SEPTEMBER 2018
VOLUME 25 NO. 9
Connecting People, Ideas and Products in the Document Technology Industry since 1994
engage ‘n exchange
THE MPS CONUNDRUM: Dealers Can’t Manage Print Without Managing a Profit
ALSO ON MPS: • NOT ALWAYS LOVE AT FIRST SIGHT • MPS=MOST PROFITABLE SERVICE? • SERVICE POV: MPS PROS & CONS • FIXING THE BROKEN MPS BEAST
Joe Reeves, Smile Business Products
State of Excellence:
Smile Business Products Uses NOC, Sharp Relationship to Build Out Empire
OVAL PARTNERS AND FLEX TECHNOLOGY GROUP OFFER ALTERNATIVE TO TRADITIONAL M&A DEALS CET GROUP ACHIEVES EXPONENTIAL GROWTH
ENX Magazine
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AllPage
TECHNOLOGY
AllPage
TECHNOLOGY
AllPage
TECHNOLOGY
With fewer parts for less maintenance1 and predictive service that keeps your business up and running, HP A3 MFPs are an upgrade from traditional copiers.
Š Copyright 2018 HP Development Company, L.P. The information contained herein is subject to change without notice. 1Fewer service parts claim based on HP analysis of leading in-class A3 color laser printers and MFPs as of February 2018; calculations use publicly available and/or published manufacturer rated yields for long-life consumables and assume 600,000 pages printed (using a 60% black/40% color ration). Learn more at hp.com/go/pagewideclaims.
An Open Letter to The Imaging Channel Chapter 3: Failure to Measure and Manage Your Service Team Did you promote your best service technician to manager? In my experience most dealerships have, and while there is no problem doing so, the problems arise when owners expect that the service technician will immediately understand how to manage people and also to measure the efficiency of their organization. The skills that make a great service technician are not the same as the skills that make a great manager. BEI can help remedy this. BEI recognized from early on, that the vast majority of service leaders got to their position from the ranks of field technicians. Sadly, little investment in time and training has been made in these capable leaders. Compare that to the development investment made in sales leadership. Most companies manage, measure, and train their sales teams constantly. Your company’s service leadership team has probably attended various trade event classes or even service specific seminars, but how much of what was learned has been implemented? BEI solutions are designed to develop your service leadership team and make them successful. Successful service teams use less parts, make more calls per day, and fix more devices right the first time. Successful service teams increase your profits. Many owners have a natural affinity to managing the sales team, but often less attention is spent with service managers. That is understandable because things like revenue and closed deals are easily measured. Inefficient service delivery is every bit as impactful to your profits -even more so, but its harder to measure. When measurement is ignored, the service team will revert back to tactics they have always used.
“
If you do not measure and manage your service team with the same diligence you use for the sales team, your profits will suffer.
”
BEI’s consulting team has the expertise and experience to help take on the challenge. Our Performance Measurement and Coaching solution, Acuity, provides a proven process that helps leadership establish expectations, goals, accountability, and
communication. Acuity brings structure and process to service leaders who have likely never had this process taught to them. Acuity helps owners manage service teams. Successful development depends on measuring expected results, coaching, and clearly communicating changes that are necessary. Service leadership must provide the tools and resources to give team members the greatest chance of success. When this is done correctly, and the person still cannot achieve the goals, helping them to find a successful role in a different career becomes much easier, and more defensible because everything is documented in and maintained in Acuity. As a business owner, you have an obligation to your service leadership team to provide them with the most comprehensive solution to help them achieve the best possible outcome. Ask your service leadership team: • How often do they execute a development coaching session with each technician? • How often do they communicate service goals and achievement? • Do they document these exchanges? • Does each technician confirm the discussion took place? • Do they agree or disagree with expectations? Acuity facilitates this process. Acuity allows technicians to follow an individualized development path to achieve goals set by leadership. Is your service team as important to your companies success as your sales team? Do you give them the same tools and attention to make that success possible? It’s time to put BEI Services to work for you.
Wes McArtor President, BEI Services, Inc.
Visual Edge Technology incorporates a strategy of operating through established successful companies across the U.S., focused on providing a broad line of client solutions, including managed IT services, office automation solutions, multifunction products for print, wide-format solutions, managed print services and document management software. Visual Edge Technology companies represent brands Canon, HP, Konica Minolta, Kyocera, Ricoh, Samsung, Sharp, Toshiba and Xerox. Visual Edge is continually focused on identifying successful companies to join our strategy.
Michael Brigner
Michael Cozzens
Senior Vice President
Vice President of Business Development
mbrigner@visualedge.com
mcozzens@visualedge.com
• A B Dick Office Solutions, MI • A-COPI Office Solutions, ME • American Copy Service Center, CT • Axion Business Technologies, RI, MA • AXSA Imaging Solutions, Inc. FL, GA • Benchmark Business Solutions, TX & NM • Brady Business Systems, MI • Business Technology Partners, FL • Commonwealth Technology, Inc., KY, IN • Copeco, Inc., OH • Copier Source, Inc. d/b/a Image Source, CA • Counsel Technology, IA • Dunn’s Business Solutions, MI • FastForward Digital Solutions, FL • Graphic Enterprises Office Solutions, OH • Graphic Enterprises, OH • Janco Office Systems, CT • Kenmark Office Systems • MCM Business Systems, WV • Mercury Document Imaging Co., Inc • Midwest Automation, NE • N2N Technologies Inc. IN • Netwise Resources, Inc., IN • Office Systems, VT • Premier Business Products, MI • Technocom • TLC Office Systems, TX • United Business Machines, NH • WBS Technologies, FL • XMC, Inc. TN, AL, GA, AR, MS • Zymphony, FL
David Ramos
Vice President of Business Planning & Analysis Visual Edge Technology
dramos@visualedge.com
EMPLOYEES WE ARE NOT WE DO NOT WE DO NOT NO LOSE THEIR JOBS A PRIVATE EQUITY
CHANGE YOUR CHANGE YOUR AS A RESULT OF THE GROUP NOR ARE WE MARQUEE... MANUFACTURER(S)... ACQUISITION... OWNED BY ONE...
GIVE US AN OPPORTUNITY TO SHARE WITH YOU WHY THIS IS IMPORTANT AND WHY 28 COMPANIES HAVE JOINED OUR STRATEGY!
SEPTEMBER 2018
VOLUME 25 NO. 9
Connecting People, Ideas and Products in the Document Technology Industry since 1994
engage ‘n exchange
THE MPS CONUNDRUM: Dealers Can’t Manage Print Without Managing a Profit
State of Excellence:
ALSO ON MPS: • NOT ALWAYS LOVE AT FIRST SIGHT • MPS=MOST PROFITABLE SERVICE? • SERVICE POV: MPS PROS & CONS • FIXING THE BROKEN MPS BEAST OVAL PARTNERS AND FLEX TECHNOLOGY GROUP OFFER ALTERNATIVE TO TRADITIONAL M&A DEALS CET GROUP ACHIEVES EXPONENTIAL GROWTH
Joe Reeves, Smile Business Products
Smile Business Products Uses NOC, Sharp Relationship to Build Out Empire
In This Issue
22
DEALER SPOTLIGHT
State of Excellence: Smile Business Products Uses NOC, Sharp Relationship to Build Out Empire By Erik Cagle
16 STATE OF THE INDUSTRY
The MPS Conundrum: Dealers Can’t Manage Print Without Managing a Profit By Erik Cagle
30 M&A FOCUS
Keeping Skin in the Game: Oval Partners and Flex Technology Group Offer Alternative to Traditional M&A Deals By Erik Cagle
34 OEM ROUNDTABLE
30
Fixing the Broken MPS Beast to Reinvent, Deliver and Profit By Erik Cagle
40 MPS
MPS Isn’t Always Love at First Sight By Bill Erpelding
42 MANAGED SERVICES
MPS = Most Profitable Service? By Charles Lamb
48 BUSINESS PROFILE
40
CET Group Achieves Exponential Growth Through Continued Globalization
52 SERVICE MANAGEMENT
Service POV: MPS Pros and Cons, and Making it Work By Ken Edmonds
54 TECHNICAL TIPS
Resetting Fault Codes for the Families in the Xerox DC250 Style By Britt Horvat
56 DISPLAY ADVERTISERS INDEX
48 6
•
www.enxmag.com | September 2018
We Saw It In ENX Magazine
WHERE CAN TECHNOLOGY TAKE YOU? WITH THE RIGHT SERVICES, ANYWHERE From Digital Marketing To Managed Print To Tech Training & Support, Clover Services Group Has The Power To Drive Your Business Forward
DIGITAL MARKETING
MANAGED PRINT
SERVICES
SERVICES
TECH TRAINING & SUPPORT SERVICES
WE BUILD SOLUTIONS TO HELP YOU SUCCEED Contact us today! CLOVERSERVICES.COM • 877.908.9203
227818A | Clover Services Group, and its logo is a trademark owned by Clover Technologies Group, LLC, and may be registered in the United States and other countries.
Contributors
Staff
BILL ERPELDING is Director of Marketing at Distribution Management leading the team responsible for the planning, development, and execution of marketing communications, merchandising, promotions and demand-generation programs. He has over 14 years of direct marketing agency experience delivering data-driven, customer life cycle management solutions to national clients in the travel & hospitality, finance, healthcare, wholesale and other industries.
Susan Neimes Publisher & Managing Editor
KEN EDMONDS served at Sharp Electronics and then at Konica Minolta Business Solutions as a problem solver in both technical and service management issues for nearly 16 years. He retired from Konica Minolta as a District Service Manager in 2018. He has over 40 years of experience in the imaging business, having owned a successful dealership and served as service manager for multiple dealerships. He is currently consulting with dealers on strategies to improve profitability. View his blogs at www.kedmonds.biz and/or email at ken@kedmonds.biz.
Erik Cagle Editorial Director
CHARLES LAMB is the President and CEO of Mps&it Sales Consulting. His firm delivers proven methodologies and processes that assist dealer principals seeking a successful transformation into the managed services space. He’s created complementary solutions including Funnelmaker, Gatekeeper, and Shield IT services. For more info, call 888.823.0006, e-mail him at clamb@mpsandit.com, or visit www.mpsandit.com.
Ronelle Ingram Contributing Editor
TECHNICAL ARTICLE CONTRIBUTOR
BRITT HORVAT works for The Parts Drop, a company whose primary business is providing parts, supplies and information for Xerox brand copiers, printers and fax machines. You can find more information, including many of Britt’s past ENX articles on their website www.partsdrop.com.
