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CONTENTS Volume 13 No. 5
FEATURE ARTICLES 10
16
Business Color Transforming the workplace one click at a time
COURTS & CAPITOLS Setting the Standards Recommended without hesitation: Muratec, Global
22
by Brent Hoskins Office Technology Magazine
by Robert C. Goldberg BTA General Counsel
Business-color MFPs are now commonplace within OEM product lineups. In fact, nowadays, they seem to be at center stage at OEM dealer meetings and elsewhere. There are high hopes for the color-capable MFP market. Has your dealership fully embraced this sales opportunity?
There are no reservations in recommending these two companies. Both have distinguished themselves.
SELLING SOLUTIONS Facing the Challenges It begins with looking directly into the mirror
25
Shifting to Solutions Dealership sales plans changing with the times
by Gilbert E. Cargill Cargill Consulting Group Inc.
Nothing will change until management changes its attitude and behavior toward the sales force.
by Barbara Richards InfoTrends
To be successful in today’s competitive environment, dealers must face enormous challenges. Average selling prices and total placement volumes are declining. A recent InfoTrends research study reveals that dealers are addressing the challenges by increasingly pursuing software solutions.
18
‘Look, Don’t Listen’ It will help you to improve your employees’ skills
26
by Jim Kahrs Prosperity Plus Management Consulting Inc.
‘A Renewed Focus’ Panasonic hosts 2006 national dealer meeting by Brent Hoskins Office Technology Magazine
Those who attended the 2006 Panasonic Digital Document Company national dealer meeting heard three clear messages — the OEM is seeking to become a more significant player in the industry, its current primary product focus is colorcapable MFPs and it is committed to the dealer channel.
20
PRINCIPAL ISSUES
The Changing Industry InfoTrends forum addresses transition to solutions by Brent Hoskins Office Technology Magazine
With a focus on helping dealers, hardware manufacturers and software providers better address the changes and challenges in today’s office technology market, InfoTrends recently hosted the Office Document Technology Forum, comprised of back-to-back conferences. 4 | www.of ficetechnologymag.com | November 2006
A good manager needs to actually look at what his or her employees are doing, not just listen to them.
Repositories of Information Editorial: Making the case for industry consultants
28
We Can Help
by Bob Sostilio Sostilio & Associates International
Consultants and consulting firms deliver knowledge, not influence, and back up their assertions with fact.
DEPARTMENTS Business Technology Association
23
December-January Education Calendar BTA Membership Application
6
Executive Director’s Page
8
BTA President’s Message
30
Advertiser Index
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EXECUTIVE DIRECTOR’S PAGE
Member Volunteers Giving Back to BTA
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have not attended this event in past years, but I can now say firsthand that the BTA Southeast “Fall Colors” Conference is impressive. I was among those who attended this year’s conference, held Oct. 20-21 in Waynesville, N.C. The setting was perfect. So, too, was the opportunity to meet and visit with BTA members from the Southeast. In his President’s Message column in this issue, Dan Hayes provides a great description of the conference. You will note that he mentions that I was among the presenters. As he describes, I opened up my presentation to audience participation. Since the topic was “the advantages of BTA membership,” who better to share the advantages than BTA members? I was pleased with the number of attendees who spoke about the return on their BTA membership investment. Among those sharing were the five members of the national BTA Board of Directors who were in attendance. All were quick to comment on how BTA membership has helped them in their businesses. I had asked members of the audience to give examples regarding one of six member benefit categories, such as legal services, research or networking opportunities. BTA President-Elect Shannon Oliver was the first to share. Like so many other members through the years, Shannon has taken advantage of the legal services provided by BTA General Counsel Bob Goldberg. He told how Bob had helped him with a non-disclosure agreement. Later, I asked Shannon to share more about this member 6 | www.of ficetechnologymag.com | November 2006
benefit via e-mail. He wrote: “Bob has helped me through many issues and it has not cost me a dime. Without a doubt, my dues have been returned ten-fold from legal services alone. When I hear Bob speak, I always come away with ideas that can be immediately implemented to save us untold money, time and problems.” Another national board member, Bill James, shared a particularly heartfelt “advantage of BTA membership” during the session. Later, I asked Bill to restate his comments via e-mail. He wrote about the many networking opportunities through the years and how much he has learned from his fellow dealers in a noncompetitive environment. He concluded: “Over the years these new acquaintances have developed into long-term friendships. This fact was keenly driven home to me after being hit by Katrina in 2005. Once I was able to establish communication with the outside world the offers of help and assistance on both a personal and business level from my BTA friends was overwhelming. It was then that I realized that they were more than my friends, they were my BTA family.” As I consider these two expressions of the value of BTA membership, it strikes me that Shannon and Bob are among the association’s volunteer leaders because they want to give back to BTA — it has given them so much. Of course, this has been true of all of our many volunteers through the years. If you, too, are seeking a way to give back to the association, would you be willing to serve as a volunteer? If so, I would love to hear from you. Contact me at (816) 303-4040 or brent@bta.org. — Brent Hoskins
Executive Director/BTA Editor/Office Technology Brent Hoskins brent@bta.org (816) 303-4040 Contributing Writers Gilbert E. Cargill, Cargill Consulting Group Inc. www.salesleadershipforum.com Robert C. Goldberg, General Counsel Business Technology Association Jim Kahrs, Prosperity Plus Management Consulting Inc. www.prosperityplus.com Barbara Richards, InfoTrends www.infotrends.com Bob Sostilio Sostilio & Associates International Inc.
®
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 McLaughlin Membership Marketing Manager valerie@bta.org Cathy Kenton Membership Sales Representative cathy@bta.org Gary Hedberg Accounting Manager gary@bta.org Mary Hopkins Accounting Clerk mary@bta.org ©2006 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.
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Vibrant color. Superior functionality.
Must be one terrific MFP.
Kyocera’s KM-C3232 Delivers Across-the-Board Productivity for Your Customers For an affordable color document solution that maximizes business productivity, discover the power and reliability of the KM-C3232. This workhorse is one of a series of color MFPs designed to keep your customers’ business color needs in-house and within budget. At 32 pages per minute of crisp black and white or brilliant color, it delivers impact to any job. Add the full range of advanced finishing features for compelling business communications. Plus optional software solutions maximize your customers’ hardware investment. Combine all this with strong dealer marketing support, and it’s no wonder Kyocera keeps you smiling. That’s the power of People Friendly. Learn more about Kyocera and its products: www.kyoceramita.com
KYOCERA MITA CORPORATION. KYOCERA MITA AMERICA, INC. ©2006 Kyocera Mita Corporation. “People Friendly,” “The New Value Frontier,” the Kyocera “smile” and the Kyocera logo are trademarks of Kyocera.
