By Larry Trevarthen, Epson America
The small-to-medium business (SMB) market has provided a large, yet complicated opportunity for dealers and vendors. The SMB segment has more diverse needs and less infrastructure support compared to the large enterprise segment, and therefore requires more support from their vendor partners. While SMB customers can be more agile in their decision making due to their smaller size, technology implementations can be time consuming due to the level of assistance required. Therefore, it is critical for SMBs to develop strong channel relationships to find a solution customized for their needs.
For vendors, the SMB segment is becoming an ever-more valuable market, particularly as technologies and solutions that have historically been focused on the enterprise are now available and of interest to the SMB. As an example, managed print services, or MPS, originated with a focus at the enterprise segment as a way to achieve fleet optimization and print cost control. However, MPS is seeing growth in the SMB segment, morphing to become a tool to bring affordable color printing and optimize print management. This MPS shift has allowed resellers to find new growth opportunities with SMB customers, and also take advantage of new technologies such as business inkjet printers.
Ink-based products have been successful in the small office/home office (SOHO) environment, but inkjet printers are just emerging in their penetration of the SMB, office workgroup and enterprise segments. There are a number of factors behind this lack of market penetration, but chief among them was the fact that very few ink-based printer products were designed specifically for the demands of the office workgroup. With a few exceptions, past business inkjet product introductions had been designed for single users or very small work teams with relatively low print-volume requirements.
Over the last couple years, business inkjet printers have fundamentally changed. Today’s high-speed business inkjet printers feature linehead printing scaled down from production class printers, paper handling rich enough to support workgroups, and network and MPS tools required by the IT managers and resellers. Thanks to this leap in development, business inkjet printers are quickly changing the office technology landscape with high quality, affordable color printing. Further advancements to inkjet imaging architecture, print-head manufacturing, ink chemistry, supplies packaging and delivery, and other variables have resulted in a whole new class of office workgroup printers and MFPs that is zeroing in on the SMB.
When it comes to acceptance of business inkjet, the main barriers have less to do with end-user bias and more with the dealers and resellers that sell office-class inkjet products to their business customers. Many IT resellers are increasingly comfortable with inkjet technology, since they’ve been selling these devices on a transactional basis and are seeing the robustness and networkability improvements in the newest class of business inkjet products.
Within the more traditional copier-based imaging channel, reaction to office inkjet technology has not been as favorable because of business model fit. Office equipment dealers have a business model that incorporates hardware contracts, break/fix service and support, and consumable supplies; a model based on a long history with the laser-based copier/MFP. The entire dealer business model is predicated on profit margins derived from sales of laser hardware, service and supplies. Sales territory, quotas, compensation plans — everything that is tied to the model is steeped in the traditional value proposition of the laser-based MFP.
Business inkjet vendors have historically not shown office equipment channel partners how to profit with inkjet printers, which have powerful, but different service, supplies and hardware pricing profiles. A BPO Research survey of office equipment dealers designed to determine current penetration and future opportunity for office inkjet products showed total operating costs as the number-one criteria considered when selecting a printer/MFP brand to carry, followed by hardware brand and customer service. It is critical that business inkjet vendors demonstrate to dealers how they can profit from ink technology within their existing go to market approach.
The top criteria for dealers come as little surprise. Supplies are the lifeblood of the office equipment channel. This channel is also very brand-loyal, and dealers tend to stick with those suppliers they have partnered with successfully in the past and have demonstrated predictable service and operating costs. In short, dealers need to know that the hardware they place will meet customer expectations and that they can depend on their vendor to provide proper support, training and parts availability.
The Office Equipment Dealer Opportunity
While dealers have held onto traditionally successful models, the market itself has changed, making way for new ideas and revenue opportunities. The office imaging market has been affected by a decline in the overall demand for printed output, and increasingly reliable hardware further reduces service profit opportunities the dealer has historically relied on. Yet there are pockets of growth within the office printing market that represent profit opportunities for the dealer.
This is why savvy dealers are finding clever ways to diversify their portfolios and address an expanded target customer base. For some, these strategies are designed to increase share in the core business of print and copy, while for others it is about generating new profit alternative revenue streams in areas of document management to lessen the dependence on print. Either way, the transformation that is occurring in the office is expanding the range of the office equipment channel’s legacy business model.
At the same time, existing methods for acquiring printers, MFPs, and printing-related services are morphing as IT managers, office managers and business managers’ responsibilities and budgets combine. Printing today is viewed as a commodity; an important business function but not necessarily an integral process. The continued migration to contractual print services shows that businesses are shifting from focusing primarily on printer hardware specifications and putting increased emphasis on making print easier to manage, optimizing the use and cost of color printing, ensuring security and print management controls are in place. SMBs are looking at the overall print spend, instead of simply capitalizing hardware and operationalizing supplies spend.
Managed Print Services
The previously mentioned move toward contractual services is one of the most important trends in the office-printing market. Adoption of MPS has accelerated to the point where a majority of large and enterprise businesses have now moved at least some portion of their fleet under a managed contract.
Now, MPS is migrating quickly down market. The SMB market currently represents the strongest growth opportunity for MPS and many market research firms are predicting double-digit MPS growth rates among the SMB segment. This trend should serve as a positive impact on the business inkjet category.
The inkjet value proposition is strong. First, inkjet can deliver groundbreaking print speeds for both monochrome and color. Second, inkjet delivers operating costs that increase the affordability of printing and open up opportunities to move more pages to color. Third, inkjet is inherently less complicated than laser and requires less service. Fourth, inkjet machines are more environmentally friendly compared with laser, consuming less energy and generating less waste.
In addition to these benefits, business inkjet printers today are designed with all the network and MPS management tools required by the IT manager or dealer, and are therefore the perfect technology for MPS installations — both for the customer and the dealer. For the customer the benefits center on ease of printer management and lower operating costs. For the dealer, the secret lies in the efficiency of the technology. Office-class inkjets are simply easier to maintain with very high yield ink supplies that require fewer service interventions than their laser-based rivals. If you were to sit down and define the perfect MPS product, it would be best to have a product that required limited service and would require less supplies replenishment. After all, each time you have to send a technician to service a printer or MFP it cuts into the profit of an MPS contract.
Recent innovations are proving that office inkjet technology is a real disrupter that will continue to find footing in the office printing landscape. Market research shows that users are not focused on printer technology, but rather a print solution that is reliable and easy to manage, has affordable operating costs and great print quality.
What does the future hold for the SMB and business inkjet? While inkjet already holds a significant presence in the lower end of the SMB segment, business inkjet printers will experience growth in medium businesses and small workgroups in the coming years as they’ve become complete, reliable solutions for high-quality, lower-cost color.
This is why the disruptive forces of inkjet are so important. Inkjet changes the paradigm and will foster entirely new and innovative ways for businesses to acquire print services — from solutions that offer very high yield supplies up front, to coverage-based pricing plans and low-cost subscription services. As an office equipment dealer, the SMB opportunity and the business inkjet opportunity go hand in hand. Why not get in early to take advantage of new revenue opportunities as opposed to waiting until it is too late?
This article originally appeared in the July 2017 issue of The Imaging Channel