October 2014 Office Technology by Business Technology Association

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CONTENTS Volume 21 • No. 4

FEATURE ARTICLES 10

2014 Software Buyer’s Guide Is it time to build on your dealership’s offerings?

P R I N C I PA L I S S U E S Samsung: ‘Think Big’ Manufacturer hosts National Dealer Summit

by Brent Hoskins Office Technology Magazine

Compiled by Elizabeth Marvel Office Technology Magazine

“Think Big” was the theme of the company’s 2014 Printing Solutions National Dealer Summit, held Sept. 10-12 in Dallas. How big are Samsung executives thinking? Within three years, Samsung’s goal is to claim the number five market-share spot in the printing solutions industry.

Have you considered building the profitability of your dealership through the use of software that can be used in your customers’ businesses — or in your dealership itself? Read on to find the software that best fits the needs of your customers and your business.

Grand Slam BTA East hosts district event in Baltimore

A Second Look: Roth 401(k) Use it in conjunction with a traditional plan

by Todd D. Thompson Sentry Insurance

by Brent Hoskins Office Technology Magazine

401(k) plans have become a triedand-true way to help employees build retirement nest eggs. However, while a traditional 401(k) option is good, adding a Roth 401(k) option could be even better. It combines some of the features of a Roth IRA and a traditional 401(k).

With a focus on learning from recognized industry leaders, BTA East hosted its annual Grand Slam district event Sept. 15-16 in Baltimore, Md. The event featured a keynote, five additional educational sessions, a dealer panel, a manufacturer panel and a baseball game at Oriole Park.

My Prescient Remarks Now is the time to embrace managed services by Bob Sostilio Sostilio & Associates International

SELLING SOLUTIONS ‘Hiring the Rolodex’ Doing so is a predictor of failure

by Troy Harrison SalesForce Solutions

Having directed research in this market for more than 30 years, I am very aware of its changes, foibles and fallacies. I have always endeavored to provide honest and perceptive advice regarding the trends taking place in the dealer environment and sought to answer the question: “What is in it for the dealer?”

I have seen a lot of hires go wrong for a lot of reasons. Yet, there is one phrase that has always (in my own experience) been a predictor of failure in a hire. In fact, a new client described a recent sales hire to me this way: “He has a great Rolodex!”

COURTS & CAPITOLS 24

Equal Opportunity Provisions Countering the first right of refusal by Robert C. Goldberg BTA General Counsel

As dealers buy other dealerships and suppliers acquire dealerships, there is always a risk that the acquiring party will emphasize different products, services and solutions. For many suppliers, the response has been to insert a right of first refusal into a dealer or program agreement.

D E PA R T M E N T S Business Technology Association

• BTA Calendar • BTA Highlights

Executive Director’s Page

BTA President’s Message

Advertiser Index

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EXECUTIVE DIRECTOR’S PAGE

Service Management Workshop Launched

n this space in the September issue of Office Technology magazine, I announced a new BTA educational offering, the BTA Dealer Marketing Workshop taught by Darrell Amy, Lindsay Kelley and Jon Mitchell of Dealer Marketing. The inaugural offering of the new workshop is scheduled for Nov. 6-7 at the headquarters of Muratec America Inc. in Plano, Texas. For more details and to register, visit www.bta.org/DealerMarketing. This month, I am pleased to announce the launch of a second new educational offering, the BTA Service Management Workshop, led by Ken Staubitz of BEI Services. The workshop will teach attendees how to optimize their service operations in order to drive profitability and provide them proven methods to improve customer satisfaction. The inaugural offering of this new workshop will be March 18-19, 2015, at Disney’s Grand Floridian Resort & Spa in Orlando, Fla. It will be a front runner to the March 2021 BTA Southeast Winter Break event. For more details and to register, visit www.bta. org/ServiceManagement. I have known Ken for a number of years and view him as one of our industry’s leading authorities on the topic of service management. He certainly has the credentials, with more than 16 years of experience in all levels of service and operations. The majority of his career prior to joining BEI Services was with Modern Office Methods (MOM) in Cincinnati, Ohio. His most recent position with MOM was as director of client services, where he managed more than 60 service personnel in various locations. Ken consistently exceeded the various financial and operational benchmarks that allowed him to successfully train and consult for both the

dealer channel and various manufacturers to improve their service operations. “There isn’t a cookie-cutter approach to improving service financial performance, because every dealership is different in various ways,” Ken says. “Therefore, it is important for dealers to understand what good looks like for their individual needs to help them develop plans for improvement. This workshop was developed to help dealership principals and service managers not only learn about the various financial and operational service benchmarks, but also to learn how to develop specific action plans tailored to each dealership. These plans will enable attendees to implement change, driving financial gain.” Topics of discussion will include: understanding service financials; best practices to protect the aftermarket revenue stream; how to improve the key cost factors driving profitability in service; determining the workload and staffing needed to support your base; key processes driving operational efficiency; best practices for inventory management; how to determine technician car stocks to minimize inventory write-off; proven and effective coaching methods to drive proper behavior and accountability; technician incentive planning — what works and why; identifying the opportunity cost for improvement in your dealership; creating an individualized action plan to improve your given situation; and many more topics that will help to ensure the improvement of your service operation. Are you looking to improve the profitability, efficiency and customer satisfaction of your service operation? If so, this is the educational opportunity for you. Mark your calendar to attend the inaugural workshop and plan to stay in Orlando for BTA Southeast’s Winter Break event. n — 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 Robert C. Goldberg, General Counsel Business Technology Association Troy Harrison, SalesForce Solutions www.troyharrison.com Bob Sostilio, Sostilio & Associates International Todd D. Thompson, Sentry Insurance www.sentry.com

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 Photo Credits: Bigstockphoto. Cover created by Bruce Quade, Brand X Studio. ©2014 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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BTA PRESIDENT’S MESSAGE 2014-2015 Board of Directors

Cannata Event Lives Up to Expectations

n Sept. 18, it was my privilege to be among the 181 attendees at the esteemed THE CANNATA REPORT 29th Annual Awards and Charities Dinner held in Randolph, N.J. The event, recognizing manufacturer award winners determined by the publication’s annual dealer survey, was also a fundraiser, bringing in $89,000 in donations and pledges for the Saint Ignatius College Prep school in Chicago, Ill. BTA General Counsel Bob Goldberg opened the event, introducing Frank Cannata, president of Marketing Research Consultants LLC (MRC) and editor-in-chief and publisher of THE CANNATA REPORT. This was my first time attending the event, which was co-sponsored this year by MWA Intelligence and Graphtec Digital Solutions Inc. It lived up to being the prestigious event I was expecting, based on the descriptions I had heard through the years. It featured excellent food, a great venue and the opportunity to visit with many office technology industry leaders. Hats off to Frank, his wife, Carol, and their son, CJ, for organizing such an enjoyable and memorable event. CJ, who serves as senior vice president of brand strategy and development at MRC, was the emcee for much of the evening. The 2014 manufacturer winners that were presented with awards at the event: Ricoh Co. Ltd., MFP Manufacturer of the Year; Lexmark International Inc., Printer Manufacturer of the Year; Toshiba America Business Solutions Inc., Best-in-Class Manufacturer of the Year; and Rick Taylor, president and COO of Konica Minolta Business Solutions U.S.A. Inc., Executive of the Year. In addition, Carol Cannata, senior vice president of client services for THE CANNATA REPORT, was