G
2018 I
N
Th
A eW e e k In I M
G
Christina Kim
OPEN NOMINATIONS FOR THE 2018 ELITE DEALER AWARDS
Editor
engage ‘n ex engage ‘n exchange engage ‘n exchange
www.enxmag.com
8
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www.enxmag.com | September 2018
La Revista del Distribuidor Dealer Source
Corporate Office
Susan Neimes - susan@enxmag.com Erik Cagle - erik@enxmag.com 10153 1/2 Riverside Drive, Suite 729 Toluca Lake, CA 91602 tel. 818-505-0022 • fax. 818-505-9972
NOMINATION DEADLINE: SEPTEMBER 14, 2018
Elite Dealer Nomination Form Available at
México & Latin America
engage ‘n exchange
ENX Magazine is published monthly by Affinity Business Communications, Inc. Any inquiries should be sent to: enx@pacbell.net or mailed to the corporate office. Copyright ©2018 by ENX Magazine printed in the U.S.A. All reproduction in whole or part is prohibited without written permission. Cover photo from depositphotos.com
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NBS / ENX | September 2018
Erik Cagle
State of the Industry
The MPS Conundrum: Dealers Can’t Manage Print Without Managing a Profit
A
mong the office technology dealer community, the subject of managed print services (MPS) is a well-visited discipline. For years now, we have been duly informed on the merits of MPS and the laundry list of reasons to provide a comprehensive offering that goes a long way toward fostering stickiness with customers. After all, the cost-per-page formula has devolved into a race to the bottom, with commoditization offering only heartbreak and fiscal disaster. It’s all about going beyond offering consumables and break/fix capabilities to provide automation and workflow efficiencies. We seek to analyze printing habits and modify behaviors, tossing in some user rules to make sure that Jill in payroll isn’t doing 100 color copies on heavy stock to promote her daughter’s under-12 soccer team tryouts all through town. Hey, that’s what Facebook is for, right? In the end, it’s about truly managing a client’s printing proclivities—it’s the first letter in the acronym, for crying out loud. It’s about leveraging customer data to provide a portal to workflows and business process optimization. Yeah, yeah, you mumble. We’ve heard all of this already. So why are we still failing with MPS? Why are so many dealers giving up the MPS ghost because they cannot make money? It’s the number-one objective of any business to make a profit and keep the lights on. But the dimmer switch is set to the low position with MPS. The good news is, there are ample opportunities to garner that monthly recurring revenue through MPS contracts, and even the more successful players out there will admit that MPS only accounts for 10-15 percent of their overall pie. We’ve pulled together a roster consisting of a half-dozen MPS specialists, including a pair of pure-play providers. They’ll garner insight into the evolution of their offering and some key points into what makes their offering so popular among their client base. What’s more, we’ll tackle the issue of profitability and the talking points behind why some dealers are struggling or failing to make MPS a vital aspect of their overall business.
ID, Contain and Control Costs
Cannon IV, a dealer that falls under the Flex Technology Group umbrella of companies, waded into the MPS pool when a client requested costper-page billing that included toner and service. Its 16
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www.enxmag.com | September 2018
program has evolved into identifying, containing and controlling costs to help customers better manage their financial outlays, while understanding their processes with printing and documents. According to Jim Jones, COO, Cannon IV eschews a rip-and-replace philosophy in favor of a stepped process to outline the customer’s costs at every juncture, including areas that may require swapping in new equipment. The dealer uses FMAudit to collect Jim Jones, Cannon IV the client’s data to track usage and glean information on frequency and user habits. Canvassing a client’s employee base is an experience in itself. “Printing is pretty personal to people; no one wants to lose their device,” Jones explained. “Everybody wants something better. It’s kind of a sensitive thing to interview people, to see what they’re doing, how they’re using it and what equipment they’re using. Whenever people think things are going to change, they’re pretty vocal. We tend not to recommend equipment that is overkill for the environment.” Cannon IV adheres to the HP balanceddeployment philosophy to define what the client’s environment entails, then develops an assessment plan that speaks to the goals of the client, taking page volumes and workflow into account. The FMAudit tool yields true print volumes, peaks and cycles, which helps devise an auto toner replenishment program and furnish predictive maintenance. Between the FMAudit data and its own analytics, Cannon IV is able to keep a tight hold on its customer costs, not to mention its own profitability. Nothing short of a full commitment to MPS will yield a profitable experience for dealers, Jones notes. “You have to be focused on this with all of your staff, your tools, how you’re going to collect data and ship toner,” he said. “It’s not a me-too product, and not something you can just tack on because you want to get into a different market. FMAudit doesn’t provide all the answers. Data collection is one tool for understanding a customer’s environment, but it’s not a secret sauce. It’s important to talk to customers about their cycles.”
We Saw It In ENX Magazine
continued on page 18
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The MPS Conundrum: Dealers Can’t Manage Print Without Managing a Profit Dedicated Digital Solutions
Cincinnati-based Donnellon McCarthy Enterprises (DME) is another dealership that leverages the FMAudit software tool for data collection, which has enabled it to substantially grow its MPS business. But what helps set the dealership apart is its digital solutions center in the Queen City. According to Jim George, DME president, the dealer has full-time employees monitoring its printer fleet seven days a week. These emJim George, DME ployees are tasked with remotely installing FMAudit’s VCA audit tool, in addition to managing the printer fleet, while also acting as a backup for DME’s technicians. “Customers can call in and if they need help with an application, (digital solutions center employees) can help assist them,” George said. “It’s not just managing the output devices or the toner, it’s assisting the customer to do their job.” The VCA (value chain analysis) tool allows DME to capture printers that may have been missed on the initial walkthrough of a client. The volume analysis is handy to ferret out devices that are overused, and DME can then recommend a more-robust production machine in its stead during a subsequent quarterly analysis review. It allows DME to have a more educated and specific conversation with its customers, thus demonstrating the managed value in the process. George is put off by the attitude of competitors who use blanked statements like, “For a penny a copy, we’ll service all of your fleet,” which is asinine. Given that a client may have a mixture of printers, including one-offs and inkjets that cost a lot of money to replenish, it’s a losing proposition. When DME does its initial walkthrough, they will recommend replacing the inkjet goblins with remanufactured HP printers that can be more economically serviced. If a client balks, that could be a telltale sign that it’s time to walk away. “Inkjet will kill you every time,” George said. “(A client’s) IT department will go online and order three $250 inkjet printers, but those cartridges are very expensive for us. The cost-per-copy for us might be 50 to 80 cents per sheet. That’s why when you tell a customer you’ll take over everything, you’ve already lost. You have to take the time to do an analysis of the organization to know exactly what they’re doing and how you can add value, while doing it at a profit.”
Streamlining the Process
Novatech of Nashville, TN, recently rebranded from NovaCopy, but it’s no stranger to MPS. The dealer endured its share of growing pains with MPS, particularly in regards to pricing, the level of resources required and timeframes for client implementations. It now boasts a streamlined process that is efficient, offers maximum savings for customers and keeps the dealer in the black with profitability. 18
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Novatech employs an industry-standard platform and proprietary data tools, along with PrintFleet’s data-driven device management and assessment software solutions. According to John Sutton, director of sales, Novatech’s MPS platform allows it to gain more detail and granularity in its metrics to provide more educated consultations for clients. “The data really allows us to influence user behavior in the way that most benefits clients,” he said. “Our MPS program is one facet of our holistic offering, and I truly believe that they’re interconnected; one discipline impacts, and can benefit, the other. Many of our MPS opportunities are not strictly MPS; obviously, there are going to be some software and professional services involved, and usually hardware that goes along John Sutton, Novatech with that. It also leads to other opportunities in other areas of business that we serve. Leveraging that user data allows us to not only spot those trends, but also provide the ability to build an actionable program that enforces the business process, whatever that happens to be. It’s much more effective than having to cookie cutter the approach and saying it has to be a certain way.” A number of sticking points can often impact profitability from the dealer end, Sutton added. Foremost is not setting proper expectations for the client as to the engagement and outcome parameters. He also feels it’s vital for the client to mobilize its own people for the implementation and to help drive the vision. Asking a client to tell the dealer what it wants, then promising to do it, might be the ultimate goal. But too often, the dealer will give up too much leverage at the onset, which flies in the face of setting proper expectations. “That is one of the key drivers to really maintain profitability in an opportunity, whether it’s MPS or otherwise,” Sutton noted. “Those are things that impact your outcome, whether it’s an older fleet that is going to require a flip of the equipment, or a mixed fleet of old and new, and the customer is expecting us to really guide them. If we don’t set expectations, that’s going to be harder to do.”
A High-Level Offering
One pure-play MPS provider, Qualpath of Pompano Beach, FL, offers a platform that is a combination of third-party and self-fulfillment. CEO and President Kevin DeYoung, the former president and currently a board member of the Managed Print Services Association, notes that while his company handles the more basic elements of MPS (print outputs/volumes, costs, user burdens and device rationalization) it has evolved to include security elements, least-cost print routing, workflow inputs and processes (such as invoice processing, remote worker image processing and electronic signatures) in an effort to streamline work and eliminate errors. Qualpath’s primary strength, according to DeYoung, is in avoiding off-the-shelf programs. Prospective clients are ascontinued on page 20
We Saw It In ENX Magazine
The MPS Conundrum: Dealers Can’t Manage Print Without Managing a Profit sessed without leaning toward a specific MPS offering. Thus, Qualpath’s strength is flexibility in its offering, which combines both input/output analysis. “We subscribe to a Six Sigma-type of analysis, meaning that we audit the existing process, capture costs and errors, monetize the current state and evaluate if our solution is business justifiable (less than the current costs and errors) to drive Kevin DeYoung, Qualpath a compelling business justification,” DeYoung explained. “In some cases, we cannot and are forthright in that representation.” What saddens and often frustrates DeYoung is the proliferation of toner-break/fix providers masquerading as MPS, which in turn confuses customers who were expecting a more managed approach that would produce continuous improvements— leaving DeYoung’s team to perform tutorials for clients on the true meaning of MPS. “The problem with offering a basic program is that it lacks the managed part,” he added. “Continual meetings as to what is happening and where continual improvements can be made is the key. The downside of a basic offering is that it isolates a previous unknown spend and makes it tangible. This previous hidden cost that was buried in invoices from various providers (toner suppliers, break/fix providers, printer suppliers) now is consolidated into one cost that is looked at as perhaps an additional spend or cost. So constant communication of the ongoing state in relation to the starting point (reminding the customer of where they were, what they have saved, and where they can go next) is critical.”
Evolving the Platform
Loffler Companies of Bloomington, MN, has been in the MPS game for 15-plus years, serving clients throughout the United States and Canada. John Turner, director of managed print services for Loffler, notes the dealership has evolved its national call center to take all service and supply requests, and boasts an automated supply-delivery service. “Our MPS solution includes a secure follow-me-print and secure-scan solution,” Turner said. “This allows us to manage all MFDs and single-function printers across the John Turner, Loffler enterprise. We also offer a solution around securing the print environment. We use HP security manager software and other manufacturer-specific tools, and wrap around a managed service contract.” Turner believes that offering a security solution and supporting via its national operations center allows it to create client retention. The service also allows Loffler to be more integrated 20
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www.enxmag.com | September 2018
with the client’s IT staff, creating customer adhesiveness that can defy the allure of another MPS vendor offering a lower CPC on printers. Another pure-play MPS provider, OneDOC Managed Print Services of Oklahoma City, modeled its MPS business after a Seattle-based company called Print Inc., which unveiled one of the earliest platforms more than 20 years ago. Kevin Morris, president and CEO of OneDOC, says the company prides itself on getting to the heart of a client’s true program costs, which is refreshing to many prospects who have endured dismal, socalled MPS platforms devoid of the management aspect. “A lot of dealers ventured into the MPS waters and stepped back away because they didn’t how to manage it, put it together and couldn’t differentiate it from their normal offerings of CPP and providing supplies,” he said. “We take a look at what the user does every day. We’ll install software and see what people are printing, what applications they’re printing from. We see who the biggest users are, the least users, see what devices Kevin Morris, OneDOC are over-utilized and under-utilized within the organization. We want to know what they’re trying to accomplish as well. We look at a lot of things that many of our competitors couldn’t give two rips about.”
