Page 1

VOLUME 24 NO. 1

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

JANUARY 2017

DOCUMENT IMAGING TRENDS AND PREDICTIONS FOR 2017 AND WHAT THEY MEAN

APEX CLOSES LEXMARK DEAL. UP NEXT, HP’S ACQUISITION OF SAMSUNG’S PRINTER BIZ

Staying Ahead of the Technology Curve—An Interview with ACT Group Canon’s Mason Olds Is Bullish on the Dealer Channel and the Office Imaging Market Change Leadership! Why Your Sales Team Cannot Be Your Marketing Department What’s Your Base Management Strategy?

Office Technology Service Excellence Award

DIAMOND LEVEL

Interesting Times Ahead: How Will New Inkjet Devices Impact The Service Department? ENX Magazine ENX Magazine PO Box 2240 Suite 729 PO Box 2240 Suite 729 Toluca Lake,CA CA 91610-0240 USA Toluca Lake, 91610-0240 USA tel: 818-505-0022 tel: 818-505-0022 / fax: 818-505-9972 fax: 818-505-9972 email: enx@pacbell.net www.enxmag.com email: enx@pacbell.net

www.enxmag.com

We would like to thank those of you who have sent us address change information. HELP US CONSERVE NATURAL RESOURCES To correct or delete your address from our subscription list, please call, fax or email us.


In This Issue

16

STATE OF THE INDUSTRY

Document Imaging Trends and Predictions for 2017 and What They Mean By Michael Nadeau

26

MARKET INTELLIGENCE Apex Closes Lexmark Deal. Up Next, HP’s Acquisition of Samsung’s Printer Biz By Charles Brewer

32

DEALER SPOTLIGHT Staying Ahead of the Technology Curve—An Interview with ACT Group By Christina Kim

36

CHANNEL INSIGHT Canon’s Mason Olds Is Bullish on the Dealer Channel and the Office Imaging Market By Editorial Staff

40 42

LEADERSHIP Change Leadership! By Charles Lamb

46

SALES & MARKETING Why Your Sales Team Cannot Be Your Marketing Department By Darrell Amy

50 54

SALES MANAGEMENT What’s Your Base Management Strategy? By Sheryne Glicksman

55

PRINTER TECH TIP By LaserPros

56

DISPLAY ADVERTISERS INDEX

26

32

42 6

www.enxmag.com | January 2017

SERVICE EXCELLENCE DIAMOND AWARD WINNER Automation and Efficiency Keep South Coast Copy Systems at the Top of the Service Game By Michael Nadeau

SERVICE MANAGEMENT Interesting Times Ahead : How Will New Inkjet Devices Impact The Service Department? By Ken Edmonds

We Saw It In ENX Magazine


Expand your business with Samsung’s A3 & A4 platform. Samsung

2.0 • Increase profitability • Improve productivity • Enhance workflow • Extensive app center

To learn about joining the winning team of Samsung Authorized Dealers Call: 1-866-SAM4BIZ Take a virtual tour today at samsung.com/b2bprinters ©2016 Samsung Electronics America, Inc. Samsung is a registered mark of Samsung Electronics Corp., Ltd. Specifications and designs are subject to change without notice. All brand, product, service names and logos are trademarks and/ or registered trademarks of their respective manufacturers and companies. Simulated screen images.


Contributors

Staff

DARRELL AMY is the founder of Dealer Marketing, a managed marketing services team dedicated to helping independent copier dealers win net-new business and protect their current accounts. He regularly consults with dealers to create new websites and execute their digital marketing plans. Darrell has 23 years of industry experience in sales, sales management, solution selling, and digital marketing. Learn more at www.dealermarketing.net

Susan Neimes Publisher & Managing Editor

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.

Michael Nadeau Editorial Director

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

Todd Turner Contributing Editor

SHERYNE GLICKSMAN is a Regional Sales Manager with Compass Sales Solutions. Her company specializes in sales process automation using Compass Sherpa as the platform to help companies be more efficient and increase their revenues. Being in the copier industry for 24 years, She has first-hand knowledge of how the proper tool and leadership commitment can help retain customers, elevate client satisfaction and deliver new business growth. She is driven by connecting people with solutions and is inspired by affecting change and making a difference in our industry today.

Ronelle Ingram Contributing Editor

Christina Kim

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.

Editor

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México & Latin America

La Revista del Distribuidor Dealer Source

engage ‘n exchange

Corporate Office

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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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

8

www.enxmag.com | January 2017

We Saw It In ENX Magazine


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Image shown: SD375

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LASERJET M506N......................................................$150 REBATE LASERJET M506DN...................................................$180 REBATE LASERJET M506X......................................................$230 REBATE COLOR LASERJET M477FNW....................................$150 REBATE COLOR LASERJET M477FDW..........................................BIG SALE! COLOR LASERJET M570DN......................................$250 REBATE LASERJET M225DN..........................................................BIG SALE! LASERJET M402N.............................................................BIG SALE! COLOR LASERJET M553N.........................................$120 REBATE COLOR LASERJET M553DN......................................$160 REBATE COLOR LASERJET M553X.........................................$240 REBATE COLOR LASERJET M452NW......................................$200 REBATE COLOR LASERJET M452DN......................................$200 REBATE COLOR LASERJET M277DW............................................BIG SALE!

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150

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Parts Order Hotline: 562.977.4949

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.

NBS / ENX | January 2017


Since 1985

Your Prime Source T EL: 800.729.8320

FAX: 800.829.0292

INSTANT REBATE SALE! ALL INSTANT REBATE PROMOS ARE VALID THROUGH DECEMBER 31, 2016 TO CANON PREMIER PARTNERS OR WHILE SUPPLIES LAST!

D1520 / D1550

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200 150 $REBATE

$

REBATE D1520

Both models can only be sold to 3P Authorized Dealers!

D1550

125 75 $REBATE

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MF515DW

375 200 $REBATE

$

MF820CDN can only be sold to 3P Authorized Dealers!

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65

85

$

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Image Shown: MF628CW

Color Digital Copy/Print/ Fax/Scan MFPs w/ Duplex & W-Ntwrk • 21/21ppm (BW/Color) MF729CDW can only be sold to 3P Authorized Dealers!

135

175 $105

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Image Shown: MF729CDW

$

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MF726CDW MF729CDW

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LBP253DW can only be sold to 3P Authorized Dealers!

75

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Image Shown: LBP253DW

60

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LBP251DW LBP253DW

Both models can only be sold to 3P Authorized Dealers!

175 $210

$

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351DN

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325

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Image Shown: LBP6780DN

Image Shown: LBP712CDN

200 $80

$

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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.


Copiers • Printers • MFPs • Faxes • Scanners E m a il: info @ n u w o rld in c.co m

Order Online! www.nuworldinc.com

Blind Drop Shipping

Same Day Shipping

BIG SALE! FAXES

PRINTERS

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MFPs

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319

30

$

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$

BIG

399

SALE!

AFTER REBATE

Multifunction Business Fax w/ Network Print

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PANABOARDS UF-6200

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$

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GENERAL SPECIFICATIONS

GENERAL SPECIFICATIONS

GENERAL SPECIFICATIONS

• 35ppm B&W • 520-Sheet Tray • 50-Sheet RADF • Hi Speed USB 2.0 Interface • Network Scan/ to-Email • 33.6Kbps Fax Modem

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• 18ppm BW/Color • 1200 x 1200 dpi Res. • 530-Sheet Cap. • 128MB Memory • Ethernet / USB 2.0 • Auto Interface Switching

535

$

BLOWOUT

555

SALE!

UB-5335 / 5835

2-Panel Electronic White Boards with Integrated Printer

665

799

$

$

$

MC210P

MC210D

MC210S1

UB-7325

Interactive Electronic White Board with Integrated Printer

359

$

UB-T880 / T880W Interactive Elite Electronic White Boards

FREE DUPLEX WITH 40GB HDD

UB-5338C / 5838C 2-Panel Electronic Color White Boards

GENERAL SPECIFICATIONS

GENERAL SPECIFICATIONS

GENERAL SPECIFICATIONS

GENERAL SPECIFICATIONS

• 50” Diagonal (UB-5335) • 62.1” Diagonal (UB-5835) • CIS (Contact Image Sensor

• 62.1” Diagonal • 4-Panel Electronic Board • USB 1.1, 2.0, PC Interface • 256MB Memory or More (Windows XP)

• 77” Diagonal (UB-T880) • 82” Diagonal (UB-T880W) • 46.26”H x 63.07”W (UB-T880) • 46.26”H x 72.64”W (UB-T880W)

• 63” Diagonal (UB-5338C) • 76” Diagonal (UB-5838C) • 1.8” Color LCD • USB 2.0 Full Speed • SD Memory Card

949

$

UB-5335

1159

$

UB-5835

BLOWOUT

SALE!

BLOWOUT

SALE!

BLOWOUT

SALE!

BLOWOUT

SALE!

Parts Order Hotline: 562.977.4949

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.

NBS / ENX | January 2017


Since 1985

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NBS / ENX | January 2017


Michael Nadeau

State of the Industry News Briefing

Document Imaging Trends and Predictions for 2017 and What They Mean

T

o say that 2016 was an eventful year is an understatement. Within the industry, we saw mergers big and small change the competitive landscape. Economic trends and declining print volumes buffeted the major OEMs and the channel. And contentious politics raised uncertainty over the business climate. This begs the question: What can we expect in 2017? ENX Magazine asked a number of leaders within the office imaging community to weigh in. We included people from all aspects of the industry’s ecosystem: major hardware OEMs, software vendors, dealers, suppliers, and financial services providers. These are the biggest trends the industry is paying attention to in 2017 along with their advice on how the channel should react. ENX Magazine will continue to cover emerging trends for 2017 in our ENX The Week in Imaging enewsletter.

A Changing Workforce

Finding good people to hire has always been tough. Generational turnover within dealerships is presenting a new challenge as management tries to meet the expectations of younger prospects and employees. “Today’s businesses include four generations (tra- Greg Chavers, ditionals, baby boomers, gen- Lexmark eration X, and millennials) working together,” said Greg Chavers, director of U.S. copier sales for Lexmark. “Tailoring your message based on the different audiences is the key to success,” he added. Millennials will also be buying a lot of equipment and services, again with a new set of expectations. “Millennials now make up a quarter of the nation’s population and are expected to spend upwards of $200 billion annually by 2017,” said Stephanie Dismore, vice president and general manager, Americas Commercial Channel at HP. “They prefer sleek designs that are flexible and compact – yet powerful,”

said Dismore. She cited millennials’ preferences for influencing everything from mobile printing apps to multi-function printers to the rise of managed print services (MPS). “If the experience doesn’t meet their needs or expectations, they will seek an alternative,” she Stephanie Dismore, HP said. Of course, the best way to understand and deliver on those expectations is to hire millennials into the right positions. That could be difficult in a climate where it’s hard to find the right people regardless of their generation. “Hiring is the number-one dealer challenge – again!” said Jennie Fisher, SVP and GM, for the Office Equipment Group for GreatAmerica Financial Services. She cited The Cannata Report’s 2016 Annual Dealer Survey, which showed recruiting personnel to perform in the services area as the top dealer challenge. She noted that GreatAmerica formed its PathShare HR Services eight years ago to help dealers with recruiting, hiring and retaining top talent. “Solution providers need to be effective in this area in order to scale,” she said. Hiring good people might be harder depending on a dealer’s geographic region. “We do not have high unemployment in our markets,” noted Barry Simon, president of Datamax. “We cannot grow without hiring the right people to help us get there.”

