Thursday, November 13, 2008

InfoTrends - It's All About the Solution

And it's Deja Vu all over again.

I found this excerpt from an Infotrends article in Europe.

Very interesting but not all that surprising.

— InfoTrends —

Solutions Capture More Pages and Fuel the Office Equipment Market


In years past, InfoTrends has written documents regarding the adoption rate of solutions within the office equipment market. At that time, solutions were really in the early stages of adoption, and OEM vendors and ISVs were in their initial posturing stages as they were trying to determine how best to take advantage of solutions and how they would eventually fit into their overall marketing and sales strategies. While solutions are still in the early stages of technology adoption today, we have seen significant growth in this category over the years and believe that solutions have yet to reach their full potential for penetration within this market.

Although many dealers understand that solutions should be an integral part of their strategy, most are still in the process of figuring out how to incorporate them into their range of offerings. Their propensity to fall back on the hardware products they are used to selling is hindering them from migrating to the next level and fully embracing the true solutions sale.

One of the biggest issues is sales cycles. Hardware sales cycles have traditionally been shorter than a solutions sales cycle. Another problem is that many companies set monthly quotas and sales people are usually trained to focus on hardware as they can bring the numbers in at the end of the month. In reality, a sales person would not be able to push a solution in 30 days; the cycles are getting shorter, but it still may be impossible in such a short period of time. A solution sale is like creating a good bottle of wine. It is a slower process that needs a certain amount of attention and caring before it is ready to be consumed. Nevertheless, within the office equipment market, hardware is becoming more difficult to differentiate as vendors are bringing to the market devices with equivalent functionalities and performances.

There have been some disruptions in the market with HP’s Edgeline and Xerox’s solid ink, but it seems that these technologies need more time before they gain great acceptance in the industry.

One trend is for sure: hardware is becoming more difficult to differentiate.

It is becoming more of an easily replaceable commodity or accessory, and vendors are dropping their margins at a consistent rate to remain competitive in this saturated market. Hardware revenues are expected to plummet in the next five years and, as a result, some vendors have already started to realign their sales focus from “hardware placed” to “pages captured,” from “printers” to “printing.”

Solutions and professional services have been welcomed as the Holy Grail of the office equipment market as they can be a huge differentiator in a hardware sale.

According to Clayton Christensen’s terminology, solutions can be defined as “the disrupting innovations” capable of changing the dynamics and evolution of value in the office equipment industry.

On the wave of Web 2.0, end-users are also increasingly changing the way they create, manage, and digest documents and information. Customers are sitting in the driving seat and they are inevitably looking for a tighter control over their document workflow. They require effective device utilization, reduced costs, and a single-source supplier for their equipment needs. They want to drive their entire document life-cycle and decide how to consume the originated contents and information.

As a consequence, solutions have been deemed strategic in addressing these customers’ requirements as they can help capture more pages, reduce Total Cost of Ownership, and enable a seamless and effective document management. On top of that, InfoTrends has been talking about solutions as a key driver in pulling hardware sales and professional services engagements. The popular chart below shows very clearly the European solutions crossroads, predicting that by the end of 2009, the roster of hardware only players would be cut down to 50% of the field.

The preceding is an excerpt from a report entitled Western European Network Document Solutions Forecast: 2007 - 2012. To learn more about this report, visit our online store or contact Robyn Wuori at 781-616-2100 ext. 103 or via e-mail at robyn_wuori@infotrends.com.

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European report, but the phrase remains the same - All copiers are the same, all of them, every single one.
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