OEM-Agnostic Approach
What truly separates OneDOC from other MPS providers is its structure: it is 100 percent sales, with all service, supply, warehousing, NOC and other functions farmed out to a third party. OneDOC is also brand-agnostic. Though it primarily sells HP, Konica Minolta and Xerox equipment, it is authorized to sell many OEM lines, thus it is not beholden to any small cadre of providers. The SMB space is its sweet spot. In order for dealers to get the most mileage out of their MPS program, Morris believes it’s a matter of answering a simple question: do you want the OEM to control your dealership, or do you want control of your own dealership? Many will answer the latter, but find it difficult to break free of the quota grip. “Dealers end up buying X-number of devices at the end of each month, quarter or annually, based on what a manufacturer provides them in the way of discounts,” he said. “I still get rebates from my manufacturers, but I get them in a different way. I have no quotas with my manufacturers and I won’t sign a quota agreement. We want to sell what’s best for the client, which may not mesh with what the manufacturer wants us to move. “Companies like BEI provide us information on breakdowns of devices for every manufacturer, and we’ll guide clients accordingly. We select the best of the best from each manufacturer; we never sell an entire line. Too many dealers sell MPS three weeks a month, and the fourth week they sell boxes. That’s the OEM driving that.” ♦ We Saw It In ENX Magazine
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DealerBriefing Spotlight News
State of Excellence: Smile Business Products Uses NOC, Sharp Relationship to Build Out Empire
D
on’t let Joe Reeves fool you. The CEO of Sacramento, CA-based Smile Business Products may have whipped up a creative acronym for the name (Super, Magnificent, Intelligent, Loyal Employees). But the concept of the dealership—born during the dotcom explosion of 1997—truly emanates from a desire to break loose of corporate America to embrace the many wonders technology has to offer...and many of those are not central to the mighty MFP.
Joe Reeves 22
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Smile traces its roots to Standard Office Systems, where Reeves cut his teeth selling office equipment in 1980, and then made the conversion to IKON. Unhappy with its direction, Reeves (a senior executive at the time) was one of the first principles to defect from the network. Smile soon became the biggest Sharp dealer in California, and is now one of the largest in the nation. Intrigued with the digital movement, Reeves cultivated one of the most ambitious network operating centers (NOC), which manages tens of thousands of MIFs and nodes, and has garnered a reputation as a leading MSP. Reeves also took his message on the road courtesy of Smile’s state-of-the-art mobile showroom, a.k.a. Big Red. Today, Smile holds the State of California’s MFP contract and boasts a market reach that encompasses 32 counties in the Golden State and four more in northern Nevada. Leveraging the NOC, Smile can offer all eight offices these multiple technologies while supporting the entire State of California. Smile currently offers products and services from manufacturers including HP, Dell, ACDI, Lexmark, Panasonic, Samsung and Dell. Its cornerstone relationship with Sharp has extended the company into ancillary offerings, including the AQUOS BOARD and the emerging Smart Office, all the while focusing on MPS and MNS relationships that focus on We Saw It In ENX Magazine
generating recurring monthly revenue. We spoke with Reeves on how the state contract, asset acquisitions and the managed service component, combined with its foray into relationshipwidening technologies, will push Smile beyond its status as the goto Sharp provider in California. And as Reeves is quick to point out, the mere mention of his company’s name brings a smile to everyone’s face. How was business in 2017? REEVES: Overall, it was good. While unit placements were up 25-30 percent, revenues grew by only 10 percent because of price erosion. Everyone is heavily discounting machines, so we’re placing more units and gaining market share, but the revenue isn’t growing proportionally. When it was time to renew the California state contract, we knew it would be a bloodbath when we went to bid. But we were the incumbent; between Smile and Sharp, we had held the state contract for 10-plus years. Backed by our track record, great relationship with the state and Sharp, along with extremely aggressive pricing, we were able to renew the contract. At $50-plus million, it was a huge victory for Smile and our Sharp dealer partners. Sacramento is a funny town; outside of government, most of the business is in health care, services and construction. There’s less business, so the competition is much fiercer. In order to gain pure growth, we continued on page 24
Congratulations to Smile Business Products for winning the State of California’s copier contract award for mid-range multifunction printers (MFPs). Smile has been a consistent provider of Sharp color and monochrome MFPs to the state for more than 20 years, helping the state improve operations, meet small business goals and maintain its environmental initiatives.
Š 2018 Sharp Electronics Corporation. All rights reserved.
State of Excellence: Smile Business Products Uses NOC, Sharp Relationship to Build Out Empire
Smile Business Products’ network operating center
have to take it from the competition. We had two acquisitions last year and two more are currently in process. The companies we’re acquiring now are small, and they usually want to get out of the business because they can’t make the investment to be in managed services. Our newest area for growth is in digital signage, where we can sell, manage the content and annuitize it to have a recurring revenue stream from the customer like we do with the copier business. What is your acquisition criteria? REEVES: It is a focus on capturing and expanding our customer base. The two deals we’re currently working on are assimilations, so the economies of scale are huge. We don’t need the facilities and assets, so we just buy the customer base and bring aboard their quality personnel. That’s a win-win for us. Generally, we can assimilate these companies without much expense and bring in that top-line revenue. Last year, we moved into the northern part of the valley and south into the Monterey/Salinas market, which were new locations. We target Sharp dealers because of our expertise and relationship with the manufacturer. If we were to buy a Ricoh or Konica Minolta dealer, they would immediately put in another dealer to compete with us, forcing us into a defensive position with the newly acquired firm. 24
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All our purchases are structured as asset buys for tax reasons. When we evaluate a company, it’s based on the service revenue and a multiple of it. Topline equipment revenue is important, but not necessarily repeatable. Companies that have a solid mix of 50 percent hardware and 50 percent service with contracts that are evergreen and hold 50 percent gross profit are our targets. We probably keep 90 percent of the acquired client base. What does Smile Business Products pride itself on? REEVES: We started Smile as servicebased company that guarantees twohour service, and we’ve maintained that statistic for 21 years. Our average service call is logged and responded to onsite in an hour and 27 minutes. I’ll put that statistic up against anybody in the country. We have an average tenure of 37 years per tech in our service department, even though we’re only a 20-year-old company. Most of our techs followed me over from Standard Office Systems. Our first-call completion rate is about 97 percent, with techs averaging 5.5 calls per day. The average tech manages about $3 million in revenue. We like to describe our NOC as a converged NOC. Smile’s dispatch is trained to triage the call, and if they think there’s a chance we can remotely fix the machine, it goes into the NOC.
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In our NOC, there are four copier helpdesk techs, a telephone tech, a document management specialist and MNS engineers. Twenty-eight percent of the time, copier calls are remotely fixed or cleared through the help desk without a tech being dispatched. It helps our stats when you can eliminate nearly 30 percent of the service calls remotely. In order to do that, you have to have a staff that’s highly educated. We do about 5,000 service calls a month, and about 30 percent of them are cleared remotely in less than 12 minutes. Sharp has recognized us as the “most innovative and technical” company in America. We’ve been a platinum service dealer and a Hyakuman Kai elite dealer since the day we opened. We think of ourselves as an MSP; we can handle anything that hangs on a network, whether it’s a printer, MFP, phone system, desktop or server. Selling it is nice, but we’d rather get a recurring revenue stream by managing technology for our customers. We were one of the first big companies in MNS. We started our own NOC in 2000, built it internally instead of outsourcing. Before then, we did break/fix and sold blocks of time. Back then, there was no software to manage networks like there is today. When a customer comes into Smile and
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State of Excellence: Smile Business Products Uses NOC, Sharp Relationship to Build Out Empire management and workflow. It’s one thing to go to a customer and say you’re a DocuWare dealer, and it’s another to bring the customer into Smile and show them how we use DocuWare. Once the customers sees and understands it, they’re sold on it. It starts with educating your people. We want to be the total provider of technology that makes it simple for the customer, intuitive and allows them to focus on running their business, not the technology. Smile Business Products’ showroom
sees the NOC, 100 percent of the time they go with us. Why does the State of California value your offering? REEVES: I think they like the ability to have a single point of contact for billing and service. Historically, these type of contracts have been won by manufacturers who immediately outsourced the maintenance of these contracts to leasing companies to do the billing. Thus, they’re disconnected. The manufacturers usually don’t have their own service facilities, so they have to outsource it to multiple, independent dealers. We’ve been extremely good at organizing that process. The state requires us to give them quarterly
statistics on the number of calls and the usage, and we’re one of the first vendors they ever had that does it for them in a timely manner. When they call us, we still guarantee a response time that is unheard of in the industry. We’ve been able to provide it with our dealer partners. And, of course, pricing does matter. You’ve been a Sharp dealer for nearly 40 years. Tell us about that relationship. REEVES: I’ve been on the Sharp dealer council for 17 of the 20 years Smile has existed and was chairman of the council for nine-plus years. I was instrumental in promoting a productdevelopment committee and helped Sharp develop technology. It was through that subcommittee that Sharp came up with the original LCD panel. We were the first one to have the touch screen iPad panel, because the iPad is a Sharp-made device and that ISO Glass is Sharp technology. When Sharp first came out with that display, it had a retractable keyboard that was built into it. That was a council-pushed idea. We pointed out that authenticating by using a query display that’s nested is laborious, and that it would be better to have a keyboard like we authenticate when we log into our laptops or computers.
Your mobile showroom is quite unique in the industry, and brings the power of Smile’s offering to the client’s front door. REEVES: We call it the Smile Experience. When we pull that bus up in front of a company and the customer walks in, their jaw drops. It’s a network hot spot, it has IWBs, computers, phones and a couple copiers. We’re not trying to show copiers—we demonstrate office technologies. We physically break the copier in front of the customer and ask them to call our NOC. We have a camera that shows someone in the NOC answering the phone. That person remotely takes over the copier in the bus, fixes it, says “Thanks for calling Smile, your remediation time was eight minutes. Have a nice day.” When we do that, 100 percent of the time we get the business. No one else is going to buy a $500,000 bus, put all that technology in it, and entrust it to a sales rep.
