Article prepared by C. Clint Bolte, C. Clint Bolte & Associates, Chambersburg, Pennsylvania. For additional information please call 717-263-5768, fax 717-263-8945, or e-mail to clint@clintbolte.com.

Managed Print Services Conference 2009;

Controlling the Fleet, Reducing Costs & Enhancing Business Processes

The inaugural gathering of 150 copier fleet aficionados committed to better control, cost reduction, and improved knowledge worker efficiency met April 26-28, 2009 at the Omni La Mansion del Rio on the San Antonio River Walk. Digital print engine manufacturers, specialty software vendors, value-added resellers, consultants, and a few corporate end users heard Managed Print Services presentations on best practices and successful case studies. At conference conclusion a volunteer task force was formed to consider the creation of a trade association around these shared Managed Print Services (MPS) precepts. The MPS market research and strategic consultancy, the Photizo Group, organized this first topical conclave.

The definition of Managed Print Services is evolving and quite often set by each vendor to best match its service offering. Photizo defines Managed Print Services as “the outsourcing of hardware devices, services, supplies, and most importantly management of the fleet.” The actual definition of the term varies among the marketing research firms of Gartner, Lyra, and Photizo that track this market niche, which contributes in part to the variance in each of their growth projections. The overall market for hard copy administrative printing is acknowledged as being flat as more and more document storage and dissemination is virtual and electronic rather than printed.

However, Photizo pegged the 2007 MPS market in North America to be $5.2 billion or about 14% of the total NA imaging market. They expect a 20% year over year growth for the next five years with MPS climbing to 35% of the total imaging market in 2012. One to three percent of corporate revenues, depending upon SIC category, are being spent on hard copy printing.

Converting a stagnant market to one of growth suggests a shifting or broadening of objectives by the corporate end users and an enlightened new business model by the manufacturing channel. Here are the proposed change elements from the low hanging fruit all the way up to moving the mountain;

1. Corporations of virtually all sizes have no idea how much they are spending in this space. The low cost of some desktop devices are under the corporate asset radar. Hence, most firms have much more equipment than they realize. As larger pieces of leased copier equipment come up for renewal, the clear, knee-jerk objective is to get control of this growing amoeba.
2. 2. Contacting any of the sixteen hardware manufacturers and many of the VARs selling and servicing the equipment, a firm’s purchasing and/or IT departments learn that free equipment utilization assessments are available. Surprisingly simple software is linked to the print network and USB data capture ports are added to the stand alone devices to determine how much simplex/duplex, mono/color printing and by whom and how much downtime is experienced.
3. 3. Proven cost savings venues are plentiful:
   a. Economy of scale buying of equipment and supplies,
   b. Moving the assets off the balance sheet as part of a cost per copy (cpc) contract,
   c. Reducing head count by outsourcing service,
   d. Utilizing pop-up software on all equipment to encourage users to save money, such as default duplexing and sending the job to the least expensive device for printing, is a user behavior change initiative,
   e. Utilizing the scan and fax features of the multi functional printers (MFPs) reduces unnecessary printing by capturing and moving documents electronically, and
   f. Total chargeback capability via user code or card, i.e., no free copies, also contributes to fewer copies being made.
4. 4. Process improvement adds to knowledge worker productivity:
   a. Office mapping to assure that the appropriate equipment is convenient to all employees adds to efficiency and savings,
   b. Client productivity and satisfaction climb with automatic software feedback embedded in the hardware (1) to maintenance forewarning problems improves up time and (2) to supplies control reduces idle inventory investment,
   c. Software queuing work (with user permission) to low production demand periods (nights) increased hardware utilization and
   d. More energy efficient hardware, fewer copies, and recycling add to the corporation’s overall environmental efficiencies.