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BTA PRESIDENT’S MESSAGE ®
BTA Southeast Hosts Another Great Event
C
ongratulations to the BTA Southeast leadership team for another great fall event. Held Oct. 2021 near the Blue Ridge and Great Smoky mountains of North Carolina, the “Fall Colors” Conference presented an opportunity to network with other BTA members and learn new business strategies. For the second consecutive year the conference was held at the Waynesville Country Club Inn in Waynesville, N.C. Of course, the name of the conference is very appropriate. The fall foliage in the mountains is something to behold. This year the trees were particularly amazing. My wife and I arrived Friday and attended the opening evening reception. While I always enjoy catching up with long-time fellow dealer members, I was pleased to see a number of new faces at this year’s conference, including some younger individuals still in the early stages of their careers. They are no different than the industry veterans. They see the value in networking with fellow dealers in a laid-back, relaxing venue. On Saturday, we had several hours of education beginning with a presentation by Jim Kahrs, president of Prosperity Plus Management Consulting Inc., who shared some excellent ideas to help dealership principals gain better control of their sales departments. In the next session, Jim Strauss, president of MOTIVE8S Inc., addressed strategies to help dealers continually recruit for new sales reps, so that they are not left with a hole to fill in the sales team. Finally, BTA Executive Director Brent Hoskins presented a session on the advantages of BTA member8 | www.of ficetechnologymag.com | November 2006
ship, providing an overview of some of the key BTA benefits. I enjoyed listening as he engaged audience members, asking that they share about some of the member benefits that have helped them in their businesses. Saturday afternoon provided free time to further enjoy our conference location. The town of Waynesville was having its annual Apple Harvest Festival. There was also the Inn’s 18-hole golf course. The conference concluded with a very nice dinner — another opportunity to visit with other BTA members. I’m sure the others who attended enjoyed the conference as much as I did. I’m already looking forward to next fall’s conference. In the meantime, BTA Southeast will be hosting a conference in the spring, scheduled for May 18-19, 2007, in Nashville, Tenn. The venue is the recently renovated Union Station, a Wyndham Historic Hotel. There will be a number of networking opportunities, including an evening out on the General Jackson Showboat. And, of course, there will be more outstanding education sessions. Keep your eye on www.btasoutheast.org for more details in the months to come. Are events in the BTA Southeast district too far from your location? BTA is currently exploring the idea of hosting other district events elsewhere in the country. The schedule could be similar to what I have described. Or, perhaps, the event could include a single full-day education workshop. The key to success is the participation of local dealers in the planning process. If you would be interested in assisting or attending such an event, let us know your thoughts. Just send me an e-mail at dan@purcells.com or e-mail Brent Hoskins at brent@bta.org. We would love to hear from you. — Dan Hayes
2006-2007 Board of Directors President Dan Hayes Purcell’s Business Products 222 E. 1st St. Campbellsville, KY 42718 dan@purcells.com President-Elect Shannon Oliver Copier Source Inc. 215-G Industrial Ave. P.O. Box 36395 Greensboro, NC 27406-4542 soliver@copiersourceinc.com Vice President Ronelle Ingram Steven Enterprises Inc. 17952 Sky Park Circle Ste. E Irvine, CA 92614 ronellei@msn.com BTA East Thomas Chin Accolade Technologies LLC 604 Hampshire Road Mamaroneck, NY 10543 tchin@accotech.com BTA Mid-America Mike Blake Corporate Business Systems LLC 2018 S. Stoughton Road Madison, WI 53716 mblake@corpbussystems.com BTA Southeast Bill James WJS Enterprises Inc. 3315 Ridgelake Drive P.O. Box 6620 Metairie, LA 70009 bjames@wjsenterprises.com BTA West Rock Janecek Burtronics Business Systems Inc. 216 S. Arrowhead Ave. P.O. Box 1170 San Bernardino, CA 92408 rjanecek@burtronics.com Ex-Officio/General Counsel Robert C. Goldberg Schoenberg Fisher Newman & Rosenberg Ltd. 222 S. Riverside Plaza Ste. 2100 Chicago, IL 60606 robert.goldberg@sfnr.com
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Business Color Transforming the workplace one click at a time by: Brent Hoskins, Office Technology Magazine
T
really the way to go.” From Lou he transformation conSlawetsky, CEO of Industry Anatinues. Today, workers in lysts Inc.: “Color is just about the the general office envionly thing left where the average ronment are not simply printing dealer can make any real money. documents with black toner. A color page generates six to Increasingly, they are also printseven times more revenue than a ing and copying documents in black-and-white page.” full color — sales and marketing While color copiers and printmaterials, PowerPoint presentaers for graphic-centric environtions, spreadsheets, Web pages, ments have been around for etc. The list is growing. some time, many would agree Certainly, this is not news to that the rise of the color-capable office technology dealers. BusiMFP (sometimes referred to as a ness-color MFPs are now comB2C device) for the general office monplace within OEM prohas been rapid. “Two years ago I duct line-ups. In fact, nowawouldn’t have said there would days, they seem to be at center Copyright © 2006 Konica Minolta Business Solutions Europe GmbH. be this many B2C units on the stage at OEM dealer meetings and elsewhere. There are high hopes for the color-capable market at these speeds and these prices,” says Bill Cassidy, associate director of product and solutions marketing for MFP market. Of course, many dealers are finding notable success in Kyocera Mita America. “Everyone envisioned this, but I selling color into the general office environment. However, think the timeline was seen as a lot further out.” Is the demand for color in the general office that signifiothers may be holding back. There is the issue of how to best charge for color output. There may also be some lingering cant? Or is there some “product push” underway on the part hurdles to overcome in the sales process. Has your dealer- of manufacturers? “I think it’s both,” says Yoshida. “There is a customer pull factor. Color is more persuasive, more powship fully embraced this burgeoning sales opportunity? OEMs and industry analysts emphasize the importance of erful. I think customer desire to incorporate more color is selling color-capable MFPs. From Sam Yoshida, director and definitely growing and that demand is pulling the products. general manager of product marketing for the Imaging But, at the same time, I think the competitive nature of our Systems Group of Canon U.S.A. Inc.: “If you still only have a industry is that manufacturers do push the drive toward a half foot in the office color space or you are still contem- certain product category.” Kevin Kern, vice president of product planning and plating how much more to invest in this space, there is no more waiting.” From Danielle Jurasek, product and solutions development for Konica Minolta Business Solutions U.S.A. marketing manager for color MFPs at Kyocera Mita America Inc., offers a similar comment. “Everybody in this industry Inc.: “If dealers need to get additional revenue streams going is pushing color right now,” he says. “The customers are and start capturing additional clicks on the machines, color is hearing a lot about color. It has opened up their minds to it. 10 | 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 | N o v e m b e r 2 0 0 6
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Fortunately, with projecSo, it’s somewhat of a self“The machines have tions of a declining markfulfilling prophecy.” gotten far better — et for monochrome-only However, says Kern, there they’re easier to use MFPs, many of the past are other drivers that have inhibitors to the growth helped to increase the deand more reliable. So, of the color market are mand. “The machines have service costs have gone. For example, as noted, gotten far better — they’re come down and the the reliability of color easier to use and more relimachines have become devices has improved. In able,” he says. “So, service easier to place.” addition, prices have decosts have come down and — Kevin Kern, Konica Minolta clined and print speeds have the machines have become Business Solutions U.S.A. Inc. increased. However, a few easier to place.” hurdles remain — perhaps The fact that today’s primary among them (from the dealer’s perspective) is the color-capable MFPs are designed to combine color and monochrome volume — rather than produce business-color issue of appropriately charging customers for color pages in volume only — is also helping to drive the market, says CPC programs. “Some dealers are scared to death of color because their Slawetsky. Generally, the units are positioned for approxiaftermarket profits are at risk,” says Slawetsky, citing the tramately 70 percent monochrome and 30 percent color volume. “The equipment does not seem too expensive,” he ditional practice of including supplies in all-inclusive consays, “because you are amortizing the cost over existing tracts. “In the monochrome-only days, the main supply items were one kind of developer and one kind of toner. black-and-white volume.” Beyond simply an emphasis on color and the expectations Dealers based contracts on a yield of around 5 percent. If it for the future, the reality is that the number of unit place- turned out to be 6 percent, who cares? “Well, in the color world, if you are off on your yield you ments of color-capable MFPs in the general office is increasing. Slawetsky says dealer surveys reveal that about 20 are off by a factor of four,” he continues. “So, the dealership to 25 percent of unit placements are now color-capable. then starts losing money on the contract because they Yoshida shares a similar estimate. “Currently, if you look at underestimated the page coverage for color.” Slawetsky notes that OEMs have historically