Are you investing a lot in deploying the technologies that you’re selling into your own office use? REEVES: We’re a firm believer that you use what you sell. Take document 26
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State of Excellence: Smile Business Products Uses NOC, Sharp Relationship to Build Out Empire
Mobile Showroom
How do you recruit and retain quality employees? REEVES: That is the biggest challenge, especially on the sales side. We have no problem hiring service techs, because everybody wants to come here. We provide company cars, tools, parts and training—this is heaven for a technician. One of the unique things we do for sales reps is they get a monthly annuity on every maintenance agreement that they manage. Every time they sell a copier that has a maintenance agreement in it, they get a commission on that monthly bill. A good sales rep can earn $3,000 to $4,000 a month just on their service annuity. One of the challenges we had when we got into MPS is that no one is interested in selling a printer where they get a $25 or $50 commission. But if they can make another $10 to $15 dollars a month per device on maintenance, and they’ve got 10 devices, now they’re getting $100 a month annuity. That compounds every month. The program became so lucrative that I had to put a qualifier on it. What are your goals for next five years? REEVES: Our goal is to be a premiere northern California dealership with 15 branches and $50 million in revenue. Aside from the two acquisitions we have lined up, we are preparing for the Sharp Smart Office. We’re currently beta testing the Alexa under an NDA with Sharp. We are looking to hire graphic artists, because we’re getting into digital signage. One of the big opportunities we have right now is with a large manufacturer that has a facility the size of 10 football fields. They want digital signage throughout the facility that has 28
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the safety message of the day, wishes happy birthday to employees and posts other messages for internal use. When the Smart Office comes out, digital signage, monitors, Skype and all that stuff is going to be more important. Under our agreement with Sharp/ Foxconn, we can go to them and buy multiple Foxconn products under one Sharp SKU number. Ordinarily, if you wanted to buy a video-conferencing system, you would need to buy a monitor, camera, phone device and a router separately to make all of that work. Instead of buying them from five or six different manufacturers, what if you could order one Sharp SKU number and source all those things in one bundle? Instead of having five or six different user manuals and many remotes, there’s one user manual written for all those devices to run as one, using Alexa voice activated. That’s super sexy to me. Can you imagine a demo bus presentation with voice authentication and facial authentication? Some of our
larger customers, such as law firms, have beautiful conference rooms, but it’s an absolute cluster when they try to turn on a PowerPoint presentation. They’re attorneys—they don’t know how to run computer systems. We’re going to simplify that, and it’s going to be the next step in the evolution of office technology. This aligns with our mission statement: we are committed to proactively simplifying our clients’ business-technology experience through innovative customer-service tools and responsive professional support, empowering them to focus on their core business. Do you have any advice for the dealer community? REEVES: Print will always be there, but it’s having less and less significance. We want to manage information, and we don’t care if it’s video, voice, cloud or print. When all’s said and done, it’s communication with information and the dealer who controls that is the dealer who’s going to survive. ♦
An interior view of Big Red, Smile Business Products’ mobile showroom
www.enxmag.com | September 2018
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Erik Cagle
M&A Focus News Briefing
Keeping Skin in the Game: Oval Partners and Flex Technology Group Offer Alternative to Traditional M&A Deals
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ew terms are sexier in today’s business world than “organic growth.” Likewise, few others are harder to achieve. This holds true in today’s office technology dealership channel, where the stagnating demand for MFPs and copiers has pushed dealers toward managed print and IT. Not to mention, it has coaxed dealership owners to consider other alternatives to attaining top- and bottom-line margin growth, not the least of which is entering the merger and acquisition fray.
that a dealership cannot survive for the long haul without an infusion of investment that can enable it to expand on products and services such as the aforementioned managed services. It is in this vein that San Francisco-based private equity firm Oval Partners and Flex Technologies Group have crafted a strategy that is singularly unique in our industry. And with no lack of competition in the M&A space— from smaller geographically matched companies leveraging economies of scale to larger en-
BUSINESS OWNERS HAVE THE OPPORTUNITY TO GET SOME LIQUIDITY AND REINVEST THE PRE-TAX PROCEEDS BACK INTO OUR HOLDING COMPANY.THE PIECE THEY TAKE OUT IS TAXED TO CAPITAL GAINS, BUT THE PIECE REINVESTED WITH US IS PRETAX. Dan Ruhl
Naturally, as the economic landscape has provided favorable conditions for owners to consider selling—with higher EBITDA multiples, available equity and lower interest rates—the competition level has ramped up among buyers. Obtaining dealers in which the owner is reaching retirement age and doesn’t have progeny to take the wheel is no longer the chief selling persona. Not all sellers are looking to cash out and buy a retirement villa in the Caribbean. And not all dealership owners are looking to stand down once the sale has been completed. But there’s one common denominator that is virtually universal. It’s the realization 30
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tities rolling up dealerships at a prodigious pace—Oval Partners employs a hybrid M&A solution that, in its first 30 months of existence, has attracted nine dealerships into the fold. Phoenix-based FlexPrint, led by industry veteran Frank Gaspari, created this initiative and partnered with Oval Partners in December of 2015. Laser Options, also of Phoenix, followed suit. Oval Partners then onboarded ProCopy Office Solutions (Phoenix), Cannon IV (Indianapolis), Action Imaging Group (Tucson, AZ), Caltronics (Sacramento, CA), Flo-Tech (Middletown, CT), Marimon Business Systems (Houston) and We Saw It In ENX Magazine
RS Business Machines (Ohio). All of these companies fall under the Flex Technology Group umbrella, of which Gaspari is the CEO. Oval Partners was founded by two senior partners at Golden Gate Capital on an evergreen basis so that founders are not forced to exit prematurely based on typical shorter private equity timeframes. Instead, Oval works with founders to build value over a longer timeframe.
A Different Route
What sets Oval Partners apart from other M&A players is that in addition to providing an outlet for owners who are looking to sell, its deals are structured so that owners can stay at the helm of their business and can reinvest in the Flex Technology Group holding company. Here’s how it works: Oval Partners facilitates the purchase of the company, allowing the former owner to cash out. At the same time, the owner can then reinvest a portion of the sales proceeds, pretax, back into the Flex Technology Group holding company. The seller then becomes a shareholder within the group, owning a percentage of the overall pie, according to Dan Ruhl, a partner with Oval Partners. “With us, business owners have the opportunity to get some liquidity and reinvest the pre-tax proceeds back into our holding company,” he said. “The piece they take out is taxed to capital gains, but the piece reinvested with us is pretax. That way, continued on page 32
Keeping Skin in the Game: Oval Partners and Flex Technology Group Offer Alternative to Traditional M&A Deals the owner benefits from synergies, purchasing leverage and higher exit multiple when the business is sold in the future. We have owners who have reinvested up to 50 percent of their pretax proceeds back into our holding company.” Gaspari and Ruhl point out that many of the owners under the Flex Technology Group weren’t necessarily looking to sell their companies. But they saw a golden opportunity to take away a portion of the equity they earned through their businesses over the years while augmenting their earning power and setting their firms up to flourish in the future, backed by the collective strength of the holding company. “The combination of the reinvestment option, coupled with the company retaining its identity following the transaction, together make the option unique,” Gaspari said. “Since we’re at the beginning of the consolidation process, it’s a very attractive time for those business owners to consider a reinvestment option with us. In fact, the business owners who have reinvested in our initial platform have close to tripled the value of their stock over the last two years in being with us.” Most of the owners who have joined Flex Technology Group have reinvested between 10 and 50 percent from the proceeds of their sale back into the holding company. Their percentage of ownership in the holding company is calculated based on their investment. Quarterly, Oval Partners revalues the holding company, according to Ruhl. Prospective sellers are shown the valuation of the holding company to help them determine how much of their proceeds they would like to reinvest.
Why Office Technology Space?
FlexPrint, a managed print services provider, set the tone for the onset of Oval Partners’ strategy. According to Ruhl, Oval Partners was intrigued by the potential offered by the dealer channel, its fragmented nature and the potential to bring together strong businesses that can benefit from the economies of scale and 32
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other strengths offered by a single, large organization. The contractual nature of MPS and the copier dealer channel, and a lack of customer concentration, also appealed to Oval Partners, as did high customer-retention rates. These cash flows generated over time have much lower volatility than most other industry sectors, Ruhl maintains. “These businesses are not growing quickly, but the opportunity to bring them together and be able to invest in bringing additional products and services to the customer base as technology continues to change within the industry definitely exists, and it’s easier to make those investments as a larger company than it is as a one-dealer branch,” he noted. In assessing a potential addition to the holding company, Oval Partners and Flex Technology Group seek to enter a new geography with an anchor dealership with $20 million or more in annual revenue. Dealers added to an existing foot-
qualities, such as contractual work, high customer retention and growth. (For MPS businesses, a high percentage of transactional toner sales is usually a red flag, according to Gaspari.) Oval Partners meets with the holding company members on a quarterly basis to discuss prospects that are under consideration. Should a member company feel strongly that a given company is not a good fit for the organization, that candidate is eliminated. The next step entails Gaspari and Ruhl meeting with the business owner, followed by a request for additional information. Once those hurdles have been cleared, Oval Partners and Flex Technology Group will draw up a letter of intent that includes the valuation and other pertinent deal variables. Once agreed upon, and the financial and legal due diligence are completed, Oval Partners and Flex Technology Group will issue the financials and documents for reinvesting in the holding company. While all additions to the holding
SINCE WE’RE AT THE BEGINNING OF THE CONSOLIDATION PROCESS, IT’S A VERY ATTRACTIVE TIME FOR THOSE BUSINESS OWNERS TO CONSIDER A REINVESTMENT OPTION WITH US. Frank Gaspari
print generally have $5 million or more in revenue, but smaller firms that make sense from an integration standpoint are also considered. While all current dealers in the chain are U.S.-based, Gaspari and Ruhl pointed out that Canadian-based firms are also being considered. Evaluating more than 100 dealerships per year, Oval Partners closes five deals, on average. Many of the candidates are filtered out early in the process, as they are not cultural or financial fits, or perhaps the prospective seller decides a different solution would be more ideal. The initial conversation is generally done by Ruhl. Many of the deals are sourced through the internal network of business owners. Those that get past the initial screen possess the aforementioned
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company have reinvested between 10 and 50 percent of their sales proceeds, it is not mandatory. As new members of the holding company, their performance metrics are analyzed to determine enhancement opportunities. They evaluate each business’ service, consumables and equipment sales margins and benchmark each area. Companies at the low end of any category are paired to work with companies that have a strength in that discipline. “We bring those best practices across all of our businesses so those companies that might be at lower service margins today are improved over the quarters to come,” Gaspari said. “We move everybody to that most efficient services margin in the business.”
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Vested Interest in Core
The partners at Oval Partners have replicated their M&A formula across multiple industries. Unlike most private equity firms, Oval encourages its owners to invest in the holding company and benefit from the synergies, purchasing leverage and higher valuations. One of the critical factors that sometimes gets lost in the conversation is the notion that each investor owns a piece of the entire holding company’s members firms, not a percentage of just their firm. “We bring our relationships, our track record with equity capital and with lenders to further invest in their organic growth, but also in future acquisitions,” Ruhl said. “We value the leadership and the management teams of the businesses that we bring in. As a result, very little changes after we bring in a new partner, unless the management team or new partner wants those changes to occur. “We believe we bring the business owner the ability to have some liquidity today, and to make more money in
the future than they could on their own. We invest in organic growth and acquisitions, and the company keeps its name, culture and heritage. We also stand out from other investors because our capital is permanent. Unlike a traditional private equity firm, where they have to return that capital to shareholders, we’re unconstrained in the terms of how long we can hold this business. That means we can continue to compound our investments for our entrepreneurs over a longer timeframe, making more money for them and for us down the road. We exit when we want to exit.”
