March 2010 Office Technology

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CONTENTS Volume 16 No. 9 G

FEATURE ARTICLES 10

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Document Management Streamlining electronic file access & control

COURTS & CAPITOLS Proper Safeguards Avoiding internal financial fraud in the dealership

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by Brent Hoskins Office Technology Magazine

by Robert C. Goldberg BTA General Counsel

If yours is among the office technology dealerships that are focused solely on providing customers with hardware, perhaps it is time to transition your dealership’s primary focus from hardware to the electronic files your customers use on a daily basis.

In these difficult economic times, it is essential for every dealer to review the safeguards in place to curtail financial fraud. The worst thing that can occur is to become complacent and assume all is running well.

More Cool Technology A look at free (or nearly free) sales tools

PRINCIPAL ISSUES Pursuing Network Technology It begins by addressing these top two issues

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by Tim McMahon The BizCAT Group

by Susan Muth Strategic Business Solutions Inc.

In my February Office Technology article, I told you about some pretty amazing free tools that could help power your marketing efforts. In this article, I will focus on some free, or nearly free, sales tools that can improve your sales tracking, build customer relationships and even save you some money.

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Bundled Agreements The key to success lies in aftermarket pricing

Many office technology dealers are looking to broaden product and service offerings in order to create new revenue streams. The products that fit into the current customer base are within the world of network technology.

MPS STRATEGIES Apple’s iPad Tablet Does it signal an approaching paperless office?

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by Michael H. Dudek Zygoquest — Mergers & Acquisitions

by David Ramos Strategy Development

Many companies in different industries, including thousands of copier/MFP and printer dealers, sell aftermarket agreements to support equipment purchased by customers. While some aftermarket agreements are for services only, many are comprised of a bundle of services and supplies.

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Managed Network Services Another step to becoming a total solutions provider

by Mitch Morgan CEO Focus

There is a shift occurring in service and support for our customers. Through utilizing technology, a more efficient service model is evolving. I have clients who are generating incremental revenue providing help-desk services for current customers in connectivity and software support.

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I can hear the collective yawn from the “hybrid” dealer nation after reading the subhead to this article. Read on. I believe Apple’s recent product launch will have a big impact and is a sign of things to come.

DEPARTMENTS Business Technology Association

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G

Education Calendar

G BTA Highlights

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Executive Director’s Page

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BTA President’s Message

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Advertiser Index

Docuware ad Mar 10:Layout 1

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EXECUTIVE DIRECTOR’S PAGE

Attend ‘Building My Business’ Webinars n January 2008, the Business Technology Association launched the BTA “Building My Business” Webinar Series.

The goal of the webinars is simple: To help dealers improve the management of their companies, take full advantage of market opportunities and, ultimately, improve the bottom line. To date, there have been a total of more than 1,500 attendees of the first 26 webinars. Are you among them?

If not, I encourage you to pre-register today for the next four webinars in the series. All are free to BTA members. Here’s a brief synopsis of each one: I “Hiring Right the First Time,” to be presented by Kelli Tueber, founder and CEO, Emerald Executive Search LLC, on March 11.

Have you ever made a costly hiring mistake?

If so, perhaps it is time to take a look at your hiring process. This webinar will provide an overall snapshot on how to find, interview and retain new hires in the office technology industry. It is with this very simple methodology and knowledge base that you can greatly enhance your ability to grow your company with effective personnel.

I “Managed Network Ser vices: An Emerging Growth Opportunity,” to be presented by Mitch Morgan, consultant, CEO Focus, on April 14. The managed network services (MNS) opportunity provides a tremendous market for office technology dealers. The small and medium-sized business (SMB) customer is receptive to a new way of supporting its internal IT environment. Forward-looking dealers have an opportunity to build a customer base in this growing market. Many customers are moving

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to a new, more efficient IT support model and moving away from a dated, reactive model. Once the shift occurs, winning new business will mean replacing the incumbent provider. If you are considering MNS, this webinar will give you information to help you make the decisions on the best way to begin.

I “Grow Sales with a Common Process," to be presented by David Ramos, consultant, Strategy Development, on May 11. Eighty-nine percent of those companies that have a formal sales process experience revenue growth. Further research demonstrates that top performing sales professionals use a consistent sales process. Yet, many sales representatives today still believe that sales are a big smile, firm handshake and manipulative tactics. This webinar will show how a consistent sales process will help you develop and retain your sales professionals and help managers to develop these valuable employees.

I “Transitioning to IT,” to be presented by Susan Muth, founder & president, Strategic Business Solutions Inc., on June 24. Many office technology dealers are looking to broaden product and service offerings in order to create new revenue streams. A natural way to capitalize on current customer relationships is to offer a range of network technology products that integrate into the office technology suite. Making the transition requires considerations that are beyond the scope of current capabilities and will require a thoughtful strategy that will allow for a smooth game plan. This webinar will address the key issues that a company must face in order to make the most effective transition.

To pre-register for any of these Building My Business webinars, visit www.bta.org/ BuildingMyBusiness. I — Brent Hoskins

Executive Director/BTA Editor/Office Technology Brent Hoskins brent@bta.org (816) 303-4040 Associate Editor Elizabeth Marvel elizabeth@bta.org (816) 303-4060 Contributing Writers Mike Dudek, Zygoquest — Mergers & Acquisitions www.zygoquest.com Robert C. Goldberg, General Counsel Business Technology Association Tim McMahon, The BizCAT Group www.thebizcat.com Mitch Morgan, CEO Focus www.ceofocus.com Susan Muth, Strategic Business Solutions Inc. www.susanmuth.com David Ramos, Strategy Development www.strategydevelopment.org

®

Business Technology Association 12411 Wornall Road Kansas City, MO 64145 (816) 941-3100 www.bta.org Member Services: (800) 505-2821 BTA Legal Hotline: (800) 869-6688 Valerie Briseno Membership & Marketing Manager valerie@bta.org Mary Hopkins Database Administrator mary@bta.org Teresa Leerar Bookkeeper teresa@bta.org Brian Smith Membership Sales Representative brian@bta.org ©2010 by the Business Technology Association. All Rights Reserved. No part of this publication may be reproduced by any means without the written permission of the publisher. Every effort is made to ensure the accuracy of published material.

However, the publisher assumes no liability for errors in articles nor are opinions expressed necessarily those of the publisher.

Lexmark ad Mar 10:Layout 1

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BTA PRESIDENT’S MESSAGE

®

2009-2010 Board of Directors

Complete BTA Survey & Receive State BEQI he Business Technology Association needs your help.

Currently, BTA is seeking responses to its 2010 BTA Benchmarking Series reports survey, which includes a series of questions that focus on three key areas within the dealership — finance, compensation and service.

The results will be compiled into three separate reports, providing dealers with a great resource to compare their dealerships’ metrics to industry averages. Previously, BTA produced its Benchmarking Series reports over three years — one each year. Now producing all three reports annually, BTA is significantly enhancing the value of this member benefit.

A quick look at the three reports provides a better understanding of their value: I The 2010 BTA Finance Report will compare key income statements and balance sheet indicators of dealerships to the recommended benchmarks of the model for success as taught in BTA’s ProFinance workshop.

Industry employee productivity, profitability, expense and asset management ratio performance will be provided and compared to the recommended benchmarks. The survey results will be reflected by size of business (annual revenue) and core product line.

I The 2010 BTA Compensation Report will provide detailed salary information on a wide variety of positions, from the executive level to administration level. The survey results will be reflected by size of business, core product line and geographical area.

I The 2010 Service Report will compare median industry performance by size of business and core product line. The data will be reflected in key performance categories:

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profitability (service revenue per service employee and per technician, service sales per unit in base, service gross profit, rental and CPC revenue allocations, clicks per unit on contract, etc.); personnel (technician accountable time, average billing rate, incentive plans, distribution of time, etc.); call center efficiencies (response times, gross calls per day, recalls and incompletes, installation times, service department automation, etc.); and product (copier/MFPs on contract and T&M, percent of sales, etc.).