presented with an award in the newest category, “Woman Executive of the Year.” This year, THE CANNATA REPORT rebranded its awards to statuettes called the “Frank” — in honor of Frank Cannata. “The new award, bearing Frank’s name, has as much style and class as the man himself,” Konica Minolta’s Taylor said. “Frank deserves the recognition for all of his contributions to our industry and the many charities THE CANNATA REPORT Awards and Charities Dinner has helped over the years.” Those “many charities” have included such organizations as: the V Foundation for Cancer Research; the Glide Foundation for the homeless; Child Help USA for battered women and children; and Windows of Hope, a 9/11 charity. Since 1997, when the annual awards dinner transformed into a charitable event as well, a total of $1.4 million has been raised. The significant amount raised through the years is a testament to the generosity of those who have supported the event. For this year’s charity, Saint Ignatius matched the funds raised at the dinner, bringing the total results of the event to $178,000. The funds will go to help those students unable to pay for all or part of the cost of attendance at the school. The nearly 150-year-old Jesuit high school has 1,400 students. Father Michael Caruso, president of St. Ignatius, attended the dinner and warmly expressed his heartfelt thanks to the attendees at the end of the evening. Next year will be a significant milestone for this illustrious event — THE CANNATA REPORT 30th Annual Awards and Charities Dinner. No doubt the Cannatas will ensure it is 2015’s premier event in terms of bringing movers and shakers together to honor the industry’s best and give generously. n — Ron Hulett

President Ron Hulett U.S. Business Systems Inc. 3221 Southview Drive Elkhart, IN 46514 ron.hulett@usbus.com President-Elect Dave Quint Advanced Systems Inc. 2945 Airport Blvd. P.O. Box 57 Waterloo, IA 50704 dquint@asiowa.com Vice President Rob Richardson Allied Document Solutions & Services Inc. 200 Church St. Swedesboro, NJ 08085 robr@ads-s.com BTA East Mike Boyle BASE Technologies Inc. 23 Francis Clarke Circle, Ste. 1B Bethel, CT 06801 mboyle@baseinc.com BTA Mid-America Dan Castaneda International Copy Machine Center 1515 Lee Trevino, Ste. EE El Paso, TX 79936 dan@icmc-elp.com BTA Southeast Gerry Purvis Purvis Business Machines Inc. 4505 Highway 39 N. Meridian, MS 39301 gerry.purvis@gopurvis.com BTA West Mike Ehlers Yost Business Systems 685 E. Anderson Idaho Falls, ID 83401 mike@yostonline.com Immediate Past President Todd J. Fitzsimons Automated Business Solutions DBA Network Imaging 277 Captain Lewis Drive Southington, CT 06489 tjfitzsimons@ni-ct.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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“We need to work with a leasing company that’s not stuck in the past.”

EQUIPMENT FINANCE Total Image Solutions Program Credit Prescreen Tool Check Register Marketing Assistance Spreadsheet Invoicing

Our experienced Office Automation team members understand that you can’t move forward if you’re stuck in the past. That’s why we have been carefully listening to your voice, the valued dealer, to develop the right products, programs and services. Our focus is to help find ways to contribute to the care of your customers, and we are proud to play a role in your growth and success. Let’s have a conversation and move forward together. Call us today at 1-800-223-1420.

© 2014 Wells Fargo Bank, N.A. All rights reserved. All transactions are subject to credit approval. Some restrictions may apply. Wells Fargo Equipment Finance is the trade name for certain equipment leasing and finance businesses of Wells Fargo Bank, N.A., and its subsidiaries. WCS-1183791

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2014 Software Buyer’s Guide Is it time to build on your dealership’s offerings? Compiled by: Elizabeth Marvel, Office Technology Magazine

re you looking to build the profitability of your dealership and further streamline your processes? Have you considered doing so through the use of software that can be used in your customers’ businesses — or in your dealership itself ? Each year, Office Technology magazine invites software vendors to submit brief overviews of their products to help dealers sort through the vast selection of software available today. Each company was given the opportunity to submit a description of its offerings and select or submit the best software category for the company. Most of the software listed is intended for endusers’ use, but many can be used to improve your dealership’s processes. Is it time to build on your dealership’s offerings? Read on to find the software that best fits the needs of your customers and your business. Business Intelligence BEI Services www.beiservices.com BEI Services provides dealerships expert advice paired with a complete array of tools designed to catapult growth and increase profitability. BEI’s exclusive solutions address every aspect of service department performance and include national performance benchmarking, technician compensation, and territory and inventory management. Join the most respected and awarded dealers in the world by becoming a client today. A free two-week trial is available. NXB www.nxbmobile.com NXB is a comprehensive management platform for your mobile workforce. NXB automates the dispatch of delivery and service calls while tracking mobile workers in real time. Integration with your ERP system automates workflows, drives efficiencies and allows for richer analytics and

management tools. Combined with its offline ability, NXB allows workers continued access to in-field information, regardless of data signal. Business Process Improvement DirectCloud Webtop www.mydirectcloud.com DirectCloud Webtop is a cloudbased virtual server and desktop solution that provides users with access to their data, applications and communications anywhere, anytime and on any device. Webtop is replacing traditional premise server networks with a managed service that enables customers to reduce IT costs, operate efficiently and increase productivity. DirectCloud’s partner program is geared toward technology companies looking to grow their managed services practices. OCM International www.ocmplc.com OCM International offers a product portfolio incorporating a range of professional services and print management software solutions, offering end-to-end output cost management business solutions. The company presents manufacturers, service integrators (SIs) and dealerships with a turnkey solution that will increase efficiency and productivity while reducing internal document production costs by more than 20 percent. SalesChain www.saleschain.com SalesChain is a comprehensive CRM and business management solution for dealers. Features include intelligent sales analytics, forecasting, proposal and order pricing, documentation, sales commissions and delivery automation. SalesChain’s comprehensive bi-directional integration with e-automate and exclusive credit desk automation provides unmatched productivity and value to dealers. SalesChain is

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a preferred partner with Digital Gateway, OnTrack, OMD, La Crosse, CEO Juice, EDA, LMI Solutions, GreatAmerica Financial Services, LEAF and DLL.

engender a valuable level of trust within and between business partners using cloud-based managed services to mitigate risk of data breach and misuse.

Capture/Forms Recognition Artsyl Technologies www.artsyltech.com Artsyl Technologies develops a full range of document and data capture solutions that reduce the cost of processing forms, helping companies to streamline processes. Artsyl’s flagship product, docAlpha, is a fully automated, distributed data capture, classification, extraction and processing solution with self-learning technology that does not require templates to be created. docAlpha works well in the health care, financial services, government and education verticals.

Dealership Management Compass Sales Solutions www.compasscontact.net Since 2001, Compass Sales Solutions has been a leading sales force automation provider for the office technology industry. Compass Sherpa provides a comprehensive suite that automates all disparate sales processes and allows your sales professionals to utilize one tool to completely manage the sales process including prospect/client identification, Outlook integration, product configuration, proposal generation, MPS analysis, ERP integration and mobile access.

