost After selecting a candidate, the next step is to get them onboard with the company. Costs associated with this would include background investigation, drug testing, perhaps a physical. Also included would be the time of employees to enter the new technician into HR and payroll systems, explain benefits, provide orientation to the company, etc. This cost can easily exceed $2,000 and even more if you provide relocation money. For our example, we will use $1,500 to be conservative. Cost of Bad Hires In every company, there are going to be new employees that 48

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do not work out. The reasons will be different but there will be bad hires. If your company uses a 90-day probationary period, then in most cases you would be out the recruiting cost plus the first 3 months of salary and associated costs. According to a recent salary survey of copier technicians, the average salary was over $45,000. If we reduce that by one third, that would still leave a starting salary of about $30,000. For 90 days that equates to $7,500 plus counting the employer’s share of taxes, it would be closer to $8,000. If we are very good at hiring and retaining new employees, we might have a 90% success rate. If we use a 10% failure, this adds another $800 to the cost of new hires.

Cost of Training

After hiring and onboarding a new technician, the next expense we have to consider is the cost of training this person to service equipment successfully. Again, the amount of training cost will vary depending on industry experience and aptitude. For our discussion, we will use a new technician of average aptitude. More experienced technicians require less training, but will demand a higher salary. Formal Training For a new technician, there will be a number of online and factory schools that they will have to complete. For our discussion, we will use four factory classes. We will account for online training later in the article. For the factory classes we have the cost of travel, hotel, and meals that need to be included. Assuming the following: • Travel

$300

We Saw It In ENX Magazine

• Hotel

$500

• Meals $200 • Total

$1,000

These values are conservative. With the four classes, that is a total of $4,000 in additional cost. For dealers that have in house training, the cost may be slightly less, but we would have to include the value of the trainer’s time. OJT During the training process, there will also be costs involved in providing on the job training (OJT). The technician or supervisor that is providing this training will accomplish less while he is training. He will have to move more slowly, stop to explain things, and then as the new technician progresses, he will initially be slower and make more mistakes. This is a difficult number to calculate and will vary depending on many factors, but for our discussion, we will assign a token cost of $1,500 to this process. This gives us a total training cost of $5,500. Again, this is a very conservative value and your actual cost is likely to be significantly higher.

Cost of Lost Productivity

The costs listed above pale in comparison to the impact on productivity of the new technician. When we factor in the lack of skill, the time spent in OJT where the technician is not aiding in the call process, and the necessary online training time, the new technician will most likely be 50% or less effective in the field as a skilled technician the first year. During the next year, he might improve to be 75% effective and by the third year, he should be approaching the 90% level. continued on page 49


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The Value of a Technician If we use our initial salary of $30,000 and we add another 25% to cover taxes, insurance and vacation, that gives us a cost of $36,000 per year. This would mean that the first year the company had a lost productivity cost of $18,000. The next two years add another $12,600 in lost productivity. This is a total cost of $30,600.

The result Recruiting Cost

$2,500

Onboarding Cost

$1,500

Bad Hire Cost Training Cost

$800 $5,500

Cost of Lost Productivity

$30,600

Total

$40,900

When I went through this exercise working in California, the cost 20 years ago using actual data was over $60,000. So to save $208.70 in the cost of the raise for one year, my employer let $60,000 walk out the door. I would encourage all to sit down and work up the real numbers for your company. Understanding this information will motivate you to do all you can to retain employees. I would also encourage you to review your hiring process to minimize the number of hiring mistakes. ♦ We Saw It In ENX Magazine

February 2017 | www.enxmag.com

49


Industry News News Briefing

ITEX is Better Than Ever

I

Marc Spring

TEX Imaging & Technology Education Exposition is the largest and most extensive international trade show connecting vendors and resellers in the office technology space. Aimed at Business Solutions Providers (BSPs) such as IT VARs, Copier and Print Dealers and Imaging VARs, the show has grown exponentially and is now a staple of the industry. Founded by Marc Spring in 2001, ITEX was developed to provide BSPs with access to vendor-neutral education, trends and best practices to help grow their businesses. As the show grew over the years, it proved to be a huge success—with revenue growing 780 percent between the show’s inception in 2001 and when Spring sold the show in 2009. Now for 2017, Spring has reacquired the show and is determined to bring back the best of what ITEX has to offer. Here’s what he had to say about reacquiring the show, and what to expect in April: We’ve been hearing a lot of buzz about the show since your reacquisition, what is the direction for ITEX this year? SPRING: ITEX was always about bringing the industry to-