estimated the entire black-and-white copier/MFP space and compare how much color has penetrated into the space, color is only monochrome toner yields at 5 percent per page. “Our own about 15 to 20 percent of what’s out in the field,” he says. “But research shows that is pretty close,” he says. However, he the color part will continue to grow. We saw probably 50 to 70 adds, estimating an average 5 percent coverage per color or percent growth each year for the past couple of years. I can 20 percent total on a full-color document is not realistic. “We see a day very soon where 30 to 40 percent of the machines in think the average coverage for a color page is 8.5 percent per color or 34 percent total.” the field are color.” An error in pricing color pages can be costly to the dealerCharlie Corr, a group director for InfoTrends, shared the research firm’s projections for the color market at its recent ship. “At the end of the first year, they may find out they lost Office Document Technology Forum, held Sept. 20-22 in money,” says Slawetsky. “Let’s assume it’s a three-year conQuincy, Mass. “When you look at the total market opportunity tract, which is not unusual. They cannot raise the prices in for equipment, service and supplies for all color copiers (color- years two and three fast enough to compensate for the loss in capable MFPs), it’s growing at a CAGR (compound annual year one. Why not? Suppose they are charging seven cents per growth rate) of 27.4 percent (between 2005 and 2010 in the copy and they need to go to eight or nine cents to make up the U.S. market),” he said in one of his conference presentations. difference. However, in the meantime, the market rate has “That’s pretty good growth. Now, on the other hand, black- dropped. You cannot raise prices in a declining price market.” Slawetsky says the issue is further complicated by another and-white copiers are declining at 10.3 percent. So, some of this is just replacement for what you are losing on mono- reality revealed through product testing at Industry Analysts chrome. If you are not taking advantage of this (color) and you Inc.: There is no linear relationship between page coverage and toner consumption. “A linear relationship means if your are just doing monochrome, it’s not a very pretty picture.” 12 | 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 | N o v e m b e r 2 0 0 6
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coverage assumption goes Cassidy says that in the “We’ve seen devices in from 5 percent to 10 percent, “next 12 to 18 months” some our lab where coverage then your toner consumpdealers may find that toner went from 5 percent tion will double,” explains coverage is higher than origiSlawetsky. “That’s not true. nally estimated and will to 6 percent. A linear We’ve seen devices in our need to react to the situarelationship would say lab where coverage went tion. “This could be tenthat’s a 20 percent from 5 percent to 6 percent. uous,” he says. “It’s very diffiincrease. However, the A linear relationship would cult to go back to a customer toner consumption doubled.” say that’s a 20 percent after you are charging five to — Lou Slawetsky increase. However, the toner seven cents a copy and ask Industry Analysts Inc. consumption doubled. for more during the lifetime That’s an extreme example, I of the contract.” admit, but that’s the nature of the risk.” How can dealers best address the issue? “The most OEMs acknowledge there is a risk involved in estimating common dealer strategy is to say, ‘The service contract price toner coverage on color pages and pricing them appropri- includes everything except color toner,’” says Slawetsky. ately. “This is a concern that I don’t think anyone is immune “I think that’s a logical response on the color side, given from,” says Yoshida. “I think every manufacturer and every there is a risk in the variability of the page coverage,” says dealer is facing the issue of how to deal with this.” Kern, in agreement. “It is perfectly acceptable, if not preferable
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do have a desire to print in — they provide the toner and “When you are talking color. “If you talk to endyou provide the service and about color you can probe users about what they print everything else.” into the customer’s and copy, they will tell you There are other issues of with some consistency that, concern that exist within the document process. If you in their view, about 40 color-capable MFP market, really have done your percent of what they print in says Slawetsky. For example, homework and understand monochrome would benefit he says, there is often a lack of how the product works, you from being printed in color,” color consistency across mulcan bring the discussion to applications ... “ he said, referring to the tiple MFPs of the same brand Sam Yoshida firm’s research. “That’s their in one workplace or from the Canon U.S.A. Inc. opinion. They don’t articubeginning to the end of a late why. The point is that print run on a single MFP. users think color adds value to documents.” There is also the longstanding issue of the cost delta between a Slawetsky cites an interesting example of how the perblack-only print on a color-capable MFP and a monochromeonly MFP. “The cost of monochrome on a color device is too ception of value may be reality. “If you print the balance in high,” he says. “It needs to be the same as an existing mono- red on an invoice there is a tendency for people to pay that amount sooner; I’ve heard people say 30 percent sooner,” he chrome MFP, but it’s about 30 to 50 percent higher.” Slawetsky defines the issue from the end-user’s perspec- says. “There’s a real value in terms of cash flow if that tive: “‘You are charging me 30 to 50 percent more for a number is correct.” The example that Slawetsky cites points to a strategy black-and-white print which, by your standards, is 70 many believe is key to greater success in placing colorpercent of my total volume for the privilege of doing the capable MFPs. “It behooves the sales rep to find applicaother 30 percent in color?’” While the industry continues to grapple with such issues, tions, through workflow analysis, where attention to a it is clear, nonetheless, that placements of color-capable specific document — be it an invoice or anything else — MFPs will continue to rise. The decision to acquire will ulti- improves workflow, improves the work process in some mately be easy given the ever-declining hardware costs, other way or reduces errors,” he says. Yoshida agrees. “You have to move away from just says Slawetsky, noting that the current difference in price between a monochrome-only MFP and a color-capable talking about speeds, feeds and specs,” he says. “When you MFP at the same speed averages $3,000 to $4,000. “But are talking about color you can probe into the customer’s suppose the black-and-white workgroup MFP cost $10,000 document process. If you really have done your homework and the color MFP at the same speed cost $11,000,” he and understand how the product works, you can bring the explains. “Wouldn’t you say, ‘What’s another $1,000 spread discussion to applications, rather than to specs, and avoid the pricing conversation.” over 60 months?’ It’s nothing. It’s lunch money.” Variable data printing, for example, is the type of applicaEven today, says Jurasek, many users are not concerned about the price of printing color pages. “They have no tion that is ideally suited for color-capable MFPS, says concept of the individual cost,” she says. “The average Yoshida. “That’s not just a high-end production discussion,” person in the office isn’t going to think, ‘This page is costing he says. “In every office, if they are going to use the device for outputting charts, data sheets or customer-targeted materials, my company X amount.’” Similarly, Cassidy points to the growing expectation for variable data printing is a very hot topic to talk about. So, by color and the common disregard for the cost. He cites the presenting this application, you can make your selling efforts acceptance of color printing in the home on inkjet printers, and service offerings stand out against your competition.” Most, if not all, agree that prospects for color-capable despite the high cost of ink cartridges. “We are talking about a generation of people who don’t seem to care what it MFPs exist in virtually any industry. In addition, dealerships costs in their homes,” he says. “Why would they care what it of all sizes in markets of all sizes are finding success. “Size is not a predictor of success,” says Kern. “I think it’s a commitcosts in the office where they are not even paying?” And, said Corr at the recent InfoTrends conference, users ment to get into the business, to make the investment in the 14 | 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 | N o v e m b e r 2 0 0 6
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demo room and to train been using computers their “You are going into your people. We’ve seen relwhole lives and everything office environments today atively small dealerships be they do is in color.� where the employees, on very successful and we’ve “Clearly, from a manuseen large dealerships be f a c turer’s standpoint, I average, are in their 30s. very successful. But, the key don’t think you are going to They’ve been using is somebody made the decisee any manufacturer decomputers their whole lives sion that ‘we are going to velop a whole new monoand everything they do aggressively pursue this’ chrome engine other than is in color.� and the organization folfor production,� says Kern. — Danielle Jurasek lowed and the result has “By the time monochrome Kyocera Mita America Inc. been good.� is done, it will be too late There are a variety of to get into indications that the emphasis on and demand for color- color. It has got to be a part of your sales capable MFPs will continue. Among them: process today.� “Think back to the early days of inkjet,� says Slawetsky. Brent Hoskins, executive director “Can you buy a black-and-white inkjet printer today?� of the Business Technology Association “You are going into office environments today where the and editor of Office Technology, employees, on average, are in their 30s,� says Jurasek. “They’ve can be reached at brent@bta.org.
