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Channel Managed Print Services A review of European MPS programmes November 2012

Louella Fernandes Quocirca Ltd Tel : +44 07786 331924 Email: Louella.Fernandes@Quocirca.com

Clive Longbottom Quocirca Ltd Tel : +44 118 948 3360 ext 200 Email: Clive.Longbottom@Quocirca.com

REPORT NOTE: This report has been written independently by Quocirca Ltd. Quocirca has obtained information from multiple sources in putting together this analysis. Although Quocirca has taken what steps it can to ensure that the information provided in this report is true and reflects real market conditions, Quocirca cannot take any responsibility for the ultimate reliability of the details presented. Therefore, Quocirca expressly disclaims all warranties and claims as to the validity of the data presented here, including any and all consequential losses incurred by any organisation or individual taking any action based on such data. All brand and product names are trademarks or service marks of their respective holders.

Copyright Quocirca Š 2012


Channel MPS Programmes 2012

November 2012

Channel Managed Print Services A review of European MPS programmes Managed print services (MPS) has emerged as an effective approach to reducing printing costs, improving productivity, enhancing document security and supporting sustainability. With MPS adoption is strongest amongst enterprises; many vendors are now extending and refining their MPS offerings for their channel partners to capture the growing opportunity in the SMB and midmarket space. MPS promises to usher the holy grail of recurring revenue for resellers operating in a highly commoditised market, whilst helping cash-strapped customers shift capital expenditure spending to more predictable operational expenses. This report provides an overview of some of the key channel MPS offerings in the European market. Channel MPS offerings are rapidly evolving

Service offerings range from basic MPS packaged offerings to flexible modular MPS platforms. Given the diversity of the printer/MFP channel, these programmes have to address both the IT reseller, with their low MPS expertise and infrastructure, and the copier dealers, who already have the resources and experience to sell and deliver MPS.

Volume commitment plans still prevail, but pay per print is becoming more popular

MPS contracts are often based on a cost per page, which requires volume commitments. However, more programmes are emerging that do not require minimum volumes – for example, Brother’s MPS programme and Ricoh Click, both of which use a ‘pay per print’ approach. Xerox’s PagePack contracts are also now more commonly without volume commitment.

Xerox offers the most comprehensive range of multi-vendor channel MPS offerings.

Xerox has a broad channel MPS portfolio, from basic maintenance and supplies contracts, such as PagePack, to its multi-vendor services for the channel, Xerox Partner Print Services (XPPS). In Europe, Xerox now has around 200 XPPS partners, having grown from 90 at the end of 2010. It is increasingly focusing on managed IT service providers, although success so far has been limited to the US. XPPS has been well received by multi-brand resellers and has helped Xerox expand beyond its concessionaire channel. In recent months, Xerox has expanded its focus on solutions with a clear roadmap. Ricoh has, so far, had to rely on localised MPS approaches in Europe, which have been highly variable depending on reseller capability. Although Ricoh is now extending its ChaMPS platform to its European channel through modularised service options, it remains to be seen how well it engages its reseller base with this approach.

Ricoh is extending its US ChaMPS strategy to Europe Lexmark leads with a strong vertical solution focus

Other manufacturers are taking bigger MPS steps

Although software solutions can drive MPS value, few resellers are actively pursuing such an approach

Lexmark has renamed its LVP programme to the Business Solutions Dealer (BSD) programme in Europe, bringing it in line with its US approach. Lexmark is actively targeting the copier channel with its offerings, particularly those who wish to add to their A3 portfolio with A4 devices. It has been particularly successful with this strategy in the major European countries, and has a reputation for strong training and support. It continues to develop its industry solution portfolio, enabling resellers to customise their products to their customer business needs. This is a key differentiator for Lexmark. Companies like Brother, OKI, Konica Minolta and Kyocera are expanding their offerings for their channel partners. Whilst Brother is restricting itself to a basic MPS lease model, both OKI and Kyocera are developing their MPS capabilities. Kyocera, in particular, is actively training its channel to sell MPS and offers a range of options that requires minimal upfront investment. With many resellers still just dipping their toes in the unchartered MPS waters, it is only the more mature MPS resellers that are looking at driving further value from their MPS contracts with solutions – and this tends, of course, to be in the larger SMBs and mid-market organisations. Today, Lexmark appears to be having most success in this arena, given its long-established focus on solutions.

