Recurring revenue is a weighty term. On its face, it’s simply defined as a continual stream of income generated on a regular basis. Contextually, though, recurring revenue is so much more. It’s the golden eggs laid by the golden goose. It’s a focal point for company-wide restructuring and reorganization. It’s commonly viewed as nothing short of the promised land and the holy grail of company valuation and financial success. 

But what happens when the golden eggs become a commodity, get smaller or get less golden?  The revenue is still recurring, but C-level heart rates tend to rise and, organizationally, so do the number of questions around the business models and go-to-market strategy. That scenario is essentially what’s happening today for managed print resellers in the office equipment channel.

Cost-per-page revenues still hold healthy margins, but declining output and increasing competitive pricing pressures are forcing dealers to look for alternatives or other forms of differentiation. Those alternative revenue opportunities are numerous and diverse. One differentiation strategy that is growing in popularity is hedging against a decline in page volumes by flipping the script on the trend and actually leaning into the digital transformation of the customer’s paper processes by offering document workflow solutions and professional services. 

But wait, doesn’t that actually hasten the decline of cost-per-page revenue? In many cases, not fundamentally. Document workflow solutions help customers take paper documents and convert those to readable, searchable digital documents. The goal for customers is typically not to eliminate paper but to optimize the document lifecycle and business processes by incorporating automation in order to eliminate repetitive and time-consuming operations. 

Office equipment dealers have supplemented hardware and service cost per page revenue with software solutions successfully for years. Solutions revenue continues to grow, but the sales are largely tied to the contract period and much less significant than hardware and services figures. The difference with document workflow solutions is they allow the dealer to not only bundle a software license, but also provide ongoing consultative recommendations for customers who have cumbersome paper-based processes like invoicing or logging data from handwritten forms. This is a ticket to continue to sell meaningful solutions into that customer environment over the course of the contract period. That way, they continue to drive revenue through cost-per-page contracts when print output remains steady. When the same customer is ready to implement a process that will reduce the printed pages by making them digital, having solutions that will help address the customer needs can mitigate the reduction in pages. While this sounds counterintuitive, the common denominator is the document. 

Printed documents and digital documents are both still documents. The 8.5×11 rectangle is still the primary medium through which much of humanity’s ideas and information is conveyed and shared. The reality that fewer and fewer of these rectangles end up in MFP paper trays is largely irrelevant. In fact, there is a high likelihood that this article will only be printed for the Imaging Channel hardcopy edition. I created it in Google Docs, exported it to Word, and sent it to the Imaging Channel staff via email. In fact, you may be reading the online version of this article right now and never have the opportunity to come in contact with the printed version.  

Students in high school and college routinely have to write “papers” as part of their curriculum. That they are still called papers but increasingly don’t ever end up as paper is indicative of the changing landscape of what documents look like in the era of digital transformation. The contextual label sticks even if it doesn’t apply practically because that’s the way the human brain has been trained to organize ideas. We have put our thoughts down in the printed page format for thousands of years and a few years of cloud-based collaboration tools hasn’t changed that. Whether the document is paper or digital, businesses will continue to use them to convey information and ideas and dealers can help their customers by providing the best possible document experience in either scenario. It’s an objective position for the dealer to take with the customer compared with a print output cost-per-page business model where dealers have an incentive to help the customer print more and avoid digital transformation. 

From a customer perspective, this is a much more attractive mindset than the idea of “my office equipment provider wants me to print as much as possible.” Instead, the customer receives an objective and thoughtful experience that instills trust that their provider is a true document solutions provider who can lead their organization through adding or transitioning to digital document processes. 

But wait, you say. Wouldn’t digital documents fall under the jurisdiction of the customer’s IT team? Managing relationships with customer IT teams can be challenging. They’re all different and primarily focused on a combination of user workstations, network management and server maintenance projects. While they do manage software licenses for applications like Microsoft 365 or Google, they seldom go deeper to focus on the true life or flow of a document process from beginning to end. That includes communication, collaboration, verification and many more “-ations” than should be responsibly included in one sentence. With so much focus elsewhere for internal IT, there is commonly a gap or a need where our channel can add needed value by optimizing document workflows for their customers. 

For example, IT departments are not likely to spend time creating automated workflows where documents can be scanned, information from the document extracted via optical character recognition (OCR) or other methods, entered into a CRM or ERP software and finally stored in a searchable document repository. But this type of transitional operation is absolutely necessary for businesses that use paper documents as part of their day-to-day business but want to move to digital. And it’s exactly the type of service that office equipment dealers are uniquely equipped to provide. 

By selling the MFP with scan and print capabilities, dealers are providing both the print output and the digital onramp to get the document and its contents into an automated digital workflow. The workflows can be customizable, scalable and make the dealer’s sale initiatives extremely sticky. Instead of selling the MFP hardware along with some add-on software solutions once every three to five years as a couple of line items on a sales order, they can sell custom document processes to the customer’s human resources department, accounting team, operations teams and others. Adding digital automation to a customer’s entire list of document processes from top to bottom provides numerous and lucrative opportunities that can be created and implemented throughout the life of the contract. What does this look like? It’s repeat and ongoing hardware sales, new software licenses, customization and professional services. It’s true ongoing business process optimization geared around the document lifecycle. 

If dealers can drive significant recurring revenue with document workflow solutions, does it negate the need for diversification into other offerings? No. Every dealer is different and needs to build go-to-market strategies based on their organizational strengths. EV charging, managed IT and other options can be both great fits and lucrative pivots for office equipment dealers and the channel will continue to evolve accordingly. Document workflow, however, is a natural extension of the already existing print business as MFPs, desktop scanners and document workflow software solutions are already part of many dealers’ existing offerings. Going forward, dealers will want as many golden eggs as possible. New business models and offerings just make sense. Focusing on document workflow opportunities to offset a reduction in volumes will keep the golden egg of print shinier longer. 

David Brown is Manager, KPAX Business Services, at ACDI.