To show its appreciation for the time and effort taken by those who complete the survey, BTA will provide respondents, at no charge, the 2007 Business Equipment Quota Index (BEQI) and the new 2010 BEQI for one state of each respondent’s choice. Respondents will also receive, at no charge, all three Benchmarking Series reports.

In case you are not familiar with the BEQI, this invaluable resource provides market potential (product demand) indices for the U.S. market. Through a comprehensive study conducted on behalf of BTA, users of the BEQI are provided with an index for the desired state, county, MSA (metropolitan statistical area) or ZIP code in the United States for specific product categories. These indices can be used to: forecast sales, evaluate territories, measure sales potential, establish sales quotas and more.

I encourage you to take the time today to complete the 2010 BTA Benchmarking Series reports survey. The survey is accessible at www.bta.org/BenchmarkingReports Survey. If you have any questions regarding the survey, contact BTA Membership and Marketing Manager Valerie Briseno at valerie@bta.org. I — Bill James

President Bill James WJS Enterprises Inc. 3315 Ridgelake Drive Metairie, LA 70002 bjames@wjsenterprises.com President-Elect Rock Janecek Burtronics Business Systems Inc. 216 S. Arrowhead Ave. San Bernardino, CA 92408 rjanecek@burtronics.com Vice President Tom Ouellette Budget Document Technology 251 Goddard Road Lewiston, ME 04240 touellette@bdtme.com BTA East Todd J. Fitzsimons Network Imaging LLC 122 Spring St. Southington, CT 06489 tjfitzsimons@networkimaging.biz BTA Mid-America Ron Hulett U.S. Business Systems Inc. 3221 Southview Drive Elkhart, IN 46514 ron.hulett@usbus.com BTA Southeast Terry Chapman Business Electronics Corp.

219 Oxmoor Circle Birmingham, AL 35209 tchapman@businesselectronics.com BTA West Lokke Patrick Docutxt Corp.

11110 E. Artesia Blvd., Ste. B Cerritos, CA 90703 lokke@docutxt.com Ex-Officio/Immediate Past President Ronelle Ingram Steven Enterprises Inc. 17952 Sky Park Circle, Ste. E Irvine, CA 92614 ronellei@msn.com Ex-Officio/General Counsel Robert C. Goldberg Schoenberg Finkel Newman & Rosenberg LLC 222 S. Riverside Plaza, Ste. 2100 Chicago, IL 60606 robert.goldberg@sfnr.com

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Document Management Streamlining electronic file access & control by: Brent Hoskins, Office Technology Magazine

f yours is among the office technology dealerships that are focused solely on providing customers with hardware, many would agree you are missing numerous sales and revenue opportunities.

After all, while the office copier/MFP provides two touch points to files/documents — the input through scanning and the output through printing or copying — the lifecycle of any file extends well beyond its contact with hardware. Perhaps it is time to transition your dealership’s primary focus from the hardware you sell to the electronic files your customers use on a daily basis.

Today, a focus on the files can be facilitated by any of a number of document management solutions that are available through the dealer channel. While there are certainly distinguishing characteristics between the many solutions offered, the core function of the software is the same — it provides a means to easily access and control (e.g., protect) files of all types while automating workflow processes, providing greater efficiencies, improving customer service and helping end users comply with legislative directives.

Providing end users with “intelligent” technology to manage their electronic files can also help to distinguish office technology dealerships from their competitors. “With hardware, it i s a c ommo dity market,” say s Gregor y Schloemer, president of DocuWare Corp. (www.docuware .com), makers of the DocuWare 5 document management solution. “So, if the dealership is not selling a software solution, it has no way to differentiate itself from everyone else on the block, so to speak. A document management solution starts the differentiation process.”

St e ph en Youn g, pre si d ent of S quare 9 S oftw ork s (www.square-9.com), concurs. To illustrate the power of document management as a differentiator, he cites a recent

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success story from a dealership that sells his company’s SmartSearch document management solution. “There were 300 machines involved along with what was actually a relatively small document management sale; it was $3 million in hardware and about $60,000 in software,” he says. “However, that decision was made based upon the dealer’s ability to deliver the solution. The incumbent was unable to provide a document management solution and, as a result, lost the customer.”

Beyond helping dealers win a deal that includes or is dominated by hardware placements as well, document management can also help dealers secure customers for the long term, says Schloemer. “Once a customer starts with a document management system, it is not likely that they are going to discontinue its use,” he says. “As a result, two things happen. One, the dealer creates this very good recurring revenue stream [through annual maintenance agreement renewals]. And, two, it extends the relationship the dealer has with the customer well beyond the life of any hardware.

It becomes very difficult for a competitor to come in and say, for example, ‘I’m going to replace all of those Toshiba MFPs with Ricoh MFPs.’ Because the customer is going to say, ‘My solution provider is ABC Company and they take care of all of our document needs.’ So, it becomes a very good relationship that goes well beyond the life of a lease.”

David Ayres, president of Prism Software Corp. (www. prism-software.com), makers of the DocRecord document management solution, shares a similar observation, referencing today’s commodity hardware. “Even though you may be the ‘dealership of choice’ today, when the lease is up, you may no longer be the ‘dealership of choice’ tomorrow,” he explains. “However, if you install a document management solution and the customer requires 10 seats, two years from

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now they may say, ‘We have ship that is just starting out “The standard margin gone through a growth spurt with the software,” he says. for a higher-volume and we need another 10 “Add to that the annual mainseats.’ The customer is not tenance fee, which is 20 dealership is around 40 going to turn to another percent of the cost of the softpercent; it is around 35 dealership; they’re going to ware [paid to DocuLex, which percent for the dealership stay with their current proitself provides ongoing supthat is just starting out vider. So, there is a continuity port]; the dealer gets 35 with the software. Add to of the relationship.” percent of that fee.” that the annual maintenance fee ... ” Such relationships proGiven that the software — Kenyon Sutton vide dealers with welcomed category can provide a means DocuLex new revenue (and, as Schloefor dealerships to distinguish mer states, a recurring rethemselves from the compevenue stream) from the installation of document management. tition, secure customer relationships and generate new revKenyon Sutton, vice president of sales for DocuLex enues, one may think that the majority of dealers have (www.doculex.com), makers of the Archive Studio document jumped on board, partnering with one of the document management solution, shares a glimpse at some of the management companies serving the industry. However, says numbers. “The standard margin for a higher-volume dealer- Sutton, many dealers are holding back. He states: “I would ship is around 40 percent; it is around 35 percent for the dealer- say that probably half of the dealers in the industry, or maybe

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a little more than half, haven’t Through Web-based and “Our approach is ... like really done anything in this classroom educational proteaching someone to fish. area yet.” grams, collateral materials All you need to do is get What is the hesitation for marketing and selling, among some dealers? Sutton and the availability of persomething ‘on the hook’ responds: “I think, number sonnel to assist in sales and and we’ll step in to assist one, they are simply intimisupport, dealers can expect a you. Later on, you may dated by the technology; it is degree of guidance that they not need all of those something new and it remay not be accustomed to points of assistance, but they are there ... “ quires change within the from other vendors.