Conclusion Undoubtedly the SMB market represents a huge opportunity for manufacturers and resellers alike to capture incremental revenue opportunities. In the face of continued hardware commoditisation and shrinking margins, resellers must make the transition from transactional to services-led approaches. Unsurprisingly, it is those resellers who have invested the time and effort to train and educate their staff about MPS that are managing this well. While resellers require simple and flexible tools that limit the infrastructure investment, they must invest in the human resources necessary to take their MPS business forward.

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Channel MPS Programmes 2012

November 2012

1 Introduction In a flat hardware market, characterised by falling prices and shrinking margins, printer manufacturers view MPS as key to their growth. Achieving this for the SMB market is challenging due to the disparate nature of the printer and copier reseller channel. Experienced copier resellers will be aware of the infrastructure and skills that their company needs to provide to be successful. However, for classic IT resellers, managed print services are still relatively new. Whilst copier resellers have the experience of selling contracts based on pages, or ‘clicks’, many IT resellers are not used to selling these types of contracts. This is leading to the emergence of hybrid resellers who offer such contracts backed by IT expertise. Up to now, MPS has largely been the domain of larger enterprises, due to established direct MPS offerings from vendors such as HP, Lexmark, Ricoh and Xerox. However, mid-sized businesses are gradually waking up to the MPS opportunity with the emergence of more channel-driven MPS packages from almost every vendor in the market. These range from device-centric offerings, which are typically inclusive service contracts encompassing service and supplies, to some packages including the leasing of devices and may also include support, depending on the capability of individual resellers. With cost reduction high on the agenda for most businesses, MPS provides an opportunity for organisations of all sizes to gain the visibility they need into print costs and enables resellers to develop long term and profitable customer relationships. With more and more manufacturers simplifying and expanding their channel propositions, MPS is becoming more accessible for resellers. The barriers to entry for MPS, such as cost and complexity, which may have discouraged resellers in the past, are no longer daunting – and there is no better time than now for resellers to add value to their services with MPS. This report outlines some of the key trends in the MPS market for SMB and mid-market organisations, and provides an overview of the key vendor channel MPS programmes in Europe. This report draws on a combination of desk research and reseller interviews. Please note that the detail for each vendor programme varies depending on the relative maturity of the programme and the availability of information in the public domain.

2 MPS Definitions What does MPS include? Channel-packaged MPS offerings in the mid-market vary in depth and scale. Unlike enterprise MPS, they do not require an initial print audit assessment. An entry-level MPS offers a way to purchase printers combined with supplies, maintenance and support through an all-inclusive contract. 

Purchasing: Payment schemes vary as customers may either purchase devices outright or lease them from a financing company. Leasing enables organisations to shift capital to operational expenditure. Businesses then pay a monthly fee based on predicted monthly print volume, which covers the cost of the equipment, any leasing costs, supplies, service and support. Print volume commitment: Some contracts require a monthly or annual print volume commitment, where unused pages are still paid for. Where minimum volumes are required, an overpage charge is generally applied, which is a cost for each page beyond the minimum page volume. Alternative approaches are contracts that do not impose minimum volumes, where users only pay for what they print. These contracts may still require a commitment to a service contract for a minimum period. Additional services. These are dependent on the reseller capability and may include assessment services, device consolidation consultancy or document workflow solutions.