Cloud Solutions Solgenia www.solgenia.com Solgenia is the global market leader in cloud collaboration and cloud infrastructure software solutions. Its solutions help improve productivity, reduce collaboration costs, and increase the overall enterprise value by bringing collaboration and infrastructure solutions to the cloud. Solgenia’s solutions support private, public and hybrid cloud models, offering ease of use, platform neutrality and mobile ubiquity.

ECi e-automate www.e-automate.com ECi e-automate is a leading provider of dealer management software for companies that sell and service technology. Part of the ECi Software Solutions family of companies, e-automate, OMD and La Crosse products together provide 1,700-plus dealerships with unmatched technology to compete in today’s marketplace.

Cost Recovery nQueue www.nqueue.com nQueue provides cost recovery and document scanning and routing solutions to the legal market and others. Its clients include 35 percent of the largest 250 law firms in the United States and five of the top 10 globally. nQueue’s software offerings, branded iA for Information Accountability, unlock the value from information to help firms run their businesses more profitably.

Miracle Service www.miracleservice.com Miracle Service offers complete dealership management software. Features include: technician scheduling; meter management (collection, contracts and billing); inventory; accounting integration (QuickBooks and more); sales CRM; customer self-service portal; mobile field technician console (iPhone, Blackberry, iPad, Android and Windows Mobile); and much more. Miracle Service has helped thousands of dealers in more than 45 countries optimize their field services and gain a competitive edge.

Data Security Risk Assessment AVG www.avg.com AVG Managed Workplace® is a remote monitoring and management platform for organizations that want more awareness and control across their networks — all from a single pane of glass. Comprehensive monitoring and management capabilities offer you a centralized view of your IT environment, including computers, mobile devices, cloud services, telecom equipment, printers, applications, security systems and more.

Document Capture & Imaging Drivve www.drivve.com Drivve provides a range of embedded solutions for MFPs and printers. Its unique portfolio covers secure device authentication and single sign-on; scanning and image capture; print management and cost recovery; mobile printing; and document management and workflow. Drivve sells its software exclusively through MFP and printer OEMs and independent dealers. Drivve also provides comprehensive support and professional services to help dealers sell solutions and increase their bottom lines.

Protected Trust www.protectedtrust.com Protected Trust offers a suite of products and services innovatively developed to keep digital information assets secure, private and compliant. Protected Trust provides a holistic approach to secure communications designed to

Document Management ABBYY www.abbyy.com ABBYY is a leader in document recognition, data capture and linguistic technologies and services. With 14 global offices and an R&D team comprising 700 linguistic and software

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The TOTAL

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scientists, ABBYY has a track record for innovation, earning it more than 250 awards and partnerships with leading manufacturers of document capture and mobile devices. Its solutions serve more than 30 million individuals worldwide, empowering businesses of every size. DocuWare www.docuware.com More than 11,000 companies trust DocuWare for managing their most critical documents. Offer your customers DocuWare’s on-premise or cloud-based document management solution. Dealers profit from: a proven business plan, education, field sales support and more. Build recurring revenue and a successful professional services team. DocuWare — available in 16 languages — is BLI five-star rated and ISO certified. MaxxVault www.maxxvault.com MaxxVault document management software provides efficiency improvements, regulatory compliance, reduced costs and customer satisfaction. It is an open system that uses the latest technology to provide security, dependability and interoperability with existing systems. MaxxVault is a Red Herring 2011 Top 100 North American award winner, a Red Herring 2012 Top 100 Global award winner, a CRN 2011 Top 20 Cloud Vendor and a BLI five-star solution. The company was also picked as a top Microsoft solution provider by CIO Review and was named one of North America’s top 2014 software vendors by Locator Magazine. Enterprise Content Management docSTAR www.docstar.com More than 125,000 users trust docSTAR to deliver intuitive, easy-to-use enterprise content management and automated AP processing and workflow solutions. Available either on-premise or hosted in the cloud, docSTAR eclipse provides secure document control, improved retention and increased efficiency — anywhere, anytime, on any device. docSTAR’s reseller partners receive extensive margins and access to free sales and technical training. Square 9 www.square-9.com Square 9® is an award-winning developer of document control solutions that meet the rapidly evolving needs of the business community. The company’s flagship document management software, SmartSearch, provides a broad product offering including both cloud-enabled and on-premise solutions in business automation, mobile content management, document workflow and Web forms management. Square 9 delivers backing on software and support, comprehensive training and an extensive marketing program to assist its dedicated channel of dealers.

Enterprise Resource Planning MWA Intelligence Inc. www.mwaintel.com MWA Intelligence (MWAi), a SAP Gold Partner and leader in enterprise relationship management (ERP), serves the imaging industry by providing the dealer community with the first true and verticalized ERP. FORZA, built on the SAP Business One platform, is a complete, integrated business management solution that provides transparency and instant visibility into operations. The FORZA solution helps dealerships to better unify, manage and control their entire business across financials, sales, customers and operations. Together, MWAi and SAP will provide office technology and imaging channel businesses the ability to make smart IT decisions, improve future performance and achieve long-term success. Managed Print Technology ECi FMAudit www.fmaudit.com FMAudit® is a leading provider of meter, supply and service process automation software for MPS. FMAudit software is easy to deploy and maintain, collects data from both networked and local devices, integrates with e-automate, OMD, DDMS and La Crosse for automated meter billing, and provides supply-level alert monitoring, service-alert filtering, complete TCO analysis and green reporting. Network Managed Services Continuum Managed IT Services www.continuum.net Continuum assists office equipment dealers in capitalizing on the $100-plus billion IT services market by leveraging the company’s leading SaaS-based managed services software platform and NOC services based on an industry-first Managed IT Services Business Model (www.continuum.net/ businessmodel). Co-authored by Continuum and Growth Achievement Partners (GAP), this model is designed to help dealers maximize profitability and operational efficiencies by focusing on achieving key metrics and benchmarks in managed IT services. N-able by SolarWinds www.n-able.com N-able by SolarWinds is a leading global provider of complete IT management, automation and MSP business transformation solutions. N-able N-central® is an award-winning RMM and MSP service automation platform. N-able has a proven track record of helping MSPs standardize and automate the setup and delivery of IT services in order to achieve true scalability. N-central is backed by comprehensive business enablement support services and a unique freemium licensing model. Thousands of MSPs use N-able solutions to deliver scalable, flexible, profitable managed services to more than 100,000 SMBs worldwide. With offices in North

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America, the Netherlands and Australia, N-able is 100-percent channel-friendly and maintains strategic partnerships with Microsoft, Intel, IBM, CA and Cisco, among others. Print Management Nuance Equitrac www.nuance.com Nuance Equitrac intelligent print management software helps companies with increasingly complex IT systems and workplaces gain better control and more flexible management of their print environments. Equitrac gives businesses the flexibility to let users print what they need and when they need it, while reducing the costs and complexities of deploying a print infrastructure. PaperCut www.papercut.com PaperCut™ specializes in print management software for the global business and education markets. The PaperCut MF software is multi-platform, highly scalable and will work with most printers and copiers. Installed in more than 50,000 organizations across 112 countries, it helps to reduce printing costs, secure documents and minimize environmental impact. Print Audit www.printaudit.com Print Audit Premier is a new subscription plan that gives office equipment dealers virtually unlimited access to all of Print Audit’s products for one low monthly fee. In addition to powerful remote meter reading and device management tools, Premier provides dealers with a full suite of print management products to help their clients analyze, control and recover their printing costs. Print Tracker www.printtracker.net Print Tracker is a low-impact, highly secure print management solution that captures information from networked and locally connected imaging devices. Print Tracker is easily deployed and often configured in less than three minutes to send meters and alerts. It includes management tools such as its ePortal, service and meter viewers, and a fully customizable TCO estimator. Print Tracker integrates with most ERP accounting software. PrintFleet www.printfleet.com PrintFleet’s print management software solutions range from simple, rapid assessment to advanced managed services, offering unparalleled agnostic data collection, data integrity and back-end support. Available in multiple languages, PrintFleet solutions empower OEMs, dealers and distributors in more than 100 countries to sustain rich customer relationships through creating exceptional value for their clients.