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Shifting to Solutions Dealership sales plans changing with the times by: Barbara Richards, InfoTrends
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Customer Value
o be successful in today’s competitive environment, dealers must face enormous chalSales Plan by Product Category lenges. Average selling prices are declining Please indicate your sales plan for each product category. Sell today, but may stop in next 2 years across the board and total placement volumes are Sell today, and will continue over next 2 years Don’t sell today, but may in next 2 years Have no intention of selling declining as well. Networking and Integration According to InfoTrends’ recent U.S. Copier Services N=133 Market Forecast (2005-2010), total placements are Document Capture & expected to decline (-3.1 percent Compound Workflow N=128 Annual Growth Rate, CAGR) and equipment revDocument Storage & Retrieval Software enues will remain relatively flat (2.2 percent CAGR) N=131 through 2010. Adding value to pages through the Document Output Mgmt Software use of software solutions is increasingly necessary N=128 to drive additional revenue growth. Solutions Device Mgmt Software N=129 related to office workflow provide the best oppor60% 100% 80% Percentage of Respondents 0% 40% 20% tunity for the dealer community. This type of approach features a copier MFP as the on-ramp for digital workflow in the office. In an InfoTrends primary research study Market Evolution & Value completed in June 2006, roughly 40.3 percent of Stage 4 the dealers surveyed indicate that device manProcess and Workflow Focus Product is Secondary to Services Solution Sale agement software solutions (i.e., Canon No Perceived HW Differentiation Value Based on Knowledge NetSpot, HP Web Jetadmin) will be added to Stage 3 Application Focus their sales plan within the next two years. This SW Bundling Adds Incremental Value Application Sale HW Continues to Drive Sale was followed by document storage and retrieval Low HW Differentiation software solutions (i.e., Liberty IMS, MS ShareStage 2 Multifunction Focus Printing/Connectivity Value Add Point, OpenText) with 30 percent of surveyed Connected MFP Declining HW Differentiation dealers responding. Roughly 26 percent of Stage 1 Spec Focus dealers indicate that they will add document Clear HW Differentiation Customer Value in Performance output management software (i.e., Equitrac, Standalone and Functionality. CopyTrack) or document capture and workflow Time (i.e., eCopy, Ricoh GlobalScan, Omtool) software to their sales plan in the coming years. In addition, 18.9 percent of surveyed dealers said they will be rently sell solutions and will be dropping this activity from introducing networking and integration services within their sales plan. In fact, a very large number currently sell the next couple of years. solutions, and a good number are looking to add solution Viewed another way, very few respondents said they cur- sales to their business in the next two years. The reasons 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 | N o v e m b e r 2 0 0 6
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behind this trend are very compelling. recognize the importance of the applicaThe successful Survey respondents indicate that solution sale and are changing their busidealerships will ... tions-led sales generate an average inness structure to support it. deliver competitive crease in revenue of 25.8 percent comAs dealers are increasingly being pared with traditional sales. Even forced to change their business models products bundled better, they report that margins imto sustain profits and growth, software with value-added prove by 13.1 percent. solutions bundled with equipment offer software solutions that The survey respondents represent potential revenue and margin growth meet customer needs. local office equipment dealers, computer opportunities. VAR/integrators and distributors as well as national equipment dealers primarily focused within the The Successful Dealerships SMB marketplace. Of the 135 dealers surveyed, 22.2 percent Dealers competing in today’s office equipment market indicate they have revenues between $2.5 million and $4.9 are finding that it is not enough to have the best product at million annually. the best price. Products and pricing are more or less the same from vendor to vendor. Therefore, the successful dealMarket Evolution erships will be the ones that deliver competitive products Although the office equipment market today is quite bundled with value-added software solutions that meet cusmature, it is not necessarily stagnant. In fact, the market is tomer needs. undergoing an important evolution, with solutions driving Barbara Richards is a senior consultant the change. The bottom chart on page 16 depicts the for InfoTrends’ Digital Peripherals Solutions Consulting market’s evolutionary stages. Today, most dealers fall within Service. Previously, she was product Stage 1 or Stage 2 and are working their way towards more manager of workgroup and color products advanced solution sales. at Konica Minolta Business Solutions InfoTrends believes the next step is to move to the appliU.S.A. Inc. She also served as product cation sale or Stage 3. This type of software bundling adds marketing manager for the Printing incremental value, while hardware continues to drive the Business Services Division of Digital sale. Our recent survey results indicate that many dealers Equipment Corp. Visit www.infotrends.com.
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‘A Renewed Focus’ Panasonic hosts 2006 national dealer meeting by: Brent Hoskins, Office Technology Magazine
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he office technology dealers attending the 2006 Panasonic Digital Document Company (PDDC) national dealer meeting heard three clear messages — the OEM is seeking to become a more significant player in the industry, its current primary product focus is color-capable MFPs and it is committed to the dealer channel of distribution. The meeting, themed “A Renewed Focus,” was held Sept. 14-16 at the Red Rock Resort in Las Vegas, Nev. “‘A Renewed Focus’ — What does it mean, exactly, in the world of Panasonic?” asked PDDC President Steve Mullin, in his welcoming comments during the meeting’s opening General Session. “It refers to the level of commitment Panasonic has placed on enhancing our position in this industry. We are focused on transforming Panasonic into an organization that is founded on the premise of developing strong partnerships built on honesty and integrity. We are focused on taking the necesClockwise from top: Two of the many attendees who gathered at the stage sary steps needed to aggressively establish ourfollowing the General Session take photos of the C-3 models previewed with selves as a leader in the market.” non-traditional color panels; Panasonic Digital Document Company PresiMullin also took the opportunity to empha- dent Steve Mullin; and attendees listen intently during the General Session. size Panasonic’s commitment to its dealer channel. “In determining how to best maximize our busi- aware of your loyalty and continued support and I personally ness growth and which channel best fits our needs, the appreciate the dedication you have given to the Panasonic strategic decision was made to grow our business through product line,” he said. Fujiyoshi later noted that Panasonic you, our dealers,” he said. “That decision resulted in the welcomes the input of its dealers. “Through your feedback closing of our direct operations, thus eliminating any we are able to develop a more powerful business approach potential channel conflict and placing all of our focus and that gives us an advantage over our competition,” he said. “As a business partner in the U.S. market, we appreciate your resources on you.” Dealer attendees heard a similar message from other honest input.” Part of that dealer input, said Fujiyoshi, was the request General Session presenters, including Kazuyoshi Fujiyoshi, president of Panasonic Communications Company. “PCC is that Panasonic introduce new models of its C3 series color18 | 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 | N o v e m b e r 2 0 0 6
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capable MFPs at varying print speeds. During the meeting, PDDC announced five new C3 series models — the DP-C354, offering 26 page-per-minute (ppm) color and 35 ppm monochrome output, DP-C323 (21/32 ppm), DP-C264 (26/26 ppm), DP-C263 (21/26 ppm) and the DP-C213 (21/21 ppm). Along with the announcement of the launch, PDDC previewed several C3 models featuring outside panels in various non-traditional colors. In a post-meeting telephone briefing with industry editors and analysts, Mullin commented on the previewed models. “It was to display a new idea of how we package our equipment,” he said. “It was not meant to be a ploy. They will be available within the next three to four months as kits for our dealers to buy.” Mullin said the market for the color-paneled machines may include, for example, those desiring university colors or those who are otherwise “fanatics” about color. “We will certainly follow the lead from the demand of the market as to how far we go with this,” he said. “We’ll continue to look for ways to differentiate and separate Panasonic from everyone else.” It was announced at the dealer meeting that PDDC had achieved a 4 percent market share with the C3 series in its speed range during the past year. “We will continue to develop and build on that platform through 2007 and 2008 and bring more models to bear in color,” said Mullin, during the post-meeting briefing. “We are focusing the vast majority of our efforts on developing color technology. We’re looking to double our business in the coming years in the color area.” In addition to the new C3 series models, PDDC announced several other product launches during the dealer meeting: The UB-2815C and UB-2315C Panaboards — electronic whiteboards featuring “runner-scanning” technology, enabling electronic capture of flip charts and other printed material as well as material written directly on the board. Two monochrome MFPs — the DP-8020E and DP8016P, offering 20 ppm and 16 ppm output, respectively. In the post-meeting briefing, Mullin noted that representatives of approximately 120 of PDDC’s 450 authorized dealerships attended the meeting. “We have a list of what we call our strategic partners who we are placing most of our emphasis on to grow our business and, of course, grow theirs,” he said. “Probably 80 percent of our revenue is going through these strategic partners.” Brent Hoskins, executive director of the Business Technology Association and editor of Office Technology, can be reached at brent@bta.org. 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 | N o v e m b e r 2 0 0 6 | 19