The following table describes the key differences between a basic MPS and value MPS approach. Services that offer flexible levels of service enable MPS to easily scale to support business growth, something that can be challenging for mid-size businesses. Target market SMB

SMB & midmarket

Category Basic: Maintenance, supplies and support Value: Assessment, optimisation and management

Description Hardware, supplies, service, support, finance based on cost per page

Channel requirements Minimal investment: Simple and quick to operate: No software, no audits, no complexity

Assessment of print volumes, environment, workflows and cost

Some investment: Print audit tools, multi-vendor support, remote monitoring

Figure 1. MPS definitions

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Channel MPS Programmes 2012

November 2012

Quocirca believes that the following capabilities offer mid-market businesses the strongest opportunities for cost saving and productivity improvements. Features Automatic meter/counter reading

       

Automatic error notification Automatic toner/ink management capabilities/supplies ordering Usage reports

  

Customer portal/web interface (for customer and service provider)

 Remote management e.g. automatic software upgrades, remote configuration

 

Benefits Reduced time associated with manual meter reads Greater billing accuracy Automatic invoicing Predict equipment failure, improve uptime Less user intervention Proactive maintenance and replenishment Improved inventory management Optimise hardware usage through more efficient data collection and analysis Better device utilisation and management Warn of device reaching end of life Improved customer experience, ease of use, fast and efficient way to view device usage Service provider can analyse customer reports on demand to improve service levels Improved customer response time Maximise service engineer utilisation

Figure 2: Recommended MPS capabilities

3 Market Trends 1

Printing is far from dead in the SMB market. A recent Quocirca study amongst 150 SMBs (50–500 employees) in Europe revealed that 56% of respondents view printing as critical or very important in supporting business activities. Many of these organisations are also seeing a continued growth in colour print volumes, which translates to higher expenditure on consumables. Indeed, the study showed that reducing costs and understanding usage are the top print management challenges for SMBs today (Figure 3).

Figure 3. What is your level of concern in the following print management challenges? (Significant or very significant) With SMBs struggling to manage print costs, lower energy usage and reduce time spent on printer admin, the time is ripe for vendors and resellers to promote the MPS opportunity. Certainly, there is some appetite for moving to MPS contracts amongst SMBs. While today the majority (60%) of SMBs and mid-market organisations currently purchase printer hardware and 1 consumables on a transactional basis, almost 40% of respondents in Quocirca’s study plan to lease printers as part of an MPS contract in the future. Currently, around 20% of smaller SMBs (50–249 employees) use a basic MPS compared to 45% of larger SMBs (250–500 employees). Unsurprisingly, larger SMBs are most likely to be using (25%) or planning to use (19%) a full MPS.

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Channel MPS Programmes 2012

November 2012

Figure 4. Is your company currently using or planning to deploy a managed print service? This is positive news for resellers as they transition customers to a contractual approach to buying ‘printing’ rather than ‘printers’. At one end of the scale, this could be a simple single branded, basic service that essentially wraps hardware with services and support; at the other, this could be an end-to-end approach that includes assessment, optimisation and on-going management. However, is there still room for improvement? Around 50% of SMBs in Quocirca’s survey had no knowledge of MPS, indicating that the market still lacks education on MPS; the concept, approach and benefits.

4 Competitive landscape The overall MPS landscape is characterised by printer/copier manufacturers, systems integrators, software infrastructure vendors and consulting/audit firms.  Printer/copier manufacturers: These programmes are tied to vendor product offerings and include assessment, design, implementation and support services. Vendors may also offer channel MPS programmes through reseller partners where capabilities exist. Vendors in this category include Canon, HP, Konica Minolta, Lexmark, Ricoh and Xerox.  Systems integrators/resellers: These are often a channel to market for printer and copier vendors and may offer MPS as part of a wider desktop service offering or green IT service strategy. Vendors in this category include Atos Origin, Cap Gemini, CSC and IBM.  Software infrastructure vendors: These provide software tools for assessment and optimisation of the print environment. Examples include Asset DB, PaperCut, PrintAudit and PrintFleet. The maturity of services in the above categories varies significantly and it can sometimes be confusing as to what is exactly covered by different vendor offerings. MPS programmes targeted at the office environment include the following:

Figure 5: MPS vendor landscape Please note that the above list of MPS providers is not intended to be exhaustive, but highlights some of the key players in the market.