— David Ayres dealership. Plus, they don’t Ayres likens Prism SoftPrism Software Corp. feel like they have the staff to ware’s support of its dealer support this type of techpartners to someone teachnology.” Likewise, Schloemer responds: “I believe the reason ing a child to fish. “At first, you place the hook and bait on the for the hesitation is just fear of the unknown. There is a fear line for the child,” he explains. “And, when he gets someof the investment that they have to make in personnel.” thing on the line, you help him reel it in. Our approach is Addressing their keen awareness of the hesitation among sometimes like teaching someone to fish. All you need to do some dealers, document management software vendors strive is get something ‘on the hook’ and we’ll step in to assist you. to make partnering with their companies as easy as possible. Later on, you may not need all of those points of assistance,

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Toshiba ad Mar 10:Layout 1

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says Young. “It is clear that but they are there if you “Our model allows new organizations are looking to want them.” partners to lean on us for achieve their pre-recession Over time, says Ayres, the revenue levels, but have dealership may transition pre-sales support, committed to achieving this from relying so much on installation services and objective with far less hiring Prism to taking on more (or post-sales support ... This and by depending more on all) of the selling, installaallows our partners to technology. People are looktion and support process grow into the technical ing to do more with less.” itself. “ For exampl e, we support role over time ... “ Meanwhile, says Ayres, provide professional serv— Stephen Young today, given th e le vel of ices, but oft entim es th e Square 9 Softworks competition — including dealer will say, ‘I get money competition from hardware from selling the hardware, but I don’t know professional services; can you install the manufacturer sales operations — it has become imperative software for us?’” he explains. “So, we say, ‘Yes, we can do for dealers to focus on the electronic file in the workplace, that.’ Then, after a couple of installations, the dealer says, ‘I which often leads to document management opportunities. could be making money off of the professional services; can “The end user now has an expectation that the dealer you train us to install the software?’ And we say, ‘Absolutely.’” should know more about the electronic document,” he says.

Young attests that a similar philosophy exists at Square 9 “It’s no longer just about printing. It is that they have an Softworks. “Our model allows new partners to lean on us for electronic document and printing is just one of the things pre-sales support, installation services and post-sales they want to do with that document.”

Ayres says the opportunities realized by focusing on the support through our Professional Services Group,” he says.

“This allows our partners to grow into the technical support file — and, in turn, identifying document management solurole over time and only after they have had success in selling tion sales opportunities — are often missed by sales reps.

“I’m always trying to remind people to adopt the approach SmartSearch.”

With an assurance of a high level of guidance and of ‘What else can I sell my customer?’” he explains. “So, sales support from vendors, dealers may next find themselves reps, who spend a great deal of time developing professional wondering about the degree of market demand for docu- relationships and establishing credibility, should be essenment management solutions. Two realties provide a sense tially saying, ‘You selected me to sell you some digital MFPs of the scope of the opportunity. First, there is the reality that for your electronic documents; what else can I sell you most small and mid-sized companies are not using a docu- regarding these electronic documents?’”

Perhaps it is time for more dealers to take another look at ment management solution. “While more than 60 percent of Fortune 500 companies have some kind of document document management and, in turn, their sales reps to focus management system in place, when you look at small to on the file when calling on prospects. Those dealers who are mid-size companies, I think it is a relatively untapped not pursuing document management are leaving money on market,” says Sutton. “I would say only about 10 to 20 the table, says Ayres. “There are only so many dollars out percent of these companies have something in place. there and either you are going to grab them or you are going However, I would say half of these companies that don’t to consciously or unconsciously let somebody else go after have something in place do have document management those dollars,” he says. “If you are consciously saying, ‘I’m okay with letting my competitor have those dollars,’ my queson their to-do list.”

Those to-do lists lead to the second reality. As referenced in tion is, ‘Do you want to remain in this business?’ Letting the example of the dealership that sold 300 machines in con- competitors have those dollars is not a susjunction with the software solution, it appears there is a tainable business model.”

Brent Hoskins, executive director of the growing demand for document management. The poor Business Technology Association, is editor of economy may have something to do with it. “Square 9 SoftOffice Technology magazine. He can be works witnessed tremendous growth in 2009 despite the state reached at brent@bta.org. of our global economy; and we are seeing the same in 2010,” 16 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a r c h 2 0 1 0

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More Cool Technology A look at free (or nearly free) sales tools by: Tim McMahon, The BizCAT Group

n my February Office Technology article, I told you about some pretty amazing free tools that could help power your marketing efforts. In this article, I will focus on some free, or nearly free, sales tools that can improve your sales tracking, build customer relationships and even save you some money. At the BizCAT Group (www.thebizcats.com) we have reviewed and tested each of these products and, the bottom line is: We love them! So, give them a try and drop us an e-mail to let us know what you think.

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Zoho CRM The state-of-the-art technology for small businesses is cloud computing, which simply means that the business programs you use and where you store your files is online, not on your PC. Google offers Gmail, Google Docs and much more.

Microsoft Live has similar offerings. Not only is this a good strategy that allows you to manage your business applications from any PC, but it is basically free. But if you want to see a suite of cloud applications that will knock your socks off — and just might give your business everything you will ever need — then you need to check out Zoho (www.zoho.com) right away.

What do you get? Office-compatible Writer (word processor) and Sheet (spreadsheets), Mail (similar to Gmail or Microsoft Live), Docs (like Google Docs) and Planner (tasks, calendar and more). Add to that Zoho Show for online presentations and Zoho Meeting (desktop sharing Web conferencing). There is more, too, but we saved the best for last: Zoho CRM. Zoho CRM is our pick for the best full-featured online CRM application. Similar to Salesforce.com’s offering, Zoho CRM offers easy management of accounts, contacts, opportunities and activities combined with robust forecasting and reporting — and it is fully customizable. It is also intuitive and truly easy to use. The best part is that it is free for up to 18 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a r c h 2 0 1 0

three users and just a small monthly charge for additional ones.

What I like is that Zoho organizes everything together into its Zoho Business application . Not only does thi s make th e applications easy to use, but everything is fully integrated. This means all the applications work together. And with Zoho Reports, a small business owner can easily manage his (or her) entire team and business.

Gist Relationship Management I found thi s sit e, Gi st Rel ationship Mana gem ent (www.gist.com), and cannot stop playing with it. I still cannot figure out what to call it. CRM? Social media marketing? Business intelligence? Relationship management?

Something else? I have no idea. Still, it is the business tool I wish I had created because it is fantastic. If you are in sales or marketing, or are a small business owner, you absolutely, positively need Gist. With Gist, you have a powerhouse of customer and prospect information right at your fingertips that can help you manage your customer relationships at a whole new level.

What is Gist? It is a free online site that takes all of your business contact information — from e-mail contacts, Facebook, LinkedIn, Twitter or anywhere else you have information — and aggregates it all together in one simple system. It then goes a step further and searches the Web for more information about your contacts and their companies, like articles, blogs, company profile data, stock performance, management team information, phone numbers and so forth. Finally, it interrelates everything; you can see your contacts by company (or related companies), who is connected with whom and a lot more. There are three views: Company View, Contact View and a slick Dashboard that shows you what is new every day with contacts or companies so you do

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McMahon Mar 10:McMahon Mar 10

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we will ever need. not have to dig for it.

Let ’s look at Rondee (www.ron Is it an individual CRM system? It can Many of the free dee.com). You can set up a free account be. By cleverly using tags and setting conference calling in less than a minute that gives you “importance rankings,” I can track comservices are now completely free conference calling for up panies where I have an open sales opoffering a no-charge to 40 participants, as well as some pretty portunity, a project underway or even product with basic nice features like: on-demand or schedtrack my “top prospects.” When you view functionality as well as uled calls; Web invitations and response a company or contact profile, Gist has a premium offering ... tracking; the ability to view all attendees provided a handy “notes” function that and comments at a glance; U.S. and lets you add comments or track activities. Your e-mail and attachments history shows up in the European dial-in numbers; Outlook and iCal integration; and individual records, too. Does it have all the bells and whis- free audio call recording. With this product, everyone calls tles of a full-blown CRM system? No, but what it has ( for Rondee’s bridge number (United States or Europe) and enters an assigned passcode to connect to your meeting. It once) is exactly what you really need.

Gist is good. Very, very good. Visit www.gist.com and see could not be much more simple or easy for all concerned.