Room for Growth
Gaspari and Ruhl predict that barring unforeseen variables that would impact the economy, the onslaught of M&A activity will continue to build during the next two years as dealers seek to remain competitive by joining larger, wellfortified organizations that are positioned to make the necessary investments to grow. Oval Partners has used traditional networking to grow awareness among We Saw It In ENX Magazine
companies seeking an alternative to conventional business sales, which has enabled Flex Technology Group to surpass the $230 million mark in annual revenue. While Oval Partners has a goal of growing 5 to 10 percent per year organically, its acquisition plan of $100 million per year is quite a bit more aggressive. Gaspari and Ruhl also held out the possibility of acquiring a company with $100 million in annual revenues. “While we’re still early in the process, now is a good time to get in,” Ruhl said. “The time to maximize the reinvestment potential is early on in the consolidation. Our initial investors in the platform have nearly tripled their investment. Once we get somebody’s attention and put these numbers up on a white board, more often than not, an owner is going to move forward with us.” For more information on Oval Partners’ strategy, email Ruhl at dan@ ovalpartners.com. ♦
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Erik Cagle
OEM Roundtable
Fixing the Broken MPS Beast to Reinvent, Deliver and Profit
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s part of this month’s state of the industry report on managed print services (MPS), we’ll take a look at what factors are preventing dealers from delivering on a true MPS proposition. Honestly, we’re positive, glass-half-full editors by nature, and we don’t like to dwell on the negative. But we’ve got a blue-ribbon panel of experts from three major manufacturers— Toshiba America Business Solutions, Xerox Corp. and Lexmark International—to provide insight to their office technology dealer compadres and perhaps lure back a few providers who may have dabbled in MPS, only to exit amid red ink and frustration. This OEM roundtable consists of Melanie Hudson, vice president, Global Services Operations for Lexmark; Bill Melo, chief marketing executive for Toshiba America Business Solutions; and Jim Joyce, vice president MPS/ Innovation, U.S. Channels Unit, Xerox Corp. This how-to look at reinventing a process that is far too often relegated to break/fix and toner replenishment is meant to drive dealers toward crafting a truly differentiated platform that emphasizes management, solutions and—this can’t be over-emphasized— profits. Why do we, as dealers, fail to deliver on a true managed print services platform? What finer points of an effective offering are often overlooked? HUDSON: An effective offering considers more than just the basics of asset management, consumables management and break/fix services. While these basic tenets of a managed services environment are widespread, it is the execution that is often lacking. An effective offering considers the right placement of devices, how the customer is using those devices, implementing and 34
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training on a consolidated fleet, ensuring you are providing more features and capabilities than the customer had with their prior environment and executing flawlessly. This requires more due diligence in assessing the environment up-front to set the engagement up for success. Basic asset management, consumables management and maintenance services must be delivered in a way that adds value to the customer. Consider what reporting you are providing them or how you are making their lives easier, so they can spend more time with their customers. If your program just creates work for them, they’re likely to move on to another provider or simply go back to an unmanaged state. When the basics are not executed well, there
serving your needs instead of the customer’s, and that’s where a lot of dealers go astray. A true MPS offering is going to focus on providing the customer the greatest benefit—financially and from a productivity standpoint—with the least amount of turmoil and disruption. In our view, that is utilizing the in-place assets as much as you can, and augmenting those with products that are going to provide additional cost savings. More often than not, when a manufacturer is offering a program or training dealers on how to offer a program, it’s a rip-and-replace approach, where they take out all of a particular company’s printers and put in their own machines. That serves the OEM well, but it doesn’t necessarily serve the customer well.
A TRUE MPS OFFERING IS GOING TO FOCUS ON PROVIDING THE CUSTOMER THE GREATEST BENEFIT—FINANCIALLY AND FROM A PRODUCTIVITY STANDPOINT—WITH THE LEAST AMOUNT OF TURMOIL AND DISRUPTION. Bill Melo, Toshiba
is very little opportunity to have a relationship with the customer such that you can continue with the contract and sell additional services, particularly software solutions that may provide higher margins and more value for the customer. MELO: Probably the biggest issue in terms of resellers delivering a pure managed service offering to the client is if, for whatever reason, you’re following an OEM’s program, or, through your own inclination, you approach MPS as an idea of taking out whatever the customer currently has implemented and replacing it with all your manufacturer’s products. That approach is essentially
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JOYCE: For far too many resellers, their definition of MPS remains cost-per-print. There’s a huge difference between CPC and MPS. With CPC, they are using a data collector to provide some alerts and auto replenishment, yet this amounts to a modified traditional sale of a device, toner and basic service. For some, this is all they need, and it fits their business model for small, entry-level business. Yet many are seeing their clients who are in these models demand more. MPS requires different skills and the knowledge of proven best practices. Not one MPS deal is ever the same from customer to customer. There are different motivators, drivers and dynamics, and
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Fixing the Broken MPS Beast to Reinvent, Deliver and Profit they’re different by industry. So you’re rationalization model will be different. That drives all the economics differently as it relates to cost, savings and impact. Your security algorithms, profiles and requirements can, and should, be different. The environmental impact requirements will be different, as will the operating requirements. When you are doing a CPC, none of that science really comes into play, so you are missing many of the best practices that lead to outcomes that are more tangible for the customer and partner.
in the K-12 space, plagiarism detection, standardized test scoring. We know that ideally, the most cost-effective print or the most secure print is the one that’s never made. As we begin to capture impressions and look where they travel throughout an organization, it provides a greater opportunity to repurpose printed content into actual digital workflow scenarios. It’s not complicated, full-enterprise content management, but simple workflows that are highly repetitive. We offer analytics tools that track all of that as part of our MPS strategy.
OUR PARTNERS WHO DRIVE MPS TYPICALLY EXPERIENCE 40-PLUS PERCENT GROSS MARGIN AND EXTREMELY HIGH RETENTION IN EXCESS OF 90 PERCENT. Jim Joyce, Xerox
Often times, dealers won’t do an assessment focused on multiple levels of value that align with the prospect or customers enterprise. They can say, ‘here’s how much color and black and white that you do,’ and ‘here’s your impression volume,’ but it ends there. If you’re really going to do MPS, you have to think about balancing the load. That way, you can govern and push things that should be printed in the light production area over to another space for economics, or you can move print around based on content and security requirements, or even based on economics and convenience. In some cases, we will trap certain print schemes and push them to devices that are the most secure, simply based on the content embedded in the documents. Above those layers, there is the opportunity to automatically translate documents into multiple languages, drive real-time user analytics for security and economics, and drive workflow analytics that shift MPS more toward managed content services. In addition, multiple layers that are vertical in nature—specific to the needs of an industry segment—with examples that include IEP management 36
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When you can reduce a client’s total impression volume by 50 percent over time, while not negatively affect their business, you are managing print at another level. What issues are causing dealers to lose out on profits, and how can they devise an MPS platform that is competitively priced, yet profitable? MELO: Unfortunately, a lot of dealers have taken shortcuts and commoditized the whole offering. They’re only offering CPCs (cost per clicks) for services they don’t always understand. When we built our Encompass app in 2004, our focus was on being able to identify and accurately portray the customer’s current scenario and provide them a mix of currently owned and new products that’re going to provide cost and productivity benefits. There are literally thousands of product types in the marketplace that a customer might own, and each of them has a different cost profile. We’ve seen CPC just on toner that might range 5x from top to bottom within a customer’s site. So being able to identify the ones that are not cost effective, and being able to replace those
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while keeping the ones that are, is a really key starting point. Being able to price out an offering that, on the one hand, provides a customer with benefit by the way of cost savings, and is profitable for you, is a very complex issue. Especially when you’re dealing with the heterogeneous fleet of existing products, some of which you’re going to take over and manage, and a mix of your own OEM products that you have to continue sourcing. Also, it’s a very dynamic environment. When you’re in the printer realm, unlike MFPs, unless a customer grows substantially, their MFP fleet is fairly fixed over time. But printers come and go, whether it’s desktop or networked printers, they’re constantly moved in to, out of and around the environment. One of the daunting tasks of MPS is the move/add/change component of it. Being able to understand why those products are being put in, capturing the usage if they’re part of the MPS contract or not, being able to work with the customer on a mutually agreed upon set of products that are routed to the network, and which are not. Under our contract, we collaborate on which products will fit into the contract, whether they’re third party or Toshiba. The customer got into a mess, and the idea of the MPS is ‘I’m going to manage this for you, clean up your mess and save you costs…but it’s going to be under a mutually agreed upon, tighter set of regulations.’ The customer, on their own, will tend to gravitate back to their original mess. So you need to keep a handle on this. I think sometimes dealers, because they’re so used to it on the MFP side, they think it’s a static environment and don’t make the investment in learning a tool set like Encompass, or having a customer service manager whose job it is to not do break/fix, but manage the customer’s environment and work with them to adhere to the mutually agreed-upon standards. JOYCE: It’s the biggest fear point that dealers have. If you still play in the CPC world only, you’re down groveling with everybody who can compete against you
We Saw It In ENX Magazine
continued on page 38
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Fixing the Broken MPS Beast to Reinvent, Deliver and Profit with similar, traditional offers. However, with the managed aspects I alluded to earlier, it’s difficult for someone to come and unseat me because of the unique and focused value I am able to bring to the segments I serve. There’s an old adage: where there’s mystery, there’s margin. Let’s look at this from a vertical standpoint, such as education. For example, if I can solve your plagiarism issue, or solve the fact that you can’t test your third graders due to funding challenges, or solve your language translations due to an influx of refugees and non-English speaking students into your school district, it has nothing to do with how fast the copier prints.