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The Changing Industry InfoTrends forum addresses transition to solutions by: Brent Hoskins, Office Technology Magazine
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Millions (M)
ith a focus on helping dealers, Solutions Sales Forecast and Hardware Pull Through (U.S.) hardware manufacturers and software providers better adTotal annual hardware revenue in the U.S.: $20 billion dress the changes and challenges in $9,000 today’s office technology market, CAGR 29% $8,000 InfoTrends recently hosted the Office $7,000 Document Technology Forum, com$6,000 prised of back-to-back conferences — $5,000 29% one focused on solutions, the other on Hardware $4,000 hardware. The market research firm’s Pull Through $3,000 dual conferences, which featured $2,000 approximately 35 education sessions, $1,000 were held Sept. 20-22 in Quincy, Mass. 30% Solutions $0 “Obviously, it’s not all about software 2004 2005 2006 2007 2008 2009 solutions and it’s not all about hardware,” said Charlie Pesko, president of Clockwise from top: InfoTrends, in his welcoming comments This InfoTrends chart as the first conference got underway. illustrates how solutions “It’s going to be an integrated business generate hardware sales; model going forward.” Matthew Espe, chairman Pesko was quick to point out the ma- and CEO of IKON Office turing nature of the industry. “It’s not Solutions; and Charlie the old 20 to 30 percent growth rate on Pesko, president the hardware business that it was 10 to of InfoTrends. 15 years ago,” he said. “And page vol“What’s our future all about?” he asked. “It’s all about value. ume growth has slowed pretty dramatically. In fact, 10 to It’s not about TCO (total cost of ownership) anymore. It’s not 15 years from now, it is still going to be, basically, where it about hardware, service or supplies ... We’re talking about is today, with very small growth.” Where are the opportunities for growth in the industry? Pri- changing the relationship between you and your customer. marily, explained Pesko, they lie in solutions, defined by That’s what the solution business is all about — changing the InfoTrends as: “A set of software and/or services, often accom- nature of the relationship and changing the whole value panied by hardware, that solves a business problem, improves proposition that you’re bringing to your customers. “You are going to change your position from being a a process or creates a new business opportunity for a customer.” InfoTrends market analysts believe the industry is vendor — someone who sells them a piece of hardware — to “crossing the chasm now from early introduction to fast a partner, helping customers look at their document processes and problems and solving those problems for growth for the solutions side of the business,” said Pesko. 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 | N o v e m b e r 2 0 0 6
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ships with those providers.” them,” Pesko continued. “It’s a very dif“A shift to solutions ... (4) Don’t try to be everything to everyferent business model, but it’s one that creates more value body. “I would say, pick one or two verwe all have to deal with. It’s not an around the equipment. tical or horizontal applications, get good option. It’s a necessity moving forward.” at them and repeat them over and over,” InfoTrends forecasts that the soluIt’s about extending the he advised. “By the fourth or fifth time tions business — including the service box to create a digital you’ve implemented the same solution, and support that go around those soluworkflow around the you will have a good handle on the risk tions — is going to be a $1.4 billion MFP, around color ...” and challenges.” industry by 2009, said Pesko. “The impor(5) Don’t abandon the equipment. tant thing is, it pulls through hardware at about four to five X,” he added. “So, you have four to five X “The fact is, the hardware is the core of our business and provides an important annuity stream,” said Espe. “A shift pull-through of hardware for every dollar of solutions sold.” By 2009, hardware placements tied to solutions will reach to solutions really just creates more value around the $8 billion in the U.S. market, said Pesko. “More than half of equipment. It’s about extending the box to create a digital the hardware sold in our business by the end of the decade workflow around the MFP, around color or any other key is going to be tied to solutions,” he said. “So, if you are not applications.” Brent Hoskins, executive director of the Business playing in the solutions business, you are not playing in half Technology Association and editor of Office Technology, of the hardware business. And, I would contend, you are can be reached at brent@bta.org. probably out of business.” Among the many speakers at the conference was Matthew Espe, chairman and CEO of IKON Office Solutions. Like Pesko, Espe emphasized the importance of dealerships — and the office technology industry in general — effectively making the transition from hardware-only to integrated solutions. “We all know we have to sell solutions,” he said. “It’s about value. It’s about the customer. It’s a margin expansion opportunity and, frankly, it allows us all to deepen the relationships with our customers.” Espe defined what he sees as the five essential strategies necessary to make the transition to integrated solutions: (1) You have to understand the customer. “You have to understand that customers can have different needs at different times,” said Espe. “Some customers just want to buy a piece of hardware.” Meanwhile, others are “looking for a strategic partner to help them solve a specific business problem.” (2) Training and knowledge are the most important things to deliver to employees. Salespeople need to have proper support and training to understand and uncover the customer requirements, he said. “They need to know how to design a solution and bring the right people to the project to work on the problem they have uncovered.” (3) Dealerships should only select a few solution partners and develop strong relationships with them. “One pitfall is to try and partner with everyone who has an offering that any customer could want,” explained Espe. “My advice is to focus on a few providers ... and then build strong relationw w w . o f f i c e t e c h n o l o g y m a g . c o m | N o v e m b e r 2 0 0 6 | 21
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COURTS & CAPITOLS
Setting the Standard Recommended without hesitation: Muratec, Global by: Robert C. Goldberg, General Counsel for the Business Technology Association
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or nearly 30 years, the BTA Legal Hotline has been my window to the industry. Through this portal I have been able to anticipate trends, problems and opportunities. Almost daily a member calls to inquire as to my feelings regarding a potential vendor, supplier or service provider. I gladly share my knowledge as to how others are fairing with this potential partner. Certainly there are past experiences and events that may influence one prior to investing in a new product line. If BTA can provide information and knowledge to aid a member in reaching a decision, the association has fulfilled its mission. Reflecting upon this role, I came to realize that there are two companies for which there are no reservations — Muratec America Inc. and Global Imaging Systems Inc. Muratec is a niche player in the industry. Its dealer agreement is fair and equitable, but the agreement has never been necessary to resolve an issue. Corporations are composed of individuals; Jim D’Emidio, Muratec’s vice president of sales and marketing, has represented the company well. In 30 years there has been only one issue. Muratec and Jim apologized that the issue even arose. The matter was promptly resolved to the dealer’s satisfaction. Several dealers have recently inquired about Muratec as a vendor. I have told them there is no reason not to move forward. Muratec supports the dealer channel and BTA. A dealer agreement is important, but once that document needs to be consulted, the relationship is often damaged. Companies that support the channel and the dealer do not rely on legal provisions to guide their dealings. They know how to act fairly and equitably and do so every day. The people at Muratec have learned how to build a loyal and successful dealer channel. Similarly, Global Imaging Systems distinguishes itself through the caliber of individuals it employs. There is no more generous an individual than Chairman and CEO Tom Johnson. 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 | N o v e m b e r 2 0 0 6
Speaking around the country I often find myself on the same program as Tom. Global has shared its business model, chart of accounts and business philosophy with anyone interested. John Hey and John Hanson developed a business educating and consulting dealers on the Global model. BTA’s ProFinance course has been a tremendous aid to members. The information provided has enabled dealers to grow their businesses and recognize the ramifications of pursuing business opportunities at any cost. It has made dealers stronger and better able to compete with Global. Tom Johnson knows how to be successful and he does not mind sharing his knowledge with others. Global has not only disclosed its financial model, but has further revealed its competitive stance in the marketplace. Global is a tough competitor, but a profitable organization. Having worked and spoken with many former dealers who sold their business to a third party, those who are most pleased with their decision are those who sold to Global. The dealers received a fair price and the opportunity to further expand the business with Global’s backing. Tom Johnson and Global took their businesses to the next level and often the level after that as well. Along the way everyone profited. Thank you, Tom. The strength of BTA is its members. The willingness of members to share their knowledge cannot be duplicated in any other forum. What was the last BTA event you attended? If it was presented by NOMDA (BTA since 1994), you have missed a great deal. Make plans to attend a BTA seminar, meeting or event. Come to ITEX 2007 where BTA seminars will be presented. Meet vendors and dealers and come away with new ideas and solutions. You will be glad you did. Robert C. Goldberg is general counsel for the Business Technology Association. He can be reached at robert.goldberg@sfnr.com. Members may call BTA Legal Services at (800) 869-6688.