Now let’s look at FreeConferenceCalling.com. Like Rondee, how you can get set up and running in ten minutes or less. you can host a free conference call with your dedicated Free Rondee & FreeConferenceCalling.com Conference Calling account anytime, from anywhere. The difDo you conference call with customers, employees, ference is that FreeConferenceCalling.com assigns you a pervendors or your sales team? Do you hold telephone semi- sonal, permanent telephone number and passcode. With this nars or meetings? For a lot of us, conference calling has product you can access conference call reports after each call become a way of life. Today, it is one of those fundamental to review when and which callers attended your call, and business tools that we seem to be using more and more. The record your conference call for easy reference and playback thing is, conference calling can be an expensive proposition via MP3 so you can listen, download and podcast easily. What — but it does not have to be. we like is that you can watch your conference call from your At the BizCAT Group, we have been using free conference Web browser and manage the individual rights of conference calling services for the last seven or eight years. Here’s how call attendees for up to 500 callers. Attendees can join a conthey work: Instead of you paying a fee for each of the callers ference call from a regular telephone, cell phone and popular on your conference call, each participant simply calls in to a VoIP services without issue. predefined telephone number assigned to your event or your Whichever product you choose, we think you will be more company. The thing is, this is not an 800 number, so rather than happy. Both do a great job and seemed to be pretty than you paying a charge, each caller pays whatever amount problem-free. And if you are concerned that your customers he would normally pay to call that number — typically a might think you are being cheap by not having an 800 long-distance call. Just to clarify, there are no surcharges number for them, we can pretty much assure you that will from the conference call companies or the telephone compa- not be the case — at least that’s what our years of experience nies to your participants; they only pay long-distance using these services for our calls tells us. Besides, your cuscharges. Now, at first that might seem off-putting, especially tomers might just be impressed that you are focused on if they are customers, since you are causing people to incur saving a bundle of money in today’s economy (especially an expense. But today, most people have unlimited long-dis- when it is probably not costing them anything either).

Tim McMahon held senior executive positions for many years tance plans built into their landlines or cell phones, so it with IBM and DEC before founding Catalyst, a global really does not make much of a difference, if any. consulting firm, in 1995. He is a best-selling Many of the free conference calling services are now author of four books and has been offering a no-charge product with basic functionality as well as featured on CNN and CNBC International. a premium offering with additional capabilities, such as call He can be reached at recording and on-demand playback, Web scheduling, desktop sharing and more. The good news is that for most of us in tim.mcmahon@thebizcat.com. small or medium-sized businesses, the free offerings will be all Visit.www.thebizcat.com/reviews.

20 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a r c h 2 0 1 0

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Dudek Mar 10:Dudek Mar 10

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Bundled Agreements The key to success lies in aftermarket pricing by: Michael H. Dudek, Zygoquest — Mergers & Acquisitions

any companies in different industries, including thousands of copier/ MFP and printer dealers in the office technology industry, sell aftermarket agreements to support equipment purchased by customers. While some aftermarket agreements are for services only, many are comprised of a bundle of services and supplies.

Companies that sell equipment along with related services and supplies generally realize substantially lower profit contributions from equipment sales. After accounting for the equipment cost, the sales commission and direct selling expenses, generally there has been little operating contribution to cover admin expenses and return a reasonable bottom-line profit. This business model has been to aggressively place equipment despite its relatively lower profitability in order to capitalize on historically reliable and healthy aftermarket margins. If aftermarket margin profitability falters, the business model breaks down.

M

Proper Pricing A dealer’s ongoing profitability, value and viability can be severely impaired long-term if the dealer misprices the aftermarket. While this article focuses more on the supply portion of bundled agreements, the same concepts apply to the service portion. Dealers mispricing just the supply portion of an agreement, perhaps due to underestimating the cost of supplies to be consumed for a contracted volume of business or shipping excess supplies, can impair supply profitability and, thus, overall dealership profitability and value. When mispricing occurs on a large scale, profit can shrink dramatically to the point where a dealership’s viability is in jeopardy. At a minimum, dealerships with such problems have a substantially lower enterprise exit value than they would otherwise.

Historically, aftermarket pricing was easier to measure and 22 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a r c h 2 0 1 0

manage. Costs and margins were much more predictable. Many factors have evolved over the years to cause measurement and management problems in this area, including: Bundled arrangem ents are now the number-one offering by most dealers; Higher-end monochrome and color products, which carry very expensive supply cost investments; New product introductions by manufacturers, bringing untested cost estimates and little to no service history make pricing management very challenging; Customer applications, which might consume extraordinary amounts of supplies, such as copying and printing of Web pages with high-density toner coverage, vary extensively; Overall supply costs have increased, placing substantially more owner capital at risk.

The evolution of such factors has created many opportunities, but these factors have also substantially increased risks, which require proper planning and management oversight.

Years ago, most contracts were unbundled, which created an effective self-controlling management process since customers generally only ordered and paid for supplies on an as-needed-for-consumption basis. Even if customers overordered or overconsumed supplies, there was little to no concern because customers paid for supplies on a transaction basis. Consequently, dealers did not have to devise sophisticated management systems to track and manage overshipped, overconsumed or overstocked supply inventories at customer locations.

Since supply sale transactions were separate and distinct from service transactions, related mark-ups, pricing, discounts and profit margins were easier to measure and manage.

Dealers knew the cost of supplies and marked them up to achieve desired margins. Dealers simply established standard

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Dudek Mar 10:Dudek Mar 10

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Competition, of course, has often driven supply price lists and managed deviations prices to painful levels — even below for large customers with special pricing.

With all of these cost. The absence of price escalation In summary, dealers more easily managed changes over the years, clauses in contracts can be especially and realized healthy supply margins unfortunately, aftermarket haunting and damaging to a dealer’s despite competitive pressures. pricing is prone to ongoing profitability.

Over time, dealers belatedly recognized mismanagement and Dealers selling bundled agreements that supply revenue was decreasing. problems are now have experienced other problems, which Therefore, they introduced bundled prevalent in the industry. erode margins. Customers were ordering agreements to lock-up customers from excess supplies and dealerships were the competition and to capture supply revenue, which was under assault by “toner phoners.” shipping supplies according to a schedule, whether the cusJumping with two feet into selling bundled agreements often tomer needed them or not. Some dealers discovered extraorresulted in unintended consequences. Bundled contracts dinary amounts of costly unused supplies at customer had commitments based on estimates. Big bucks were at locations. Self-controlling processes where customers paid for risk and many dealerships did not have adequate systems to what they ordered were no longer in place. Dealers instituted periodic collection programs for sales and service technicians measure and manage profitability.

Risk increased as dealerships moved upmarket. In the old to collect excess inventory. Others began capitalizing invendays, dealerships were selling relatively low-end equipment with tory on balance sheets for supplies at customer locations. lower supply costs to lower-end customers. For example, in the While this captures the cost, it does not help cash flow unless copier/printer industry, high-end monochrome machines and the cost is then managed down. In addition, although capitalcolor machines were not pervasive. Supply costs per transac- izing such inventory can be an acceptable accounting praction, per machine and per customer were relatively lower. Since tice, dealers must follow standard accounting conventions.

With all of these changes over the years, unfortunately, less money was at risk and few transactions were bundled, many dealers did not modify their operating systems to track aftermarket pricing is prone to mismanagement and problems are now prevalent in the industry. Such problems and measure costs and margins of bundled agreements.

Over time, manufacturers and dealers moved upmarket create tension between dealers and manufacturers, dealers to sell high-end monochrome and color devices. Supplies for and customers, owners and management, and between these high-end and color machines are obviously much sales, service and administration department employees. more expensive. For example, even providing each customer This tension often translates to eroding bottom-line results.