Solimar Systems www.solimarsystems.com Solimar Systems is a leading developer of customer communication management and delivery solutions. The company’s solutions provide clients visibility into their operations while driving costs down. Users can: track the life cycle of all jobs from receipt to multi-channel distribution; optimize and convert data and documents; manage production printing across the enterprise; ensure security access and compliance; and integrate composition, messaging and workflow tools into a universal Web dashboard. With thousands of clients worldwide, including 70 percent of the Fortune 100, Solimar has integral, proven IT solutions that have benefited print and data centers for more than 20 years. Sales & Marketing Automation Evolved Office www.evolvedoffice.com Evolved Office is a full-service marketing platform that provides office equipment dealers with turnkey and customizable marketing solutions that include: newsletters, videos, email templates, postcards, brochures and complete marketing campaigns — all custom branded with your logo and company information. The software is easy to use and allows you to quickly edit templates, send them to clients via email and track the results. Each month, Evolved Office delivers new campaigns with industry-specific content and professionally designed graphics for you to use. Evolved Office also offers managed social media services for Facebook, Twitter, LinkedIn and YouTube. Sales Management EDA www.edadata.com True market insight means having access to the cleanest, most comprehensive market data available — data that not only guides your critical strategic decisions, but also leads you to the real sales opportunities. With EDA’s equipmentdata platform of more than 140,000 accounts that have purchased more than 900,000 MFPs and production printers, you will have true insight. Falcon Technology Solutions www.efalcontech.com Falcon markets Soaring, server-based sales management software specifically designed for the office equipment industry. Soaring integrates with industry software such as OMD, e-automate and others, as well as business software such as Outlook, Word and Excel. Soaring’s newest version has a robust MPS analysis/proposal section and a new mobile version designed specifically for tablets/mobile devices. n Elizabeth Marvel is associate editor of Office Technology magazine. She can be reached at elizabeth@bta.org or (816) 303-4060.

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Grand Slam BTA East hosts district event in Baltimore by: Brent Hoskins, Office Technology Magazine

ith a focus on learning from recognized industry leaders, BTA East hosted its annual Grand Slam district event Sept. 15-16. The event was held at the Marriott Inner Harbor at Camden Yards in Baltimore, Md. Attendees were treated to a welcoming reception and a Toronto Blue Jays versus Baltimore Orioles baseball game. Grand Slam featured a keynote, “Growing Dealer Revenue in the ‘Less-Print’ Era,” presented by Scott Maccabe, president and CEO of Toshiba America Business Solutions. There were also five additional educational sessions, a dealer panel and a manufacturer panel. The educational sessions: “The Shifting Office Technology Industry,” led by Robert Palmer, BPO Media; “3D — The New Wild West of Printing,” led by Mark Mathews, Airwolf 3D; “Benchmarked Sales & The Future of Selling Excellence,” led by Steve Rolla, Pros Elite Group; “Five New Ideas Using Technology to Secure Net New C-Level Meetings,” led by Kate Kingston, Kingston Training Group; and “Service Delivery Structure: What Works & Why?,” led by Ken Staubitz, BEI Services. The dealer panel, “What is Your Diversification Strategy?,” was moderated by David Ramos of InfoTrends. Palmer moderated the manufacturer panel, “Navigating a Changing Office Landscape.” The exhibiting sponsors: ACDI, Buyers Lab, Crawford Thomas, Densi, Digitek, DocuWare, ECi e-automate (Sept. 16 Breakfast Sponsor), ECi FMAudit, ESP/SurgeX, EverBank, Evolved Office, Fonality, GE Capital Office Imaging (Sept. 15 Reception Sponsor), GreatAmerica, HP, Hytec, Image Star, Impression Solutions, Katun, LEAF, Lease Corporation of America, LMI, Muratec, NA Trading and Technology, OKI (Sept. 16 Baseball Game Co-Sponsor), PHSI, Polek & Polek, Print Audit, RPT Toner, Samsung (Sept. 16 Lunch Sponsor), ScanSource, SuppliesWholesalers (Sept. 15-16 Breaks Sponsor), SYNNEX, West Point Products and Xerox. The final district event of 2014, the Fall Colors Retreat, hosted by BTA Southeast, will take place Oct. 24-25 in Asheville, N.C. For more information, visit www.bta.org/ BTASoutheastEvent. n Brent Hoskins, executive director of the Business Technology Association, is editor of Office Technology magazine.

Clockwise from top: BTA East’s Grand Slam featured a keynote, five educational sessions, a dealer panel and a manufacturer panel; Doug Trogdon (left) and Scott Novinger of Advanced Office Equipment Inc., Sterling, Va., listen to the keynote; Jerry and Christina DiMartino of Quality Business Solutions, Baltimore, Md., visit with Melissa Scott of GE Capital Office Imaging during a break between sessions; dealers visit with exhibiting sponsors to learn more about their products and services; Scott Maccabe presents his keynote address.

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Growing Revenue

Top photo: The dealer panelists ( from left to right) were Cindi Gondek, ACT Group, Cromwell, Conn.; Mike McCurdy, Integrated Technologies Inc., Twin Falls, Idaho; and David Scibetta, Copier Fax Business Technologies Inc., Buffalo, N.Y.; Middle five photos, clockwise from top left: The educational session presenters were Robert Palmer; Mark Mathews; Steve Rolla; Ken Staubitz; and Kate Kingston; The manufacturer panelists were ( from left to right) Dennis Amorosano, Canon U.S.A. Inc.; Phil Boatman, Lexmark International Inc.; and James Buck, OKI Data Americas; Jeff Winsor (left) of HP visits with Vince and Michelle McHenry of Laser Lab, Ephrata, Pa.