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EDUCATION CALENDAR BUSINESS TECHNOLOGY ASSOCIATION • November 2006
EDUCATION CALENDAR December 4-6
Sales Management Workshop Dallas, TX This three-day workshop, presented by MOTIVE8S Inc., is designed for the office technology sales organization — specifically for owners and sales managers, executives, vice presidents and supervisors. Workshop focus areas include leadership, situational management and team culture. The workshop is followed up with four months of individualized, one-hour telephone coaching sessions and access to quarterly Web-cast meetings. The ongoing coaching allows for continuous process improvement. For information, call MOTIVE8S at (515) 210-2136.
January 12-13 FIX: Cost Management for Service Workshop
Cypress, CA Learn proven service management and customer service strategies to use in your company. Costing out the service hour, effective and profitable maintenance agreements, efficient vehicle operations, reducing personnel turnover, competitive compensation plans and identifying profit-making opportunities through the service operation are issues that are critical for success. Receive service department worksheets and action plan templates, sample maintenance agreements, cost/price spreadsheet templates on CD and a handy workshop reference manual.
15-16 Service Managers Program
Atlanta, GA This two-day workshop, presented by MOTIVE8S Inc., will provide office technology dealership service managers with improved management techniques and enhanced team productivity. The goal of the program is to help service managers improve consistency, accounting and productivity through the development of new mind-sets, strategies, processes and tactics. The first area of focus is leadership: How to manage individuals and the service team with a consistent management process. The second area of focus is team development: people development and training; team staffing and recruiting; accountability standards; daily, weekly and monthly communications; and motivation, recognition and service team meetings. For information, call MOTIVE8S at (515) 210-2136.
For a full list of upcoming BTA and other educational seminars or to register for BTA or MOTIVE8S workshops visit www.bta.org or call (800) 843-5059. BTA dealer members may use their $150 discount coupons for any of the three workshops listed on the calendar.
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MEMBERSHIP APPLICATION PART I – COMPANY INFORMATION Company Name: Street Address:
PO Box:
City:
State/Province:
Phone: (
)
Fax: (
ZIP/Postal Code:
)
Country:
Web Address:
May we communicate with you via fax and/or e-mail? Yes No May we include your fax number in the BTA Membership Directory? Yes No May we include your e-mail address in the BTA Membership Directory? Yes No Occasionally, BTA makes its member list available to companies who wish to present opportunities to our members. If you prefer not to receive such information, please check here: Contact Names (first name listed receives all mail): Principal Contact:
Title:
E-mail Address:
Sales Contact:
Title:
E-mail Address:
Title:
E-mail Address:
Service Contact: No. of locations (include parent):
No. of employees (include owners):
PART II – PRODUCT INFORMATION
OEM Authorizations:
Please indicate the products you sell (check all that apply):
Equipment/Products: Audio/Video Presentation Equipment Bar Coding Equipment Binding Equipment/Supplies Cash Registers/Point of Sale Check Writing/Protection Equipment Computers/Accessories/Parts/Supplies Copiers (MFPs) B&W/Accessories/Parts/Supplies Copiers (MFPs) Color/Accessories/Parts/Supplies Duplicating Equipment/Parts/Supplies Facsimile Equipment/Parts/Supplies Filing Systems/Electronic Organizers Furniture Identification Systems/Labeling Equipment
Mailing/Shipping Equipment/Supplies Networking Products/Services OCR Scanners Office Supplies Paper Handling Equipment Phone Answering Equipment Power Protection Printers B&W/Accessories/Parts/Supplies Printers Color/Accessories/Parts/Supplies Recycled/Remanufactured Equipment/Supplies Security Equipment/Systems Shredders Software Development/Sales/Support Time Recording Equipment
Typewriters/Accessories/Parts/Supplies Other:
Services: Circuit Board Repair Consulting Equipment Rental Financing/Leasing Insurance Internet Solutions Publication Service/Repair Training/Education Other:
PART III – MEMBERSHIP Categories, Classifications and Investments Retail Dealer/VAR Memberships
Vendor Associate Memberships
Service Associate Memberships
$430
1-10 Locations
$1,500 Annual Sales up to $5 million
$500 Annual Sales up to $1 million
$885
11-50 Locations
$2,000 Annual Sales $5-$10 million
$750 Annual Sales $1-$5 million
$2,500 Annual Sales over $10 million
$950 Annual Sales over $5 million
$1,395 51+ Locations $125
Branch Location (in addition to parent)
$100 Keylink
$150 Publications Associate
Will your OEM reimburse you for your membership dues? Call BTA at (800) 505-2821 for details. Payment Enclosed (Make check payable to Business Technology Association)
PART IV – INVESTMENT Annual BTA Dues:
MasterCard Visa American Express
Processing Fee:
$ $ 25
Card Number:
TOTAL:
$
Card Holder’s Name:
Exp. Date:
Membership dues must be submitted in U.S. funds. Dues paid to BTA do not qualify as a charitable tax deduction, but do qualify as a business expense. $45 of the annual dues pays for your subscription to Office Technology magazine. I hereby apply for BTA membership: Signature: Date: Don’t let my membership lapse! Renew my membership using this credit card number at the end of my membership year. Return to: Business Technology Association, 12411 Wornall Road, Kansas City, MO 64145 Phone: (800) 505-2821
Fax: (816) 941-4838
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 | N o v e m b e r 2 0 0 6
Join online at www.bta.org
Nov. 06 OT
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SELLING SOLUTIONS
Facing the Challenges It begins with looking directly into the mirror by: Gilbert E. Cargill, Cargill Consulting Group Inc.