One post-bundling phenomena in the office products with only a single replacement cartridge for each high-end monochrome and color machine under contract could industry, which pertains to measuring functional profitability, require an investment of many thousands of dollars. Poten- is particularly troubling. Many years ago, a team of finance tial overstocking of supplies at customer locations merely professionals at Alco Standard Corp. developed a functional P&L approach to benchmark and manage dealer profitability compounds this investment.

Another factor was that years ago, product introductions and productivity. This approach has been adopted by countwere far less frequent. Manufacturers are now introducing less dealers throughout the industry and remains the best products at a record pace. The introduction of many high- way to both manage profitability and to identify material end monochrome and color machines carrying more costly issues that warrant management attention.

The troubling development has been that many dealers no supplies along with the adoption of bundled contracts by almost all dealers have changed the landscape and formula longer attempt to allocate revenue from bundled contracts, for success. More sophisticated management and manage- even with the advent of pervasive bundling. The effect is that the cost of supplies is not matched against supply revenue in ment systems are required.

As manufacturers rapidly introduced new products, some order to properly compute both supply and service margins. A introductions may have been released with unreliable cost and combined aftermarket margin is substantially less insightful consumption estimates. Properly pricing bundled aftermarket for managing the business. The hodgepodge combination of agreements for new products without service histories is par- bundled and unbundled aftermarket agreements without alloticularly challenging for both the manufacturer and the dealer. cation of supply revenue has caused large portions of a dealer’s 24 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a r c h 2 0 1 0

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Dudek Mar 10:Dudek Mar 10

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tomer. Models and customers that are consuming supplies in excess of bud... Owners need to geted amounts must be identified. Once ensure that management identified, management should revise systems are in place to pricing on future sales transactions and measure and manage should closely manage price escalation aftermarket pricing — on existing contracts. Guidance from top both the supply and management to support personnel must service portions ... be provided because there will always be tension about how to handle price escalations on existing contracts as you run the risk of damaging customer relations and losing customers to the competition.

Identifying Problems Sales, service and administration management must work Dealership owners have been striving to grow the top line while retaining historical profit margins despite increasing together, especially on all substantial transactions, to gain a competition. In order to maintain historical profit margins, good understanding of customer applications in order to owners and management teams must routinely capitalize on properly price the bundle, especially when multiple high-end growth opportunities while examining the trends of the big monochrome and color machines are at stake. Customers, chunks of revenue, cost and expense on their income state- such as print-for-pay customers who routinely copy and print ments. Management gets paid to anticipate “what can go high-density coverage on oversized paper, need to be closely wrong.” In the case of bundled aftermarket contracts, a huge assessed both pre- and post-sale. You might find that such portion of the business is at stake and many significant things knowledgeable customers are effectively realizing two expencan go wrong that would have a dramatic effect on profitability. sive clicks for the price of one inexpensive click charged by Each owner should determine whether an aftermarket the dealer. It is frustratingly ironic that when such customers pricing problem exists. If there is a major problem, the run more clicks, the dealer becomes less profitable.

There are various management tools and techniques that future profitability and value of your dealership is at stake.

You need to determine if any of your bundled contracts are can be instituted on a dealer-by-dealer basis to improve aftermispriced. Perhaps some adverse pricing commitments are market profitability. Frankly, we continue to be amazed by the long-term in nature without the ability to escalate future large majority of dealers who do not routinely generate manprices. Perhaps revenue with inferior pricing was pre-funded agement reports to assess contract pricing. The population of in long-term leases carrying double-digit interest rates that customer contracts is the owner’s annuity and arguably the mortgage the future. Perhaps customers are consuming sup- dealer’s most important asset. The contract population warplies substantially in excess of estimated supplies that were rants constant management attention and it is never too late budgeted into bundled pricing by the manufacturer or to get started. In this era of automated management systems dealer. Perhaps excess supplies are being inadvertently and reporting capabilities, analysis of contract pricing should be routine. Owners must challenge their management teams shipped to and stocked at customer locations.

Owners and management must make a thorough assess- if such analysis is not being performed.

Mike Dudek is founder and owner of Zygoquest and the Law ment of this critical area. If a problem exists, corrective Office of Mike Dudek. Zygoquest provides customized merger action should be taken. Not being able to identify whether a and acquisition services and advisory services to owners, problem exists is a problem itself. executives and especially to buyers and sellers of companies.

Dudek and Rich Wisniewski of Zygoquest are authors Management Tools To operate effectively in the current environment, owners of more than 400 M&A consummated need to ensure that management systems are in place to transactions during their careers and measure and manage aftermarket pricing — both the supply experts at enhancing business value. and service portions separately.

Dudek can be reached at (610) 873-6555 or For companies with many transactions, systems must be mdudek@zygoquest.com. automated to measure costs by machine model and cusVisit www.zyoquest.com. functional P&L to be unreliable and useless in managing critical aspects of the business. This shortcoming should be corrected across the industry, for what is not measured cannot be properly managed. Many dealers may be in for a rude awakening when they recognize that those once reliable and healthy supply profit margins may have dwindled to unacceptable levels.

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West Point Products ad Feb 10:Layout 1

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Managed Network Services Another step to becoming a total solutions provider by: Mitch Morgan, CEO Focus

here is a shift occurring in service and support for our customers. Through utilizing technology, a more efficient service model is evolving. In an article I wrote for the November 2009 issue of Office Technology, I described the benefits of a help desk for our current MFP and managed print customers. I have clients who are generating incremental revenue providing help-desk services for current customers in connectivity and software support on the products and solutions they sell today. In addition, there is a growing trend in implementing connectivity installations through the help desk using common remote connection software tools.

Taking this support model to the next level opens the door for a lucrative adjacent market opportunity — managed network services (MNS). The business model is attractive for the service provider and the adoption rate is growing, in particular in the small to medium-sized business (SMB) market.

A managed services provider (MSP) I recently met with described the environment as a “land grab” that is occurring as we speak. The technology has matured and the SMB customer is open to less expensive alternatives to current support models that are based on reactive “break/fix” service.

A business owner I spoke to recently who uses MNS stated: “I haven’t thought about my network in a year and a half; it just works. It gives me one less thing to worry about.”

The benefits of centralized service delivery are undeniable and an irreversible trend. They include: A few people managing many devices centrally.

Utilization of automation tools rather than expensive labor.

Allowing the system to tell us when there is a problem.

T

Proactive Versus Reactive A large percentage of network support providers rely on a dated model for support by sending someone out when something breaks. Using the right technology, the help desk 28 | w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a r c h 2 0 1 0

is able to see (and solve) the problem in minutes, not hours. The majority of the time, problem resolution occurs before the customer knows about it, resulting in continuation of system availability and performance levels. If it becomes necessary to send a technician (which occurs less than 15 percent of the time) he (or she) shows up knowing exactly where to go to resolve the issue.

With remote technology services, the service provider can make the systems much more productive by preventing problems before they occur. Alarm thresholds are established on critical measures of network performance and the system sends out an alert to the central console when these levels are exceeded. The help-desk technician can often resolve the issue before the condition causes downtime or performance degradation.

Automated tools are utilized for patch management, virus protection and workstation updates. Remote back-up capabilities have been enhanced to the point that it is a more cost effective and reliable process. The bottom line is that many customers who utilize MNS are finding they spend less time on their IT systems, the performance is improved and the costs are reduced.

MNS Business Model If the business is properly structured, the revenue is annuity based and service focused. The trend is to provide a monthly fixed price, computed per server and per workstation. The customer can opt for full IT outsourcing and the pricing is generally significantly less than the cost of staffing the function internally and having an outside service provider for downtime support and special projects. Setting the business up properly up front in terms of service level agreements (SLA), service offerings and pricing is critical to success.