Diversification Putting Pressure on Margins and Growth

Many dealers will try to grow by offering new services and products in 2017, and the range of those new offerings can be quite wide. “We see more and more dealers looking to diverge their business beyond the foundation of print Luke Goldberg, to print-adjacent business,” Clover Imaging said Luke Goldberg, Clover Group continued on page 18

16

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Document Imaging Trends and Predictions for 2017 and What They Mean Imaging Group’s executive vice-president of global sales and marketing. This includes managed IT services, workflow, BPO, security, and even coffee services. “Business customers are demanding more from their suppliers and are looking to consolidate services in order to have one throat to choke,” he said. “Print’s future is uncertain to many dealers and diversification is the path forward.” “Dealers are diversifying all over the place,” said John MacInnes, president of Print Audit. “They are getting into just about everything that the typical business consumes. This is good news because dealers are fantastic sales organizations that have the ability to sell anything.” Diversification, especially in areas furthest away from the core print business, can put margins at risk if it’s not done wisely—for example, underpricing to gain new customers. “The erosion of service pricing in order to gain net new business is an alarming trend that needs to stop,” said Debbie Dellaposta, president of WPS/DoDebbie Dellaposta, ing Better Business. Some dealers caution against rushing WPS/Doing Better into new areas. “Dealers are losing focus Business on their core business because they are getting caught up in the hype and false high-margin promises of the shiny stuff. In reality, new product lines are a drain on capital, time, and energy,” said Dellaposta. The commoditization of services like MPS and increasing competition are squeezing margins and prompting dealers to look for new lines of business. The best strategy for evaluating new lines, then, is to find products that are in-demand and under-served in the channel. “While MPS has reached a certain degree of adoption, other offerings such as digital signage/ content services, and managed IT services have not,” said Bill Melo, chief marketing executive for Toshiba America Business Solutions. He recommends dealers have at least one managed service in their portfolios. “Moving forward in this arena will differentiate resellers from the competition while providing another revenue stream.”

Refinement and Expansion of Managed Services

Dealers depend on mainstay services like MPS for recurring revenue, but again, competition and commoditization have been making them less profitable. “Too many companies are selling the same product in the same territory,” said Simon. “It is a lot tougher when costs are coming down and so is the pricing of aftermarket service, and you have to compete with someone Barry Simon, selling the same product.” Datamax This has led dealers to look for other higher margin services. A big area is managed IT services. “In 2017, integrated network and other IT services in the office technology industry will continue to evolve,” said Fred Carollo, GM of Office Technology Platform at EverBank. “These total solu-

tion products will be offered to the end-user with bundled documentation and invoicing. If the economy continues to improve and new businesses enter, a focus on maintenance contracts and services may be the key to converting clients in the traditional office products space.” That doesn’t mean that MPS is dead. In fact, MPS may see a bit of a revival as dealers rethink how they deliver the service. “As MPS has become commoditized over the last few years, the growth and profitability of the business model has suffered,” said Doug Johnson, chief strategy officer at LMI Solutions. “Many dealers are now taking another look at MPS from Doug Johnson, the ground up, in part to determine if they LMI Solutions continue to offer MPS as part of their portfolio and in part to determine how to offer an MPS solution set that is efficient, scalable, and profitable.” The challenge for some dealers is the lack of investment capital needed to relaunch their offerings. “It will be interesting to see how that shakes out. Who will back away from MPS, who will double-down on a relaunch?” he said. “Managed print profitability and scalability seem to be a key topic for resellers that have a managed print practice, but are struggling to reach the business potential they had hoped,” said David Concors, vice president of sales at Supplies Network. “The need to add overhead in the form of staff and equipment outpaces the onboarding of new managed accounts, and the fail- David Concors, ure to deliver an authentic, hands-off man- Supplies Network aged program prevents the ability to scale. For many resellers the battle to achieve profits and growth are causing them to reevaluate their strategy in an attempt to streamline operations and improve the customer experience.” “I think the key word is relevance,” said Concors. “The market is not experiencing overall growth. However, according to Infotrends, managed or contracted business is experiencing growth. So all of us in the supply chain need to challenge ourselves. Are we offering relevant products and services to our customers? Are we delivering on the promise of those products and services? If the answers to those questions are unclear, we may be losing in the battle for relevance in what will only become an increasingly competitive market.” Increased use of technology to deliver and manage MPS and other services might help boost margins as well. “Increasing efficiency and reducing cost are all based on automating print operations, eliminating redo or waste, and using analytics and software tools to reduce downtime,” said John Henze, vice president of marketing at EFI. John Henze, EFI Another hurdle that dealers will have to face with new services is marketing—getting the message out to customers and prospects about those services. Simon, for excontinued on page 20

18

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We Saw It In ENX Magazine


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Document Imaging Trends and Predictions for 2017 and What They Mean ample, said that Datamax would be thinking about how it would market managed network services to its existing customers profitably. “It’s our future,” he said. “Even when a company is adding offerings or providing more in the way of service, many dealers see the next challenge is communicating the value of what they are now offering,” said Henze. “The smart dealers are trying to recruit more tech savvy salespeople who can do this. The end result is that a dealer can capitalize on the trends and conduct real business discussions with clients, as opposed to just having a product centered discussion.” Expect to see more dealers offer content-related services, and not just those associated with digital signage or website development. “As the volume of available data continues to grow, end users will look to dealers to help manage that information,” said Hiro Imamura, vice president and general manager, Business Imaging Solutions Group at Canon U.S.A. “This Hiro Imamura, growth is a major revenue generating op- Canon portunity for the dealer.” Canon recommends that businesses take advantage of professional services that will address these pain points, enabling seamless and secure access to documents inside and outside the enterprise, creating a pathway for information to move faster and work to be completed more efficiently. “As MPS matures, organizations are finding that there are many more advantages to having managed services than simply reducing print related costs, with businesses becoming more receptive to implementing additional cost saving measures and efficiency-enhancing services into their environment,” said Imamura. “MPS is not a prerequisite to managed content services (MCS), but where there is an active MPS relationship with a customer, there is the potential for dealers to initiate the MCS discussion.”

Customers Looking for More Holistic Solutions

Much of what is driving dealers to enhance or expand their offerings is that customers are turning to their trusted providers for products and services outside their core areas. “We see more accounts/prospects looking for a single source provider for their imaging and IT needs,” said Bill McLaughlin, CTO at Atlantic, Tomorrow’s Office. “Having the ability to assess and Bill McLaughlin, optimize the entire imaging fleet by utiliz- Atlantic, Tomorrow’s ing a suite of software to provide automat- Office ed supply and service fulfillment, rules based print, secure print, and document management.” Dealers who understand the core customer issues seek a more holistic approach to the solution, thereby creating more customer trust, loyalty and “stickiness.” “Dealers are becoming better skilled at deploying more solutions and services beyond the hardware box they sell,” said Leah Quesada, VP of marketing and communications at Xerox Corporation. According to a Xe20

www.enxmag.com | January 2017

rox survey, SMBs want to improve workflow/business processes (47 percent), reduce printing costs (42 percent), improve customer service/response times (39 percent), and improve security/disaster recovery (34 percent). “Dealers are aware of these business priorities and are more inclined to address them with end-users,” she added. Customers are willing to pay a premium to providers who can reliably provide solutions across all their objectives. “The dealers that are thriving are doing so because of increasing value to their customers,” said Henze. They add value by expanding offerings into areas like display graphics or providing more sophisticated cut-sheet offerings like perfect bound or bleed edge tabs. “Another way to add value is to provide more services – offering a storefront, design services, cross-media marketing, color matching guarantees, and so on,” he said.

Industry Consolidation

Dealers are increasingly being divided into buyers or sellers. Buyers are looking to expand offerings or territory by acquiring competitors or complementary businesses. Sellers might be owners ready to retire but have no one to hand the reins to, or don’t have the resources to make the investments needed to stay competitive. MacInnes sees continued M&A activity among dealers. “The baby boomers have a choice, sell or pass on the reins,” he said. “This gives aggressive acquirers a great opportunity to get bigger. We are also seeing private equity backing acquisitions, so the money is out there.” “Reseller consolidation seems to be accelerating,” said Concors. “We are seeing John MacInnes, larger resellers focused on selling solutions Print Audit growing. They are taking market share and planning for acquisitions to expand geographical coverage and customer base as well as add to their product and services portfolio to increase relevance to customers and vendors alike. The struggle to remain relevant is becoming very real for those who have not evolved to offer services and solutions that add real value.” “Dealers are often looking to grow their businesses to transition to the next generation or to sell. With this in mind, there’s been a renewed focus on building enterprise value,” said Fisher. “GreatAmerica works closely with our dealers to identify ways in which they can enhance their enterprise value. Many are taking initiatives like technology integrations, bundling, and Jennie Fisher, Great managed services to the next level of so- America Fianancial Services phistication and profit.” Not just the dealer channel is consolidating. It’s happening throughout the office imaging ecosystem. “Our industry has been stuck in neutral for the past few years, and OEMs are seeking new ways to grow revenue and share through committed partners,” said Brian Stevenson, president of footPRINT MPS and the director of technology & managed services at TriMega. continued on page 22

We Saw It In ENX Magazine


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Document Imaging Trends and Predictions for 2017 and What They Mean “HP started this trend, which resulted in 20,000-plus resellers losing their ability to purchase HP supplies through authorized distributors.” OEM consolidation has led several OEMs to carry out their own version of an authorized reseller model. “These OEM decisions, along with the growth of new transactional competitors (Amazon), will have an impact on a significant percentage of the reseller community. These realities may be leading to the accelerated rate of consolidation we’ve been seeing across our industry – and with bigger dealers,” said Stevenson. “Clearly, there are changes at every point in the value chain, and even across points in the value chain,” said Johnson. “The rules of engagement that have guided this industry for 30 years are being blown up. That means new opportunities for those willing to think outside of the box and the potential of death for those that are not.”

Increasing Digitization of Paper Processes

People are printing less, and that’s affecting services and supplies revenue. Some see opportunity ahead in the trend towards digitization. “Forty-six percent of all SMBs say that time is wasted in their organizations every day on paper intensive processes, indicating the potential for great savings if the processes could be streamlined,” said Quesada. Xerox’s sur- Leah Quesada, vey shows that SMBs are digitizing paper Xerox processes at a significant rate. One in five SMBs would like to implement a plan for digital processes, but are unaware of paper-free options and solutions. “These trends are important because they signal opportunities for dealers to expand their revenue,” said Quesada. “Document management is the bloodline to running companies. Some 81 percent of all organizations also report that they plan to improve some of their current document workflow processes in the coming 12 months. Only 22 percent intend to use the office equipment dealer to carry out an MPS assessment. There are huge business opportunities for dealers – delivering MPS, cost reduction, and productivity improvements integrated into the customer’s mobility and security initiatives,” she said. Another big opportunity is scanning, but dealers might need to rethink how they package the products and services. “Document scanning versus printing is increasing significantly,” said Joe Odore, product manager at Panasonic. “Numerous resellers have told us that customers are scanning more than they are printing and it is shrinking their margins due to higher Joe Odore, service and less print.” As a result of in- Panasonic creased scanning, Odore sees more dealers adding a standalone scanner as part of the document management solution. More scanning means an increase in service cost, since MFPs are not designed for substantial document scanning, particularly the feeders. “The addition of a document scanner into any MFP-

based solution only adds a small increase in monthly leasing costs, while reducing the servicing burden on the MFP device itself,” said Odore. MacInnes noted that in Europe and South America, dealers are starting to charge for scans. “North America has got to follow suit,” he said. “The machines are getting used, but the dealer is not getting paid.” There is also opportunity to generate more revenue from printing. “Negativity surrounding the future of print still persists,” said Goldberg. “This is critical because our biggest revenue generator as an industry is supplies. While the 3 trillion pages being printed annually represent a huge opportunity, many dealers don’t feel bullish about print as a growth area.” To maximize print revenue, he advises dealers to look at technology that addresses print mobility, security, and workflow, which might remove barriers to printing.

