SOS
T W E N T Y: T W E N T Y S E R I E S
PART TWO RECOGNISING THE THREATS TO BUSINESS SUCCESS FACING UP TO THE CHALLENGES What challenges are channel partners facing?
UNDER PRESSURE What are today’s big business pressures?
PARTNER VIEWS How do channel partners view the current market? www.dealersupport.co.uk MARCH 2012
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Q&A
WELCOME TO THE T W E N T Y: T W E N T Y S E R I E S K E E P I N G U P I N A N E V E R - C H A N G I N G M A R K E T P L AC E
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elcome to the second of four Dealer Support Twenty:Twenty issues supported by KYOCERA Document Solutions UK. In this series Dealer Support will assess the current state of the industry and review the key issues facing dealers today. Keeping abreast of industry and product developments is vital as dealers need to be aware of all the options in order to deliver real value to their customers. At KYOCERA we’re moving on apace with our HyPAS solutions and apps which are proving immensely popular because they improve the way in which people can use and share their documents and improve the user experience at the device. From Cloud Connect to Print & Follow, Colour Control to Teaching Assistant there is a HyPAS app for you. These are simple to install and save time and money. As well as the suite of off the shelf applications to address common customer needs, KYOCERA has a development team who can create bespoke apps to meet specific business requirements. There are lots of figures and stats bandied about but it is largely accepted that some 40% of the workforce is now mobile and the need to print while home working and when out and about in remote locations is driving mobile printing. People need access to documents electronically while out of the office and while our own Mobile Print App is in great demand, our recently launched, best of breed software such as Everyone Print is growing in popularity. Despite the hype, we’re seeing genuine interest in Cloud Printing. It’s vital that end-users have access to secure cloud printing solutions and we believe that cloud printing has the potential to make the print environment more agile and take efficiency to a new level. Ultimately it can offer improved cost-efficiency, agility and productivity and realistically most organisations will be interested in that. For dealers, Cloud Printing is about attracting customers with simple licensing models. Offering the right solutions portfolio will easily overcome any fears about security, print management and device monitoring and reporting. To thrive in today’s market dealers should focus on their strengths with the support they need from vendors. And as a 100% indirect vendor, KYOCERA is dedicated to giving its channel partners as much or as little of the support they need. .
Steve Mitchell Group Product Marketing Manager, KYOCERA Document Solutions UK
ENDLESS POSSIBILITIES POWERED BY
Harness the power of KYOCERA’s HyPAS apps Developed around real business needs and challenges, KYOCERA’s extensive portfolio of off the shelf or custom built apps mean that there’s a HyPAS solution for your organisation. The options for your business are endless.
Find out more at: kyoceradocumentsolutions.co.uk Call: 08457 103104
Facebook: KYOCERADocumentSolutionsUK
Twitter: @KYOCERADUK
TWENTY:TWENTY
TODAY’S CHALLENGES
FA C I N G U P T O T H E CHALLENGES
Resellers currently have to deal with a number of different challenges in order to thrive. Peter Lunn, Dealer Channel Sales Manager at KYOCERA Document Solutions UK, tells Austin Clark more about those challenges and what they mean for the company’s channel partners
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TODAY’S CHALLENGES Q&A
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here’s no avoiding the fact that our channel partners are having to work harder than ever to win business in today’s challenging marketplace,” admits Peter Lunn, Dealer Channel Sales Manager at KYOCERA Document Solutions UK. “Threats are coming from many different directions, providing business managers with plenty to think about.” The first threat that Lunn identifies is that of shrinking margins. He explains: “Margins are definitely being compromised in terms of hardware and cost-per-clicks (CPC) because of certain manufacturers in the marketplace driving CPC prices down on Government frameworks. What we’re seeing now is that these low prices are beginning to creep into ordinary commercial business deals as well. As we don’t sell direct we’re very close to our channel partners so we get to see firsthand the impact this downward march is having on them and what they have to deal with. The direct sales teams of manufacturers are 100% compromising the sector.” As margins on hardware and CPC decrease, more emphasis is placed on making money from software and solutions, which Lunn says channel partners really must get to grips with. “The software and app side of business is growing and the key challenge here is to get our channel partners to charge for it. Dealers should be looking to tie their customers into more services and sell them more products. Everything from hardware and services to software and professional solutions needs to be offered.” PRICE PRESSURES On the hardware side, margins are also being driven down by a number of factors including online price transparency and changing end-user buying patterns. Lunn says: “Most people nowadays tend to get three quotes before buying, which challenges everybody’s price. The days of pulling a decent margin out of a straightforward sale are long gone as the sector has been commoditised. Online price transparency doesn’t help either. “Websites are more integral to businesses than ever before and while business in the partner channel isn’t necessarily transacted online, customers are using websites to influence their buying decisions. That means product information and data is absolutely crucial, as is information about each business – buyers will form decisions based on what they see online so partners need to make sure their sites offer the information required in a stylish format.” SERVICE MATTERS Lunn agrees that business is becoming much more solutions-based rather than being simply about selling products. Managed print and managed document services are growth areas, but of course where there’s growth there’s increased competition. Increased competition requires dealers to ensure customer service, staff expertise and contract management is as good as it can possibly be, after encouraging customers to buy through a the channel in the first place, rather than going direct to the manufacturers. “Manufacturers can sell one thing and one thing only – their own products – which limits choice and suitability of solution. Service back-up is often poor, if it even exists, with the service providers blasé about business,” comments Lunn. “The business of our channel partners is built on service, so there’s a need to maintain high standards and look after customers. The big benefit
