Friday, July 22, 2016

The Case Against TCO tools: They Don’t Work


Feathers, prepare to be ruffled.

I know people who know people who have created some of the best Total Cost of Operation/Ownership calculators in the business. Indeed, collecting historical cost figures for such a wide variety of output devices, then applying mathematical formula's to the data, is a daunting task - it can take years to build a good TCO tool.

I've seen the biggest and the 'best' tools available; each time I've walked away thinking,

"Am I the only person who sees how complex and burdensome these things are?"

In the past six months, I have heard folks express frustration over TCO tools -"...too complex, time consuming and unreliable..." No, I am not the only one feeling TCO tools are losing relevancy.

I see three reasons for this:

  1. TCO Tools are Wrong
  2. TCO Tools are designed for Us, Not Them
  3. TCO Tools focus on cost

The Tools are Wrong -

There once was a tool designed and utilized by the largest printer manufacturer in the world. Because the company had been around forever, they had a detailed and in-depth data set of real costs. The database was huge; including figures on just about every printer or copier in the market. It was an experience scrolling through the reams of data - impressive.

The tool was Excel workbook, required 3 days of training to understand and prove more effective if used daily and supported a specialist.

One day, I was putting together a TCO report for a prospective 50 devices. The fleet contained multiple printer and copier manufacturers.

The Tool was awesome.

 I was able to find every device and all related cost components - this was going to be great.

I had high hopes.

Determining TCO for single function printers was a snap and accurate. But when I was establishing cost figures for copiers, I ran into a peculiar issue; all the cost of supporting a copier were rolled into the TCO - rollers, springs, scanning units, ADF’s, paper-tray elements, toner, fuser oil and so on. The information was detailed, correct and to the copier user, irrelevant.

The majority of copier customers do not recognize ANY of these costs. Clients with an “all inclusive” service agreement, never see a charge for rollers or fuser oil - these are covered under the service agreement.

This was a major flaw. If I were to present this figure to a client as their total cost of ownership for copiers, he would have laughed me out the door.

In a second and more familiar scenario, I once presented what I believed to be a solid projection of another prospects TCO. I utilized a tool, found every device in question, applied the known data points and calculated a monthly cost. When first queried, the prospect had no idea how much he was paying for toner and service, but unbeknownst to me, he rustled up some invoices before my presentation.

My figures were grossly exaggerated when compared to his actual cost.  Has this ever happened to you?

I know, I know your TCO tool is easy to use and always accurate, so I must be referring to everyone else's TCO tool, not yours.

Designed for Us, Not Them -

As a practice manager, I've utilized TCO tools to tell me how much MY cost would be if I were to include an “off” brand device under my MpS engagement.

In this case, the TCO tool worked well.

And that’s my point, these tools are designed from the viewpoint of a provider, not the client.

When we suggest to a prospect, how much he's paying, it is us telling them.  Sure, they might agree with your methodology and even your derived cost figures.  But the days of clients believing any sales statement, unchallenged, are waning.  Fewer prospects are comfortable being told what they do not know.

Today, a business worth its salt, can easily determine how much they've spent on toner and paper and services calls - entry level accounting systems track and report this information with the click of a mouse.

Here's the real dirt - most of the designers, creators and providers of TCO tools have never sat across a prospect and proposed a sale.  They've never had a customer challenge the numbers and they've never depended on commissions to pay for food or diapers.

Focus on CPI-

We never leave a proposal at the front desk.
We never discuss cost, except in round numbers, over the phone.
We never make price the only factor.

Sales 101, right?

Then why, oh why, do we boil a sale down to cost per image/machine/unit lead with a TCO?

You see that, right?

When you install the DCA,  run the TCO calculating cost per image, and propose a solution that reduces your client' TCO you've accelerated the commoditization of our industry.

Congratulations.

One more thing - It is Too Late

Not only are the tools inaccurate, anti-client and sales-stunting - everybody is or has a TCO tool in their sales-bag.  This has been going on for decades, we say and believe one thing at the beginning of the month and by the 15th, we're all back to selling as many boxes, images, seats, users, licenses as possible, at a "competitive" price.

It is the way of things.

The train is off the tracks, gravity has taken hold, the bottom is rushing up - margins tumble, OEM's disintegrate, clicks vanish.

Chang the way you sell? It just doesn't matter.

What to do -

I've been there, I've watched this shift occur over the years, not just in printing/copying but in technology, entertainment and the auto industry.  Things change.  Everything dies, baby, that's a fact.

Except and move forward:

  1. Solidify you existing business - use new, simple tools applicable to other niches
  2. Pivot into new areas - you know this
  3. Get rid of your OEM - don't be afraid, let them wear the albatross, not you

Just because something didn't last forever, doesn't mean it wasn't perfect.

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