Verticalization

One way to add value for customers is to offer solutions that are fine-tuned to the industries they are in. OEMs have started offering devices and solutions that are designed for or configurable to specific industries. “One area that is gaining traction and having a positive impact on the dealer community is verticalization,” said Melo. Bill Melo, Toshiba Toshiba’s approach combines its e-STU- America Business DIO MFPs, the Elevate customizable UI Solutions app, and its Vertical360 go-to-market methodology. “Document management dealers are expanding their customer outreach efforts to include more verticals – healthcare, churches, education, legal, financial, and real estate,” said Quesada. Companies are looking to cut costs and increase productivity in billing/invoicing, business/financial reporting and HR forms. Dealers who can tailor industry-specific solutions in these areas will have an advantage. Dealers with larger vertical opportunities might want to consider devoting more resources to them. “Dealers, with varying degrees of success, are focusing more on vertical markets with services and software that add value. The larger dealers will often have specialists in those industries,” said Henze.

More Ink in the Office

Manufacturers like HP and Epson are pushing inkjet as a lower-cost alternative to laser technology in the office. Dealers are watching to see what happens, but most are a bit skeptical. “Ink in the office is definitely growing, and it’s poised to grow at a faster rate in 2017 with several new models expected to be released,” said Stevenson. “The performance appears to Brian Stevenson, be on par with or better than many laser footPRINT MPS devices. With the lower cost per page, the speed benefits, and the commitment of the OEMs to continue down the path of ink-based technology, dealers may want to incontinued on page 24

22

www.enxmag.com | January 2017

We Saw It In ENX Magazine


Document Imaging Trends and Predictions for 2017 and What They Mean vest some time to understand the benefits and drawbacks,” said Stevenson. “2017 will be a telling year for the long-term success of ink in the office,” said Johnson. “If 2017 doesn’t deliver significant increases in device placements in 2017, the technology may be a limited alternative in the long run.”

Like any opportunity, however, success depends on how much you are willing to invest in it. “Larger organizations are bringing more of their production print in-house,” said Dellaposta. “It’s important to have knowledgeable staff to help with these different and more challenging requirements.”

Production and Industrial Print Growth

What do all these changes together mean for dealers? LMI Solutions’ Johnson talked about the additional pressure it all puts on the dealer. “Navigating a revamped MPS offering, responding to the myriad of changes that industry consolidation pushes to the channel, and evaluating technology such as ink, all put a much bigger burden on the dealer. The dealer has always been the point in the value chain where all of the chaos has to be organized, rationalized, and structured in a way to make sense of it all to the end customer. The workload placed on the typical dealer to make sense of it all has probably never been higher.” ♦

More and more companies are looking for in-house digital solutions for printing services they had previously outsourced. Dealers see this as a big opportunity going forward since the technology and OEM partners are familiar. “We should see an increase in dealers offering newer segments such as industrial printers and production print units to accommodate concentration in the mass Fred Carollo, print sector,” said Everbank’s Carollo. “We EverBank expect to see the market continue to expand with these product offerings to compensate for the reduction in print volume.” “The new buzz lately is label printing,” said Fisher. “Capabilities like variable data printing and the ability to print on demand are catching the market’s attention. There are vertical markets like healthcare and distribution that show promise, and it will be exciting to see where this opportunity goes.” 24

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The Bottom Line: More Work

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Market Intelligence News Briefing

Apex Closes Lexmark Deal. Up Next, HP’s Acquisition of Samsung’s Printer Biz

A

s the printer industry continues to wrestle with overcapacity and declining print volumes, word came in 2016 of two major deals involving three key vendors. The deals promise to radically change the competitive landscape. In April, a consortium of Chinese investors announced their intentions to acquire Lexmark and in September Hewlett-Packard revealed its plan to acquire Samsung’s printer and copier business in 2017. It is hard to say which deal was more surprising. Rumors regarding the potential sale of Lexmark (or some portion thereof) began circulating after the firm said during its Q3 FY15 earnings call that it would “explore strategic alternatives to enhance shareholder value.” Various companies including Canon, Konica Minolta, and Ricoh as well as

others were all said to have taken a look at the Lexington, KYbased OEM. When news finally broke, however, that Apex Technology along with Legend Capital and PAG Asia Capital had reached a definitive agreement with Lexmark to acquire the firm the industry was stunned. Few expected the Zhuhai, China-based chip maker could make such a deal. A few months later, the industry was surprised again when news broke that HP would acquire Samsung’s printer assets. What a year!

Curious and Curiouser

When I first heard that Apex was involved in a potential Lexmark buyout, it seemed like a long shot—not to mention ironic. As a major supplier of third-party chips and other components to the third-party printer

consumables industry, I was well acquainted with Apex. It’s an important company. But, it just seemed too small to be in a group of bidders made up of OEMs with billions of dollars in annual revenue. The deal was also ironic because of Apex’s tight relationship with the oft-sued, third party cartridge manufacturer Ninestar (also known as Zhuhai Seine Technology Co., Ltd.). On numerous occasions, Ninestar has been hauled into court for violating patents held by an assortment of OEMs including Lexmark. Apex was spun out of Ninestar in 2004 after being established as Ninestar’s internal chip supplier. Ninestar was founded and continues to be run by Dongying Wang, who is also known by his English name, Jackson Wang. Mr. Wang’s brother Dongjie, whose English name is Jason Wang, runs Apex. Today, Apex is a public company listed on the Shenzhen Stock Exchange under the name Apex Technology (stock code 002180). Seine Technology remains the largest stakeholder in Apex, holding about 70 percent of the firm’s voting shares. Although Apex doesn’t have the annual sales of one of the huge OEMs it was bidding against, it does have an impressive market capitalization of RMB29.31 billion (USD4.26 billion) at the time of this writing, which it leveraged to get the deal done. According to its annual report, Apex had revenue of RMB2.049 billion (about USD297 million) in 2015, up 22 percent from continued on page 28

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Apex Closes Lexmark Deal. Up Next, HP’s Acquisition of Samsung’s Printer Biz the year prior. In fiscal 2015, Apex’s operating income was RMB315 million (USD45.7 million), up 43 percent from fiscal 2014, while net income of RMB281 million (USD40.7 million) was up 39.1 percent from the year prior. In contrast, Lexmark’s revenue was $3.551 billion in 2015, down 4.3 percent from the year prior. Lexmark posted an operating loss of $24.5 million last year and a net loss of $40.4 million.

The Lexmark Deal

News of buyout by Apex and its Chinese partners first broke on April 19 and the deal was finalized on November 29. Valued at $40.50 per share or $3.6 billion, the Chinese investors paid well over Lexmark’s market capitalization of about $2.2 billion. Lexmark shareholders apparently liked the $1.4 billion premium and approved the acquisition at a special shareholder meeting held in July. The deal cleared a major regulatory hurdle when the Committee on Foreign Investment in the United States (CFIUS) signed off on the deal in September and subsequently passed the scrutiny of other regulators, including regulators in China. When it announced the deal had closed, Lexmark said its stocks have ceased trading on the New York Stock Exchange. Lexmark filings with the Securities and Exchange Commission (SEC) reveal that the U.S. OEM met with companies in Japan about an acquisition before having Goldman Sachs contact firms about bids. In the end, there were three serious bids for the company as a whole, but, as of April, only Apex had secured committed financing, which ultimately led Lexmark to accept Apex’s offer. According to one SEC filing, the partners raised $1.14 billion in debt financing; Ninestar Group contributed $443 million in term loan facilities; and under equity commitment letters, Apex, PAG Asia, and Legend Capital Management agreed to put up $2.32 billion to finance the deal. Reuters reported in September that Apex will take out RMB8 billion (USB1.16 billion) in loans related to the acquisi28

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tion, presumably to meet its end of the financial commitment. When it announced the Chinese consortium’s acquisition was completed, Lexmark said it was changing leadership at the firm. Paul Rooke stepped down as president and CEO to be succeeded in these roles by David Reeder, formerly Lexmark vice president and CFO. Lexmark will remain headquartered in Lexington, KY. In previous announcements, Lexmark had indicated that business would continue as usual but in addition to the management change the firm announced another big change. The Enterprise Software group will be separated from Lexmark and rebranded Kofax. In a prepared statement, Lexmark said, “The Consortium and Lexmark will engage in a process to sell the business while focusing on growing the imaging business, particularly in China and the Asia-Pacific region.”

What’s Next?

In prepared remarks, Mr. Reeder, Lexmark’s new head, said, “I’m incredibly excited about Lexmark’s future… We are now uniquely positioned to grow the company in China and greater Asia, along with continuing to deliver industry-leading products and services to customers in other regions of the world.” Later in the release, Lexmark stated that its partnership with Apex “will allow it to offer a complete line of printer products, streamline its development and supply chains, and extend its reach into the growing markets of China, the rest of Asia and elsewhere.” Lexmark is well positioned to give laser printer vendors like Canon, HP, Fuji Xerox, and Ricoh a run for their money in China and the Asia Pacific region. Lexmark has consistently indicated that Apex will allow it to expand its business in China and the Asia-Pacific, which are not currently strong markets for the OEM. In addition to gaining share in Asian markets under the Lexmark brand, I would not be surprised to see Lexmark engines sold under Ninestar’s Pantum brand should Ninestar decide

to subsume its Pantum operations into Lexmark proper. Right now, it seems it could go either way. Ninestar currently markets a limited number of Pantum laser printers and MFPs, and has indicated that it would like to broaden the line to include a range of devices for various market segments. It’s also quite possible that Lexmark engines may be used in machines marketed under the Lenovo brand—after all Legend Holding is a controlling shareholder in Lenovo and Lenovo has been rumored to be interested in acquiring Lexmark for years. In terms of supplies, it will be interesting to see if Apex and Ninestar continue to market Lexmark chips and components along with finished compatible and remanufactured cartridges. If so, presumably the manufacturing of these will shift from Lexmark to the Chinese firms. That would be an obvious manufacturing synergy to exploit, but it will be interesting to see how Apex and Ninestar rationalize their own cartridge-collection and manufacturing facilities in China with those that Lexmark has in Mexico. One way or another, there can be no question going forward that Apex and Ninestar will certainly be able to offer Lexmark compatibles with an iron-clad guarantee not to infringe. Beyond cartridges for use in Lexmark machines, it’s quite possible that Apex and Ninestar may decide to leverage the well-known Lexmark brand to bring to market third-party cartridges and components for use in other OEMs’ devices. At one time, Lexmark marketed SKUs for LaserJet machines under the Linea brand, but that line has slipped into obscurity. Might it be revived? The prospect of Lexmark selling Ninestar-built, Lexmark-branded remanufactured cartridges direct from its own webstore and through their numerous distributors and other channel partners has got to be something that keeps folks at other OEMs lying awake at night. Xerox and other OEMs have done well offering their own lines of remanufactured cartridges for competitors’ machines. None of these firms, however, does the actual

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Apex Closes Lexmark Deal. Up Next, HP’s Acquisition of Samsung’s Printer Biz remanufacturing nor do they offer the breath of products that Apex and Ninestar have at their disposal. Perhaps the biggest question on the supplies front is what does the Lexmark acquisition mean for ongoing litigation? As noted earlier, Lexmark is a litigant in a case slated to be heard by the U.S. Supreme Court next year. Related to how patent-holder rights are exhausted, the case has huge implications for the remanufacturing industry as well as for industries outside of the imaging space. As the case progressed through the lower courts, Lexmark has prevailed, successfully defending its right to sue various third-party supplies vendors under current U.S. patent law. As major stakeholders in the non-OEM cartridge industry, Apex and Ninestar undoubtedly want the Supreme Court to rule against Lexmark and overturn the earlier lower court decisions. So, will Lexmark’s new owners withdraw the case from the high-court and let the lower court rulings stand, which would be bad for remanufacturers? Or will they allow— and fund—the case before the Supreme Court to proceed hoping it will overturn earlier decisions? At this point, I can offer no answers to the questions I’m raising. Clearly, the industry needs to follow the newly merged companies in the New Year to see how things ultimately shake down.