of partners tends to be that they are big enough to cope and small enough to care. Business is built on the machines out in the field and the service revenue coming in from them and every customer therefore matters. Manufacturers should stick to researching, developing and making machines while dealers do the selling and customer service bit. It’s about letting the specialists deal with their specialist areas.” INFORMATION OVERLOAD One of the big threats to business often shared by channel partners is the lack of time to learn everything they need to learn – whether it’s to do with hardware, software or solutions. How can partners learn everything they need to learn as the industry continues to move on at a rate of knots? “Channel partners are under pressure to learn more skills and
“The days of pulling a decent margin out of a straightforward sale are long gone as the sector has been commoditised” digest more information but you could argue that today’s business is, as I said before, about specialising rather than trying to learn everything,” says Lunn. “We’re only taking our cloud proposition out to channel partners who we think have the infrastructure to deal with it. We haven’t got the resource as a manufacturer to support everyone so we have to select carefully, just as partners have to decide which areas they’re going to take on, according to their skill sets. “That said, channel partners cannot use a lack of time as an excuse to avoid learning new skills. Business is changing and they need to change with it in order to thrive. KYOCERA offers plenty of support and training to help partners add new solutions to their portfolio and plenty of ongoing support through the sale, implementation and management stages.” Lunn expects to see more acquisitions and mergers in the sector over the coming months as those dealers that stand still ship out, consumed by the growing players who work hard to introduce new services and skills. GOING PAPERLESS A much vaunted threat to the print and stationery sector is the move towards a paperless office. Lunn has typically forthright views on the topic and says: “We’ve been talking about the paperless office for the 20 years I’ve been in the business and it’ll never happen. People are still printing and while in some areas print volume is decreasing by a small percentage, dealers have an opportunity to respond to threats by looking at document management and scanning. People still like the touchy, feely properties of paper.” Lunn concludes by saying: “There are plenty of threats to the future profitability of our channel partners. However, when it comes to the growth areas including managed print, document solutions and software, our partners are already streets ahead of where their rivals are. If they continue to evolve, continue to offer unbeatable service and continue to learn, there’s no reason why they can’t continue to beat off these threats and lead the way for the foreseeable future.” DS
TWENTY:TWENTY
BUSINESS PRESSURES
IDENTIFYING YOU R P R E S S U R E POINTS Resellers of office products and services are operating in changing times and facing stiffer competition than ever before. In order to survive and thrive it pays to identify the pressures your business currently faces so that future activity can be shaped accordingly
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BUSINESS PRESSURES Q&A
SERVICING GENERATION Y Generation Y is here and expecting more from suppliers of business supplies. They are time poor and don’t have enormous budgets to splurge so when they do spend money they expect a service. Resellers, this is your opportunity – service is the independent’s piece de resistance and the future is full of opportunities to use it.
INCREASED COMPETITION Competition is stiff. Traditional opponents such as contract stationers and IT resellers are muscling in on business. As are the likes of eBay and Amazon. Think carefully about who your competition is and what they offer that you don’t and then find your way of adding value to your service. Above all else, find a way of standing out from the crowd.
THE SOCIAL NETWORK Modern buyers want to use modern channels – that means increasing amounts of online transactions, development of online currencies such as Bitcoins and increased emphasis on social media.
THE CHANGING BRIEFCASE Product demand is changing. Not so long ago a business briefcase contained pens, pads, book, files and a diary. Today you’re just as likely to see a tablet computer, privacy filter, screen wipes, expensive pair of headphones and 3/4G broadband dongle. Is your product portfolio keeping pace with these changes?
INSTANT JUDGEMENT Today’s society has access to an unprecedented volume of information. With this mass of info comes a need to make snap decisions, including about you as a company, making first impressions crucial. Are you doing enough to paint the right picture on your website, in company literature and in social media that will allow buyers to make the right decision about you? LESS MARGIN = MORE SERVICES Unfortunately online trading means increased price transparency and serious erosion of margins as companies compete on price. That means resellers need to concentrate on providing solutions to customers – think managed print, document solutions and even stationery subscriptions. DON’T GIVE IT AWAY If margins on product sales diminish, it makes the need to charge for services more important than ever. Sell your service – don’t give it away. Why should you offer free next-day delivery to every customer? Get to know your more profitable customers and give them more. STRIPPING OUT COSTS As margins decrease, the need to strip costs out of a business and improve efficiency comes to the fore. Yet, you have to maintain service levels, which costs money. Can you make savings? Can manufacturers and distributors help you with certain areas of business? CREDIT CONTROLS The cost of insuring credit has increased so therefore disties and wholesalers are getting tougher with regards the credit they offer resellers. Traditional office product dealers moving into IT will be hit particularly hard. Therefore keeping on top of customer payments will become critical, as will keeping cash in the bank.