gether, but more importantly, ITEX has been about what will be the next “big thing” that dealers need to focus on. This year is all about the convergence of the industry, Managed Print and Managed IT coming together and transforming the way we think about Managed Services Providers. What will you be doing differently for the show versus previous years? SPRING: First and foremost, we are back in Vegas! But really, what sets my management of the show apart from previous years is that our education was crafted for dealers and by dealers. And we are re-committing ourselves to that dealer-centered model. At ITEX you’ll find the dealer education to get you where you want to go. In addition, I am excited to report that we will have six co-location events that will take place at ITEX this year! Tell me more about those partnerships and co-locations… SPRING: On the MPS side we’ve partnered with ENX Magazine, Industry Analysts and MPSA; for Managed IT we have partnerships with CompTIA, ChannelPro and Channel e2e.

What would you say is the biggest selling point for a vendor to exhibit at ITEX? SPRING: I would say the number of attendees; we are already expecting over 2,000 attendees including this new IT audience that our partners are bringing. Of course, we still have a channel of successful resellers who will be returning, so it’s really the perfect representation of that convergence. Why should someone attend ITEX? SPRING: We provide a perspective like no other event: a holistic assessment of the industry. We are in it for the benefit of all resellers and their goals, whether your dealership is small or large, whether you want to improve your MPS offering or get into Managed IT. We have everything from MPS courses to IT Certificates. Tell me more about the IT Certificate… SPRING: In the spirit of being at the forefront, this year’s show also brings something like never before. We will be offering an Executive Certificate in IT Security* from our partners CompTIA. This is a huge deal for the show and really underscores the emphasis we have placed on creating a technology-driven show. An IT Security certificate will go a long away for those resellers that want to differentiate themselves from their local competition when fighting for a Managed IT/MPS deal. ITEX 2017 will be held April 18 – 20, 2017 at the Mandalay Bay Hotel in Las Vegas. For more information, visit itexshow.com ♦ ITEX Contact Info: Tel: 954-903-7900 www.itexshow.com

50

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Technical Tips News Briefing

Loss of Memory in Xerox C35 Style: Dealing with NVM Failures on the DC555, WC-Pro55, WC-275, & WC-5687 Families Reloading System Software and dealing with messages: “System Unavailable,” “Speed Mismatch,” and others

P C35 style (Pro55 shown)

52

erhaps the most prolific and popular Xerox style of copiers/MFDs, the black and white C35 style started selling about 15 years ago, and through half a dozen new families of models, this series continues to be sold today as the WC-5890 family. One of the most difficult problems to cope with remains memory loss or corruption. The NVM (Non Volatile Memory) is protected by a 3 volt lithium battery and when that fails, as is true for most copiers, the machine loses its memory and needs to have the memory restored one way or another to get it back up and running. Let’s have a look at some of the fault messages you may see and the best steps to try to remedy the situation. First, an ounce of prevention is worth a pound of cure. Make sure to keep a current copy of the machine’s configuration report handy (keep a copy in a pouch on the rear cover of the machine). You’ll be happy to have this if you ever need to reload the system software, because you’ll need to know which version the machine was equipped with in the first place. Also, you’ll want to know with confidence which optional services are loaded and what the network configuration settings are supposed to be. You can also check the system software level by pressing the “Machine Status” button and then touching the “Machine Details” choice on screen. Read the version listed under “Current System Software.” It’s also important to back up the memory on these machines if the opportunity ever arises. If a tech with a PWS (Portable Work Station) laptop is working on the machine at any point, ask them to run the NVM Save/Restore utility and load the file onto a backup disk. Keep this disk in the pouch on the machine. This disk is known as the “Resident Diskette” (older models kept this on a floppy disk). This way if the NVM ever gets corrupted you have a backup file so someone with the PWS can use it to run NVM Save/Restore to restore the settings from the backup file. If you ever need to reload the system software on the machine, the process all depends on which model you’re working on. You can find the software .dlm file on the excellent Xerox support website: www.support. xerox.com and there enter the model of the machine and choose the link below your model for “Drivers & Downloads.” Scroll down to the bottom of the screen to find the firmware. You can download the newest software in a zip file and in most cases there are also