Autumnal Surprise

As unexpected as the news was in April that Apex et al were buying out Lexmark, word of HP’s plan to purchase Samsung Electronics’ printer business also seemed to come out of the blue. Calling it “the largest print acquisition in HP’s history,” the company told attendees at the September HP Global Partner Conference in Boston, MA that it would purchase the South Korean company’s assets for $1.05 billion. HP said that the transaction should close within 12 months and that after closing Samsung will make a $100 million to $300 million equity investment in HP. According to Samsung, its printing business had revenue of 2 trillion Korean 30

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won (USD1.8 billion) in 2015. For the fiscal year just ended, HP’s printer business was more than ten times as large with revenue of USD18.26 billion. The market research firm IDC ranks HP as the world’s top vendor in terms of overall printer and MFP shipments, and ranks Samsung number five. In the second quarter of 2016, IDC reported that HP had a 36.6 percent share of worldwide hardcopy peripheral shipments, while Samsung held 4.0 percent of the market. At the time the acquisition was announced, Samsung indicated that the deal would allow it to focus on its core businesses, such as smartphones and appliances. For more than two decades, the South Korean firm has been one of the world’s major producers of A4 laser engines, which have been sold under various brands as well as Samsung’s. Since the 1990s, executives for the company declared Samsung would be among the industry’s largest OEMs and that the printing business was crucial for the firm’s overall growth. In recent years, however, the firm has struggled to shift from marketing low-cost A4 products to the more profitable A3 MFP and its market share slipped. It appears Samsung found it difficult to get BTA and office-equipment dealers to carry its line. Faced with difficulties in both the A3 and A4 markets, it appears that Samsung no longer had the stomach to continue to battle for share. For HP, the deal is all about entering the A3 market. Valuing the A3 copier/ MFP market at $55 billion annually, the company said in a prepared text that Samsung’s printer business “accelerates its [HP’s] growth opportunities in the copier segment, strengthens its leading laser printing portfolio that has been established with Canon, and paves the way for future printing innovation.” Calling the copier market “a segment that hasn’t innovated in decades,” HP says it will be market disruptive. According to HP, “Copiers are outdated, complicated machines with dozens of replaceable parts requiring inefficient service and maintenance agreements,” and the firm plans

to penetrate the market with what it calls “superior multifunction printer (MFP) technology.” HP has made more than one attempt to crack the A3 market and woo copier dealers but like Samsung it has met with little success. A couple years ago the company expanded its A3 portfolio to include some Sharp-manufactured MFPs that HP sells under its own brand through its managed print business. Now, it appears the firm believes that snapping up Samsung’s printing business will be the key move that enables it to enjoy a greater share of a delicious $55 billion pie. The proposed acquisition is subject to regulatory approval and other closing conditions. It will be interesting to see if there are any objections from regulators, given HP’s already large market share. However, I suspect that given the large number of players remaining in both the A4 and A3 printer and MFP markets and HP’s very small share in A3, the deal will go through.

Unanswered Questions

Like Apex’s Lexmark acquisition, HP’s purchase of Samsung’s printer assets leaves industry wonks like me with more questions than answers. Perhaps the most pressing and potentially impactful question is: “What will become of the HP-Canon partnership?” From the introduction of the 2680A Laser Printing System in 1980 to the latest Jetintelligence models, Canon has been HP’s main laser technology supplier for nearly 40 years. Acquiring the Samsung assets gives HP access to its own laser technology—and not just for A3 products but A4 as well. Does this sound the death knell for the relationship between HP and Canon? For the moment, the two companies are down playing any changes. Announcing the Samsung asset purchase, HP said in a press release that the deal will “strengthen its leading laser printing portfolio that has been established with Canon.” It described its decades-long partnership with Canon as “strong” and “mutually beneficial,” and said that the deal “will provide new opportunities to further

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Apex Closes Lexmark Deal. Up Next, HP’s Acquisition of Samsung’s Printer Biz strengthen and accelerate this highly valued relationship.” Fujio Mitarai, chairman and CEO of Canon Inc., even commented in the HP press release, saying, “HP and Canon have long discussed print innovation to create customer value in business printing and in the growing MPS market. This transaction will further evolve our collaboration and bring about growth for both of our companies.” Despite the positive spin on the HP-Canon relationship and the indications that the companies will continue to work together, the Samsung acquisition will force the two firms to square off in the market. At the very least, HP will be looking to compete head-to-head against Canon and other leading A3 vendors and trying to woo away dealers, if possible. Worst case, the deal will give HP the option of quietly or not so quietly beginning to launch Samsung-based devices in

the A4 market to replace previous Canon-based machines. For its part, Canon has been quite active in expanding its line of imageCLASS laser printers and MFPs, which compete directly with HP LaserJet machines. The move to market more imageCLASS devices over the past couple of years suggests that Canon has been anticipating a change with its partner for a while. Another question I have is if HP wanted to enter the A3 market, why acquire Samsung’s assets? Sure, the South Korean firm has good technology and has been making hardware for more than 25 years so it’s well established. But one of HP’s past failing in the A3 market has been its rather feckless pursuit of office-equipment dealers and while arguably Samsung has had better success with its A3 line than HP ever did, that ain’t really saying much. It would

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seem that HP might have been better off purchasing the assets of a company with an established channel as well as A3 technology. It seems to me that Xerox, for example, would have made a better acquisition target. But maybe regulators would have nixed the deal, or, perhaps with a price tag that was less than 1x Samsung’s print business’s annual revenue, the deal to acquire the South Korean firm’s assets was simply too good to turn down. So, even before the New Year gets under way, we at Actionable Intelligence can see there will be plenty to write about in 2017. I hope you’ll frequent our website as we follow how all these deals shake down. Moreover, I’m thinking it’s a good bet that the urge to merge will continue to be felt during the upcoming year and all the M&A activity we’ve been seeing will continue. Happy New Year! ♦

January 2017 | www.enxmag.com

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Dealer Spotlight

Staying Ahead of the Technology Curve—An Interview with ACT Group

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hen Cindi and Greg Gondek purchased Northeast Copy in 1999, they weren’t afraid to make big changes. Renaming the company as Advanced Copy Technologies, they shrunk down the geographic area they covered to improve their response time and serve their customers better. Since then, they’ve gone far beyond traditional office equipment, diversifying into five different divisions and rebranding as ACT Group. They were early adopters of MPS as well as document management software, and have been investing in 3D printing since 2011. They are always keeping an eye out for the next disruptive technology. As any dealer that’s tried to expand its offerings can tell you, 3D printing is not for the faint of heart. ACT Group has managed to become an expert in the field, building a strong, self-supporting infrastructure as well as focusing on client education. Now the company serves as a resource center for OEM 3D Systems for all of New England, including Maine, Rhode Island, Vermont, New Hampshire, and Massachusetts, as well as parts of New York and New Jersey, with

Greg and Cindi Gondek 32

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office equipment placements in Connecticut and Western Massachusetts. Anyone can sell a machine, but it’s what you do after that makes a difference with the customer. CEO Cindi Gondek and President Greg Gondek have made strategic decisions regarding the clients they take on and the geographic area they serve. Their first priority is their customer, and ensuring that with any new technology, the end user never feels the pain of transition. With a unique MPS program that puts their customers 100 percent in control of a non-stagnant environment, original document management software, and an engaging and meaningful social media presence, ACT Group embraces technology and what it can offer. ACT Group sells the entire 3D Systems line, from the professional and the production machines, right up to the metal machines. Nick Gondek, Director of additive manufacturing, and the director of 3D service even went to the metal factory in France and became certified. ACT Group’s commitment to innovation and technical expertise is one of the reasons they’ve enjoyed 20 percent growth year over year, most of that organic. We sat down with Cindi, Greg, and Nick Gondek to talk in depth about their experience with 3D printing, staying competitive in an ever-changing market, and Purps the Penguin. What does ACT Group pride itself on? GREG: We’re proudest of our reputation. We can go up against anybody in any of the areas of expertise that we’ve chosen to We Saw It In ENX Magazine

Nick Gondek, Director of Additive Manufacturing & 3D Service

represent, whether it’s document management, where we’re writing customized software for clients that other companies couldn’t do, or our MPS program, which every time someone sees what we have to offer, they can’t believe it. Our reputation is hard and well earned, and we won’t jeopardize that for anything. Where do you see your greatest opportunities for growth? GREG: The customized software that we’re doing, including document management and archiving. Our software division is working on some large-scale projects right now for national companies. We’re a small, Connecticut company, but we’re involved in transactions that can place software all over the U.S. CINDI: I would say our greatest opportunities for growth are in additive manufacturing. We’re seeing much more companies looking at it. Why did you decide to get into 3D printing? What has that journey been like? CINDI: Our director of IT had brought it to me. At that time, no one had heard about it, so I was very interested. We contacted 3D Systems and we decided to become a dealer. That was before it was mainstream. It started out as an add-in value for the company, but once Greg and I realized the potential of this market, that’s continued on page 34


Staying Ahead of the Technology Curve—An Interview with ACT Group when we brought in Nick, a physics and mechanical engineer, for his expertise. It’s been a tough journey, as far as getting it to be more mainstream. NICK: One of the initial challenges was trying to understand the technology and what different companies will benefit from the use of it, internally. It was about getting our sales team proficient in the technology and then for us to really understand the marketplace and build a niche where we’re finding our opportunities within our territory. Who are your biggest clients in 3D printing? NICK: Right now our backbone of 3D is the shoe industry. We have a large number of shoe companies that we service and provide equipment for, including New Balance, Reebok, and Puma. They use it for rapid prototyping. From there, another vertical is education, for rapid tooling, but there’s widespread interest in this technology and the type of companies that utilize it. How do you identify 3D opportunities? NICK: Our sales team is very attuned to the industry and what people are doing with the technology, and they identify potential prospects, given what has been tried and true in this industry. We’ve sent a couple of our sales team to MIT’s professional education course to connect with the industries using this technology, and to understand at a high level the benefits and types of applications where this technology makes sense. GREG: We learned very quickly that it’s a whole different ball game. We have a team of 10 people where that’s all they do. We have 3D salespeople that don’t sell anything else, 3D technicians, and a 3D service manager that eat, breathe and live 3D printing. There’s a certain proficiency level that’s required in order to be successful. You’re not dealing with typical buyers, but heads of engineering in companies, so you’re on a whole different level. What percentage of your business is 3D vs. traditional office equipment? How long did it take to become profitable? GREG: I would say we will become profitable 10 years from now [laughs]. We got into it as a long-term invest34

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tions and new products to bring to market that make sense and fill a void.