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hat’s right. A significant portion of the challenges we face, as it pertains to selling solutions, can be solved by looking directly into the mirror. Managers, owners and executives of reseller companies continue to manage their sales forces in a way that minimizes the probability of success as it pertains to selling true document solutions. Let’s take a look at some of the things you can do, right now, to stop this madness. It has gone on too long and, candidly, nothing will change until management changes its attitude and behavior toward the sales force. The first thing to do is stop hiring salespeople who have been successful selling analog systems in the hopes that, through some quirk of magic, they will be able to become predictably productive selling solutions. The problem with this strategy revolves around the fact that the DNA that makes a successful analog salesperson is completely different from the DNA required to be successful in selling solutions. The second thing you can do is take a hard look at your training program. Manufacturers are just starting to wake up and realize that they need to bring some business sales training to the reseller channel. You can get a head start on this by teaching your DNA-compatible salespeople how businesses make business decisions. An easy way to do this is to invite your company’s CFO to your next sales meeting to present to your team how businesses evaluate true solutions. A solution is not a solution unless it renders a permanent, measurable and significant improvement in one or more of the prospect’s business operating conditions. Your sales team must learn how to: Become conversant in the language of business as well as in the decision-making process within business; Present a cost justification based on both hard and soft dollars;
Probe and seek decisionmaking criteria based on the results a prospect desires, not based on the “speeds and feeds” of the product the salesperson is selling. Lastly, you must modify internal operations. Solution sales take longer than box sales. Solution sales also require your team to create proposals that illustrate, in a before-and-after fashion, the operating conditions that will be impacted by the solution. Frequently, salespeople attempt to sell a crafted solution using boilerplate proposals that never mention the improved results and only specify the technical issues regarding the box the salesperson is proposing. An additional strategy you can employ is to have your team collect case studies of customers who have achieved success through the implementation of a document-management solution. These case studies should be quantified. If you organize your team in an effort to go out and talk to all customers and establish some quantification of the results those customers have derived, I think you will find your organization will be farther down the road as it pertains to implementing a true solution sale. Remember: To the prospect the technology we sell is only the delivery vehicle of the solution. It is not the solution in and of itself. Good luck and good selling. Gilbert E. Cargill is president of Cargill Consulting Group Inc., a sales management consultancy based in Los Angeles, Calif. A former sales manager at IBM, he has spent the past 27 years as a consultant, speaker and sales trainer helping businesses improve sales productivity. Cargill can be reached at (310) 305-7198. Visit www.salesleadershipforum.com. 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 | N o v e m b e r 2 0 0 6 | 25
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PRINCIPAL ISSUES
‘Look, Don’t Listen’ It will help you to improve your employees’ skills by: Jim Kahrs, Prosperity Plus Management Consulting Inc.
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o here’s the situation. One of your top sales reps has just returned to the office from a huge sales call. He was presenting a proposal to a current customer for $250,000 of new equipment plus maintenance and supply contracts for each machine. The total value of this sale including maintenance and supplies over the next five years will be more than $400,000. As he walks into the office he says, “I nailed it! We got the deal.” However, the paperwork is not signed because the owner of the company has to “rubber stamp” the deal. Of course, you are told there is no way he will say no. The rep goes back in the next week to get the paperwork only to find out that the prospect decided to go a different direction. You find out that they purchased the equipment from another dealership; not just any other dealership, but your arch rival! How did this happen? There can literally be hundreds of possible answers. The more important question is: “What can we do to make sure this doesn’t happen again?” One of the main precepts of the Hubbard Management System, developed by acclaimed author and administrator L. Ron Hubbard, states very simply: “Look, don’t listen.” What exactly does this mean? In a nutshell it means you should not just allow your staff to go about their jobs and tell you what they are doing or have done. A good manager needs to actually look at what is being done. It is critical to observe staff members when they are doing their jobs. By watching someone do their job you can very easily see steps they are missing or things they might be doing wrong. This allows for immediate coaching. You also need to look at reports that show what was actually done. When an employee tells you what he (or she) did you do not get the whole picture and very often do not get a true picture. Unfortunately, I’ve seen employees claim to have done something that they never did. It is like asking your kids if they washed their hands before dinner and they say “yes,” even though they 26 | 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 | N o v e m b e r 2 0 0 6
never even got close to the sink, let alone the soap. This is not common, but it does happen. However, it is not the primary reason for looking. The primary reason to look is to determine ways to improve how they do their jobs for better results in the future. Let’s go back to the original situation. The rep returns from the customer’s office to tell you about the call. So you are immediately listening to what he did instead of looking at what he did. What could have been done differently? The sales rep is about to go on the biggest sales call of his career. The first step would be to have the sales manager or the dealer principal go on the call with him — not to take over the sales cycle but to look at what is happening so that help can be offered as needed and to make sure that all of the appropriate questions are asked and answered. When working on a big deal sales reps will often avoid asking questions like “Who else are you considering for this purchase?” for fear of introducing the idea to shop and thus do not find out what is really going on. Following are a couple of examples and suggestions on how to apply this principle in your dealership. One of the most common areas where dealership principals just listen instead of looking is finance. Do you look at your income statement and balance sheet every month? Or, do you listen to what the controller tells you about the financial position of the company? You should sit with your key managers and review these documents line by line and ask pointed questions. When going through the income statement you should compare revenues, cost of goods and expenses to your monthly averages, same month last year and recent monthly actual numbers to see if there are areas that jump out as extraordinary. For example, let’s say telephone costs for the month were $1,100. When looking at the numbers you see that the recent average has been $700 per month, the same month last year was $750 and
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was done when they close out calls, but recent months were $725, $680 and $735. A good manager how often do you look to see what was This would indicate that it is time to have learns to really look actually done? How often does the service the controller give you a breakdown of ... So, help your manager ride with technicians and watch exactly what made up the $1,100 expense. them do their calls for the day? This is When doing this you learn that there was employees improve probably the best coaching and training a $400 charge for a replacement cell their skills — look at you can give a technician. phone. However, you have insurance for what they are doing Of course, the sales department can fall the cell phones, so a new policy is issued and coach from there. into the bad habit of just listening instead that clarifies the cell phone replacement of looking as well. Some common areas procedures to prevent future problems. One other financial area that is often not looked at is the are sales calls (as shown in the opening example), cold calls, monthly bank statement. Even if you have a bookkeeper, con- proposals and general daily activities. When was the last time troller or CFO who does your bank reconciliations and says you or your sales manager went cold calling with a rep to look everything is okay you still need to look for yourself. The at what he is doing? What is his approach? Does he ask the easiest way to do this is to have the bank statements delivered right questions? How well does he introduce the company? to your desk unopened. You would then open them yourself Like the service example, the time spent looking at what a and look at each transaction. If you do not already do this, try sales rep does and how he does it leads to the best coaching and training you can offer. it. You will be surprised what can come up. Another sales area that does not get looked at closely enough Another area that is commonly overlooked is accounts receivable and collections. Do you listen to your team telling is proposals. Who looks at each proposal before it is presented you how collections are going? The first step is to look at the to the customer? It should be standard policy that the sales reports to see how the aging is really going. From there it is manager read and approve every proposal. This allows the very important that you or another manager actually look at manager to see how the sales rep prepares his proposals, gives what the collections person is doing. This includes sitting with an opportunity for coaching and, most importantly, allows for this employee and watching him do his job. How many calls changes to be made before the customer sees it. Finally, sales managers often listen to reps telling them does he actually make? Is he calling everyone he should or just certain accounts? What does he say when he calls? In almost what they did the previous day or week. Of course, you cannot every case where I’ve had dealers do this the result is changes be with all of your reps every day, but you can look at their to the collections process and considerable improvement in activity