oday, technological and societal changes have compelled office technology dealers to transition to a new business model that will better serve customer needs into the future. The advice was the core message in the Grand Slam keynote session, “Growing Dealer Revenue in the ‘Less-Print’ Era,” presented by Scott Maccabe, president and CEO of Toshiba America Business Solutions Inc. (TABS). “Obviously, there is an industry business model based upon page volume,” Maccabe said, as he emphasized that page volumes are now generally flat. “And we understand that you are driving a great majority of the profitability largely based upon the services and supplies that you sell. So how do we move from that ‘survival mode’ environment into an environment where we create a business that thrives? The key is preparedness; always being able to look ahead and plan. As business leaders and business owners, we need to be aware of what opportunities are available to us to be able to expand beyond what our core competency is today.” In today’s world “our business models have to evolve,” Maccabe said. “Unfortunately, A3 hardware units are on the decline. I hate to say that, but they are, and so manufacturers have to be able to reach beyond and offer other solutions to our partners.” Selecting the best “other solutions” is based, significantly, on embracing the megatrends in the marketplace, Maccabe said, listing as primary among them the reality that computing is now largely mobile. “That is a factor in how we will plan and run our businesses,” he said. “The advent of mobility has dramatically affected how we live and how we work, and will continue to have an effect.” Of course, the dominance of mobility, Maccabe said, is tied to two other notable megatrends impacting the traditional office technology industry — the rise of both social media and cloud services. He shared a variety of telling statistics. Among them: Every minute, Twitter users post about 100,000 tweets and there are more than two million search queries on Google; 90 percent of the data in the world has been created in the last two years, with consumers generating 78 percent of the data and enterprises generating only 22 percent; and the global “big data” market is projected to generate more than $122 billion in revenue by 2025. Cloud services, Maccabe said, provides one of the new revenue opportunities for dealers, helping them expand beyond their traditional core competencies. “Make no mistake, this is an opportunity that is going to be huge for the services provider industry,” he said. “That means it is going to be huge for you because small-to-medium-sized, up-and-down-the-road customers don’t understand the cloud as much as we do. They don’t have the insight into what the real value proposition is, as well as the risks associated with it. They are going to need guidance. They are going to need tools, services and consultation to help them understand how to maximize and continue with the cloud.” Among the other new dealer managed services revenue opportunities cited by Maccabe: digital signage; capture solutions; workflow; and security solutions. “Partner appropriately and work with your partners to provide you with the education and services you need to be successful,” he advised. “Stay connected. Participate in events such as this one. Understand the value that is brought to you. And understand the knowledge base and thought leadership that is out there that you can draw upon.” n —Brent Hoskins www.offi cetechnol ogymag.co m | Oc tob e r 2014 | 19

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My Prescient Remarks Now is the time to embrace managed services by: Bob Sostilio, Sostilio & Associates International

fter years of conducting research on the dealer channel and sharing my analysis and remarks with dealership principals, I am now emptying out my file cabinets and scanning all of my paper documents to a hard drive. This is my attempt at a cloud solution. Reading some of my previous articles and presentations, I feel less like an industry consultant and more like an old curmudgeon muttering “I told them so” under my breath. Did you know that Sam’s Club is selling “Your Personal Cloud Storage” device for $169.98? My Early Observation Having directed research in this market for more than 30 years, I am very aware of its changes, foibles and fallacies. I have always endeavored to provide honest and perceptive advice regarding the trends taking place in the dealer environment and sought to answer the question: “What is in it for the dealer?” Having worked in both dealer and direct operations at a number of U.S. and Japanese manufacturers starting in the late 1960s, I have worked from the street to the factory floor, to product planning, international service and worldwide marketing. I am aware that not all independent dealers or distributors have the wherewithal, opportunity or skill set — including manpower and revenue — to implement change. However, there are still far too many dealers trying to continue generating revenue by selling hardware with 10-percent margins and a diminishing recurring annuity. If a dealer has not augmented his (or her) business model with an acquisition strategy or a significant and proportional amount of service revenue from managed services by now, the future of his business is in jeopardy given the consolidating nature of our market. Oh, did you know that Wal-Mart is selling its “My Cloud Personal Cloud Storage” for $149? My Dataquest Prognostications As the associate director of copier and duplicating service at Dataquest in the late 1980s, I penned and published

guidance that, in reality, copier dealers were service providers and should stop calling themselves “copier dealers.” I said that “office products were more in line with the processing of information and data that was crucial to a company’s business operations.” I stressed that intelligent copiers were more than mere boxes spitting out pages with marks on them. While emptying my files, I found slide after slide where I underscored that “copier dealers are more than hardware sellers.” I suggested that dealers change their company names to reflect more than hardware and to get their service personnel trained on high-speed copiers/printers. Some dealers actually changed their companies’ names in the late 1980s and early 1990s, and started looking like “solution” (the precursor to IT) organizations offering services and document management support. Did you know that, for $149.99, Staples sells the Toshiba Canvio Home 3TB Backup & Share Network Attached Storage? My CAP Ventures Forecasts In 1997, as senior group service director of the Converging Digital Peripheral Services of North America and Europe Group at CAP Ventures, I presented and published evidence that there was a diminishing use of copies and more users were relying on the Internet to distribute data. I said that