Purps the Penguin Project

ment. We’re profitable now, but we still have a couple of years before all our investment comes back ten-fold. If you look at it revenue-wise, they’re almost equal, because with 3D we’re working on higher ticket numbers, but that can be deceiving. If we’re looking at this year, it would be 60-40, with 60 in our traditional market, which we do very well in, and 40 percent on the 3D hardware end, but it’s getting pretty close. Your document management business is growing. What’s driving that? GREG: We started four years ago, and we have hired high-level expertise in that area. We’re expecting that to grow 2530 percent plus a year for the next three years. Last year we doubled that revenue. CINDI: I think what’s helping our growth in both 3D and document management is the change of attitude of our customers of this new software. They’re seeing the abilities of the technology. A lot of our driving force is through education and knowledge of those industries, and our customers being receptive to it. Speaking of which, how do you view the industry changing in the future and what are you doing to adapt? CINDI: Greg and I strategize on that together. People say, “What’s your five year plan?” Six years ago, I’d never even heard of 3D printing, and now that’s a huge part of our industry. So we’re constantly looking into the next things and what we feel would be great. We’re open to new technology and staying on the cutting edge. GREG: We recently launched another new product based on what we’re seeing as the future needs of the mid-sized market, called Easy Forward, a scanning, archiving and indexing service, where we partnered with the best IT company in the state. We look for good collabora-

What was your dealership’s most significant accomplishment last year? GREG: To me, it’s not the size of the deals, because we’ve won some big deals, but it’s the fact that in a very competitive environment, where we’re up against major manufacturers, we’re winning, not just on hardware, but also on the software side, including MPS. CINDI: We’ve also won Ricoh’s top service award, a 27th consecutive Kyocera Service Excellence Award, and Elite Dealer of the Year. We don’t just win one award; we want to do that every year. What was one of the biggest challenges of last year? GREG: From an operational sense, trying to keep up. We represent multiple manufacturers and there’s been a leapfrog effect, where they’re too busy trying to jump over each other with new products. So the biggest challenge is keeping up our expertise level. We have to be more self-sufficient now than we have in the past. CINDI: But our customers don’t feel a lag in support or service, because we’re filling that in. We absorb that pain for our customers. What was one of your biggest wins in the past year? NICK: We did a project with a local middle school and a local aquarium. Our team trained students in 3D software and helped them design a boot for an injured penguin named Purps the Penguin. We’re trying to promote the technology discreetly in education and have them feel comfortable with the technology, and it was a great marketing opportunity for us as well. You can see it on Youtube (https://www.youtube.com/watch?v=7J8lO_1S2k). Who do you see as your biggest competition, and how do you differentiate your company from the rest? GREG: The biggest competition isn’t based on expertise anymore; it’s based on price points. We’ve seen price points from some manufacturers that don’t make sense if you want to take proper care of a customer. As far as 3D competition, the infrastructure we’ve built

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Staying Ahead of the Technology Curve—An Interview with ACT Group gives us a huge advantage. We see people trying to get into 3D without making the investment to take care of the customer’s needs. We have that, from the engineering support to same or next day service, which we don’t see in our market. What do you look for in your employees? How do you recruit and retain good ones? GREG: The two main things are honesty and integrity. We won’t jeopardize either in our organization. We bring in people that have no prior sales experience, like in our 3D department, and they do fantastic, but they are highly intelligent, and have honesty and integrity, which is not something you can train. What keeps you motivated and excited about the work that you do? CINDI: All the new innovations, with office equipment, software, and 3D. We love all the new technology. NICK: For me, it’s being involved with something different every day. In this

industry we get to work with a lot of different companies. Every day brings something new and different, and it keeps it exciting. GREG: Seeing brilliant young people who work for us, and the people that we interact with. All these innovations shaping up and being put into place, and the way the world is changing and how we’re fitting in. What is your least favorite thing about your job? GREG: Not being out in the field as much. Unfortunately we have a lot of checks and balances that need to be taken care of. I love being out with reps and interacting with the customers, to make sure they’re happy, and I find sometimes I’m at my desk too often. CINDI: I’m one of the rare people in the world that doesn’t dread going to work. NICK: I’m on the same page. Nothing comes to mind. Outside of work, what do you do for fun? We Saw It In ENX Magazine

CINDI: Now that you say that, I like to golf, so maybe my least favorite thing about my job is that I don’t have enough time to golf. GREG: What I like to see is Cindi hit a long perfect drive. CINDI: And Nick likes to golf too. What are you looking forward to the most for the year ahead and beyond? CINDI: Watching this new technology make a difference in our world. Additive manufacturing is disruptive technology, and just to be part of that evolution is exciting. GREG: Seeing our hard work and everything we’ve done long-range pay off. We’re growing at a great pace and we have the infrastructure to handle it, with a national reputation in 3D, so I’m excited about this year. NICK: I’m looking forward to how this industry is evolving. We’re developing a niche in this market, and our intuition led by lot of education is leading us in the right direction. ♦

January 2017 | www.enxmag.com

35


Editorial Staff

Channel Insight News Briefing

Canon’s Mason Olds Is Bullish on the Dealer Channel and the Office Imaging Market

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ast August, Canon U.S.A. announced its One Canon initiative. Its goal was to get all of Canon’s internal groups serving the B2B market working together. For dealers, this means better and faster access to all of Canon’s products and services. Those B2B-focused entities include Canon Solutions America, Canon Information & Imaging Solutions (CIIS), Canon Financial Services (CFS), and Canon Business Process Services (CBPS). All are consolidated under the Canon Business Imaging Solutions Group (BISG). Mason Olds, the senior vice president and general manager for sales, BISG, is charged with redeveloping Canon’s channel strategies to “provide the best service for each customer and partner with a one-to-one approach,” in the words of Toyo Kuwamura, executive vice-president and general manager of BISG at the August announcement. ENX Magazine had the opportunity to speak with Olds, who discussed his role and the positive effect of One Canon within the company and in the market.

Mason Olds, SVP and GM for Sales, Canon BISG 36

Tell us a little about your background. OLDS: I’ve been with Canon for over 25 years, following my time with Eastman Kodak as a sales rep in Manhattan in the 1980s. I’ve always appreciated Canon’s color laser technology, and about ten years into my time with the company, I

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began overseeing the color division. From there, I spent seven years with Canon Canada, where I directed operations and the dealer business for seven years. Upon returning to the U.S. in 2010, I began leading the sales in the United States for the BISG division, where I have been ever since. In my current role, I’m involved in all facets of the B2B side, including copiers, production and software. I also work closely with our subsidiaries: Canon Solutions America (CSA), CFS (our finance company), and CIIS (our special technology company). You manage both Canon’s direct channel as well as the independent dealer channel, right? OLDS: Yes. In addition to our independent dealer channel, we have our direct sales channel, CSA. I have the overall responsibility for all products sold, whether they are sold into CSA or into our dealers. CSA has separate management, headed by my boss, Toyo Kuwamura, and BISG has the overall profit-and-loss responsibility for the total business in North America. We sell through at least eight channels, which I oversee; the biggest of which are CSA and our dealer business. At the Canon summit in August, there was talk about how your mission is to build the strongest U.S. dealer partnerships that you can. Can you speak to that? OLDS: The dealer channel has always been the main channel for Canon. Working with dealers is in our DNA; we still sell more units through dealers than we do through direct operations. We Saw It In ENX Magazine

We started a new program called the Advance Partner Program (APP), which focuses on our top 30 to 35 dealers. Twice a year we meet with these channel partners to discuss business, but more importantly we listen to what they have to say. This input truly allows us to achieve growth. For example, in November we achieved double-digit revenue growth thanks to the feedback provided by our dealer channel. Obviously, over the years, a number of dealers have been sold to competitors, which presents its challenges and results in a loss of business, but with challenges come opportunities. Now, we can be very focused on a customized approach with our dealers. Every market varies, and what works in one market might not work in another. You have everything from the very large regional dealers like Gordon Flesch, Ray Morgan, DEX, POA, RJ Young, LDI, Loffler, Marco, among others. Yet, we see that the vast majority of dealers are midsized, or very localized. For those more localized dealers, they are limited in their ability to sell software and solutions, due to factors like expense and the ability to obtain good people. We recognize these challenges, and tailor our approach to those dealers’ needs, offering them a chance to grow. In the overall copier business, return per click keeps decreasing every year. The black-and-white volume goes down a little bit every year. In response, dealers must keep placing more machines in the field (MIF), often by means of acquiring other dealers; but even with acquisicontinued on page 38


Canon’s Mason Olds Is Bullish on the Dealer Channel and the Office Imaging Market tions and increased MIF, many still need to branch out into other areas to be successful. We recently purchased Axis Communications, the world’s leader in security cameras and video surveillance, and some of our dealers have already recognized the success of selling these products. We think this market can be a natural extension of our dealers, who already have many good customers in their local markets that require equipment like security cameras and video surveillance, including schools, banks, public offices and hospitals. Looking back at the last year, what do you see as your biggest highs and lows? OLDS: This will be the sixth year in a row that we grew both our revenue and our unit sales through the dealer channel. As I said, that’s our biggest channel. Canon is unique in that we have a very strong, wholly owned leasing company. We’re able to use that to our advantage because most of our competitors rely on third-party leasing. The business is very solid in the U.S., and we’re also seeing strong sales of our uniFLOW print management software, which helps to differentiate us from the competition. Our unit sales have been very strong, helped by the introduction and success of the imageRUNNER ADVANCE C3300, imageRUNNER ADVANCE C5500, imagePRESS C800/700 and most recently the launches of the imagePRESS C850/C750 and imagePRESS C10000VP/8000VP. These products are light years ahead of their predecessors, helping us to gain share. Perhaps the largest single customer in the U.S. is FedEx Office, formerly known as Kinko’s. FedEx Office recently put all of its equipment up to be refreshed, at which point Canon won four out of the five categories, almost all the units installed. We’re so proud of this because they’ve been a long-term customer; it’s a testament to the value they see in our company. Sometimes if you go in with a low price you can obtain new customers, but in order to keep winning business year after year, you not only have to provide good service and support, you must also keep bringing new ideas to the table. 38

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How important is production print to Canon? OLDS: Very important, as demonstrated by our commitment to providing a full complement of production equipment, from the low-end to the very high-end. That was one of our main reasons for acquiring Océ; we realized there was a large amount of analog printing in the production space that would be transitioning to digital, so we made a bold move, which has proven to be a great success for us. We’re big believers in production print, but I also remind dealers of the importance of entering into this business correctly. Equipment is typically more expensive and dealers must be able to service equipment around the clock, so I also remind dealers to take these two points into consideration. Has One Canon made a visible difference to the dealer channel? OLDS: Yes. In the past, different areas within Canon were more “siloed”. One Canon has allowed us to combine the expertise of all our subsidiaries for a more customer-focused approach. For example, lease programs were introduced to the dealers on a variety of products, which simply did not exist before because you had to work between groups. We’re seeing more interaction between our dealer channel and CSA. While there may be some competition between these two parties, it has encouraged more sharing of best practices, making both parties stronger. We saw this recently when we hosted an APP group in Boca Raton, Florida where owners of top dealerships came together with the top management of CSA. The event allowed us to strengthen relationships through candid discussions and an informative question and answer session. We spoke of things that happened in the past and the way things could be better. We had never done anything like that in the past and it was very well received. How do you see HP’s acquisition of Samsung affecting Canon? OLDS: HP is a wonderful partner of ours on the laser printer side, truly a great story. For more than 25 years we’ve worked together, providing very big business for both companies.