A typical 20-user small business customer using remote

InkCycle ad Dec 09:Layout 1

11/19/09

5:08 PM

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The reality for dealers is that, if they monitoring and help-desk services will choose to enter this market, partnering bring well in excess of $1,000 per month Many copier/MFP will be a fact of life. As an example, if a in annuity-based service revenue. Simple dealers are choosing to dealer is planning to offer remote backmath will tell you that 100 of these cusenter the market by up/disaster-recovery services (which tomers will provide monthly services outsourcing the delivery should be a standard of fering ) the revenue in excess of $100,000 or $1.2 of the service. This smart decision would be to utilize an million per year. Additionally, there will allows them to focus ... infrastructure and services delivery be revenue opportunities for upgrades on sales and marketing ... platform that has already been built. and project work related to the network.

Even the largest MSPs utilize partnering A help-desk technician utilizing remote monitoring software combined with a good profes- in this manner where it makes sense.

If you have not heard of this quickly emerging trend, you sional services automation software system will be able to support in excess of 400 workstations. It is not uncommon will. Many companies are seeking a better, more efficient to generate in excess of $300,000 annually in annuity- way of optimizing and managing IT investments. It can be a based service revenue per help-desk technician as the great way to enhance your relationship with customers and prospects and be viewed as a total solution provider. business matures.

Mitch Morgan has built successful business models within Getting Started the copier/MFP business since 1992. He founded the Many copier/MFP dealers are choosing to enter the Connectivity Dealer Program from NIA (a BTA alliance) in market by outsourcing the delivery of the service. This allows 1991. After his businesses were acquired by IKON Office them to focus their efforts on sales and marketing, in particSolutions in 1996, he led their Technology Services division. ular to their current customer base. This is the fastest way to In 2001, he formed the Professional Services division get started, with the smallest initial investment. There are a for IKON. Through CEO Focus number of companies that provide these services to dealers, (www.ceofocus.com), Morgan has been who then mark up the services to the customer. The dealer consulting with CEOs on strategy, provides on-site service and proactive network planning. The operations, organizational development ability to scale up quickly is an advantage and the gross profit and sales since 2005. He formed the margin is positive from the first sale.

Professional Services Roundtable in 2007.

Having trouble finding money for your child’s education?

Mark Your Calendar!

The deadline for scholarship applications for the 2010-2011 year is May 1, 2010.

Scholarships for use at colleges or accredited vocational trade schools are available to the sons and daughters of full-time employees of BTA member dealerships. Scholarship recipients are chosen by an impartial and independent evaluator. Completed applications must be received at BTA by May 1, 2010. To obtain a scholarship application form, contact Mary Hopkins at mary@bta.org or (816) 303-4031 or write to: BTA Scholarship Foundation, 12411 Wornall Road, Kansas City, MO 64145.

BTA Can Help.

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Do you crunch the numbers,

or do the numbers crunch you?

T

he BTA ProFinance course will teach you how to set the strategy, track critical performance measures and manage your assets according to a proven business model designed to improve the profitability of your company.

Instructors John Hanson and John Hey of Strategic Business Associates take a holistic approach to the redirection of your business — from sales rep compensation and projecting service revenues to inventory management and an action plan for implementation — with the short-term goal of achieving a minimum of 14% operating income. You can achieve these results by monitoring 24 key benchmarks and making strategic shifts as discussed in the program.

To register for ProFinance or get more information on pricing and quantity discounts, visit www.bta.org/ProFinance or call BTA at (800) 843-5059.

2010 workshop dates & locations: April 21-22, 2010 Aug. 11-12, 2010 Nov. 10-11, 2010

Nashville, Tenn.

Chicago, Ill. Las Vegas, Nev.

Start planning for improved profitability today! Send all of your strategic decision makers to ProFinance — it’s an investment in your company that will help you relieve the end-of-the-month crunch.

ProFinance is designed for owners and executive-level staff who make the critical business decisions that impact your company’s success. Some OEMs reimburse for ProFinance tuition through advertising co-op or professional development funds. Check with your OEM.

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COURTS & CAPITOLS

Proper Safeguards Avoiding internal financial fraud in the dealership by: Robert C. Goldberg, General Counsel for the Business Technology Association

he dealer’s call came after office hours and the tone indicated both embarrassment and deep concern. In fact, knowing where the fault laid, it was almost apologetic. The dealer had been in business for 25 years. For 19 of those 25 years, he had employed “Betty” as his bookkeeper. Betty had started in the office and had stayed with the business as it grew to $8 million a year in sales. Betty was always willing to help with anything, did not take time off and became a valued and trusted employee.

The business was successful, but did not have the same success as others in its peer group. The owner felt that the business’ liberal approach to payment of the owner’s expenses, automobiles, credit card payments and other “owner” benefits were most likely the explanation. Outside consultants had been shunned as an unnecessary expense. The dealer looked at his financial statements, but really did not know what to look for.

The state in which the business was located was conducting a sales tax audit and the dealer sought outside assistance, as he felt the issue was beyond what Betty could handle. He brought in an outside accountant, who, in the course of reviewing the records, found numerous checks that he did not understand. The accountant made notes and sat down with the owner to discuss these checks. Numerous checks were made out to the owner without any notation or back up. Some checks were made payable to credit card companies and some to cash. By now you know what happened. Yes, Betty was making a very good living stealing from the company.

The owner was furious and confronted Betty immediately.

She did not deny stealing from the company, but merely explained that she was doing what the owner did and he should be careful before he started any trouble. Betty was certain that any discussion she had with the Internal Revenue Service would not benefit the owner or his family. Of course, the funds that Betty was taking were not being reported as income, thus creating her own tax issues.

The dealer was devastated and did not know where to start. The first step suggested was to contact the police and

T

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press charges against Betty for theft.

Bowing to her threats to go to the IRS would only make matters worse and delay the ultimate day of reckoning.

Once a police report existed , contacting his business insurance company would be possible. Insurance companies will not consider a claim if a police report has not been filed .

Often the insurance company will sue the individual for restitution in a civil matter if any assets exist.

The dealer may also wish to discuss with his accountant the filing of revised tax returns for the previous years. If income had been overlooked and expenses taken that may not have been justified, an amended tax return could lessen the impact and curtail any of Betty’s actions.

In these difficult economic times, it is essential for every dealer to review the safeguards in place to curtail financial fraud. Having a trusted “Betty” is not the answer. Accounting functions must be separated to the greatest extent possible.

The person writing the checks should not be the individual who signs the checks. Mail should be opened by one individual and deposit slips created by another. Still another person should reconcile bank statements. Of course, you may not have sufficient employees to allocate all these roles, but in those instances, the functions should be rotated among your employees and changed periodically.

The worst thing that can occur is to become complacent and assume all is running well. The most important factor is the owner’s own diligence. Know your financial statements and review them regularly. Have an outside accountant who periodically, if not regularly, reviews your financial information. Your accountant can review certain financial areas on a rotating basis and serve as an excellent deterrent to financial fraud. Do not let your business become a victim of internal theft; there are enough challenges in the marketplace.

Robert C. Goldberg is general counsel for the Business Technology Association.

He can be reached at robert.goldberg@sfnr.com.

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EDUCATION CALENDAR April 1-2

ProSolutions Little Rock, AR Software vendors teach you about their technology. But your clients don’t care about technology — they want their business problems solved. Taught by Darrell Amy of Dealer Marketing Systems, this course will help you understand your clients’ business problems, so you can provide solutions.

6

BTA MPS Operations & Service Workshop Baltimore, MD With entry into the print management/MPS space, you add complexity to your back-office operations and to your service department. Taught by Jim Boulden and Mike Woodard of Strategy Development, this course is designed to jump-start your understanding of how to set up and manage all operational and service aspects of an MPS agreement.

6-7

BTA MPS Sales Workshop Baltimore, MD Taught by Tom Callinan and Ed Carroll of Strategy Development, this workshop is designed to provide dealerships with the tools they need to establish a managed print services strategy that will allow them to significantly increase the quantity of captured prints, lock in customers, distinguish themselves from competitors and, ultimately, sell more hardware.