by asking very pointed questions in weekly one-on-one A/R aging. Not because the collections person was bad but meetings and requiring that all activity be entered into a contact management software package. Having this visibility because he was not being managed the way he should be. The service department can also fall victim to listening makes it easier to look and not just listen to the sales team. As you can see, the common thread in all of the examples instead of looking. Have you ever asked your service manager or dispatcher, “How are we doing with calls today?” What kind and the key fact to keep in mind when managing is “look, don’t of an answer do you get? Typically you will hear things like listen.” When you only rely on listening to what people tell you “good” or “we’re doing okay.” What does this mean? How instead of looking at what they do, you can easily be misled. many open calls are there? How long have they been open? You lose the opportunity to make changes that will improve What is your response time? Is there anyone who has been the employee’s performance in the future. A good manager waiting for an excessive period of time? You need to look at learns to really look and can spot a problem area from a the open calls to see exactly how many there are, how long hundred feet away while going at a dead run. So, help your they have been open and what the calls are for. When you see a employees improve their skills — look at what they are doing big customer who has had a call on the board for three days and coach from there. Jim Kahrs is the founder and president of you ask why. There will be times the answers will shock you, Prosperity Plus Management Consulting Inc. like, “We’re trying to save money on overnight shipments so PPMC works with office technology companies we ordered the part to ship ground.” Now let’s look at the technicians. How often does your in building revenue and profitability. Kahrs can be reached at jkahrs@prosperityplus.com or service manager make follow-up visits to look at machines (631) 382-7762. Visit www.prosperityplus.com. the technicians have worked on? You listen to what they say 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 | N o v e m b e r 2 0 0 6 | 27
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PRINCIPAL ISSUES
Repositories of Information Editorial: Making the case for industry consultants by: Bob Sostilio, Sostilio & Associates International
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ome time back I attended a national dealer meeting hosted by an office equipment manufacturer. The keynote speaker at the meeting opened his remarks by disparaging industry consultants, some of whom were present in the audience and who had forecasted that the copier/printer market was flat or declining. His dislike for the consultants was apparent when he told the attending dealers that they didn’t need to hear that the market was flat from cynics. He continued by telling attendees that they should not have to read a newsletter to find out what is going on in their markets. He recommended that they sit down with their customers instead. The speaker said he hated the notion that a consultant “gives one good idea” or “leaves you with one action item.” He advocated that dealers should find out for themselves what single financial engine drives their business and not what a consultant recommends. Above all, he pleaded with them to develop courage. Although the speech’s content was full of vitriol, it was delivered with unquestionable energy and passion. But when the speaker ended his remarks by telling attendees not to hire “retreads” or individuals with a history in the office equipment industry, I think he crossed a line. He nixed conferences as learning environments and advocated that dealers must spend years to master their skills and markets. There is another side to this issue. I believe it is essential that dealers listen to more than the type of advice shared by the animated speaker. This is apparent from the results of a recent survey conducted by my firm. The survey results reveal that 45 percent of the dealers have no idea what their customers need in terms of technology or after-sale support, and that 74 percent have no idea what users want on their next generation MFP. It is important for dealers to know they do not have years to hone their skills, that the market has matured and that the topography is changing exponentially. Changes within the copier/printer market have occurred as 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 | N o v e m b e r 2 0 0 6
a result of intensified competition, growing customer expectations and new technology advances — not because of what a consultant said or published. Dealers do not have the time or funds to conduct focus group studies or user research of any scale, but consultants do. The OE/IT consulting market generates at least $2.5 billion a year, the bulk of which is by consulting and research firms carrying out extensive data-gathering research and offering a wide array of services. The largest consulting firms, such as Gartner ($989 million in 2005), IDC (parent IDG $2.68 billion in 2005), Forrester ($153 million in 2005) and Yankee Group (privately held), offer technology-driven research, track and evaluate product and vendor strategies and offer their findings to major corporations. Meanwhile, the smaller firms that focus on technologies such as printing, copying, document management or channels and vertical markets offer reports in conjunction with access to industry analysts. The value of any consulting firm is the experience of its analyst (or analysts) and the quality and timeliness of the deliverables. Many of our industry’s consultants have owned dealerships, managed marketing and service organizations, launched new technology and operated major corporate divisions of distribution and after-market sales support. Most of us care about what we do. We are passionate about our field of expertise and have been quite successful in it. As a group, there is a core of industry consultants and publishers who have been providing research to back up business strategies in the office equipment industry for many years. They continuously educate themselves by conducting product evaluations, channel and end-user research. They also attend major industry events, interview industry executives, monitor trends and technology and network with virtually hundreds of dealership principals, sales reps, corporate executives and service managers. Almost 20 years ago, Dataquest was the first research firm
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to talk about a multifunctional platform revenue shifts, user expectations, product Over the years, and the evolution of copy/print long utilization ratios and much more than a consultants have before any such device was introduced. dealer could possibly devote time and been instrumental The firm conducted focus groups and calresources to. culated the potential user base, product Over the years, consultants have been in helping to size new configurations and price points relative to instrumental in helping to size new and and old markets and user expectations. old markets and prognosticate their prognosticate their Other firms followed in generating growth and demise. It is a tedious task growth and demise. MFP forecasts and market potential. In that involves thousands of man-hours forother words, it was a consultant at a conmulating placements and retirement sulting firm that sized the market potential for MFPs and rates of the aging population and calculating the impact of offered it to potential manufacturers and users. Today, as the new technology and price points. Consultants have advised market has transitioned into a printer-based industry, that hundreds of individuals and companies when they should research validates the profitability of marketing document start making a transition or consider dropping a product, all network devices. with positive results. Consultants also: helped to re-launch stencil duplicators Conferences sponsored or hosted by consulting firms are with its digital technology and sized the market thereby where independent dealers gain access to information and keeping the opportunity within realistic expectations and individuals within the industry that they would not have been not one of disproportionate demand; advise acquisition com- able to on their own. And the feedback over the years from panies and dealerships to assist with acquisitions and expe- attendees at these conferences is that participation and the dite the sale; test products before they are launched, which knowledge obtained helped them create a positive change or helps manufacturers iron out the bugs in a real-world situa- desired effect at their dealerships. tion; and measure sales performance, profit ratios, margins, Sure, consultants sometimes get it wrong. But, on the
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whole, the core of industry consultants within a maturing market. Consultants are Consultants ... are and publishers have it right. They realize keynoters with facts that inspire, motivate not retreads but a dealer can and should talk to their cusand enlighten without accusatory rhetoric. rather repositories tomers. They should also realize that Consultants and consulting firms denormally there is a bias in responses liver knowledge, not influence. They back of information acquired from their own customers. When a user up their assertions with fact, not anecover years of success responds to inquiries from the company dotal comments. And above all, they are in the ... industry and supplying them goods or service, it is difnot retreads but rather repositories of should be utilized ... ficult to discern the truth. As a neutral information acquired over years of success third party, a consultant can obtain an in the office equipment industry and unbiased response and provide that information to the should be utilized, not overlooked. dealer community. It’s done every day. Bob Sostilio is president Consultants offer a wide range of deliverables that dealers and CEO of Sostilio & Associates can access including monthly newsletters, annual studies and International, an Ocala, Fla.-based consulting subscriptions based on access to analysts. Many consulting firm serving the office technology industry. firms offer participating dealers executive summaries when the He has 34 years of experience dealership takes part in a survey. Most of the deliverables in the industry, including service provide the dealer a 30,000-foot road map that depicts what the in senior management positions with leading industry is doing as a whole and how it will impact local manufacturers and research organizations. markets. Consultants deliver knowledge that when used is a Sostilio can be reached at (352) 624-2625 powerful tool in making decisions about future directions or sostilio@flash.net.
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