In areas like inkjet and large format, we compete. They’re our very best partner on one side, and on the other side, they challenge us to bring our best technology to the market. Together HP and Samsung have less than five percent market share in the A3 space in the U.S. I think it’s going to be a challenge for them, but we certainly think a lot of HP and its capabilities. Sometimes people look at the copier business and think it’s easy, but in reality it’s not an easy business. Many industries recruit out of the copier business because the salespeople are known for being some of the toughest men and women out there. Often, the copier business doesn’t get the respect it deserves. What are your predictions or expectations for the industry as a whole for next year? OLDS: While there’s a lot of negativity about the industry and the financial results of a number of the companies are challenged, the sky is not going to fall anytime soon. I think you will see black-and-white volume continue to decline a little bit, with click rates continuing to fall slightly or remain flat, at best. We may see some growth in production and large format/ wide format areas, and we anticipate customers will still be looking for more software solutions. The state of the industry can’t be too bad; a number of the dealers that I speak to have private equity partners now, and they are looking to acquire other dealers. The fact that companies like HP is now targeting the A3 market, that the private equity is there, indicates that the industry still provides a very solid and large business. On the dealer side, I think you will also see some of the larger, more regional players buying the more local and midsized dealerships, maybe more consolidation, even from the manufacturer’s side. Overall, I think it will be fine. The wild card is the economy. We’ve all heard so many things with the election, and the day after the election some people said, “Shouldn’t we all get out of the stock market?” Then, boom, the stock market has been up lately. I don’t have a crystal ball, but that could actually help fuel growth if the economy is stronger than it is now. ♦

We Saw It In ENX Magazine


Charles Lamb

Leadership News Briefing

Change Leadership!

F

ear is the only thing that I can come up with that prevents businesses from continuing their once aggressive, most flexible, do what it takes, sales execution. I’ve heard it all, yet sometimes I can’t believe what I’m hearing. In the beginning of an engagement, I ask the question, “What do you want from your business?” which is the one question that business owners don’t want to or won’t answer. I think the reason they won’t answer it is because it would commit them to action and honestly, many owners have reached a plateau of comfort or fear of change. Typically, driving logical process delivers positive results! In many of the engagements I’ve observed, sales organizations run on poor practices, without direction, common sense or logic, and their sales reps promise almost anything to get a deal. Most often, standards and accountability are non-existent and quota is just some word the owner uses occasionally. Commonly, there are no consequences for failure and little reward for success, yet those same owners will come to my workshops and tell me, “I’ve tried everything!” What is it that allows chaos and illogical thinking to take over? Where does it begin to dissolve the aggressive, great behavior that once ruled most companies? One answer can be that the owner simply isn’t a good manager of people. Possibly they were at one time a great salesman or technician, but that doesn’t make them a good leader. But this isn’t every company. Applying common sense and sound logic help deliver success,

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but it’s not a one-time application. If your plan should fail to reach its objective, tweak it for improvement! When one fails to interject and maintain logical, common sense practices, he or she creates an artificial opposition to the result of success. I call it soft chaos. It’s mandatory to establish goals regarding what you want from your business. It’s logical to research and understand your marketplace to identify what best aligns with your company’s values and benefits. You owe your employees and customers strong leadership so that they both know the values of your company. Here’s a great test. Go out to 10 random customers and ask them, “What value do you receive from our company?” If they answer, “You’re a good copier company,” that shares one view, but if they answer, “You’re a great technology partner,” that obviously shares another view. Either way you can immediately hear what your sales team delivers to your marketplace. If what I’m saying describes what you see in your company today, don’t settle for it! Find your way back from the illogical, chaotic nonsense that exists in many companies. It’s not hard to go back but it is hard to implement and hold yourself accountable, because in most cases it’s the owner who has pushed away CEO duties to others in your down line. Only you can launch the dream again and only you can create the winning culture and responsibility to succeed. First, roll up your sleeves and plan to recapture what you’ve let slip away. There are those that say the best days are behind us; I We Saw It In ENX Magazine

say the days are what you make of them and the best days can be where you want them. Find your way back to success! Take a look at your current methodologies in going to market. It’s going to take some cash to rebuild what’s missing but the good news is most of the cash you need is already available; you just need to redirect it. Go to the most expensive categories first such as payroll and eliminate anyone who, most likely, isn’t going to make it. You probably know who these people are already; you may have even had conversations about them last week, saying, “They need to go!” Do it and free up that cash. Do the same with all other departments and categories of expense so that you can see what funds you have available. Second, build a plan for growth: growth from net-new business and growth from your account base. These two are the primary considerations (high level) that must be well tuned and logical. If necessary (and it almost always is), revamp your sales and service compensation plans to drive the behavior you need from all employees involved in your success plan. Third, announce to all employees what you’re doing and why. Tell them that you’re transforming the company into the company you want to be and that everything we do from this point forward will be to exceed your client’s expectations and to out perform your competitors. Let them know how YOU ARE PERSONALLY INVOLVED in this cause and that you expect everyone to be on board! Tell them the things you’re changing continued on page 41


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Change Leadership! (high level) and invite everyone to come to your office and share any and all ideas they may have. Make them a part of the company’s success! Fourth, and this is key, you can’t change a gelding into a stallion, and if you have geldings in stallion positions, that needs to change. In order for success to happen, you must have the right people in the right jobs. It does no good if YOU HAVE TO DO EVERYTHING YOURSELF. This idea goes beyond the sales department. Any position that requires a stallion must have a stallion. Don’t let emotion stand in your way. If that person means a lot to you (and they should), LOVE THEM to a new position if possible and replace that position with a stallion. Fifth, design your sales team to deliver. If your new business development percentages are low to non-existent, you’ll have to build a business development team. Their job is to grow your

company. YES, of course, they’ll have to be a stallion! Rework your money and go hire someone who most likely is happily employed and build an opportunity to bring that stallion into your company. YOU CAN AFFORD IT because you just got rid of 4 non-producing sales reps. Remember if you use a recruiter, their job is to sell you on placing someone, that’s their motivation. They don’t necessarily care whether the person they’re recommending is a stallion. If you research and seek out a superstar, high-level sales professional, who IS hitting home runs already, you just need to work the numbers, like MONEY BALL! Lastly, design your account management team. This goes beyond loving your customers to renewal. Retention is just a part of it, and you must expand those relationships that can be expanded. So your compensation on this side is no longer just a percentage of the renewal deal, its matrix considers the overall renewal We Saw It In ENX Magazine

percentage as well as the percentage of expanded (new) business injected into each portfolio managed. You want no less than 20% expansion and somewhere around a 95% renewal result. Over this last year, it has become clear to me that many dealerships in our industry have simply become lackadaisical (apathetic, careless, lazy, relaxed, half-hearted, laid-back, easy-going, or casual). Choose any of those synonyms and you’ll be feeling what I’ve been seeing. When I ask the owners about it, they claim that they’re not lackadaisical, but when I ask them what significant changes they’ve made in the last few years that are driving new business, the answer is mostly, “Not much!” So, is it fear of change, or have they become lackadaisical, or is it just too many geldings in the corral? Don’t be afraid, build your plan, interject logic and common sense, be accountable, and lead your team to success! ♦

January 2017 | www.enxmag.com

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Service Excellence Diamond Award Winner News Briefing

Office Technology Service Excellence Award

DIAMOND LEVEL

Automation and Efficiency Keep South Coast Copy Systems at the Top of the Service Game

I

t’s a long road from selling used office equipment from a garage in San Diego to becoming a successful Canon dealer with more than $10 million in revenue and 45 employees. That’s the story of company CEO David Mann and South Coast Copy Systems (SCCS). Now celebrating 20 years in business, SCCS saw its best fiscal year in 2016 with nearly 15 percent annual growth. What’s driving SCCS’s growth? It was a decision a few years ago to get into production print and managed IT services. Both components are experiencing over 10 percent annual growth according to Mann. The word Mann uses to describe SCCS is “progressive.” “We don’t stand by status quo. Status quo is not going to get us where we need to go, which is to grow. A few years ago, we got into managed print very successfully, and now with production print and managed IT services, we’re continually raising the bar.” The company also raises the bar when it comes to service – one of the reasons it won this month’s BEI/ENX Service Ex-

(From left) Brett Hartgrave, Service Manager and David Mann, CEO 42

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cellence Diamond Award. “Our customer service differentiates us from competitors,” said Brett Hartgrave, SCCS’s service manager. “The quality of service is significant; BEI allows us to measure very accurately the real substance of the quality of our service department,” said Mann. Hartgrave sees proper inventory management as a key challenge to retaining high service quality. “If the techs don’t have the proper inventory, it really puts a damper on performance,” he said. “The basic nuts and bolts are a big challenge to any service department.” It’s also important to provide a career path for the company’s 15-person – and growing – technical service team. “We don’t want to hire an entry-level technician and keep him/her there indefinitely,” said Hartgrave. “We’re continually striving to provide an upward career path for the service employee, possibly into bigger equipment or network services.” If that path leads into the IT service side of the business, “We pay for classes for technicians to achieve certification in A+, Net+, Security+, even MCSE,” said Hartgrave. “We also provide training during work hours or using overtime, if need be, to be able to get time in to train.” Another career opportunity for SCCS technicians might be to service larger production equipment. “The training provided by Canon has been fantastic,” said Mann. “By taking our technicians that expressed a desire to go to the next level, we were able We Saw It In ENX Magazine

to grow into production print 100 percent internally.” “One of the things we’re most proud of is that we’ve taken full advantage of the Association of Technical Service Professionals (ATSP) certification program that Canon provides, and have achieved an ATSP certification for the dealership 10 consecutive years,” said Mann. This puts SCCS among the elite Canon dealers in the United States in regards to service technician proficiency. “It is a big teambuilding, motivational and spirited competition once a year to achieve the best in that certification.” SCCS also takes the unusual step of handling all copier service requests through its IT support desk. That way, a live person can handle any of the IT concerns that may be associated with the copier service request as it relates to network printing. “The technicians are able to focus on hardware issues while network queries are handled immediately in-house, reducing our technician-dispatched calls by over 30 percent,” said Mann. “As a Canon dealer, we utilize Canon’s ‘Smart Dispatch’,” said Hartgrave. “Canon has an intuitive software program for our IT support desk to be able to accurately give clients directions on standard user-operable maintenance for the copier, such as cleaning the glass or doing adjustments through the operator panel for copy quality. There also is documentation that our support team can email which has step-by-step instructions. In this way, the client can resolve their own issues without the need of a technician.” continued on page 44


Automation and Efficiency Keep South Coast Copy Systems at the Top of the Service Game Establishing a Service Baseline

SCCS had a clear idea of what it wanted to accomplish with BEI. “We were looking to establish a baseline, a status quo across the board allowing us to compare ourselves to our existing baseline, our existing historical data, and then to other companies/technicians nationwide,” said Mann. “Without BEI, it was difficult to obtain accurate monthly and annual historical data that was true to form.” Before BEI, SCCS’s technicians questioned their historical data. BEI made it easy to sit down with a tech and analyze all aspects of their performance. This allowed SCCS to maximize the team’s efficiency. “We were able to discover the best technicians on certain models and make sure that they’re the ones taking care of that portfolio of our base when service was needed,” said Mann. “It also allowed us to get away from micromanaging each technician and each service call. We could compare historical data on that technician’s performance and make it easy to compare or provide a baseline for that technician, especially as it relates to his bonus structure on BEI.” That bonus structure through BEI performance helped sell the service techs on the program. “It’s ultimately money in their pocket,” said Hartgrave. “There’s an incentive for the technician. ‘I’m not just doing this for the company’s benefit; I’m doing this for my own growth as well.’” Mann said it took about six months before the technicians recognized that benefit. “That’s when they started seeing the return on their complete First Call Effectiveness as it relates to commissions through BEI. When they get that first nice commission check, it’s downhill from there,” he said.