12-14 BTA Business Planning Workshop

Phoenix, AZ Taught by Jim Boulden, Tom Callinan and Ed Carroll of Strategy Development, this workshop’s sole purpose is to set the framework for your team to develop an operational business plan. You will learn how to layer in detailed and quantifiable actions to accomplish your goals of revenue and profit growth.

20-22 BTA Service Management University (SMU)

Columbus, OH Service managers are under pressure to deliver sustainable margins greater than 52 percent. In order to achieve this goal, they need to understand a multitude of profit inputs that range from setting prices to employee performance and development. When service leaders leave SMU, taught by Mike Woodard of Strategy Development, they will understand how to identify and address any issue within the service department.

21-22 BTA ProFinance

Nashville, TN ProFinance instructors John Hanson and John Hey of Strategic Business Associates will teach you the financial model that helped them make the decisions that grew DC Hey from a $5 million to a $170 million enterprise.

For additional information or to register for courses or events, visit www.bta.org or call (800) 843-5059.

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BTA HIGHLIGHTS BTA would like to welcome the following new members to the association:

Dealer Members American Business Machines, Houston, TX Commonwealth Technology, Lexington, KY Miller Company Inc., Louisville, KY Multiscope Inc., Canonsburg, PA Ribbon Encore Inc., Guelph, ON, Canada Vendor Associate Member NewWave Technologies Inc., Frederick, MD For full contact information of these new members, visit www.bta.org.

Discounted DataVault Training The newest addition to BTA’s educational offerings is a collection of online and onsite instructor-led training programs offered by DataVault (www.datavault.com), a training and consulting firm that primarily focuses on electronic document management systems technology. BTA has established a relationship with DataVault that allows BTA members to receive discounts of more than 12 percent off of the firm’s training and consulting services. Classes include: ECM Sales Training, ECM Needs Assessment, CompTIA CDIA+, CompTIA PDI+, Document Imaging 101, Scanner Operator Training and Scanner Bureau Workflow Training. DataVault also offers consulting services to BTA members for 25 percent off. For more information on these offerings, visit www.bta.org/DataVault.

For more information on BTA member benefits, visit www.bta.org.

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For the benefit of its dealer members, each month, BTA features two of its Vendor or Service Associate members in this space.

BTA Vendor Associate member DocuLex offers years of experience in the field of document and content management software development. The company, established in 1996, serves more than 1,000 customers with its Archive Studio product suite, encompassing document capture, indexing, data conversion, security, 100 percent browser access, file archiving and records retention management. DocuLex software is utilized horizontally by a large number of business segments, including small businesses, departments and enterprise-wide companies. www.doculex.com With nearly 30 years of experience, BTA Service Associate member Copier Careers is a recruiter with the resources to find what your dealership needs most: experienced technicians, sales representatives, managers, controllers, dispatchers, support staff and managed print services experts. Copier Careers’ database of qualified copier professionals is the biggest in the business (40,000 strong and growing!), and the company is dedicated to helping its clients and candidates make the best matches possible. www.copiercareers.com A full list of BTA Vendor and Service Associate members can be found online at www.bta.org.

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PRINCIPAL ISSUES

Pursuing Network Technology It begins with addressing these top two issues by: Susan Muth, Strategic Business Solutions Inc.

any office technology dealers are looking to broaden product and service offerings in order to create new revenue streams. A natural way to capitalize on current customer relationships is to offer a wider range of products that integrate into the office technology suite.

The products that fit into the current customer base and that provide an expanded service model are within the world of network technology.

Making the transition to incorporate higher technology into the delivery model requires considerations that are beyond the scope of current capabilities and will require a thoughtful strategy that will allow for a smooth game plan. The following are two issues to consider as you create this plan.

Technology Type — Just like selecting a name-brand office technology product, a dealer will have to consider what network technology to represent. With each of the top names in the network industry come differences in reputation, capability and customer considerations.

There are network giants, such as Cisco Systems and AVAYA that are enterprise capable. There are lower-end solutions targeted to the small and medium-sized customer, such as Shortel and 3Com. Microsoft, Hewlett-Packard and others are interwoven in the network mix. Add to this Cisco Systems’ small business solution line that targets specific products for the home and small office.

The selection process begins with the question of whether you will deliver broad-based, high-end services or targeted, specific network solutions. Are you interested in delivering managed network services, which are much like managed print services? Or, do you want to deliver less intense, lowcost, turnkey solutions? No technology consideration would be complete without determining a list of services from “break-fix” to high-end implementation of unified communications and everything in between, from implementing software, installing servers and configuring routers/switches.

Once you select the technology to deliver, you must consider the engineering talent needed to support it.

Engineering Talent — Given the type of technology you will sell, each will require unique engineering capabilities to

M

deliver and maintain services.

The engineering qualifications necessary to deliver these solutions range from lower-end network engineers with some basic fundamental installation and maintenance ability, to the highest-end engineers, such as Cisco CCIEs, who are at the top of the network industry model. Each comes with a specific set of certifications that are needed, as well as ongoing training requirements.

The cost of the engineer divided by the number of hours that an engineer is productive determines the engineer utilization rate. Maintaining a deep bench of engineers who sit idle can have a negative impact on profitability. It can be a catch 22 situation; how do you sell technology that you can deliver and how do you maintain the costly talent you need?

Some dealers use a collaborative delivery model of using outsourced engineers as a back end instead of making the investment in the engineers. This creates a seamless solution delivery model that allows for concentration on customers and business development while controlling back-end costs.

Fixed-priced outsourcing with a trusted partner and engineers who have current credentials and hands-on experience can make or break the reputation that the dealer has with customers. When it comes to the backbone of the network and IT infrastructure, the capability of the engineers is paramount to maintaining the customer loyalty for the dealer.

In Summary Once you have given these issues proper consideration, the strategy can take direction. A transition will take time and resources. The move to networking can be a lucrative one and one that can give you a solid foundation for the future. The network technology industry remains an incredible opportunity and the depth increases. Now is the time to take advantage of the marketplace and position yourself for the future.

Susan Muth is president of Strategic Business Solutions Inc., based in Cincinnati, Ohio.

She can be reached at susan@susanmuth.com.

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MPS STRATEGIES

Apple’s iPad Tablet Does it signal an approaching paperless office? by: David Ramos, Strategy Development

can hear the collective yawn from the “hybrid” dealer nation after reading the subhead to this article. I can hear the naysayers now — “Paperless shmaperless!” or “There will be a paperless office the day there is a paperless bathroom!” Read on. I believe Apple’s recent product launch will have a big impact and is a sign of things to come.

Before I get to e-paper-based technologies and where the signs point with Apple’s iPad announcement, we will start where all stories must — at the beginning.

In the 1970s, the Xerox Palo Alto Research Center (Xerox PARC) was a powerhouse of Courtesy of Apple innovation. Many aspects of the modern computer, namely the mouse, laser printer, Ethernet, graphical user interface (GUI), computer-generated color graphics, as well as a number of important computer languages, were invented at PARC around that time. For those of you who do not know, Steve Jobs visited PARC in 1979 and was impressed and influenced by the Xerox Alto, the first computer with a GUI. Jobs designed the Apple Lisa based on the technology he saw at Xerox. Why did Xerox allow this? Xerox granted Apple engineers three days of access to the PARC facilities in return for the option to buy 100,000 shares of Apple at the pre-IPO price of $10 a share.

Yet, there was another development, nearly lost among those important breakthroughs, that was invented in 1974 by PARC employee Nicholas K. Sheridon. The Gyricon, a Greek term for rotating image, was to be a new display technology for the Alto personal computer; eventually, it became the basis for modern e-paper technology. As we know from history, in the early 1970s, Xerox PARC was developing and attempting to get Xerox management to appreciate the Alto personal computer; they never did. What did Xerox do with the e-paper development?