active directory services and network infrastructure. So information travels securely, both digitally and in printed form. The last thing that customer wants to do is shift to CPC to save money on a copier and replace all the glue that our partner put behind that infrastructure. Many of our partners are primary with another major competitor. They work on a commission-only basis. If you define MPS that way, you are in a finite profit model. So you are selling predominantly cost per copy. The partner or vendor you’re working with is paying you a commission. You really have no direct ownership or control of that opportunity to drive economies that will increase
THE VALUE REALLY STARTS TO COME TO LIFE WHEN YOU CAN SOLVE OTHER BUSINESS PROBLEMS THAT MAKE THEM MORE PRODUCTIVE, LOWER THEIR COSTS AND IMPROVE THE SATISFACTION OF THEIR CUSTOMERS. Melanie Hudson, Lexmark
In some cases, it has nothing to do with my cost per impression, per se. All that pales in comparison when you begin to satisfy and solve problems that are impeding the fundamental purpose of the organization, which is to educate children from all walks of life. This is where MPS is different and brings far greater value, increased profitability and increased retention. Our partners who drive MPS typically experience 40-plus percent gross margin and extremely high retention in excess of 90 percent. We have one partner in the health care space that closes two or three deals a year and has 100 percent retention of its client base. It goes into hospitals (many large systems) and use these devices as an on-ramp to several highly vertical value points. Take patient discharge—all of these activities are automated through devices. The customer sees these tools as a part of the fabric of their company. Our partner is a good network citizen, tied to the health care provider’s entire 38
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your margin, to add value that will increase revenue and profit. HUDSON: Dealers need to understand the key variables in whether a specific sale is profitable, and that tracking and measuring those throughout the contract lifecycle is critical to success. You may need to adjust along the way if a particular client is highly unprofitable, but you cannot make those adjustments without understanding the drivers of the loss. Hardware, consumables and maintenance services are all areas one should focus on at a detailed level to understand what the cost drivers are and how to mitigate losses. By consistently monitoring each element, you can then make adjustments on the front end for new accounts. As an example, for proactive consumables, the logistics cost required to send discrete toner shipments proactively, the consumption of the toner and understanding what is driving the imbalance (waste, coverage, or theft) and then looking at those dynamics by industry to determine any patterns that
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will allow you to price accordingly from the start of the contract in order to avoid heavy losses can help drive costs out immediately. Consistent monitoring is also critical to understanding where losses are occurring and allow you to make adjustments along the way (density settings, reducing manual orders, etc.). For maintenance, it is all about service-action rates and how to avoid the dispatch from ever occurring in the first place. This is more difficult in a managed services engagement due to customer expectations, but it is the key to lowering costs. Implementing a predictive service model greatly improves the ability to lower costs and improve the client experience. Finally, continuing to build on your relationship with your customer is critical. Do you really understand their business needs, how they interact with their customers and where you might intervene to make the interaction more seamless with a software solution? The value really starts to come to life when you can solve other business problems that make them more productive, lower their costs and improve the satisfaction of their customers. For dealers who may have not found success with basic toner replenishment and break/fix programs, how can they reinvent their process to become a true MPS provider? JOYCE: The transformation involves an inversion of the selling process instead of a conversation about speeds and feeds. It’s not highly transactional; it’s highly strategic and intelligent. It requires one to do their homework and to work with people or organizations who can provide tools and best practices to assist in the transition. Using the right tools and best practices allows the partner to be more prescriptive and confident. You want to be able to tell the end user you can save them $700,000 over the next three years and deliver it. It’s being able to say that over the last 90 days, I have authenticated 36 different security incidents against your devices that you know nothing about, and here’s how we
We Saw It In ENX Magazine
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can prevent this from happening again. It is all about the program itself and it has nothing to do with the pieces. One of the challenges resellers face is the lack of experienced, on-board MPS talent. The market is ripe with individuals who profess to be MPS experts, and it can often be difficult for a reseller to determine whether the individual is credible and experienced or not. It only takes getting burned once for that pain to remain close at hand. Unless you have been in the arena, it’s often difficult to determine if somebody in front of you has that expertise or not, and many poor providers can tell a convincing story. We are actually vetting a number of candidates for our partners to help them, because some get gun shy after they pay for a so-called “MPS program” and find out the provider or individual cannot deliver. We are also working extensively with our partners to support their need to develop that talent. HUDSON: First, it is important to dive into why the success isn’t there with
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basic toner replenishment and break/ fix programs. If it is an execution issue, these are fundamentals of any MPS program that must be resolved before you have the right to sell a customer other services. Customers expect proactive toner replenishment, and vendors perform this in a variety of ways—some execute it manually and others, like Lexmark, execute it 100 percent automated. The systems being used to drive toner replenishment are critical to ensuring a smooth experience for the client. It seems basic, but many vendors do not have a robust platform to perform consumables replenishment without manual intervention, and this is just one aspect of a solid process. For maintenance, it is important to look at the entire process from the time a call is received to the device repair. It’s also important to start with a print assessment to understand what a customer truly needs for their environment. Placing the wrong device into an environment can create profit challenges in terms of additional We Saw It In ENX Magazine
hardware and maintenance services losses—all due to inadequate device selection based on functionality and utilization needs. MELO: One thing is to understand that printers aren’t small MFPs. They’re constructed differently, they are designed to be customer-replaceable units. They have shorter, less-complicated paper paths. I’ve heard dealers say they can’t make money on service. Well yeah, the issue is they don’t need to make money on service, the issue is the need to make money, period. For an MFP, the parts and labor component of service is the majority of it. On printers, the supplies portion is probably 90 percent of the consumables part, including drums. It’s a different model and you don’t need to visit printers with the same regularity as you do with MFPs, and that’s all OK. Where people tend to get tripped up, especially on the service side, is that they want to service from a break/fix perspective with the printer fleet in the same way they do the MFP fleet. It’s just a different animal altogether. ♦
September 2018 | www.enxmag.com
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Bill Erpelding
MPS
MPS Isn’t Always Love at First Sight
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uilding a successful MPS business can be challenging. Often, a decision maker gets pitched on the benefits, signs on the dotted line and the deal is done. The seller implements the program, and just like magic, everyone is in love with this new way of doing things. Right? Wrong. Imagine hundreds or thousands of employees going about their business without any idea someone has moved their cheese. The printer they’ve always used is running low on supplies, and the stash of extra toner is no longer in the supply closet. They email the person who orders the supplies, only to be told “I don’t do that anymore.” Someone in another department is dealing with a printer that appears to be broken. They turn to IT for help and hit a dead end—“we aren’t responsible for printers.” See where this is going? Without taking proper care to set upfront expectations, train end-users and carefully plot a course, your new MPS contract is doomed for
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failure. Not because it’s a bad program, but because the people using the program weren’t wooed from the beginning.
Laying Foundation
There are some things in the work environment that can easily be embraced and loved right from the start—a new Keurig in the coffee room, a better selection of snacks in the break room. But MPS doesn’t arrive in a shiny package. The efficiencies it creates aren’t always seen by the masses, and it involves change. Pitching the decision maker isn’t enough to ensure the program goes well. Ignoring the less-obvious details can really wreak havoc on the program—things like having a clear understanding of all of the stakeholders involved, the political landscape of the organization, understanding the special needs of critical users and uncovering the customer’s motivations. Repeatable, profitable realization of your MPS practice requires a clear vision of your true capabilities, and an accurate
We Saw It In ENX Magazine
explanation of your offering and value-proposition. While there are working definitions of managed print, in reality it means different things to different people. To some, it’s just a modified billing process to manage expense. To others, it’s full blown cost-per-image, inclusive of hardware, service and support. Without a clear commitment to your program capabilities, you’ll struggle to achieve alignment with customers and a repeatable sales motion. Do some soul searching. What solutions do you offer? What services are you exceptional at providing? What pain points can you resolve for customers? Being candid with yourself about your goals and motivations will allow you to better qualify customers and manage your sales pipeline— and ultimately lead to far fewer headaches surrounding your partnerships over the long haul.
Payoff Pitch
Successfully pitching the decision maker with your true MPS capabilities is only the beginning. Become a resource for your customers to educate everyone who will be impacted by the switch to a managed environment. Be transparent about the efficiencies it will create to help ease the pain of change. The end users deserve to know how the process works from the very beginning, rather than finding out after supplies run out or a machine breaks down. It will help you establish a level of trust within your customer’s organization so you both can arrive at “happily ever after” in MPS. ♦
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Managed Services
MPS = Most Profitable Service?
I
n today’s BTA channel, you’d think that everyone would have mastered the MPS sales model by now, and easily built a nice portfolio of managed print renewals. I wish that were true. Launching services (MPS) from a hardware-centric industry is extremely challenging for many reasons. Profitability inside the MPS business model doesn’t just happen; there’s a fair amount of chatter that shares the opposite. Profit comes from a plan and best-practice execution, with the intent to be profitable. With a proper MPS go-to-market strategy, most are able to master the hurdles—especially since they’re splitting the focus of their sales organization to accommodate both hardware and services together. Here are some helpful tips for driving profitable MPS opportunities: • Create a mature plan that delivers high value and seeks an appropriate level of profit. • Make sure you can financially survive the initial MPS learning curve. If not, wait until you can. • Identify your TAM (total available market): are there enough targets to launch MPS? • Specifically identify job titles that deliver the shortest path to growth and profit. • Redesign your salesteam model for non-stop opportunity development and profit. • Develop an onboarding strategy that works flawlessly the first time. • Automate supplies and service (low/no inventory).
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• Manage accounts with a fleet-service, not break/fix, mindset. • Design your MPS plan to satisfy your client’s business model, not yours. • Communicate, communicate, communicate.
Create a Mature Plan
I used the word “mature” intentionally. Many dealers haven’t taken into account the completely different market approach and sales-cycle requirements between the consultative (MPS) sale and hardware. I do understand that there are a lot of hardware-sales organizations with members who believe they’re consultative in their approach. But the majority of MFP sales reps I encounter deploy the renew/replace methodologies. Consultative sales have a longer sales cycle, and can have many contributors toward the advancement of each deal. It requires an intense businessdevelopment process to create a successful sales result; renewals can sometimes be as hard and painful as the initial agreement. Not to mention that MPS can collide with your hardware business, and without a proper engagement protocol, can create an internal battle that few will recover from. A mature plan defines the rules of engagement and maintains a unified team approach to the marketplace. If your plan simultaneously saddles an MPS quota on top of your hardware sales reps, I’ve never seen this drive success for both product lines. What does this have to do with profitability? We Saw It In ENX Magazine
If your MPS program kills your effectiveness in your hardware foundation, you obviously won’t be as profitable as you could be. Some laugh when I bring this up. But I have seen many companies with mediocre sales results try to add an MPS program, only to bail because it kills their hardware momentum. If you track the stats like I do, you’d see that even successful MPS dealers take a hit on their profit margins, because the pedigree is still a hardware sales organization. So, if your successful months are outnumbered by unsuccessful months, I would consider waiting and repair your sales foundation before launching your MPS program.
Your Total Available Market
In order to build a profitable MPS program, your marketplace has to have enough TAM to support your transition. There are markets that simply don’t support a full-charge MPS program. If you don’t have enough enterprise-level prospects, you might consider a different direction—possibly managed IT services and focus on the SMB clients. Some argue you can push MPS down to a medium-sized client, but remember their pain is less, so your value may be also. To be profitable with MPS, you have to find an enterpriselevel client whose print fleet is large enough that it distracts the IT team from their core responsibilities and wasted spending is everywhere. In those environments, as an MPS dealer, you can do things the end user can never do! continued on page 44
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MPS = Most Profitable Service? Let’s say you do have a target-rich environment for MPS, and a market loaded with enterprise-level prospects. Wouldn’t you rather spend your time approaching decision makers who will actually allow you to be profitable? For 10 years, I’ve been tracking the profit levels of MPS by title. The typical position that allows the most profit within an MPS deal is the “senior-most financially concerned corporate officer,” or the CFO if all things are normal. Why would anyone want to spend time with anyone else? The IT leader is way below the CFO for profit, and purchasing is below that. Why don’t we focus on the CFO as our primary MPS target? Mostly because hardware-centered dealers can’t afford to have their sales reps stuck in the longer MPS sales cycle. Manufacturers and dealers push their reps into whatever door they can, to get whatever deal they can. When this happens one would have to ask: if your reps really don’t have a purposeful process to sell MPS to the right targets with an authorized sales cycle, why do it at all?
that most likely will eventually lead you to other service products. But if your sales team model promotes MPS, and thus hardware at the same time, you can enjoy congruent momentum, which protects your foundational business while moving you to a services future.