Award-winning technicians

There has been a measurable difference in customer satisfaction with service, too. “After every service call, every customer gets a survey to review our service,” said Hartgrave. “They can also leave their own comments, and we’re getting positive remarks like, ‘Technician really communicated well with us.’ It’s great seeing that.” The company also utilizes CEO Juice to help set benchmarks on the sales and management side of the business. “Our personnel growth really has been in our sales department through the past two to three years,” said Mann. “We’ve significantly ramped up our sales department as our service department performance has increased without significantly increasing our personnel in the service department.”

Migrating Copier Service to an IT Model

What’s next for SCCS with BEI? “We really want to move on from the traditional copier service industry to an IT service perspective, which is being able to clear the calls remotely, improving our first-call effectiveness and dropping response times dramatically,” said Mann. “We’re moving toward an efficiency level much like an IT company would offer.”

Quality Service Relies on Good Communication

New building 44

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“Customers need someone who can really listen to their issues,” said Hartgrave. “Techs are consultants when they’re at the location and an ear for the customer more than just a hardware guy

going in with his tool bag and fixing the copier. It’s more of a personal experience.” “Communication, I think, is the biggest thing,” said Mann. SCCS notifies customers immediately when their service call has been placed in the queue and then when a technician is in-route. They’re also emailed a survey when the service call completes. Then there are the little touches that make a big difference. “If we don’t have the parts with the technician, we leave a custommade Postit note on the copier that communicates the service call status,” said Mann. “It’s a small thing, but has worked very well.” “The ongoing objective from a service standpoint is to continue to grow our IT clients, establishing new customers outside of our traditional copier base,” said Mann. “Rather than getting in with a copier and trying to take over IT, we’re able to go in with IT first and replace hardware as needed. That’s our big focus going forward.” Earlier this year SCCS made a big investment in a new 15,000 square-foot facility in the high tech district of San Diego. “That move has permitted us to dramatically increase our sales force and revolutionize our IT department,” said Mann. “We have already seen significant growth as a result of the move.” ♦

About the Dealership: 1. President/Owner: David Mann 2. Service Manager: Brett Hartgrave 3. Number of Techs: 15 4. Number of Devices Serviced: over 4,000 Why They’re a Diamond Award Winner First-Call Effectiveness: 66% Call Back Rate: 19% Hold for Parts Rate: 15% Ranking: 4th overall of the 170+ dealers

We Saw It In ENX Magazine


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Darrell Amy

Sales Briefing & Marketing News

Why Your Sales Team Cannot Be Your Marketing Department

E

very day I talk to copier dealer principals and VP’s of sales about their marketing strategies. While dealers see the importance of online marketing with today’s buyer, every so often I hear the following when it comes to marketing: “I have a marketing department—it’s our sales team.” If you’ve ever said (or thought) these words, this article is written to you. Twenty-three years ago when I started selling copiers that statement was pretty much true. Sales reps were the marketing department. They were the face of the company and the primary source of leads. As long as you had a decent brand, a solid reputation, a few brochures, and some business cards, you were good-to-go. Sales reps cold called, found people who needed to upgrade copiers, and slammed a box. Marketing was there to create some flyers, order radio ads, talk to Yellow Pages, and organize events. This worked back then. Then came the Internet. Slowly over time, buyers realized that they didn’t have to talk to sales reps to get answers to questions. They began delaying the sales conversation. And once the sales conversation started, they took advantage of the Internet to factcheck sales reps. Consider these facts: ● 94% of B2B decision makers use Google and other search engines during the buying process (Acquity Group 2014 B2B Purchasing Survey). ● 55% of buyers admit to deciding whether to meet with a sales rep based on what they

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find online (Sales Benchmark Index). ● 84% of C-level decision makers use social media in their buying decisions (IDC, 2014). ● Buyers are, on average, 57% of the way through their decision making process before contacting a sales rep (Corporate Executive Board, 2012. This number is now approaching 70%!).

Marketing Fuels Today’s Sales Process

Yes, your sales team still plays a critical role. But they are no longer the only public face of your company. Nor should they be the only source of sales leads. Your sales team and your marketing must work hand in hand. Some Deals Originate in Online Search Google is the new Yellow Pages. Your dealership needs to be found online. When prospects find you, they need to find a company that has helpful ideas. Recently, we saw a dealer that had someone come to their website through Google search and then consume 57 pages on the website before filling out a form to request information. That may be a little extreme, but you have to ask yourself these questions: ● Can we get found online? ● If you stumbled across your dealership online, would you stay on the website or leave? ● Would you trust your dealership enough to reach out to talk to a rep? As I talk with dealers about their Search Engine Optimization (SEO) strategies, our goal is to make sure the dealer has top We Saw It In ENX Magazine

placement for key search terms in each market they serve. The old days of meeting once a year with your Yellow Page rep and handing them a big check are over. SEO requires focused work over time. The dealers that successfully execute a SEO strategy gain tremendous competitive advantage. Some Deals Originate In Social Media IDC discovered that 84% of C-level decision makers use social during the buying process. While I admit that many of them were probably just trying to not look like fossils when answering the survey, the reality is that social networks like LinkedIn play a huge part in sales. My good friend, Larry Levine, coaches sales reps in the art of social selling. He regularly gets stories from reps that have invested in doing LinkedIn the right way and are finding that decision makers are reaching out to them after seeing their expertise on display in LinkedIn. In order for your reps to be positioned as experts on LinkedIn, they need content to share. Ideally, much of the content comes from your dealership, linking back to your website. Marketing’s role is to provide a steady stream of relevant content from your dealership that your sales reps can share to fuel their LinkedIn prospecting. Most Deals Still Originate From Sales Prospecting Cold calling is not dead. However, it is different. These days, the web and social media are tightly integrated into the sales process. As I talk with sales reps, continued on page 48


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Why Your Sales Team Cannot Be Your Marketing Department it’s not uncommon that when they do get a prospect on the phone, the prospect is checking out the dealership’s website while they are on the phone with the rep. (I did the same thing just last week when talking to a rep that cold called me.) Before the first-in appointment and all through the sales process, buyers are forming opinions about your dealership (and your competitors) based on what they find online.

Marketing Is Important

Here’s the bottom line: marketing is important. You can ignore it at your own peril. The problem is, you won’t be able to measure your loss. ● How many people never find your dealership online? ● How many people start talking to your sales rep but get nervous when they see your five-year-old website that doesn’t even have information about what the rep was talking about? ● How many people don’t return your sales rep’s calls when they see their LinkedIn profile and get the sense that it’s just another self-centered sales rep trying to hit quota and not someone that could genuinely help their business? This stuff matters! As we continue our conversation about marketing, here are some more items to consider. Marketing is More Than Creating Leads Yes, your marketing efforts should generate leads. However, marketing is about much more than generating leads. It should position your company for success in the buying process. In the past, buyers formed opinions about your company based on their experience with your sales rep and your reputation in the market. Today, they also form opinions based on your online presence. ● Does the company feel credible? ● Does it look like this company could help me solve my technology problems? ● Who else uses them? ● Can I trust them or will they roll in a copier and then walk away like the last vendor we worked with? Yes, your sales team is still important. However, we know that people barely 48

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trust sales reps. So, if what they find online doesn’t back up what your reps are saying, trust is gone. No trust, no sale. Your online presence is tightly integrated into the traditional sales process. Even if you never expect to get a single lead online, you need a vibrant web presence that supports your sales process. Marketing May Be The Reason Your New Business Initiatives Flounder From 2004 to 2010 I had the privilege to coach hundreds of solutions specialists and thousands of sales reps in the area of solution selling, particularly with document management. I watched many dealerships invest hundreds of thousands of dollars in staff, training, and software partners only to have the initiatives flounder. Why was this? There were many reasons, but most of these dealers had one thing in common: they forgot to invest in marketing. Sales reps would go out and have a great conversation about document management. Then the buyer would go to the website and only see copiers. They got cold feet. As a result, deals never closed. Sadly, I’m seeing the same thing happen all over again in the area of Managed IT Services. Dealers are making massive investments to provide IT support, but when you go to their websites, all you see is copiers. Maybe there is one page that briefly explains the IT offering. At best, it looks like the IT program is a bolt-on; an afterthought. Let me ask you this: would you trust your critical technology to a company that seems to be casually in the IT business as an afterthought? I don’t think so! When people experience your company online they need to get the sense that you’ve been in the IT business for years. They need to get the feeling that you know what you’re talking about with multiple pages dedicated to your suite of IT offerings. They need to find references from other companies. If you look at your website and social media presence through the eyes of someone considering trusting you with their IT, do you get the sense that your dealership is a credible source of IT services?

As I visit dealerships across the country, many of them have invested in new demo rooms with glass windows into their NOC with the goal of looking like a team of IT pros. This is fantastic. However, only a small percentage of customers will ever visit your office. All of them will visit your website. Have you made the investment to make your online presence look as credible as the NOC in your office? If You Can’t Be Found Online, You Don’t Exist One of my favorite books from this past year is Not Taught by Jim Keenan, sales editor for Forbes. In this book he explores all of the critical aspects of doing business that none of us were taught in school. Let’s face it, for most of us, the Internet didn’t exist when we were going through business school or starting dealerships. One thing that Keenan emphatically points out is this: “If someone can’t find you online, you don’t exist.” This is true for your dealership. It’s also true for your reps. Have you ever had a sales rep call you and then had a hard time finding their company online? How does that make you feel? It certainly doesn’t build confidence. Your dealership needs to come up in Google search for a wide variety of search terms. In most markets, this takes a lot of work. It’s also an area that can feel very confusing. If you’d like some insight, check out our special report “Google And Your Copier Dealership.” You can find it at: www.dealermarketing. net/Google Your sales reps can no longer be your marketing department. They need the support of a great online presence. They need social sales skills.

Marketing Matters

All of this will require investment. You need to budget for an excellent website, to keep your website and social media maintained and for search engine optimization. You can measure your marketing results using tools like Google Analytics. You should also be able to measure your results in terms of key sales metrics like call-to-appointment ratios and close rates. ♦

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Sheryne Glicksman

Sales Briefing Management News

What’s Your Base Management Strategy?

