Sunday, January 6, 2013

How Do We Monetize Workflow?

1/2013

As far back as 1999, assessments and workflow studies were performed as a way to determine exactly where our machines fit best. They were part of a hardware play. The “study” – or assessment – became embedded into all of our sales cycles. Indeed, some sales managers used "number of assessments" as a funnel metric.

OEM training courses included feature benefits, product specification and demo scripts. The more advanced selling courses incorporated a needs assessment and cost/benefit proposal training, and for the time, those courses were pretty well received.

We attended class after class, espousing various pain points, exposing methods and techniques designed to increase your share of their wallet. Because the assessments were nothing more than a component of the selling process, we never expected to be paid for those efforts. If walking around for a few days, interviewing workers, jotting down serial numbers and printing usage reports falls under the normal responsibilities of a copier rep, why would we charge for this service?

Why? Because it is the future

I think points about volumes falling, machine installs stalling and OEMs suffering don't need to be made here. Facts are stubborn things. Print is going to fade, and if you're not planning for it now, if not years ago, your dealership will end. So, unless you are looking to cash in and live on the beach somewhere (which isn't such a bad idea), you've got to be looking beyond the horizon, and right now, realizing revenue by performing workflow services is an attractive alternative.

There are as many strategies for shifting away from boxes and over to systems/processes as there are businesses.

Let's take a look at two:


The Extreme Makeover:


* Repurpose large sections of your service department. In addition to cross-training from copier to printer (or printer to copier), invest in additional technical certifications. I would look to CompTIA.

* Uptrain your selling team. The most important area to shift is your selling team. Move away from traditional industry sales techniques. Look outside our niche.

* Reduce internal costs. Assess and optimize your own internal processes to the bone, reducing wasted time and dollars along the way.

* Position into the cloud (SaaS, HaaS, IaaS, PaaS). The field of cloud providers is ever increasing. Engage in it.

This is a radical, deep-diving, ever-expanding, "burn the ships on the beach" approach and is not for everybody. The thing is, it is better to plan disruption than to be a victim of disruption.

Hearts and Minds:

* Redesign your company value proposition. Look at your business differently and articulate the new you.

* Redesign and rebuild your compensation model to include all recurring revenue, without hardware gates. Don’t destroy innovation. Open your mind to alternative compensation models.

* Repurpose large sections of your service department. In addition to cross-training from copier to printer (or printer to copier), invest in additional technical certifications. I would look to CompTIA.

* Uptrain your selling team. The most important area to shift is your selling team. Move away from traditional industry sales techniques. Look outside our niche.

* Partner with cloud service providers (SaaS, HaaS, IaaS, PaaS). The field of cloud providers is ever increasing. Engage in it.

This approach is just as complicated – and in fact, includes some of the same steps – but it engages at a slower, more thoughtful pace and is less of a shock to the system.

Having been through the "Extreme" example, I am a fan of the "burn the ships on the beach" approach, yet I believe a combination of both approaches is ultimately best. Engage as a consultant, not a copier/MpS salesperson. This requires new talent in the field, and at first, it might mean your selling staff will actually engage as billable experts.

The goals, from a tactical standpoint

When looking to monetize workflow, our goals are reasonably simple:

1. Bill for time – before beginning an assessment or close for the project
2. Bill over time – engage at a monthly rate over a period of time, similar to a retainer.

The BIG difference

In a simple phrase, the difference between revenue from product and revenue through EDM/workflow is that the latter is recurrent versus a project-based, one-time revenue. It’s all been said before: We need to move our model from equipment- to subscription-based. But getting through a plethora of variables and determining cost models over time, which are unlike hardware-plus-service pricing structures, is difficult.

Gaining revenue from workflow is more akin to business consulting, and not many of our dealerships are set up like consulting firms. Consulting firms sustain themselves on project-based revenue billable through a statement of work and a master service agreement; this does not typically generate a great deal of revenue over time – certainly not at the levels we've come to expect from a fleet of 30,000 devices, for instance.

Barriers to entry

"The strengths of the past can hold us back." Can we reverse the mentality?

Well, here we are, in 2013. Margins and the number of devices sold are shrinking, and we're hearing a lot about “workflow” and document management.

Once again, the question comes down to this:

How do we provide these services and gain revenue? This quandary is especially poignant because, for nearly two decades, we trained an army of people not to bill for "presales" functions. This is to say, performing workflow was something we've done for free as part of the selling process. How can we change now?

Indeed, early during the latest managed print services movement, there were grumblings of how to charge for assessments. There seemed to be some traction, but the effort soon died. I credit this to our overwhelming insecurities and death-grip hold of the copier-dealer mentality: “We aren't worthy to charge for services, and we still believe in OEM quotas.”

This structure worked for decades, feeding families, employing thousands and supporting business expansion all over the globe. But those days are gone. How long can we ride the remaining 60-month service agreements?

It's time to change.

Posted on 01/04/2013