They cut funding. Do you know why? Much has been written about the incredible myopia of Xerox executives, so no need to go into that except to say that there were numerous opportunities to expand Xerox’s business that were fumbled. Simply put, Xerox could not shake off the “copier mentality.”

Now, at Xerox PARC, they had long predicted the advent of

I

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the paperless office, with the widespread adoption of the personal computer they had created. The paperless office never happened. Why not? Because the mass acceptance of the personal computer as the driver of reducing paper consumption actually had the reverse affect and propagated paper consumption. There are a couple of reasons for this. First, you combine everyone having a laptop or desktop with the Internet of electronic information, throw in the creation of email and electronic documents and you have mass access and mass printing of information. Now the second reason is probably just as important as the first. Paper consumption is caused by a difference in comfort level between reading documents on paper and reading them on the screen. Any document over a half page in length is more likely to be printed, subsequently read and discarded within a day.

For years there have been major obstacles with e-paper technology. In the past three decades, there has been no technology that was sufficiently paper-like. By this, I mean a display medium that is thin, flexible, capable of storing readable images without high power consumption and highly readable in ambient light; a medium that also has good resolution, high whiteness, good contrast and is pretty cheap.

It has been 35 years since the invention of e-paper, so why do I think the announcement from Apple is so significant and impactful for our industr y? And w hat got m e started researching this subject to begin with? It was the part in the announcement from Apple that read: “Well, it’s official. Apple is competing with Amazon.”

E-paper has already been creeping into the market the past few years and great progress has been made in the field of epaper since the invention of Gyricon. Companies such as E Ink, SiPix and Polymervision, as well as such giants as Sony, IBM, Hewlett-Packard (HP), Philips, Fujitsu, Hitachi, Siemens, Epson and many others, are continuing to develop e-paper technology. Founded in 1997 and based on research begun at the Massachusetts Institute of Technology’s Media Lab, E Ink has developed proprietary e-paper technology that already has

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becoming cheaper and more accessible, been commercialized by a number of comRegardless of Apple’s the end-user’s access to information will panies, including iRex Technologies and success, the platform is only widen with the next revolution in eSony, both of which already have commerpaper-based technologies — the pocket cial e-paper readers on the market. E Ink in place for others to document reader. Other major companies provided the e-paper for the Sony Reader capitalize and the are coming out with their own tablets, that has been sold in Japan since 2004. technology has all the with many of them announced at the Apple’s new product comes at a time applications we need: recent Consumer Electronics Show. HTC when e-readers, like Amazon’s Kindle and e-mail, gaming, video ... and Google are reportedly jointly working others from Barnes & Noble and Sony are on a tablet. HP and Dell are each planning on the market, with more coming this year from companies such as Samsung and the Hearst Corpora- their own tablets. Microsoft may be, too, with the muchtion. Samsung should resonate with the “hybrid” dealer talked-about “Courier” tablet.

Is the paperless office revolution on the brink of breaking nation. Samsung has a five-year plan in any market it enters to be number one before or no later than year five. Samsung has through? Will six million tablets sold in 2010 lead us to the done it in every market it has entered, from plasma and next generation of office computing and have an impact on HDTVs to cell phones, and the company is on the rise in the the 1.2 trillion pages printed in the United States every year?

A4 MFP/SFP technology market, climbing as high as number The answer is yes. Six million tablets is simply the beginning.

ABI Research predicts that by 2010, 58 million tablets will be two according to some industry analysts.

Last year, about three million e-readers were sold. It is esti- shipping per year. How long do you think it will be before a mated that another six million will be sold in 2010, according CFO and CIO get together to calculate the decrease in cost of to the Yankee Group. The Kindle, which has a 6-inch screen operation and the impact on how people manage their time by and sells for $259, has the bulk of the e-reader sales. James utilizing these devices versus spending 1 to 3 percent of McQuivey, Forrester Research principal analyst, was quoted annual revenues on document related costs and supporting during the Apple announcement: “There are about six million antiquated printer/copier fleets?

So, what is the point of my story and historical journey? people who are gearing up this year to buy an e-reader and they are going to spend between $250 and $700 on it. They are Hindsight is always 20/20 and we know now that it seems already people who care about media and who are willing to crazy that any company would allow revolutionary technology spend money on media. So, if you can say to them, ‘Gee you to walk out the door, whether it is the computer we know can spend $350 on a dedicated book reader or you’re going to today or the technology of tomorrow (e-paper). But the lesson get this amazing Apple device at twice the price, but with the is this: Do not get caught up in what is “today.”

Do you want to know the reason Xerox management told ability to do much more than read books.’” It seems Apple’s Sheridon to discontinue his work on e-paper? They urged him tablet has a good chance of success.

Regardless of Apple’s success, the platform is in place for to invent new printer technology to counter the erosion of the others to capitalize and the technology has all the applications Xerox printer/copier market by the Japanese.

Here is what I do know — your window for launching a we need: e-mail, gaming, video and reading, with more coming. What is the potential impact for the consumer and managed print services (MPS) initiative is now.

Here are your threats: business end user in the future? The most revolutionary impact is on the way people consume media. They will take Page volumes in the United States declined in 2009 and these technologies from room to room. They will dock the will decline further in 2010.

Average selling prices are in decline for units sold. iPad next to their bed and it will become their alarm clock.

They will dock it in the living room and it will become a photo A3 equipment units and revenues are rapidly declining. frame and the video server for their TV. They will dock it in the By 2013, there will be 33 percent fewer A3 units than in 2007 kitchen and it will display recipes for the chef of the house. and revenue will be 25 percent less.

Where are the inroads for business applications and the Products are faster and more complex, with no appreimpact on paper consumption? It will start with end users ciable increase in selling price.

Channels have difficulty coping. Dealer and direct chantransforming their way of doing business. They will stop printing everything out of habit and begin bookmarking links nels struggle with lower margins.

Printer-based MFPs are taking a greater share of the and reading more online. And, with e-paper technologies w w w . o f f i c e t e c h n o l o g y m a g . c o m | M a r c h 2 0 1 0 | 37

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ima gin g market and are mov in g up changing print patterns and continue to You can ignore the market very quickly. chase the ever-decreasing copier/MFP Inexpensive A4 printer-based MFPs market. Or, you can adapt and seize the technology ... and are challenging more expensive A3 copiernew opportunities in the imaging and continue to chase the based MFPs. printing environment. Xerox’s market capiever-decreasing copier/ Here are your opportunities: talization today is $7.5 billion. Apple’s MFP market. Or, you The focus of vendors has to shift from market cap is $175 billion. I hope Xerox can adapt and seize “hardware placed” to “pages captured.” held those shares! the new opportunities ...

End users are looking for tighter David C. Ramos is a consultant with control over document output with a desire Strategy Development, a management for balanced deployment, effective device utilization, reduced consulting firm specializing in sales strategy and process, costs and a single-source supplier for equipment needs. advanced sales training and performance improvement Increased penetration of A4 MFPs. strategies. He has more than 14 years of experience in the Color placements and revenues are growing with an 11.4 imaging industry as a top-producing business development and percent compound annual growth rate (CAGR) and 6.4 management professional. Ramos’ career experience spans percent CAGR, respectively. from working for Xerox Corp. to IKON Office Solutions.

Going on five years, Strategy Development’s consulting team Ramos offers experience in training and development, has published articles on MPS, conducted BTA MPS workselling leading-edge technologies, strategic shops, and has spoken at numerous dealer meetings and conmarketing and key account management ventions. We have also worked with manufacturers and have in U.S. and foreign markets. created and implemented successful business plans with Ramos can be reached at numerous clients across the United States on how to approach ramos@strategydevelopment.org. the MPS market. You can ignore the technology that is Visit www.strategydevelopment.org.

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