www.enxmag.com | February 2017

“Read-me” files available in pdf format that explain how to load the system software. You will need to refer to the machine or to a configuration report (as mentioned earlier) if possible to know which version of software will work with your model and configuration. If you don’t have a way to check which version, here are some guidelines as to which versions are used for which configurations: • DC-555 Family [(Document Centre) DC-535, 545, 555] MS (Multifunction System) version uses software starting with 00 (example: 00.27.18.000) DC (Digital Copier) version uses software starting with 0 (example: 0.27.18.000) • WC-Pro55 Family [(CopyCentre) C35, C45, C55; (WorkCentre) WC-M35, M45, M55, Pro35, Pro45, Pro55]WC-Pro models (advanced MFP) use software which starts with 03 (example: 03.98.50.000) WC- M models (printer/copier) use software which starts with 04 (example: 04.98.50.000) CC models (copier only) use software which start with 02 (example: 02.98.50.000) • WC-275 Family [(WorkCentre) WC-165, 175, 232, 238, 245, 255, 265, 275, 5135, 5150] WC-Pro models (advanced MFP) use software which starts with 13 (example: 13.60.22.000) WC models (printer/copier) use software which starts with 14 (example: 14.60.22.000) CC models (copier only) use software which starts with 12 (example: 12.60.22.000) • WC-5687 Family [(WorkCentre) WC-5632, 5638, 5645, 5655, 5665, 5675, 5687] SBC models [with Tag 040, SBC (Single Board Controller)] use software starting with 25 (example: 25.54.53.000) WC+PS models (with Postscript, without Tag 040 external controller) use software starting with 21 (example: 21.120.52.000) WC models (no Postscript, without Tag 040 external controller) use software starting with 20 (example: 20.120.52.00) Earlier models that had external controllers hanging from the bottom rear of the machine required software upgrading to be done from either a networked computer or from a PWS laptop. The newer WC-5687 family models which are with Tag 040 (these are the ones with the SBC) allow a way to reload the software from a USB flash drive which is good because this way you don’t need to use a customer’s computer to initiate the software upgrade. For the machines that allow loading from a USB flash drive, here’s how that procedure goes: you’ll

We Saw It In ENX Magazine

continued on page 53


Loss of Memory in Xerox C35 Style need to create a top level folder on the USB thumb drive and call it “AltBoot.” Then copy the .dlm file into that new folder. Next, make sure the USB printing option is disabled on the machine. Turn off the machine, plug the USB flash drive into one of the two USB ports on the upper rear of the machine, and then switch on the copier. A software upgrade screen will appear after about a long minute of waiting. Note that if the display goes right away to “Upgrade Failed” that would be a clear indication that the hard disk drive has failed. Normally it takes about five minutes before the display shows “Upgrade Complete - remove the USB flash drive and press ‘0’ to continue.” Continue following the instructions on the display. The rest of the process takes approximately 10 minutes for the machine to complete the process. The machine will reboot at least twice before it finally comes up and prints a configuration report that shows you the software upgrade is done. If you see a warning message saying, “The NVM you are trying to restore has been generated from a different version set number,” you will need to select “yes” to continue. “System Unavailable, do not power down until the power down message appears” The Xerox support site recommends to customers to wait at least 10 minutes till the “Power Down” button becomes available. If possible use the button on the User Interface (UI). If no button appears, attempt to use the Power Button on the left side of the machine. If that also fails to power down the machine, the Xerox support site recommends only then you should unplug the machine and wait at least 10 minutes before plugging it back in and trying to power it on again. These machines HATE having the power disconnected; it causes a lot of software problems. “Install Phase Incomplete” or “Speed Configuration Mismatch” You may see these messages or other odd messages if there is a loose software module (read below about what to do if the machine was recently moved), the memory backup battery on the software module dies, or you’re replacing the software module with a new one or one from another machine. If the machine was recently moved, the first thing you’ll want to try is checking the connections. Power down completely, then go re-seat the software module and the system memory DIMMs which are found in the image processing drawer at the top rear of the machine. These little sub-boards are standing up in card connectors on the image processing board. Sometimes that’s all that is wrong. Use Stabilant 22 on the card pin connections to help make an improved electrical connection that is protected against future contaminants and oxidation formation on the contacts. If you suspect the NVM has become corrupted by a failing memory backup battery, here are details on how to check the battery: Measure across the two legs on the opposite end of the battery from where the dot is found. You Memory Backup Battery (C35MBB) should read between 2.8 and 3.0 volts if the battery is good. The battery can be ordered under the part number C35MBB. When replacing the C35MBB, the battery is a yellow rectangular snapon type of battery on the software module sub-board on the image processing board. You will want to slip a small flathead screwdriver blade under the battery and lift straight up till two contact points come loose, then go to the other side and do the same. If you try to continued on page 54 We Saw It In ENX Magazine