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Channel MPS Programmes 2012

November 2012

5 Vendor Profile: Konica Minolta Konica Minolta has made strong inroads in the direct MPS market with the launch of its Optimised Print Services (OPS) programme in 2011. This modular programme combines consultancy, hardware and software implementation and operation. The OPS concept comprises four areas – fleet, process, finance and security. Within these areas is a catalogue of service options available to its direct clients. Konica Minolta is now extending its OPS concept to its channel, offering a scaled down version of its vast OPS menu of services.

Managed IT services Konica Minolta is also striving to penetrate the IT space through a number of acquisitions of managed IT services providers. This includes All Covered in the US, Serains in France and Koneo in Sweden. In the US Konica Minolta has developed a strong programme through All Covered to help dealers penetrate the IT services market. Through Konica Minolta, All Covered will provide help desk support including application support, password resets, mobile device support, after hours help desk for e-mail protection, anti-virus protection, patch management, application update management, 24 x 7 monitoring and alerting for server and service availability, server preventive maintenance, cloud backup for both workstations and servers and software licensing monitoring. In this scenario, All Covered does not invoice the customer; instead it invoices the dealer for monthly activities in each covered account. The dealer, whose contract is with the customer, can then add their own margin. Through such a programme, Konica Minolta has provided its US dealers with a no risk program that captures incremental revenue. This is a smart move for Konica Minolta – with many of its competitors are focused on the enterprise segment of the market, this approach provides Konica Minolta the opportunity to deepen its presence in the SMB market. Quocirca is seeing more Managed Service Providers (MSP) emerge that are looking to include printing within their portfolio of services. Although this trend today is stronger in the US than Europe, there is likely to be more uptake of such services over the next few years as other manufacturers, such as Xerox, repackage their MPS offerings to target MSPs.

European channel MPS strategy Konica Minolta is heavily focused on its indirect channel which has coverage in 27 countries. Konica Minolta has been actively transforming its channel strategy over the past few years to enable its partners to deliver basic print services across its full product range – encompassing A4, A4 MFP and production printers. It is focusing on resellers who can deliver value to their customers and has pulled away from the typical volume resellers such as PC World in the UK and Rue de Commerce in France. Konica Minolta has two approaches for the channel to embrace a contractual rather than transactional sales approach: ClickPack This is targeted at the IT reseller channel and is live in the UK and France. It will be rolled out to other European countries later this year. For the first time, it is providing IT resellers with access to its bizhub portfolio. Devices in this portfolio must be sold through a ClickPack contract. This is based on a leasing model and uses a contract management system which handles quotation, invoicing and administration. Konica Minolta provides resellers with a USB tool to firstly analyse the printer fleet, then calculate the cost per page, services and rent related to the proposed equipment. A reseller can set their own CPP and add their margin and generate a quote for between 3 and 5 years via a web portal. The web portal generates a customised sales proposal, handles the credit application, prints the lease agreement and initiates the installation request. The customer can also use the portal to view print usage, technical alerts and order supplies. Billing is handled by the finance company which sends quarterly bills that combine the equipment rental with the printed page costs. No volume commitment is required as customers only pay for actual usage. Servicing can be carried out by either Konica Minolta’s direct service organisation or by the dealer itself. The billing is handled by the leasing company. ClickPack now extends to software solutions, including a range of document management software. In France, the programme was tested by 5 dealers which include Buereautica, ID21, Kiwi Informatique. All Konica Minolta resellers are eligible for marketing ClickPack if they have a network technician and there is no minimum purchase required. According to Konica Minolta France, by selling a ClickPack contract a dealer can increase its margin by 25% from a transactional sale to 40% on the equipment sale and related service (maintenance, spare parts and consumables) and 15% on the cost per page. In France it is already seeing an increase in the average selling price on longer contracts. Konica Minolta offers a range of sales training for resellers in collaboration with third parties which includes a free two day training course. OPS Indirect