Ken Roche, Vice President of Sales and Marketing for the Print Operations Group (POG), offered several best practices for MPS benchmarking and assessment. Realize that “free assessments by VARs and/or manufacturers are not free” because of their inherent conflict of interest. They want to replace your existing equipment with theirs and your supplies sources with theirs. A clear and concise request for proposal (RFP) and service level agreement (SLA) based upon the actual current spend, integration with the corporate wide strategic objectives, quantifiable and continuously monitored key performance indicators, and issues addressed with the supplier on at least a quarterly basis are essential to a successful relationship. POG is one of several independent MPS consultancies with no ties to manufacturers or suppliers.

Measuring and compiling the key performance indicators of the copier fleet is the job of the specialty software. While some hardware manufacturers offer their own solutions, the independents hold a strong market share. They include PrintFleet, PrintAudit, MWAi, fmAudit, Netaphor Systems, DocuAudit, and Compass Sales Solutions. The costs of their software that can vary from $150 down to $9 per workstation depending upon total volume of stations. This annual fee is typically rolled into the CPC agreement. Many of these softwares also provide training and marketing services to VARs who are constantly improving their MPS skills. Hence, the end user may find this to be negotiable.

The Founding Partner of The Photizo Group, Ed Crowley, offered some best practices for MPS programs. The gap analysis of where the user is and where they want to be includes four critical steps: (1) measuring the current state, (2) gathering end user input (and buy-in starting at the C-level), (3) identifying industry benchmark metrics, and (4) setting measurable objectives. He added that the end user input “was not creating a wish list.” A reliable source of metrics can be independent consultancies such as POG, Print Access, Newfield IT, and Photizo. Because the bar is always rising with users reaching for the business process enhancement stage, Crowley recommended that the MPS contract length not exceed three years.

Steve Reynolds, a Senior Analyst for Lyra Research, which is a digital imaging authority, acknowledged that more big players are entering the MPS space along with more mergers among regional VARs to be better positioned to service geographically disbursed clients. At this conference Korean manufacturer, Samsung, who claims to be the second largest manufacturer of digital copiers, announced their entry into the MPS arena to be sold exclusively via the VAR channel. That is, no direct sales force from the manufacturer trying to go around their VAR partners. In a later panel discussion Ken Stewart, Technologies Solutions Manager for Sharp, remarked, “98 dealers had consolidated down to 7.”

Randy Elliott of Dow Chemical gave their case study of a global MPS study and successful implementation that is now in its third year. They have 42,000 workstations in 49 countries in 1,700 buildings all running under a standardized worldwide IT SAP network. They identified 16,000 devices that averaged 8 years old from 30 different manufacturers that are now down to 5,500 after an eighteen-month implementation. The use of MFDs within 100 feet of users, mono printers within 60 feet, and color capability in the building increased overall fleet utilization to one printer per nine employees.

The communications strategy during implementation included enlisting the help of 2000 work group contacts to act as the training change agents as well as messages (in 11 languages throughout the world) via fax, e-mail, video, and Intranet. The message was to explain the corporate wide initiative to improve capability, reliability, and reduce costs. Elliott’s boss proudly declared “this MPS project to be the most significant human change project within Dow chemical in over ten years.”

Xerox Global Services was chosen as the sole outsourcing vendor with a five-year contract and projected cost of $65 million. The original assessment targeted a $35 million potential savings, but Elliott projected the actual savings over the life of the contract to be only $21 million. Their up time on equipment has improved from 75% to 95% and repair (not response) time does not exceed 4 hours. Presumably as a new contract is negotiated with Xerox or some other global manufacturer in two years, Dow will be in an experienced posture to fine tune objectives and target more closely cost savings expectations.

Elliott described an incident that highlights how important quick and effective communications are between the client and the vendor. As the decision was announced and implementation plans were initiated for Mexico, internal word filtered back to Elliott that a Mexican Xerox sales agent was attempting to sell features, capabilities, and equipment in excess of the agreed upon Dow contract. When confronted, XGS squelched their aggressive representative and apparently worked to convince the Dow Mexican employees that the specified equipment would be adequate to meet their needs.