Onboarding
Any company winning MPS deals knows there are a significant number of things that can go wrong in the onboarding and implementation stage. Sales works way too hard to win MPS deals, often to experience a fumble in the end zone. Onboarding a new MPS client can be an amazing experience, assuring everyone that they did the right thing. It can also be a nightmare, and a place where sales rep promises turn into “we can’t do that” explanations that most likely shift costs under “emergencyovernight” fixes that eat profit like crazy. So a great best practice is to have an internal meeting where the sales team explains and hands off every aspect of the newly acquired MPS agreement.
WHEN YOUR MPS PROGRAM DOESN’T ALIGN TO YOUR CLIENT’S FINANCIAL AND PERFORMANCE OBJECTIVES, MOST LIKELY YOU’LL HAVE TO COMPETE AGAIN TO KEEP THE BUSINESS.
Sales Team Model
So what are the characteristics of a bad sales-team model? I’ve reviewed many sales teams for both best practice and process, and when a sales team fails to produce a consistent 90-day deep pipeline with a forecast accuracy below 70 percent, someone should be working to improve those results. When you blend hardware with services, you want to restructure your sales team model so that your market approach promotes the top comprehensive product and the fallback can be to sell the lessor product. So if you transform your entire team to sell MPS, any deals that falter or dissolve still give you the possibility for hardware sales. Seldom is the reverse possible. MPS is a stepping-stone to the future. It’s just a product with a newer lifecycle 44
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Cover every promise made and share your proposal to your team exactly like you shared it to the client. You’d be surprised what you can shake out. This has a lot to do with training in both the sales and onboarding department. These teams need to function as one from the client’s point of view. How to do that? • Break down your processes, making sure software and drivers are installed first. Communicate your purpose and presence at their facility, and introduce your company to all stakeholders of the process. • Set up a staging zone, possibly ship your new inbound devices there and have a set up team work at their facility in that controlled
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area making ready all devices for deployment. • Have a dedicated follow up team do ops training and make sure everyone is printing correctly. • Make sure end users know your software will alert you when anything is less than perfect, but have them schedule follow-up training and leave their direct connect contact information so all issues can be dealt with immediately. Smooth onboarding leads to happy end users, happy end users leads to great end user productivity, their productivity leads to your profit.
Manage with a Fleet Mindset
I blended these two topics because I think they go together. Do I really need to mention that your service and supply management needs to be automated from the device level? I really don’t want six people on my payroll tied to a computer screen all day long, just so they can respond to an alert that pops up from someone’s device in the field. Can you say profit killer? The more fleets you win, the more people you’d have to apply to the process, not even accounting for vacations and turnover. I don’t know if you’ve ever experienced a board meeting where the big-money investors are present to protect their investment. If I’ve heard it once, I’ve heard it a hundred times: build everything so it’s scalable and repeatable. Keeping everything in house doesn’t always produce scalable, repeatable results, not to mention that it may hit your profitability. Go lean and grow your MPS business portfolio. Using companies like Supplies Network, LMI and Clover for fleet management allows you to focus on growing and expanding your business. Regardless of which path you take to support your client’s fleet, look at the big picture and any time your people are onsite, scan the environment for all preventable problems. Anything your team can do while they’re onsite makes you more profitable. Train your team to think fleet, not single call.
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continued on page 46
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MPS = Most Profitable Service? MPS that Satisfies.
A lot of people believe MPS is a great deliverable which sells a lot of hardware and supplies. But I contend that managing a client’s print fleet should yield a result where the client is spending less and devices last longer. If you understand this point, most likely you’ll have less account turnover, because customers will know that your objectives mirror their objectives. When your MPS program doesn’t align to your client’s financial and performance objectives, most likely you’ll have to compete again to keep the business. Once you’ve won the deal, nurture and expand your relationship by providing the client with timely, accurate information to support their decision for choosing you. It’s NOT a QBR where you blab about the ten things someone told you to share. It IS about providing information your client requires. Nurturing the relationship—loving the 46
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client to renewal—is as important as the initial sale. Don’t wait until six months before expiration to re-engage the client; that’s right about where the competitors begin their hard-core press. So if you haven’t been communicating with them all along, you’ll just be one of the crowd. I’ve never understood sitting down with a client and sharing all of the negative things that have happened over the last 90 days. I only want them to hear about how my company has created a maximum amount of “up” time, and how we’ve increased their productivity. So share the great news and endorse their decision for choosing your company. Deal with any concerns immediately and make problems non-existent. This drives your renewal, and renewals drive ongoing profit. If your main contact ever tells you they’re leaving the company, make sure you set up a meeting to transfer and consummate the new relationship. New people can often bring in new service
www.enxmag.com | September 2018
partners, and you want the best chance to communicate your value with someone in the room who will validate your worth. If you are surprised and find out that your main contact is already gone, resell the entire deal to the new contact, no matter how long the remaining term is. They have to KNOW and feel good about sending you that big check every month. There are so many things that can go wrong to eat up your profits. I’ve even heard of a couple of situations where dealers got stuck in an MPS deal in which their monthly costs were greater than the inbound revenue! It happens. However, should you fail (and you will), fail forward. Evaluate every step of your process from prospecting to renewal. You don’t have to do everything in-house to grow; choose high-quality partners for fleet management. Focus on profitable growth first, then make decisions on how you execute. Now, stop reading and go win another deal! ♦
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Business Profile
CET Group Achieves Exponential Growth Through Continued Globalization
T
he success story of CET Group has been a 22-year journey. What started as a small copier lamp shop in 1996 now includes automated manufacturing facilities, wholly owned operating subsidiaries, and sales and marketing organizations in over 100 countries. Now, the company hopes to strengthen its North American presence through its recent acquisition of Q2, LLC, a Minnesota-based office imaging parts and supplies distributor—a move spearheaded by Steven Ma, CET Group’s founder, chairman of the board and CEO.
Steven Ma, CET Group Co., Ltd.
Growth and Globalization
Under Ma’s direction, CET opened CET USA in 2006. Today, located just south of Boston in Raynham, MA, the company includes a newly expanded distribution center that 48
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doubled in size and sales offices for the Americas, including South America. “CET prides itself on developing marketing strategies and programs to meet the specific needs of our customers around the world. Entering into these regions is vital to servicing our global customer base,” said Ma. “We are committed to expanding into areas where we can provide strong local representation and support, which is why we are excited to have Q2 join our team. The people at Q2 are highly experienced and knowledgeable about the U.S. market, and their customer service and support are superior.” The result of CET’s efforts to expand? In addition to its Massachusetts offices, the company now has five international branches, all of which have opened since 2015: Singapore, Russia, Spain, Brazil and Dubai. The Russian branch, which officially opened in March 2017, manages not only the Russian market, but also Eastern Europe and Central Asia. In June of 2017, CET merged with Spanish company Reprovigo Export, S.L., to better serve customers in the Western European market. Just one month later, CET combined with Brazil’s Paulimac to form Paulimac/Benfica & CET Group Brasil. CET then capped off the year with the addition of CET AME DMCC in Dubai, established to support their growing business in the Middle East and Africa. All in all, Ma logged 300,000 flight miles in We Saw It In ENX Magazine
an effort to give his company a larger global reach. Ma explained, “We have two principles. First, we set out to learn our customer’s point of view about the market or markets they serve. This allows us to understand important requirements so we can respond to customer expectations. Second, we focus on what our customers actually need to be successful in the future, not just what we can provide them today.”
Manufacturing Capabilities
Today, CET offers more than 6,700 products for printers, copiers, and multifunction machines for every major brand including HP, Canon, Ricoh, Xerox, Konica Minolta, Lexmark and others. While the company does offer a small selection of OEM items, the majority of products in their catalog are produced inside their own manufacturing facilities. In addition, CET also operates its own chip design and production company, Ming Qi Electronic, which it acquired in 2016. The company’s largest investment, and biggest commitment to the office-imaging industry, will come this fall with the grand opening of its new factory campus in Hebei Province, China. The 980,000-plus square foot facility will house every part of the production cycle—research, design, development, training, manufacturing, quality control and warehousing—in an effort to streamline their production system. continued on page 50
Progress. The Right Pieces Coming Together Today, a new state-of-the-art laboratory, an intelligent robotic logistical system and increased production capacity have all come together in our new one million square foot manufacturing facility. Join our progress and let us help you succeed. Learn more at CETGroupco.com.
Investing in Your Future CET Group Achieves Exponential Growth Through Continued Globalization The factory will use new, state-ofthe-art toner-filling equipment, which will immediately increase capacity by 30 percent, and new robotics to improve production throughout and consistency shift to shift. It also includes a smart warehouse automated handling system that can increase accuracy of storing and picking raw materials and finished goods.
In addition, to its manufacturing, CET has another area of focus that has helped it gain additional notoriety: testing. The company stablished the “CET Imaging Technology Testing Center,” which earned accreditation from the National CNAS and the Beijing Municipal Bureau of Quality and Technical Supervision CMA. They have also been authorized by the National Accreditation Committee and the Beijing Bureau of Quality and Technical Supervision as a thirdparty inspection and testing agency for industry products including toner, developer, drums, fuser rollers and more.
Investing in the Future of Its Customers
CET’s new production facility in Hebei Province will be fully functional in Fall 2018 50
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According to Ma, CET’s focus on delivering cost-effective, quality
www.enxmag.com | September 2018
products has helped the company establish a comprehensive and loyal worldwide customer base. “There is no shortcut to maintaining long-term and stable business relationships,” he maintains. “As a supplier, it is our duty to understand and create common interests that help grow our business and that of our customers. If you can identify and nurture those interests you find satisfaction in mutual growth. We want to maintain a win-win philosophy with our customers—one that creates a relationship built on mutual respect while seeking reciprocal ideas and agreements with the aim of creating more abundant opportunities, wealth, resource recognition and reward. This principal is at the heart of our continuous development and growth.” ♦
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Group, Inc.
Last Chance to Apply for Elite Dealer Nomination G
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September 2018 | www.enxmag.com
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Ken Edmonds
Service Management News Briefing
Service POV: MPS Pros and Cons, and Making it Work
I
n talking with service managers over the last decade, I have encountered a variety of opinions about Managed Print Services (MPS). Some service managers think it’s a profitable addition to their revenue stream. Some find it difficult to manage due to the wide variety of equipment and the difficulty in becoming proficient at supporting a multitude of brands and models. Others see it as an unprofitable nuisance mandated on their department. No matter how it is viewed, MPS is here to stay. Sales departments will continue to sell the program, and service departments will have to continue supporting it. So companies need to find ways to make it both manageable and profitable.
Associated with this is the wide discrepancy in operating costs between the devices. In most cases, the sales department sells a blended rate that applies to all models. This rate does not take into account the specific costs of the models. The result is that some, or perhaps most, of the devices in the fleet may not be generating enough revenue to provide the desired profit margin. The diverse-model portfolio also requires more car stock and more inventory to have the needed parts on hand. In many cases, the necessary training for all the different models may not be available, or the cost to obtain the training may outweigh the potential profit in the contract. Another consideration is the cost of the supplies for the
THE BEST CLIENT PROFILE FROM THE SERVICE PERSPECTIVE IS ONE WITH A HIGH DENSITY OF DEVICES IN A COMPACT GEOGRAPHIC AREA, AS IT REDUCES THE DRIVE TIME ASSOCIATED WITH SERVICING THE CLIENT. Let’s discuss several challenges to the service department created by an MPS program. We will also look for steps to take to improve the serviceability of a contract and the profitability.
