Is Managed IT Services the Answer?

As the office technology industry continues to struggle amidst a climate of hyper competition and continued pressure on page volumes it leads one to wonder about the future of both OEMs and their partners.  It also raises a valid question: where are the best opportunities for sustainable growth?

Answering this question has been vexing for many in the industry and in particular OEMs.  For many years we have witnessed OEMs attempt to build, or most often, buy, adjunct business to their core hardware business, primarily in software and services.  What do these efforts have in common?  Most of them have either failed or have limped along at a pace that would raise questions as to their true impact.  The net result is that many OEMs are still searching for that magic elixir capable of providing meaningful diversification and longer-term opportunity.

For dealers, the story has been quite different.  Faced with many of the same macro-level challenges as OEMs, dealers ventured into alternative areas including software and services, only their forays have proven quite successful.  While dealers have had some success with software, it is managed IT service delivery that has catapulted dealers into diversified financials and brighter futures.  So why have dealers succeeded in this area where most OEMs have failed?  Location, location, location.

The market for managed IT services is highly fragmented.  And while many large enterprises outsource such functions to major IT service providers (making it hard for traditional print OEMs to compete), small and mid-sized organizations have had little choice but to either go it alone or work with local MSPs to obtain such services; some of which are extremely small and poorly capitalized, giving customers pause for concern when outsourcing their IT systems, applications and security.  Enter the traditional copier dealer.

Through organically developed capabilities or partnering relationships, the traditional copier dealer has seized on an opportunity ripe for the taking.  For customers seeking managed IT services, the local copier dealer is a business they know and trust.  It is a business that tends to be significantly larger in scale than the local MSP and one that is more financially stable. Given the commoditized nature of many IT managed service offerings, sourcing such services from the traditional copier dealer makes good business sense for customers by lessening their risk and packaging both IT and print under one unified umbrella.  For dealers, the net result has been a fast-growing business built upon an auto-renewing business model that in many cases has now become a significant revenue/profit producer beyond traditional print.

With this history, one might wonder if managed IT services is really the long-term answer to the prospects facing the traditional copier industry.  Over the short term the results have been quite compelling; enough to make a strong case for managed IT services to be a staple in every dealer’s portfolio.  But let’s not forget, managed IT services, like print, is highly commoditized and will likely become more so as technology advances and more players enter the space.  As a result, dealers who are banking their future on this area of service may need to think deeper.  Dealers not already offering such service will also need to recognize that doing so will require investment as the skillset is quite different than print.  It is also important to note that IT services by their nature are mission critical, something that print in most cases is not.  Effectively speaking, when a company’s network is down, its business is down, so dealers offering such services need to take this into account when considering entry.

Is your dealership offering IT managed services today?  If not, your ability to compete in the core print space may depend on it as those offering such services are quickly bundling these services with print thereby providing holistic packages which simplify customer acquisition.  Not currently engaged?  Ask yourself these questions:

• Am I presently losing business to competition that offers managed IT services?
• How loyal are my existing customers? Are they willing to acquire these services from me?
• Am I already competing in the software business? Maybe I have some of the skills I already need.
• What avenues might I have to partner as a means of market entry – local MSP or national providers?
• If entering, what impact would this have on other business expansion initiatives?

Like many new business areas, managed IT services is not a panacea.  It is however quickly becoming a must-have offering for dealers primarily targeting small and mid-sized clients.  With some prudent planning, managed IT services may very well be your answer to greater success and a healthier business.