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Channel MPS Programmes 2012

November 2012

Konica Minolta is extending its core OPS services to its indirect channel, specifically those with some competency in MPS and solutions provision. Depending on the maturity level of the reseller, Konica Minolta can offer its consulting and monitoring services to its channel partners. At a basic level, customers are given access to the OPS web portal which provides analysis of print usage, device status and consumable status. At an advanced level, reporting, automatic notifications and proactive provision of consumables for Konica Minolta devices is offered. Partners are given the opportunity to provide extra chargeable services to gain full knowledge of their customers’ printer fleet – whether it is Konica Minolta only or a mixed brand environment. Konica Minolta provides full training and support (class room and web-based) for technical and sales staff as a pre-requisite to becoming a certified OPS partner. To achieve OPS partner status, a reseller needs resources that include an OPS account manager and OPS specialist to cover pre-sales and sales roles. This is backed by continuous support from regional Konica Minolta OPS teams.

Service summary Approach Description

Product Portfolio Cost per page Contract length Billing

Vendor responsibility

Click Pack  Basic MPS  Pay-per print, no minimum volumes, automated meter reads  Sales portal to generate contract and on-line credit approval request  Full KM bizhub portfolio  Reseller defined  3-5 years  Customers invoiced periodically (quarterly or biannually), based on actual usage with no minimum volume or fixed fees  Consumables, automated meter reads, support, warranty, recycling

Reseller responsibility

Deliver and install hardware

Rebates Supplies and service

 

N/A Services portal

Solutions support

Full access to KM’s solutions portfolio

OPS Indirect  Value MPS  Based on enterprise OPS tools  OPS suite can be hosted or on-premise    

Full KM bizhub portfolio Reseller defined 3-5 years Variable

         

Training for OPS sales model Training for OPS system Market collateral Service and support (if required) Deliver and install hardware Maintenance, training, consumables N/A Services portal Automatic supplies replenishment (KM devices) Full access to KM’s solutions portfolio

References 1

MPS: An SMB Priority http://www.quocirca.com/reports/610/managed-print-services-an-smb-priority

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Channel MPS Programmes 2012

November 2012

About Quocirca Quocirca is a primary research and analysis company specialising in the business impact of information technology and communications (ITC). With world-wide, native language reach, Quocirca provides in-depth insights into the views of buyers and influencers in large, mid-sized and small organisations. Its analyst team is made up of real-world practitioners with first-hand experience of ITC delivery who continuously research and track the industry and its real usage in the markets. Through researching perceptions, Quocirca uncovers the real hurdles to technology adoption – the personal and political aspects of an organisation’s environment and the pressures of the need for demonstrable business value in any implementation. This capability to uncover and report back on the end-user perceptions in the market enables Quocirca to provide advice on the realities of technology adoption, not the promises. Quocirca research is always pragmatic, business orientated and conducted in the context of the bigger picture. ITC has the ability to transform businesses and the processes that drive them, but often fails to do so. Quocirca’s mission is to help organisations improve their success rate in process enablement through better levels of understanding and the adoption of the correct technologies at the correct time. Quocirca has a pro-active primary research programme, regularly surveying users, purchasers and resellers of ITC products and services on emerging, evolving and maturing technologies. Over time, Quocirca has built a picture of long term investment trends, providing invaluable information for the whole of the ITC community. Quocirca works with global and local providers of ITC products and services to help them deliver on the promise that ITC holds for business. Quocirca’s clients include Oracle, Microsoft, IBM, O2, T-Mobile, HP, Xerox, EMC, Symantec and Cisco, along with other large and medium-sized vendors, service providers and more specialist firms. Details of Quocirca’s work and the services it offers can be found at http://www.quocirca.com

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Quocirca channel mps market summary 2012 konica minolta