Managed Print Services: Major OEM Strategies

During the first half of 2011, Lyra had the opportunity to speak with some of the industry’s leading OEMs, including HP, Ricoh and Xerox, about their managed print services (MPS) strategies. Each company has different MPS strategies, which are explored below in summaries of Lyra’s interviews with executives from each company. 

Also, in March 2011, Lyra launched a new Managed Print Advisory Service that will explore the major trends taking place in the MPS market, which are mentioned at the end of this article. OEM domination of the market, control over consumables, more integration of MPS providers into the MPS market, and fitting cloud and mobile printing into MPS offerings are issues that will be discussed in the new service.

Xerox on MPS

Lyra spoke with Joy Lipari, Xerox’s general manager of enterprise print services, at the beginning of 2011 about Xerox’s MPS program. Lipari said that Xerox’s MPS offering is more robust than that of other vendors. “Phase one” of its MPS offering consists of asset reductions and optimization of the document output environment. The Xerox tool suite provides a high volume of data regarding printer users and their behaviors. This data enables Xerox to implement a very robust change-management program that takes on many different facets based on client needs.

Affiliated Computer Services (ACS), a Xerox company, has an organization named Information Technology Outsourcing (ITO) that allows Xerox to expand into businesses’ services and technologies. ITO’s Business Process Outsourcing (BPO) organization allows Xerox to closely examine business processes and workflows. “We have several areas where we can now compete on a broader scale,” said Lipari. “We have our own engineering organization that can develop new innovations, like mobile PDA printing, enterprise print governance, and desktop print drivers. There are several differentiators that we leverage to keep Xerox in a leadership role.”

Lipari said that the renewal rate for Xerox’s MPS engagements is 99.9 percent. In a strategic MPS contract, Xerox creates “stickiness” by adding value and developing a mutual set of goals that both Xerox and the client work toward. This strategy makes clients more likely to renew and extend MPS contracts because they view Xerox as a strategic partner.

HP’s MPS strategy

Lyra had a wide-ranging discussion about HP’s MPS strategy with two executives from HP’s Managed Enterprise Solutions (MES) organization: Mike Feldman, vice president and general manager of MES Americas, and Mark Quiroz, senior director of enterprise marketing for MES. HP clearly is continuing its strong pursuit of MPS. The company is incorporating its leadership in areas that are currently hot, such as mobile and cloud printing, and is using its cross-company strength in IT to its advantage.

Quiroz said that although the recession helped to fuel the adoption of MPS, growth opportunities in MPS are not slowing down even though the economy has recently accelerated. While HP does not currently have as many enterprise-wide deployments, it has more departmental-level deployments.

Feldman said that, although MPS clients are concerned about printing costs, concern for the environment is another significant factor that drives MPS adoption. Feldman believes carbon-footprint reduction is not a fad that will go away. Customers want credit for going green, and MPS is a way to reduce paper consumption. Security is also an important issue that MPS can help customers manage.

When we asked about the cost savings of an HP MPS deployment, Feldman indicated that the initial deployment could save a customer 20 to 30 percent in printing costs. However, the amount of savings depends on whether a customer has utilized print-management tools previously. In some instances, customers will save more than 30 percent. HP offers a print payback guarantee and will commit to specific savings through a contract, which allows customers to realize savings either through the program or a check from HP. MPS also saves customers money by eliminating excess toner inventory, managing drivers, upgrading firmware and conserving energy. The real savings, according to Feldman, can be more than 40 or 50 percent.

Feldman believes carbon-footprint reduction is not a fad that will go away. Customers want credit for going green, and MPS is a way to reduce paper consumption.

Feldman said that HP’s Access Control, which HP may incorporate into an MPS solution, could reduce paper consumption by 35 percent in some cases. In order to retrieve a print job from a device using HP Access Control, users have to swipe an ID badge at a designated printer equipped with authentication hardware. When the printer recognizes the badge, it prints the document. This system eliminates abandoned print jobs as well. Also, because MPS programs often consolidate devices, many users will no longer have personal printers on their desks, and some of these users may opt to read documents on-screen rather than walk to a central printer to collect printouts.

Lyra asked Quiroz how managed print services have affected the sales of HP-branded supplies. Quiroz replied that HP offers multivendor services, which means that HP sometimes provides customers with equipment from its competitors. HP’s alliance with Canon provides HP with 90 percent of the equipment it needs, but HP sometimes installs a Ricoh or Xerox device in a client’s office. In most MPS arrangements, HP represents 80 percent or more of the hardware installed, and in all instances in which HP hardware is installed, HP-branded supplies are used.