I

ndustry research shows that many companies don’t have a comprehensive automated sales process around how to manage their customer base. Implementing a base management strategy (BMS) starts with having a strategic plan aligned with your goals and objectives. You also need a clear understanding of the value of your customer base. Best practices around how you build the foundation for the strategy, structure your system, and use the tools within your system to help build your business are the core for your strategic roadmap. The dealer profile has evolved over the past 20 years. The platform you started with years ago, when the revenue stream for sales reps was strictly hardware, may need to be adjusted to capture multiple revenue streams and accommodate the team selling approach you take when it comes to managed print services (MPS), managed IT services (MIT), and enterprise content management (ECM) business. These sales cycles may have different forecast dates and subject matter experts (SMEs)

50

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driving the next steps to close the business. By taking a look at the way you currently have your sales process structured and adjusting it to capture multiple revenue streams will help eliminate the separate spreadsheets these division leaders may be keeping. This will allow you to have all your revenue streams in one place. Today, we have information coming at us faster than ever before. Having a system that will allow for bi-directional outlook will help organize email communication all in one place. With bi-directional outlook, you can easily have email saved into a customer or prospect record whether you are communicating directly from your sales process platform or directly from email. There is no reason to have several separate systems anymore with the advances in technology and integration tools. We also have five generations in the workflow today – all with different mindsets and perceptions. It’s time to think about how you manage these perceptions allowing for different and creative ways to learn. With everything that has changed, many things stay the same. We have missions, goals, and objectives to accomplish that drive revenue and business results. People, process, and technology make up the circle for establishing a strategic plan. Is everyone from top down and bottom up aligned and on the same page? Do you show consistent executive sponsorship to the plan? What process are you committed to and what technolWe Saw It In ENX Magazine

ogy tools are available that you can use to be more effective and efficient? Hiring and retaining good people, having a process, and leveraging technology are key components to developing a strategy to effectively run your business. Do you see alignment in your company with these key components or do you see disconnects anywhere? If so, you are likely losing customers and talent. Studies show increasing your retention rate 5 percent leads to 95 percent increase in profits. The lack of focus, lack of priority and lack of execution of strategy impact client retention. Value and risk are key drivers for implementing a BMS. Value is defined as “the worth of something” while risk is defined as “a situation involving exposure to danger.” In developing a roadmap for a successful strategy, you must first have a good understanding of the value of your base. Each of your reps, in turn, should have a good understanding of the value of their assignment. A simple calculation will show you how to put a number to this value that can be used during a business planning one-on-one session. Once your reps have a good understanding of the value of their current base, they can prepare customer business reviews (CBRs). This starts with a basic profile of your customer along with an understanding of their goals, initiatives and challenges so you are prepared to have meaningful conversations to find continued on page 52


We Saw It In ENX Magazine

January 2017 | www.enxmag.com

•

51


What’s Your Base Management Strategy? ways to help them achieve these. The right software, hardware, or solution will ultimately be the tools that can get them there and help you continue to expand and retain your customer base. The customer business review should be all about the customer! Client retention is impacted by lack of resources and technology limitations. Do you have the right people and technology available to help manage your customer base? As a best practice, look at the technology platforms you are using today to manage your business. Within these platforms, there should be some kind of CRM tool to help manage daily activities, pipeline growth, sales opportunities, and closed business. How you structure this system related to activities you are benchmarking, categories of revenue streams, sales stages, and percentage to close will provide you with consistency to execute your plan. Once your system is set up, it is important to message a cadence – for example, “If it’s not in XYZ system, it didn’t happen.” Have some fun around this concept helping the reps want to use the system, not have to use it. Make it easy for them by looking into on-the-go, real-time access applications that link into your main system to appeal to the millennial generation. Understand the limitations of your current platforms. Are they able to integrate or “talk” to each other so you are getting the most of them? If not, work closely with your business partners to find solutions that will! When it comes to pipeline growth, I get it. We all have our individual spreadsheets to manage our business. However, these should only be used as a check and balance to your master tool. If everything is entered into the system the way it should be, eventually the separate spreadsheet will no longer be needed. Lead by example and drive everyone to your tool to track opportunities and sales stages, becoming more efficient to win more business. This goes back to looking at your current sales process and making adjustments to capture those multiple revenue streams today. You have a wealth of information in the form of your current data collection agent (DCA) capturing equipment information and volumes. What you and your reps do with this information is another story. I’ve seen some dealers hide this from sales reps while other dealers provide the information to sales reps in various file formats. Either way, what you do with this information is part of a BMS.

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You want to be able to review the information found on your DCA and go beyond just looking at where the volume is being printed. Then you can ask questions as to what is being printed, why it’s being printed, and do you know who is printing. At that point you will be able to help your customers build strategic roadmaps designed to help them with the goals they want to achieve and whatever issues they may be experiencing with mission critical documents or inefficient manual processes. This opens up dialogue that will go beyond the box in conversation as you look for that business fit knowing that there are many tools to help with streamlining their print, routing their printing to cost effective devices, eliminating wasted print, and helping them to securely print and store their final output. All of this can be done during an effective CBR by putting focus on the lifecycle of the document. Some dealers state that success with MPS execution ties to using behavior modification tools to help manage user behavior and change management. Others take the approach of “getting the fleet now and optimizing later.” The point is that you have a wealth of information that you can share with your customers to help them make relevant business decisions while incorporating your tools to help them. Take a look at how your company defines and executes on MPS as you build your plan. Having an effective BMS in place is sure to yield you positive results with client retention, new business growth and profitability for years to come. ♦ We Saw It In ENX Magazine


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Ken Edmonds

Service Management News Briefing

Interesting Times Ahead : How Will New Inkjet Devices Impact The Service Department?

A

n old curse says, “May you live in interesting times.” The idea being that boring times were times of security and peace and interesting times more associated with trouble and danger. In our industry, I am concerned that interesting times lie in our near future.

Portents of the Coming Change

I have had the opportunity to visit both GraphExpo and the BTA meeting in Asheville recently, and I walked away amazed at the things I saw and heard. At GraphExpo, it seemed that several of the manufacturers devoted more booth space to devices outside of the traditional production print environment. There was also a significant shift toward inkjet devices both in the high-end industrial printing environment as well as toward specialty devices like wide format. At the BTA meeting one recurrent topic was Managed Network Services (MNS). Both during the dealer roundtable discussion and during presentations this subject was addressed as an important opportunity to diversify the revenue stream for dealers and as a way to secure the dealer client relationship. Also at the event, Epson was showing off their WorkForce Pro series inkjet devices.

Cause for Concern

This leads to my concern for the future. With print heads that print the width of the page, and the changes in ink quality, we face the possible end of the toner-based machines in the near future. The major copier manufacturers are bringing this technology from the top down, and the traditional printer manufacturers are bringing it from the bottom up. The page costs on some of the devices from Epson and HP on the low end are comparable to or 54

www.enxmag.com | January 2017

cheaper than that of toner based systems. Both HP and Epson are reporting page costs under .01 for b/w and as low as .028 for color. These devices have duty cycles and throughput speeds comparable to MFPs, lacking only the finishing options.

Low TCO and Rich Feature Set

When computing the total cost of ownership (TCO), there is no comparison to the traditional MFP. These new devices are A3 capable and priced less than most manufacturers’ A4 devices. For example, Epson’s Workforce 4640 is an A3 device with reported page cost of .009 black and white and .024 color. Couple that with a $1,199 list price and it becomes a formidable competitor. The new devices that are coming are very feature-rich, comparable to most of the more traditional products. HP and Epson both feature dual sided scanning through the ADF and support paper up to 13 X 19. These units include most if not all of the scanning capability found in traditional MFPs. Most of the new devices also have a significant paper capacity. For example, the HP Pagewide comes standard with a 500-sheet tray plus the bypass. You can add anywhere from one to three additional trays. This paper capacity rivals most traditional A3 devices today. On HP’s website, they are now previewing a finisher that has hole punching and stapling. They are also previewing new paper decks with capacity up to 4000 sheets of A4 paper. One other interesting item on their website is the concept of device as a service. The concept being that the client pays a per-seat license that can cover all of the devices the employee needs, including printing. They are definitely coming after the dealer’s business. We Saw It In ENX Magazine

Impact on Our Industry

The reason these changes matter to our industry is its impact on our financial model. According to the standard model used, almost all of the profit for a dealer comes from its service department. We rely on machines that need routine preventative maintenance like replacing drums, developers and fusers. With none of these components used in inkjet technology, what happens to service revenue? I spoke to a service manager recently who had just sold one of the HP Pagewide printers, and he told me the client declined a service agreement. The client stated that based on her usage of the device, it would not need any maintenance in the next three years. That perception may be typical of many customers in the future. From HP the end user can purchase a three-year next-day exchange program for $349. If the unit breaks and can’t be resolved over the phone, HP will ship the client a replacement unit. How can we compete with that type of program and still make a profit?

Now Is the Time to Plan

While our current model still has some life left in it, we need to plan for the coming changes. We have a short period before the inkjet products completely replace our current products. They still lack the finishing components to completely replace our MFPs in the enterprise but I am sure those are on the drawing board. As dealers, it is important to look at how you can increase your value to your client base. If possible, find new products and services that fit in your department’s skill set and try to widen and deepen your penetration of your current and future customers. Your survival depends on supplying products and services your clients cannot live without. If you can do that, the interesting times ahead may prove to be profitable and prosperous. ♦


Empties For Sale

Printer Tech Tip HP Color LaserJet Enterprise MFP M680 and M651 Tools for troubleshooting: Print/Stop Test Print/stop test: Use this diagnostic test to isolate the cause of problems such as image-formation defects and jams within the engine. During this test, stop the paper anywhere along the product paper path. The test can be programmed to stop printing internal pages or an external print job when the paper reaches a certain position. The test can also be programmed to stop from 0 to 60,000 ms. Common print stop test timing millisecond (ms) stops example for M680/M651: • Leading Edge before the Fuser: The page has passed the registration area and the leading edge is just short of entering the fuser. The image can be seen on the paper but has not fused. If the defect is visible then the cause might be the drum, transfer roller, or a roller prior to, or in, the registration area. • Leading Page into the top Output Bin: The leading edge is about 18mm into the top output bin. The image has gone through the fuser. If the defect was not visible prior to the fuser,

and is visible after the fuser, then the fuser it is the likely cause of the print quality defect. Inspect the fuser for damage, debris, or labels stuck to the fuser. Replace the fuser. Leading Edge before the Fuser M680/M651 1600 ms Model

Leading Page into the top Output Bin 2200 ms

1. From the Home screen on the product control panel, scroll to and touch the Administration button. 2. Open the following menus: 1. Troubleshooting 2. Diagnostic Tests 3. Print/Stop Test 3. Enter a range, and then touch the OK button. • After the print job is completed press OK button to return to the Troubleshooting menu before the timer times out. • After the timer times out, touch the Stop button. Activate the door switch to restart the engine and return it to a normal state. ♦

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

January 2017 | www.enxmag.com

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JANUARY 2017

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Brother TN360 Toner Cartridge

2600 Yield

$11.90

TN420, TN450

NDBTN450

Brother TN450 Toner Cartridge

2600 Yield

$9.35

TN630, TN660

NDBTN660

Brother TN660 Compatible High Yield Black Toner Cartridge

2600 Yield

$10.20

TN720, TN750

NDBTN750

Brother TN750 Toner Cartridge

8000 Yield

$14.45

CB435A

NDHCB435A

HP CB435A (HP 35A) Toner Cartridge

1500 Yield

$11.05

CC364X

NDHCC364X

HP CC364X Toner Cartridge

24000 Yield

$40.50

CE255X, 55X

NDHCE255X

HP CE255X Toner Cartridge

12500 Yield

$31.31

CE278A

NDHCE278A

HP CE278A Toner Cartridge

2100 Yield

$10.20

CE285A

NDHCE285A

HP CE285A (HP 85A) Toner Cartridge

1600 Yield

$10.20

CE390X

NDHCE390X

HP CE390X Jumbo Toner Cartridge

24000 Yield

$45.05

CE410A, 305A

NDHCE410A

HP CE410A Toner Cartridge

2200 Yield

$15.30

CE411A, 305A

NDHCE411A

HP CE411A Toner Cartridge

2600 Yield

$14.45

CE412A, 305A

NDHCE412A

HP CE412A Toner Cartridge

2600 Yield

$14.45

CE413A, 305A

NDHCE413A

HP CE413A Toner Cartridge

2600 Yield

$14.45

CE505A

NDHCE505A

HP CE505A Toner Cartridge

2300 Yield

$16.50

CF280X, 80X

NDHCF280X

HP CF280X (HP 80X) Toner Cartridge

6900 Yield

$19.55

866-817-8795 © 2017 - Supplies Wholesalers • All rights reserved. • Not responsible for typographical errors. Prices subject to change without notice.


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

ENX Magazine January 2017 Issue  

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

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