February 2017 | www.enxmag.com

53


Loss of Memory in Xerox C35 Style pry the battery up, you risk breaking the piece underneath which the battery snaps onto. After replacing the memory backup battery or the software module, if you don’t have access to someone with a PWS to do the proper NVM Restore, or you don’t have the NVM backup disk, you will need to reprogram the memory settings manually from NVM Read/Write in diagnostics. Below are the critical NVM codes that need to be set correctly to match the machine’s original configuration. You must have these all agree as to what speed the machine is set up for. There are physical differences between the 32/35/38 ppm models and the 45/55 ppm models, and the 65/75/87 ppm models. Do not try to change these settings away from their original settings that match the actual model and speed of machine you’re working on. Most Critical Memory Adjustment Codes (NVM): Code

Description

Default

03-003 Market region: 0 = US, 1 = XCL (Canada), 2 = FX (Fuji Xerox - Asia), 3 = FXAPO (Fuji Xerox Asia Pacific Operations), 4 = ACO (Americas Customer Operations), 5 = XE (Xerox Europe) **Password: 2845490**

0

03-004 System Configuration: 0 = digital copier, 1 = Multifunction Device, 2 = Printer, 3 = Scan Server, 4 = OEM Scanner, 5 = OEM Printer, 6 = OEM Multifunction, 7 = Atlanta only

0

03-005 System Install Phase: set to 2 for “Customer Install” or 3 for “Customer Setup.” Note that during normal operation, this code will normally be set to 4 for “Install Complete.” Default is “0” meaning it thinks it’s still at manufacturer.

0

03-008 Product Identifier: used to ID the machine type over the network. There are a lot of models, so we’ll cover the list of settings for each model below *** The newcomers will no doubt have their own codes. **Requires Password: 2845490**

***See below for settings for each model and configuration.

03-012 Product Configuration (Copier Speed): 32, 35, 38, 45, 55, 65, 75, or 87 pages per minute. Note that image processing speed 08-001 must AGREE with this setting. **Requires Password: 2845490** WARNING: There are physical differences between the 35 ppm and the 45 or 55 ppm machines including gearing on the main drive motor. You cannot simply change these settings to speed up a machine. 08-001 Print Rate (prints per minute): 0 = 35, 1= 45, 2 =55 ppm (value must agree with 03-012). Newer models with faster speeds will undoubtedly have new values for this memory setting. **Requires Password: 2845490** Note: There are physical differences between the 35ppm and the 45/55, & 65+ ppm machines including gearing on the main drive motor. You cannot simply change these settings to speed up a machine.

54

www.enxmag.com | February 2017

Code

Description

08-002 Process Speed: the speed at which sheets move through the machine. It is unclear how this is different from the other speed settings, but make sure this also agrees with the other speed settings.

35/38 ppm = 0 45 ppm = 1 55 ppm = 2 65 ppm = 3 75 ppm = 4 32 ppm = 5 87 pm = 6 Default, unknown= 7

32/35/38 ppm = 179 45/55 ppm = 257 65/75/87 ppm = 362

09-001 TC (Toner Concentration) Low - Fault State (value = 1 if fault is declared). Reset to ‘0’ to clear some toner concentration faults.

0

12-001 Finisher Module Type: 65 = Oscillating Catch Tray (OCT) 67 = Simple Catch Tray (SCT) 110 = Large Capacity Stapler Stacker (2K) (LCSS2K) 120 = Large Capacity Stapler Stacker (1K) (LCSS1K) 130 = High Capacity Stapler Stacker (HCSS) 140 = High Capacity Stacker Booklet Maker (HCSBM) 150 = High Capacity Stapler Stacker Booklet Maker (HCSSBM) 160 = Binder 170 = Booklet Maker 100 = No Finisher

65

17-001 Disk present or not present (1 = enabled, 0 = disabled)

Default varies by model. Just make sure to set this to the correct speed for your model machine. The last two digits in the model number tell you the speed of the machine.