“Think carefully about who your competition is and what they offer that you don’t and then find your way of adding value to your service”
THE MOBILE WORKFORCE AND BYOD Mobile working and the bring your own device (BYOD) culture is spreading as the walls of the office become less clear-cut. People are working from home and taking home to work and documents need to be accessible from both of these places. The cloud, remote access and mobile printing are therefore areas you need to understand, as is the security of devices and files. MIXING BUSINESS WITH PLEASURE Technological advances like the ubiquitous iPad and ‘the cloud’ have brought around the consumerisation of IT, which means that personal devices and equipment can no longer be segregated into the binaries of work and play. Rather there is a crossover and it becomes less clear as to what is business and what is consumer in the world of supplies. BUSINESS AGILITY Product life cycles are shrinking, product development is speeding up and consumers are becoming more impatient – they want the latest products and information yesterday. Therefore, running an agile business that stays ahead of the business curve (or at least keeps up with it) is vitally important. Independent resellers have an advantage over bigger rivals, but only if the management team allows and encourages agile business development. FINDING THE TIME The economic problems of the past few years have resulted, in a lot of cases, in reduced staff numbers at resellers. However, saying ‘but I don’t have time’ cannot be used as an excuse for not learning new skills or introducing new services – time needs to be found, even if that means dropping time-wasting tasks or delegating jobs. SUSTAINABILITY As the UK economy recovers, there are signs that sustainability and ‘green’ issues are returning to the forefront of business thinking. Are you prepared? YOU, YOURSELF When it comes down to it, the one biggest threat to any business is the person or people at the top. Are you prepared to evolve or would you prefer to continue doing what you’ve always done? DS
TWENTY:TWENTY
PARTNER VIEWS
A PA R T N E R
PERSPECTIVE How do KYOCERA’s channel partners perceive the current state of the industry? LEN ALLEYNE from Swift Digital Services and HARRY STEVENSON from ACS4IT share their views
HOW IS BUSINESS CHANGING AND HOW ARE YOU ADAPTING WITH IT? Len Alleyne (LA): The printer market has changed quite considerably and it is simply not enough just to supply a photocopier and service contract. You need to have a good understanding of your customers’ business and work with them to enhance productivity whilst adding value. As a result we are now leading with a value proposition around reducing costs, waste, carbon footprint and improving efficiency. Harry Stevenson (HS): I would suggest that business is definitely heading towards more solutions driven sales. We’re adapting to that by creating divisions specialising in areas such as managed print services and we will continue to look at developing further solutions such as shredding and document management. Dealers have to constantly develop their offering to suit today’s businesses, otherwise they’ll fall behind. You can always argue that, although it’s a declining market, there will always be a need for pens and pencils. Dealers can choose to remain in that area and fight for a share of a diminishing market or they can adapt and start offering the modern products such as tablets and privacy screens that customers now want. Do that and you can compete with the big boys. WHAT ARE THE BIGGEST THREATS TO YOUR SUCCESS? LA: The biggest threats come from us failing to change our business model to meet customer needs and understanding their business model/challenges. HS: The internet is a massive threat. There are people advertising products at prices that are just downright wrong. This blinds end-users to the real costs of goods and erodes margins to unsustainable levels. AS MANUFACTURERS START TO SELL DIRECT, HOW CAN
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RESELLERS LIKE YOU ENSURE YOU STILL HAVE AN INTEGRAL ROLE TO PLAY WHEN SELLING PRINT/DOCUMENT SOLUTIONS? HS: Fundamentally, if the manufacturers get it right, it would be difficult for dealers to compete. That said, dealers can offer greater choice and flexibility by offering hardware and software from multiple manufacturers, ensuring the end solution is right for the end-user. Dealers can also be more people focused than the manufacturers. HOW CAN YOU FIND A NICHE AND EXPLOIT IT? LA: The best way is to focus on a specific vertical market and offer products and/or services designed for that sector. HS: It’s all about looking at customer needs. We’ll look to see what our customers are demanding and make the necessary investments to ensure we can deliver what they want. It all comes back to being people focused. HOW CAN CHANNEL PARTNERS EFFECTIVELY ADD VALUE TO KYOCERA’S OFFERINGS? HS: We can develop our people to understand KYOCERA’s offering better and the benefits its range offers. We can also direct our company’s objectives to tie in with KYOCERA’s, creating a strong partnership in the process. LA: Channel partners need to offer complementary services that increase market potential. HOW SHOULD RESELLERS AND MANUFACTURERS BE WORKING TOGETHER AND WHAT CAN MANUFACTURERS DO TO HELP THEIR RESELLERS? HS: It’s such a fast-moving industry that training from manufacturers is vitally important. There are always new products being launched so it’s important that manufacturers commit to this industry and carry on educating us all. DS