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Sostilio Oct 14.indd 1

9/29/14 4:20 PM

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within 10 years, black-and-white pages service and distribution with the purWhat are you waiting would be replaced by electronic docuchase of Global Imaging Systems and ment management systems and dealers made enhancements to its agents for? If you do not have would be “image and data managers” channel. Then, Xerox acquired Affilithe expertise, go out rather than “box sellers.” I published ated Computer Services (ACS), a proand buy it. Start hiring forecast after forecast that showed a net vider of business process outsourcing the right people ... reduction in revenues from black-andsolutions to businesses, to augment its Make the commitment white annuities and forewarned dealers global services and provide managed that providing print solutions and manservices to its reprographic client base. to change now. aging client networks assured them a Xerox reinvented itself. In its 2014 seat at the table. I advocated that they second-quarter earnings report, the start physically installing networks, repairing all devices company stated that 57 percent of its $5.3 billion in earnon them and installing monitoring software that would pro- ings was from services; the services segment of the busivide hardware usage data. At that time, we stressed that the ness grew 2 percent. Its document technology business (i.e., dealer “who controls the data in his accounts will be able to MFPs/printers) was down 6 percent and represented just 40 develop consulting and managed services packages” to help percent of its total business — a big change for the company the client meet its operating goals. Again, some dealers had that invented copiers. already undergone the transformation and were looking to The same can be said about Konica Minolta with its acquire service management companies. purchase of All Covered. All Covered continues to acquire Do you really believe your clients will go to Sam’s Club, Wal- smaller IT service firms and its revenue contribution is up Mart or Staples to purchase their cloud solutions? 16 percent year over year according to its first-quarter report for 2014. That same report stated that Konica Minolta’s Today’s Observations parent company realized 8.2 percent of its total revenue I hope you get my message that today’s user walking from IT services and solutions. The U.S. portion of the busithrough Sam’s Club, Wal-Mart or Staples is being inundated ness does closer to 10 percent with its IT services revenue. with the notion that he can manage his own cloud storage It is now almost three-quarters of the way through 2014 for less than $200. Really? What else should he be doing on and I continue to read that a significant number of office his own? technology dealerships are still reluctant to commit to an Are your customers running their businesses with advice IT strategy that will secure their copier/MFP client bases from superstores? Are they getting the proper security ap- for years to come. They have no idea how to scale applicaplications? Do they have mobile print strategies or cost con- tions/solutions to aid their clients’ growth, or how to prestrols on document management? ent products beyond the standalone replacement printer to I have told some dealership principals that they may lose improve employee effectiveness. some of their small-volume paper and toner clients while tryWhat are you waiting for? If you do not have the expering to build their future recurring revenue bases on custom- tise, go out and buy it. Start hiring the right people to staff ers that have numerous locations and require high-speed your dealership who are capable of driving the managed MFPs. The future of these dealerships should include more services side of your business; do not try commingling or affordable color solutions and, perhaps, non-traditional de- doing it part time. Make the commitment to change now. I vices to meet user needs. The dealership that becomes a con- know most of you find it difficult to trust your future to IT sulting company and is able to fulfill its customers’ needs experts who tend to sit in front of computers longer than it will become the antithesis of the “box-selling” dealership. takes to make 10 cold calls, but that is the reality. Now is the perfect time for your dealership to step up its I offer the following guidance: efforts to provide managed services. With an increase of n The older you get, the things that are right in front of part-time workers and a shortage of skilled workers, a deal- you are more clear than those things that are in the future. ership with a portfolio of solutions has a high probability n Attend your suppliers’ conferences; learn their stratof capturing some new managed services revenue. Look at egies and take note of products that have embedded soluXerox, for example. tions like embedded Wi-Fi and mobile apps, among other Xerox saw what was happening to its black-and-white solutions. Train your employees on these new products. copier business in the late 1990s with the erosion of some n Attend BTA or other meetings such as those offered of its black-and-white copier revenues and annuities. The by CDA, SDG, BPCA, etc., as often as possible to learn what company made a decision to restructure its hardware sales, your colleagues are doing. 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You can also mentor for SCORE or SMB. launched a successful managed services Be proactive. Reveal This will allow you to meet with local operation. Listen and listen some more. business owners and introduce yourself n Attend industry events that are apand demonstrate your to newcomers in your area. propriate for your market and capabilities, managed services n Be proactive. Reveal and demonsuch as MWAi’s Executive Connection capabilities to your strate your managed services capabiliSummit, GRAPH EXPO or the PMA Intercustomers before they ties to your customers before they walk national Convention and Trade Show. walk through Sam’s through Sam’s Club, Staples or Waln Familiarize yourself with 3D printMart. Show them you have solutions to ing, its market and possible clients within Club ... or Wal-Mart. meet their needs. your current customer base. Attend the You will have to excuse me now; I Inside 3D Printing Conference and Expo. n Come up with your own “personal cloud” solution that have five more file cabinets to empty. n Bob Sostilio is president and CEO of Sostilio & Associates will work in conjunction with a mobile app to protect comInternational, an Ocala, Fla.-based consulting firm serving pany data stored on remote workers’ devices. the office technology industry. He has more n Be proactive and have your technicians certified to than 34 years of experience in the industry, work on networks. including service in senior management n Conduct evening open houses for customers wanting positions with leading manufacturers to learn more about security and mobile printing. and research organizations. n Market your outbound service department’s local supSostilio can be reached at port capabilities. bsostilio@embarqmail.com. n Join local affiliations such as your chamber of commerce.

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COURTS & CAPITOLS

Equal Opportunity Provisions Countering the first right of refusal by: Robert C. Goldberg, General Counsel for the Business Technology Association

ndustry consolidation means change and change brings uncertainty. Uncertainty results in protective actions to help stem uncontrollable change. As dealers buy other dealerships and suppliers acquire dealerships, there is always a risk that the acquiring party will emphasize different products, services and solutions. For many suppliers, the response has been to insert a right of first refusal into a dealer or program agreement. The typical right of first refusal provides that prior to the sale of a business, the holder of the right has the option to purchase the business under the same terms and conditions. Although this may appear to be a win-win for the seller, it really is not. For several reasons, I consistently advise against granting any right of first refusal unless there is a significant amount paid for that right. After all, the seller is giving up his (or her) right to sell his business as he sees fit — and the entity acquiring that right should pay for it. Often the request for payment is rejected and, thus, it is important to understand how a right of first refusal lessens the value of your business. One of the initial questions asked by the acquiring company is whether any such right exists. The basis for this question is that an entity considering the purchase of a business incurs significant expenses even if the transaction is not finalized. There usually is a non-disclosure agreement, followed by an initial review of documents and information, followed by a letter of intent. Once the letter of intent is signed, a process known as due diligence takes place. Due diligence is a close examination of company records to verify that the representations and information provided are true and correct. During this process, an asset or stock purchase agreement is also prepared. These events all take considerable time and money. Accountants, consultants and attorneys are part of the process. For an acquiring company to go through all this effort only to have their offer handed to another company with a right of first refusal is not prudent. This decreases the value of your business. The second drawback to the right of first refusal is the time period for the entity holding the right to reach a decision.

Often, the provisions have a period within which the offer must be communicated, followed by a period to evaluate the offer and, finally, a time frame within which the transaction must close. This has negative effects for the seller and the entity making the initial offer. Many times transactions are timed for favorable tax savings. This process can disrupt that plan and add increased taxes or loss of deductions. As word gets out that the company may be sold, employees become insecure and may consider other options. Sales often decline and, if a competitor finds out, it certainly will be mentioned in their presentations. In many instances, suppliers have legitimate concerns about the consequences from the sale of a business. In my opinion, the right of first refusal is at one end of the spectrum. There is a better option that addresses the supplier’s concerns and does not devalue the business. In fact, it may enhance the value. When confronted with a right of first refusal, counter with a right of equal opportunity: “Dealer principal acknowledges ABC’s desire to maintain the dealer’s installed base with ABC equipment and that the sale of that base to a competitive entity may not be in ABC’s best interest. Dealer principal has no current plan to sell the business, but agrees that if he enters into good-faith discussions for the sale of the business, he will notify the president of ABC within 76 hours from the onset of the discussions that a sale is being considered. Dealer principal will not enter into a binding sale of the business without first providing ABC with an equal opportunity to negotiate for the purchase of the business. Failure of the dealer principal to so proceed will result in the payment of $50,000 to ABC as liquidated damages and not as a penalty.” This provision affords the supplier with protection and does not devalue the seller’s business. It is fair and equitable and should be used when there is concern regarding the future sale of a business. n 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 October

Building My Business Webinar: “Reaching Target Prospects in the Digital Era” Lead generation in small to mid-sized office technology dealerships has evolved and companies need to adapt to the best ways to reach their target prospects. In this webinar, Darrell Amy and Lindsay Kelley of Dealer Marketing will cover ways to help your sales team with its social prospecting strategies by utilizing social channels to reach prospects. This webinar is not all about social media. It is about the way in which you can reach your business prospects for MFPs, document management and managed IT services using tools available today. Visit www.bta.org/ BuildingMyBusiness to register.

24-25 BTA’s Fall Colors Retreat - Hosted by BTA Southeast Asheville, N.C. BTA Southeast will host its annual fall district event, open to dealers from across the country, on Oct. 24-25, 2014, at the Doubletree by Hilton Asheville-Biltmore in Asheville, N.C. This event will be a great setting to gather new ideas and network with your peers. The agenda features a dealer panel and an educational session by Roy Serhal of N-able by SolarWinds, both of which will focus on managed IT services. Dealers will be able to participate in networking events that will allow them to connect with their peers and exhibiting sponsors, including round-table sessions with sponsors, two dinners, a reception and a tour of the Biltmore Estate that includes a private Butler’s Tour behind the scenes. On Saturday afternoon, there will be time to explore the Asheville area. Dealer attendees will also have the chance to win prizes in exhibitor drawings and enter the BTA District Event Sweepstakes. Visit www.bta.org/BTASoutheastEvent to register.