Default

0

***03-008 Product Identifier Settings for each particular model and configuration: Note: AMF = Advanced Multifunction options (includes network scanning, etc.), BMF = Basic Multifunction, PS = Postscript option included, DC = Digital Copier (copying only), ST = Multifunction DC555 Family: 535ST=33, 545ST=35, 555ST=37, DC535=32, DC545=34, DC555=36 WC-Pro-55 Family: WC-Pro35=48, WC-Pro45=49, WCPro55=50, WC-35=51, WC-45=52, WC-55=53 WC-275 Family: (AMF = Advanced Multifunction option, BMF = Basic Multifunction option, PS = with Postscript) WC-Pro265AMF=71, WC-Pro275AMF=72, WC-65BMF=73, WC-275BMF=74, WC-265BMF+PS=75, WC-275BMF+PS=76, WC-232BMF=77, WC-238BMF=78, WC-245BMF=79, WC-255BMF=80, WC-232BMF+PS=81, WC-238BMF+PS=82, WC-245BMF+PS=83, WC-255BMF+PS=84, WC-232AMF=85, WC-238AMF=86, WC245AMF=87, WC-255AMF=99 WC-5687 Family: WC5645 DC=106, WC5655 DC=107, WC5665 DC=108, WC5675 DC=109, WC5687 DC=110, WC5645 BMF=112, WC5655 BMF=113, WC5665 BMF=114, WC5675 BMF=115, WC5687 BMF=116, WC5645 BMF+PS=118, WC5655 BMF+PS=119, WC5665 BMF+PS=120, WC5675 BMF+PS=121, WC5685 BMF+PS=122, WC5645 AMF=124, WC5655 AMF=125, WC5665 AMF=126, WC5675 AMF=127, WC5687 AMF=128, WC5632 AMF=135, WC5638 AMF=136, WC5632 BMF+PS=139, WC5638 BMF+PS=140, WC5632 BMF=141, WC5638 BMF=142, WC5632 DC=143, WC5638 DC=144 Once you have all those critical settings right, you will still likely need to do the registration adjustments and run the machine to see if anything else needs to be tweaked or corrected. The best way is always to get a Xerox tech with the PWS laptop to come in and restore all the original settings. I hope that helps bail you out the next time one of these machines gets senile and loses its memory on you! Happy Repairs folks! J ♦ We Saw It In ENX Magazine


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“Paper Jam in Rear Door” Message HP Color Laser Jet CP2025, CM2320, M351, M451, M375, M475, M476 Printers.

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here has been an increase in cases where the above series printers have a constant paper jamming problem in the rear door in which in most instances escalates to a service call to have a technician first replace the pick up and separation rollers - to no avail. The symptom is that the printer will reach the ready state – start to process the print job – initiate pick up – pull the page about 3 inches into the paper path up to the transfer belt and then display “jam in rear door”. (Shown in image below with rear door open) The cause for this paper jam is that the transfer belt is not rotating within the printer. The cause for the belt not rotating is a broken gear on the Main Drive Assembly. The circled

gear is supposed to have 6 teeth (shown below with belt removed) that extend out to drive the transfer belt but in these cases the teeth shear off to a smooth surface and at that point require the Main Drive Assembly (MDA) to be replaced. The service manuals for these models do not list a part # for the MDA as the value of the printer is not worth the 2-3 hour repair time to change it and for most cases the printer is replaced. However it is available through Laser Pros International via part #: CM2320-GT-R for models CP2025 and CM2320 M475-GT-R for models M351, M451, M375, M475, M476. ♦

This Printer Tech Tip is contributed by LaserPros (www.laserpros.com). Email any questions to marketing@laserpros.com We Saw It In ENX Magazine

February 2017 | www.enxmag.com

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Far more than just good looks Discover our full line of award-winning document solutions

Meet the full line of Toshiba multifunction printers that will meet your customers’

National Distributors:

needs. Multitasking is being redefined with a full line of 23 distinct models, equipped

ACM Technology 800-722-7745

with sleek design, new customizable features, and unmatched versatility. With up to 75PPM in color and 85PPM in black and white, along with our Quality Commitment guarantee, the future of printing has never been brighter. It’s time to see what Toshiba can do for you and your customers. With our technology, services, and support, we will partner with you to provide what you need from start to finish, and everywhere in between. To learn more about our complete line of award-winning devices, contact a trusted distributor.

©2016 Toshiba America Business Solutions, Inc. Electronic Imaging Division. All rights reserved.

Collins Distributing Co 800-727-0884 International Digital Solutions 888-372-3700 Supplies Network 800-729-9300


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