HP differentiates its service offerings by appealing to IT departments and corporate CIOs. These individuals have experience working with HP printers, servers and PCs. Previously, facilities managers were responsible for purchasing copiers, but now that copiers are connected, IT departments are in charge of buying the devices. HP has a competitive advantage among IT managers, who have much more experience with HP output devices than with any other printer brand.

Quiroz explained that cloud and mobile printing are going to be critical to the future of MPS programs. He said that printer users are printing more often from non-office locations and that printing via smart phone or mobile device will become more prevalent. Quiroz also said that because managed print is about giving customers control over printing, vendors must provide customers with mobile printing capability.

Ricoh’s MPS program

Lyra also interviewed Ricoh Vice President Terrie Campbell, a long-time IKON executive who joined Ricoh when the company acquired IKON in 2009. When we asked how much MPS could reduce page volumes for customers, Campbell said that while every customer is different, page volumes typically decrease about 20 percent in well-controlled environments.

Campbell views MPS as foundational to managed document services (MDS). MPS allows strong movement into MDS, which helps customers manage information rather than just hard-copy output. Campbell has found that customers are happy to turn over document processes to an MDS and focus on their core competency instead.

Campbell said that Ricoh’s TRAC Solution differentiates the company’s MPS offerings from those of other vendors. TRAC helps Ricoh understand print volumes, coverage and other critical data, which helps Ricoh analyze office output trends. TRAC links the financial and usage life of a device to the MPS dispatching system to offer a holistic view of the device’s financial, service, utilization and consumables history. The number of devices is typically reduced by 15 to 25 percent in the first or second phase of an engagement. TRAC also provides savings in energy, service and maintenance.

In a strategic MPS contract, Xerox creates “stickiness” by adding value and developing a mutual set of goals that both Xerox and the client work toward. This strategy makes clients more likely to renew and extend MPS contracts because they view Xerox as a strategic partner.

When we asked how cloud printing fits in with Ricoh’s MDS strategy, Campbell explained that mobile workers’ behavior is important to Ricoh’s overall strategy. She said that Ricoh studies mobile and home workers’ traffic patterns, and that tracking usage for these two types of remote employees can be different from tracking usage for employees who work in offices. Tracking remote usage may involve gathering information collected through a network, but it may also include tracking e-mails and perhaps even manual collection of data. Campbell said that a lot of changes will take place within the next three years as Ricoh introduces new technologies, including Web-enabled projection.

Lyra’s view

MPS engagements are becoming more complex and involve more than reducing and managing hardware fleets and providing supplies. They are moving beyond printing and copying management to address document management, security, mobile printing, remote workers and other issues. Any company that is currently engaged in MPS must be able to provide more options in order to survive. The following list describes Lyra’s views regarding the future of the MPS market.

  • Major printing and imaging OEMs have been the primary source of MPS messaging over the past few years. These companies have focused on the effects of the economic recession and businesses’ requirements to do more with less. Most of the strategies these companies have offered have centered on having a large OEM provide all aspects of an MPS engagement. Lyra believes this trend is shifting. OEMs will have less control over MPS messaging, and a variety of companies will be involved at all levels and in all roles of MPS, including the crucial reseller role.
  • The constant struggle over supplies is a key control point that will continue and intensify throughout the value chain, including manufacturers, channel partners and customer sites. Now that the MPS market is expanding beyond OEMs to include aftermarket players and managed service providers (MSPs), it is important for supplies vendors to make sure that they maintain or increase their market share.
  • MPS must be actively integrated with various IT services from MPS providers. This trend will become especially popular as document digitization, workflow management and related fields that are central to traditional IT become core competencies for printer- and copier-related service providers.
  • There is growing acknowledgement in the industry that a wide continuum exists between comprehensive, OEM-dominated MPS engagement opportunities and more piecemeal approaches. The market is still maturing, and many potential new MPS clients still exist, but they are continuing to decrease in number. With an increasing number of clients already engaged in the MPS market in at least one form or another, the greatest opportunity exists among customers who are looking to add or swap out pieces and parts rather than become involved for the first time in a full-scale MPS engagement.
  • For some time, services have been the “next big thing” in IT, and this fits in nicely with companies’ MPS strategies. Now mobility and cloud conversions are pervasive in IT and the printing and imaging industry, and MPS is joining them.

Lyra announced the launch of its new Managed Print Advisory Service (MPAS) on March 21, 2011, and the trends mentioned above will be among the key factors that the service will monitor, analyze and forecast. Close interaction between Lyra’s Observer and MPAS staff will ensure that insights and developments will be available to both Observer readers and MPAS clients. Please contact Tom Sandock at 617-454-2621 for more information regarding Lyra’s MPAS service.

Complete articles that include the actual interviews are available to Hard Copy Observer subscribers at http://observer.lyra.com/thelyraweb.

 

 

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