November 6-7

BTA Dealer Marketing Workshop Plano, Texas The buying process has changed. More of the initial research is done online. If you are not involved in this online research, you may not even get a shot at the deal. Has your dealership adapted to this new buying process? Or, are you confused by the many local seminars and Internet articles from online marketing people that make big promises but do not understand the office technology industry? It is time to get serious about online marketing. The BTA Dealer Marketing Workshop, led by Darrell Amy, Lindsay Kelley and Jon Mitchell of Dealer Marketing, makes sure your dealership is ready to implement best practices in online marketing. You will see real-world examples of how dealers use the Internet to generate leads, cross-sell current clients and position themselves as local experts. Visit www.bta.org/DealerMarketing to register. For more information, visit www.bta.org/Education or call (800) 843-5059.

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Calendar Oct 14.indd 1

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

Dealer Members Royal Business Systems, Anchorage, AK GFI Digital, Maryland Heights, MO Vendor Associate Member Quick Quality Cabinets, Louisville, KY Service Associate Member Macquarie Equipment Finance, Bloomfield Hills, MI For full contact information of these new members, visit www.bta.org.

UPS Savings Program Through the UPS Savings Program, BTA members can save up to 36 percent when they ship with UPS, plus, for a limited time, they can save 50 percent on select services for up to four weeks after enrollment. Save on a broad portfolio of shipping services, some of which include: up to 36 percent on UPS Air letters, including UPS Next Day Air; up to 32 percent on UPS Air packages of more than one pound; up to 34 percent on UPS International imports and exports; up to 24 percent on UPS Ground shipments; and much more. You can receive these discounts even if you already have a UPS account, and the more you ship, the more you can save. To enroll and start saving, visit www.savewithups.com/ bta or call (800) 636-2377 Monday through Friday, 8 a.m. to 6 p.m. Eastern. For information on BTA member benefits, visit www.bta.org/MemberBenefits.

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 KIP is a manufacturer of digital printers and scanning solutions for color and blackand-white wide-format documents up to 36 inches wide. KIP offers an extensive wide-format product range that meets the ever-increasing demand for fast, high-quality and cost-effective digital reproduction. KIP is committed to product designs that promote environmental health and sustainability. It differentiates its products by integrating features that deliver energy efficiency, emissions reductions and the ability to recycle exhausted supply containers. The goal is to deliver a low total cost of ownership and an improved user experience. www.kip.com

BTA Service Associate member Macquarie Equipment Finance is a global provider of specialized financing and asset management solutions. For more than 25 years, it has worked with office product and IT manufacturers and dealers to provide creative financing programs that increase sales and build customer loyalty. Macquarie’s dedicated teams of specialists bring in-depth, industry-specific knowledge and extensive experience serving vendors and dealers in their market sectors. www.macquarie.com/mef A full list of BTA Vendor and Service Associate members can be found online at www.bta.org.

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Highlights Oct 14.indd 1

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PRINCIPAL ISSUES

Samsung: ‘Think Big’ Manufacturer hosts National Dealer Summit by: Brent Hoskins, Office Technology Magazine

xecutives at Samsung Electronics America Inc. are thinking big. In fact, “Think Big” was the theme of the company’s 2014 Printing Solutions National Dealer Summit, held Sept. 10-12 in Dallas, Texas. How big are they thinking? Within three years, Samsung’s goal is to claim the number five market-share spot in the printing solutions industry and to be number three within five years. The bold goal was shared during the opening general session of the dealer summit by Matt Smith, vice president of sales and marketing for printing solutions in Samsung’s Enterprise Business Division. “The market, we could argue, is down or flat … but it is monstrous,” he said. “We believe we can lead a paradigm shift, just like we did in TVs and cell phones, and dominate this $150 billion business.” In the general session, Tod Pike, senior vice president of the Enterprise Business Division, told the representatives of approximately 100 authorized Samsung dealerships in attendance that the printing solutions business is one of two key growth areas of focus for his division; the other is tablets. “I think everybody has been waiting in anticipation of where we are going to take this business,” he said. “We’re going to give you a glimpse into that over the next day.” A part of that glimpse included a look at future, higher-speed products. Samsung previewed its new MX7 series of A3 MFPs, which will include 40-, 50- and 60-page-per-minute monochrome and color models, slated for release in the first half of 2015. The models will feature a user interface powered by Android that was introduced with the Sept. 2 announcement of a new line of Samsung ProXpress single-function printers and MFPs. “We understand the importance of seamless connectivity and simple user interfaces,” said Smith at the time of the announcement. “Adopting the Android operating system into our printers makes them even simpler to operate and optimize.” In the general session, Tim Baxter, president of Samsung Electronics America, emphasized that the company’s varied technology portfolio will increasingly provide its dealers with important product differentiation, such as the seamless connectivity among a broadening range of its consumer and B2B products (he noted that the company sells nearly 1.5 million mobile devices daily worldwide). “We see opportunities to create new experiences by leveraging technology, mobility and connectivity in ways that we haven’t yet in this industry,” he said. “The opportunity exists and we want to do that with you.” Baxter said Samsung is currently integrating its previously

Clockwise from top: The summit’s schedule included time to visit the Technology Fair, where dealers could see the latest Samsung products; Tod Pike; and Matt Smith. separate mobile and electronics businesses and is looking forward to the “opportunities and synergy” the integration will provide. Pike emphasized the significance of the integration as well, announcing that dealers now have 63 Samsung personnel who can assist them in seven key vertical markets. “We remain wholly dedicated and committed to the vertical strategy,” Pike said. “When we talk about a new product being launched, the first thing we think about is how is somebody in [for example] an education environment going to utilize that product, or in retail or banking? When we do that, it really takes you to not only the use case of the device, but the interoperability of the device within that vertical market — the workflow that leads to that interoperability.” The summit agenda provided attendees the opportunity to fully understand Samsung’s vertical strategy. The breakout sessions focused on four key verticals: finance, health care, hospitality and retail. n Brent Hoskins, executive director of the Business Technology Association, is editor of Office Technology magazine. He can be reached at brent@bta.org. www.offi cetechnol ogymag.c om | Oc tob e r 2014 | 27