Challenges
A typical prospect for MPS may already have a wide variety of printer makes and models. In many cases, the printer chosen for a specific location was simply on sale when they wanted to add one. The resulting mix of printer manufacturers and differing models is a challenge for the service department to manage. 52
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printers., as some printers have much higher page costs. Using aftermarket toners helps, but there may not always be reliable aftermarket cartridges for all models. There is also a potential trap in truly managed print services. The premise is that by managing the output and shifting print jobs to the appropriate device, you reduce the operating costs for the client. The result is good for the client, but bad for the service department since managing print reduces revenue and profit. We Saw It In ENX Magazine
Improve the Situation
Avoiding these issues starts with the sales process. During assessment, you should provide a list of the prospect’s current printer models to the service manager for evaluation. The service manager will then need to identify the models that may be a challenge, either from a cost standpoint or because of serviceability issues. Construct the MPS agreement so the dealer can replace the models that are a challenge. Make sure the contract allows for remanufactured equipment and cartridges, so that challenging models can be replaced by low-page-cost devices with comparable features. The process of standardizing the fleet has significant benefits for both the client and the service department. For the client, it simplifies supply management— they will not need to maintain as much inventory, since more devices use the same cartridges. It will also simplify printer management on the network, requiring fewer print drivers. For the service department, developing a standardized list of replacement devices makes it much easier to manage both the needed training and the inventory., and a standardized fleet also improves technician proficiency. The best client profile from the service perspective is one with a high density of devices in a compact geographic area, as it reduces the drive time associated with servicing the client. The worst clients for the
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service department are small companies with few printers, as they’re typically less profitable due to increased drive time. Clients such as hospitals, universities and corporate headquarters may justify the expense of having one or more hot-swappable devices for critical areas. This allows the technician to install a replacement while waiting for parts or troubleshooting an issue. A standardized fleet of equipment simplifies this process. Be sure to include the cost of purchasing the hot-swappable devices in the proposal.
Rewards and Benefits
A well-structured and managed MPS process will generate additional revenue, and most dealers have the available technician time to cover these accounts without
having to hire new people. When the volume exceeds the available staffing, you can hire technicians with less experience to service the MPS accounts. It also provides the sales department with the potential to reach new clients and increase the revenue per client from the existing client base. For clients, it simplifies the management of their printer fleet. Many dealers are taking MPS to the next level with a relatively new program, Seat Based Billing (SBB). SBB is designed to leverage the advantages of an MPS program while eliminating the challenges. If you are not familiar with the program, I would recommend investigating the program and processes involved. ♦ We Saw It In ENX Magazine
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Phone 972-416-3000 • Email sales@ceicopiers.com September 2018 | www.enxmag.com
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Britt Horvat
Technical Tips News Briefing
Resetting Fault Codes for the Families in the Xerox DC250 Style Xerox Families: 550/C70, DCP700, J75/C75, DC250/DC260, WC-7675 and WC-7775
T
An increasingly common topic, which has been asked about many times over, has to do with resetting fault codes from diagnostics on the more recent families in the DC250 style. In a previous article, we looked at similarities and differences among the many families in this series, but the fault codes were not addressed at the time.
his is because even though they remained familiar, the memory codes that need to be reset to “0” to clear the faults change for each new family of machines. So let’s first have a peek at some of the subtle changes in the diagnostic-access procedures and how to navigate the diagnostic menus. Then, we’ll cover the faults that require resetting, and see what’s changed over the years. The procedure for getting into UI (User Interface) Diagnostics and navigating the menus to find “NVM Read/Write” depends on which family of machines you’re working on. Important: do not use the other function “NVM Initialize” to try to clear faults unless you have the tools and firmware and backup files to restore the machine to its original settings. (Note: NVM stands for Non Volatile Memory)
Accessing Diagnostics, and how to get into “NVM Read/ Write”
DC250 Family (DocuColor) DC240/242/250/252/260 1. Hold down the “0” button for five full seconds, and while still holding the “0,” press “Start.” A prompt for a password will show up (the “CE Access Number”). 2. Use the default password “6789,” and press “Confirm.” 3. Press the “Log-in/out” button. 4. On the touchscreen, press “System Settings,” “Common Settings” and finally “Maintenance/Diagnostics.” 54
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Here you’ll find a menu option for “NVM Read / Write.” DC700 Family (Digital Color Press) DCP-700/700i/770 or 550 Family (Color) 550/560/570, C60/C70 or J75 Family (Digital Press) C75/J75 These three families are almost the same as the DC250 Family above, but instead of pressing “Log-in/out,” press “Machine Status” instead. Then choose the “Tools Tab” up top. The rest is the same as DC250. WC-7675 Family (WorkCentre) WC7655, 7665, 7675 or WC-7775 Family WC-7755, 7765, 7775 1. From the fault code screen, hold down the following three buttons
Fault Code 010-319 (310-319) 010-320 (310-320) 010-324 (310-324) 042-326 (342-326) 093-314 (393-314) 093-315 (393-315) 093-316 (393-316) 093-317 (393-317)
www.enxmag.com | September 2018
Description
Fuser Heat Control Problem Fuser Overheat Fuser Failure IBT Belt Home Sensing Problem Toner Dispense Problem (Yellow) Toner Dispense Problem (Magenta) Toner Dispense Problem (Cyan) Toner Dispense Problem (Black)
J75 Copier
for about 10 seconds: “#,” “*” and “Stop.” 2. When the diagnostic login screen asks for a password, type in the code “6789” and press “Enter.” 3. Wait a few minutes as the machine reboots into the Service Diagnostics screen. Here you will see several tabs across the top. 4. Touch the “Adjustments” tab where you’ll find “NVM Read/Write.” Now that you have a clear shot to get to the “NVM Read/Write screen,” let’s have a look at the Fault Codes that require resetting. In each case, it’s important to first address what caused the fault and correct the problem before
NVM value: Must Reset to “0” For For For DC240/250, 550/560/570 DCP700/700i For C75/J75 DC-242/252/260, C60/C70 (*770 ONLY) WC-7655/7665/7675, WC-7755/7765/7775 744-361 745-092 & Reset to 0: 744-351 744-351 (*744-507) 765-531 744-360 745-092 & Reset to 0: 744-350 745-416 (*744-506) 765-531 744-092 & Reset to 0: 744-352 744-352 744-352 765-531 Reset to 0: 741-105
741-119
741-106
741-132
Reset to 0: 762-312
762-368
762-312
762-316
Reset to 0: 762-313
762-369
762-313
762-317
Reset to 0: 762-314
762-370
762-314
762-318
Reset to 0: 762-315
762-371
762-315
762-319
We Saw It In ENX Magazine
resetting the memory codes. The machine is protecting itself from someone trying to run copies or prints while it’s still in the error condition. If you don’t address the problem which triggered the fault, in most cases the fault code will come back in very short order. Fault conditions that require resetting include fuser faults relating to temperature control, transfer-belt home-position sensing faults and tonerdispense failures. Note that some models use a “3” as the first digit in the fault codes, while most of the machines use a “0” as the first digit. So, the fault 310-319 has the same meaning as 010-319. That wraps it up. With these few details in hand and the basic Tech Info sheets for the DC250 style, you’ll be better equipped to fix any of the models in the entire series. Happy repairs, everyone! ♦
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Display Advertisers Index All Leasing Services................ 61 Phone: 1-866-727-3750 Fax: 1-949-727-3850 www.alscopiers.com BEI Services............................... 4 Phone: 1-307-587-8446 www.beiservices.com
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Carolina Wholesale................. 21 Phone: 1-800-521-4600 Fax: 1-800-356-9169 www.cwholesale.com
Hytec......................................... 55 Phone: 1-800-883-1001 Phone: 1-407-297-1001 Fax: 1-407-297-4310 www.hytecrepair.com
Nation-Wide Repair Service.. 53 Customer Service:1-866-655-8676 Technical Support: 1-800-798-1814 www.nwrsinc.com www.fusionimagetech.com
IDS-International Digital Solutions................................... 15 Phone: 1-888-372-3700 Fax: 1-562-921-1167 sales@idswc.com
National Copy Cartridge........ 19 Phone: 1-619-562-6995 www.nationalcopycartridge.com
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ImagineIT................................ 55 Phone: 585-872-5802 Empties@ImagineRecycling.com
Docukit..................................... 33 Phone: 1-562-274-9203 www.docukit.com
Intercom Exporting Inc.......... 51 Phone: 1-800-960-1119 Phone: 1-954-978-2121 Fax: 1-954-978-2412 www.intercomcopiers.com
Escalera.................................... 55 Phone: 1-800-622-1359 www.escalera.com
ITC Supplies............................ 45 Phone: 1-877-933-5558 www.itcsupplies.com
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Nectron International Inc....... 43 Phone: 1-281-240-2222 Phone: 1-800-456-4678 Fax: 1-281-240-0468 www.nectron.com Ninestar Technology Co., LTD................................... 60 Phone: 1-800-817-0688 www.ninestartechonline.com NuWorld Business Systems............................... 10-14 Phone: 1-800-729-8320 Fax: 1-800-829-0292 www.nuworldinc.com
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Display Advertisers Index OES-Solutions........................... 9 Phone: 1-877-637-1240 www.oes-solutions.com store.oes-solutions.com
Ross International................... 47 Phone: 1-973-365-9900 Phone: 1-800-240-ROSS Fax: 1-973-473-8800 www.ross-international.com
Sharp........................................ 23 Static Control............................ 2 Phone: 1-919-774-3808 Phone:1-800-488-2426
Pinnacle Sales, Inc................... 29 Phone: 1-440-734-9195 www.psi-ohio.com
SalesMaker Carts.................... 39 Phone: 1-800-821-4140 Fax: 1-800-418-2525 www.foldingcarts.com
Quick Quality Cabinets.......... 39 Phone: 1-888-831-3030 Fax: 1-800-418-2525 www.qqcabinets.com
www.scc-inc.com/allpage Supplies Network.................... 41 Phone: 1-800-729-9300
Samsung................................... 17 www.hp.com/go/samsung
www.SuppliesNetwork.com Supplies Wholesalers......... 62-63 Phone:1-866-817-8795 www.SuppliesWholesalers.com
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Contact National Distributors ACM Technology 1-800-722-7745 Collins Distributing 1-800-727-0884 IDS 1-888-372-3700 Supplies Network 1-800-729-9300 Visual Edge Technology............ 5 www.visualedge.com
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You print one. We’ll plant one. Every time your printer reaches 8,333 pages, you’ve printed a tree’s worth of paper. Over time that’s a lot of trees, but we’re committed to eco innovation every step of the way. PrintReleaf Exchange is the world’s first technology platform offering cloud-based paper tracking and reforestation. It measures your paper consumption and every time you reach a tree’s worth of printed paper, a new tree will be planted on your behalf, keeping you at a paper-neutral footprint. Most importantly, it’s done automatically for you. Well, for all of us really. To learn more about how you can become PrintReleaf Certified, contact your Toshiba Sales Representative.
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