A second case study was offered by Marvin Reem, CIO of Greenville, SC’s Bob Jones University. Renewing printer contracts four years ago, the school embraced MPS in an effort to better manage the document life cycle. Their IT budget had been flat for nine years with only modest labor cost increases. Reem found a number of “hidden” inkjet printers on campus when he asked purchasing “to forward him all purchase orders for inkjet replacement cartridges.” Their 20 page RFP resulted in third party leasing of hardware and a much improved partner relationship with a new vendor. The fleet included 250 (Novell) networked printers and 85 MFPs serving 1,700 employees including an in-house publishing enterprise and 5,000 students. The only problem realized from the original RFP was the lack of an envelope printer, which was easily corrected.

An interesting human nature shift occurred when BJU set the pricing policy on students printing from the network. Ninety percent of the students’ historical level of printing would not be charged and then their student access card would be billed. In other words the intention was that only those students that were abusing the practice would end up paying for excess usage. This policy resulted in a 50% drop in the actual volume of student printing! Reem acknowledged that his own son, who was a BJU student at the time, immediately began printing out his papers on his dad’s printer at home to avoid possibly being charged at school. Following the yearlong MPS implementation, the school began to realize a $200,000-300,000 annual savings.

A major human tendency objection to be overcome by all corporations trying to realize maximum savings from Managed Print Services precepts is getting knowledge workers to give up their desktop printers/faxes/scanners. An attendee and employee of Sprint said they were successful at telling employees that they could buy their desktop units for home use by making a $25 contribution to the Sprint Foundation. They would then be responsible for the toner expense of their home units. Justin West of Nationwide said that his firm offered a series of prizes to employees who turned in their desktop inkjet units.

In a panel discussion of the economics of MPS, John Macinnes, CEO of Calgary, Alberta-based PrintAudit, remarked that RFPs are becoming more sophisticated and are including more environmental objectives. The ultimate goal of corporate buyers of paying a penny a copy for mono, which previously was only attainable on high speed production machines, is now a reality with MFPs. The actual print costs are quickly becoming a commodity.

Doug Johnson, Principal of Red Sage Consulting which concentrates on coaching for dealers moving into and servicing the Managed Print Services arena, offered a listing of caveats for end users that could lead to less than optimized if not failed MPS initiatives. Top of the list is a lack of C-level sponsorship and active engagement. While primarily IT and secondarily the Purchasing Department are involved in MPS operations implementation neither group manages all budgets impacted by MPS. C-level is the focal point to pace the timeline, gather costs, and approve strategy. He felt a brand specific approach to new hardware was limiting and results in replacing existing equipment unnecessarily. The vendor should be brand agnostic, which many VARs are.

His experience also points to end users not optimizing their fleet as frequently as they should. During the quarterly MPS performance review, an agenda item should include the possible movement of equipment due to departmental/division reorganization or growth to better optimize their access for the effected employees. Finally a lack of thorough communications of the MPS program to all employees only encourages “rogue buying” of desktop devices.

Leading to the discussion of the benefits of a dedicated trade association, Doug Johnson, who had been a Hewlett Packard Senior Vice President, indicated that HP’s WebJetAdmin™ had been the first software designed to measure, add admin functionality, and manage a copier fleet. It could have been the industry standard if the firm had not chosen the proprietary marketing route. Today there are many software solutions and no industry standard.

In discussing the desirability of forming a trade association, the attendees felt the idea had merit. A task force of volunteers was formed to pursue the idea. A suggestion was made that MPS consider becoming a special interest group of an existing related trade association. This might help the group realize many of the same benefits with lower administrative costs. AIIM, the association for enterprise content management, might be such an alliance while the National Association for Printing Leadership may be another.

Though started only a decade or so ago with the advent of specialized software and multi-functional devices, Managed Print Services is quickly becoming the genre for the transition from a hardware concentric management issue to that of a knowledge worker productivity opportunity. Whether it is entirely outsourced or a blend of services from specialty vendors providing maintenance or supplies, MPS will surely be embraced by corporations of all sizes sooner rather than later.

Article prepared by C. Clint Bolte, C. Clint Bolte & Associates, Chambersburg, Pennsylvania. For additional information please call 717-263-5768, fax 717-263-8945, or e-mail to clint@clintbolte.com.