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PRINCIPAL ISSUES

A Second Look: Roth 401(k) Use it in conjunction with a traditional plan by: Todd D. Thompson, Sentry Insurance

n the last three decades, 401(k) plans have become a tried-and-true way to help employees build retirement nest eggs. However, while a traditional 401(k) option is good, adding a Roth 401(k) option could be even better. Thoroughly understanding each option and how they can work together will allow your plan sponsor to make the most informed decision on what to offer your employees. Differences Between Traditional & Roth A Roth 401(k) is a type of retirement savings plan that combines some of the features of a Roth IRA and a traditional 401(k) into a very advantageous hybrid. n Traditional 401(k) — Contributions are tax deferred, meaning contributions are withheld pretax from the employees’ paychecks and the entire amount (contributions plus any gains) is taxed upon distribution. n Roth 401(k) — Contributions are made after an employer withholds taxes and the entire amount (contributions plus any gains) may be tax free upon distribution in some circumstances. (This assumes the participant has had monies in the same account for at least five years and is at least 59.5 years of age at the time of distribution.) Five Reasons to Consider Roth (1) Pay Now, Not Later — By paying taxes on contributions now instead of later, the participant is taking advantage of today’s known federal tax rate. Paying now may be safer than waiting until later since tax rates may be higher the year the money is distributed. (2) Maximize Tax-Free Growth — One of the most important benefits a Roth 401(k) offers is that it allows a participant’s contributions to grow tax free in some circumstances. (3) Lower Modified Gross Income — Individuals who plan on drawing a Social Security benefit should be aware that a portion may be subject to federal income tax. In general, a higher modified adjusted gross income (MAGI) results in more of their Social Security benefits being taxed at a higher percentage. Qualified Roth 401(k) distributions do not count toward increasing the MAGI; however, traditional pretax distributions do. (4) Easy Asset Transfer — Using a Roth 401(k) account and a Roth IRA creates an efficient way to transfer assets to heirs. Rolling Roth 401(k) money into a Roth IRA prior to the

age of 70.5 not only avoids taking required minimum distributions (RMDs), but it also lets the money grow and gives the opportunity to transfer the money to a beneficiary tax free upon death. (5) Combine 401(k) Assets — A Roth 401(k) allows participants to roll proceeds from other Roth 401(k) accounts together, as long as the current plan allows rollovers. More employers are taking a closer look at adding a Roth 401(k) option to complement their traditional 401(k) programs. The two options can be used in conjunction with each other, allowing additional flexibility and opportunity for employees, and making the company retirement program a more valuable employee attraction and retention vehicle. n Todd D. Thompson is director of retirement plan sales at Sentry Insurance. With 23 years of service in the retirement plan industry, he holds the Accredited Investment Fiduciary Analyst (AIFA), the Chartered Retirement Plans Specialist (CRPS), the Accredited Retirement Plan Consultant (ARPC) and the Qualified Plan Financial Consultant (QPFC) designations. Sentry Insurance provides a full line of business insurance to BTA members. Sentry can help you create flexible, custom-made risk management solutions, and provide property and casualty insurance, workers’ compensation, retirement plans, employee group benefits and business life planning. For more information, contact Jacklyn Johnson at (715) 346-7096. Visit www.sentry.com.

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Thompson Oct 14.indd 1

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SELLING SOLUTIONS

‘Hiring the Rolodex’ Doing so is a predictor of failure by: Troy Harrison, SalesForce Solutions

have been in sales for 25 years now and have been consulting and training for 10 years. I have seen a lot of hires go wrong for a variety of reasons. Yet, there is one phrase that has always (in my own experience) been a predictor of failure in a hire. In fact, a new client described a recent sales hire to me this way: “He has a great Rolodex!” (A note for the younger readers: A Rolodex is a business card file that was used before smartphones, contact managers and CRM software.) My client was bowled over during the hiring process by the salesperson’s length of tenure in the targeted industry, the valuable client relationships he had cultivated and the promise that he would immediately start activating those relationships to bring in business for his new company. It did not happen and it will not for you either. Here is why: n “I have a lot of contacts” really means “I am done making contacts.” When a candidate sells himself (or herself) as having the proverbial “great Rolodex,” what he really means is “My Rolodex is full of contacts — and I have no desire to make any more.” The salesperson expects to live off a base of contacts that have been made over a (typically long) career. What you do not know — and will not know until after he is hired — is that many of those contacts have retired, moved on, are not in their jobs anymore, etc. Worse, when it becomes apparent that the salesperson needs to make new relationships, he will not do it. n The salesperson will not aggressively pursue past contacts. Yes, the story gets worse for you. The salesperson values those past contacts and holds them in high esteem. At this point, they are the fruits of his (long) career. One of his innate fears is “burning” those past relationships — hence, do not expect those contacts to be sold to with persuasion and enthusiasm. Instead, expect lots of socializing, reminiscing, and an “exposure” to your products and services. If the old contact can get enthusiastic on his own, you might get a sale. If not, the salesperson may not want to move aggressively because the old contact might not want to see him again. There is also a good chance that the salesperson has oversold the quality of his relationships in the interview process. n There is a big opportunity cost. This ties back to the

second point above. Many times, those contacts are real and, many times, they can represent great opportunities — but you are only getting a 50-percent selling effort on them. You are better off having a salesperson with no prior relationship give a 100-percent effort than a salesperson with a relationship at a 50-percent effort, particularly if yours is an advocacy sale (such as a new product rollout). n You will overpay. Again, this is nearly universal in my experience. The salesperson who markets his Rolodex rather than his abilities is a salesperson who is able to negotiate a more lucrative compensation plan for himself. The hiring manager, envisioning a nearly nonexistent ramp-up period and perhaps his best territory in the making, does not worry about the little things — like an overextended salary, commission guarantee and other perks — because the big numbers that the salesperson will generate will make up for it in short order, right? In most cases, wrong. And that is money down the drain. n You will chase your losses. I go to Las Vegas about a half-dozen times a year. I seldom gamble, but when I do, I always see at least one gambler do something that turns a bad evening into a life-changing event: He chases his losses. A smart gambler realizes that luck is not with him and walks away from the table. An unintelligent gambler thinks, “I will keep borrowing money, writing checks, etc., and I will win it all back and then some!” You can guess the result. The same thing happens with a “Rolodex hire.” These hires tend to get a much longer rope than an average sales hire and, as a result, the www.offi cetechnol ogymag.com | Oc tob e r 2014 | 29

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“trait fit” for the job is something that you mistake is more expensive. That is because cannot violate. the manager is unwilling to admit the misI have had a lot of n Skills second — Second, hire sales take and continues to think, “With that consuccess hiring veteran skills. We can teach these, but it is nice if a tact base, there must be big bucks there.” salespeople when they hire has a well-rounded skills package. I should note that my remarks here apply market themselves on n Experience third — Industry expeto candidates whose primary marketing of their future and their rience is the cheapest thing you can give themselves is based on their contacts. Not a prospective salesperson. Recent experiall veteran candidates market themselves skills rather than their ence should be used as a predictor of future this way. I have had a lot of success hirpast and their contacts. results, but not as a primary hiring criteria. ing veteran salespeople when they market “Hiring the Rolodex” reverses this hierthemselves on their future and their skills archy — and results in failure. n rather than their past and their contacts. Troy Harrison is the author of “Sell Like You Mean It!” and a Why is this mistake made so often? Because it is a shortcut speaker, consultant and sales navigator. He helps companies and shortcuts are seductive. The most expensive and stressful period of any new sales hire is the onboarding and ramp-up build more profitable and productive sales forces with his cutting-edge sales training and period. A hiring manager sees a Rolodex candidate and thinks, methodologies. For information on booking “I can bypass that whole problem. Let’s get this guy on board speaking/training engagements, consulting or to and he can just make some calls and be at quota in months, sign up for his weekly e-zine, call (913) 645-3603 not years!” It seldom works that way. In fact, in my experience, or email troy@troyharrison.com. it never has. When you hire, remember the hiring hierarchy: Visit www.troyharrison.com. n Traits first — We cannot coach personal traits, so the

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