Leasing Your MFP Fleet -

I have been running into more and more opportunities with I.T. folks who do not understand leasing.

**** THIS IS NOT LEGAL ADVICE ****

**** THE FOLLOWING REFLECTS MY OPINIONS ****

I am currently researching for an in depth analysis of the leasing process from the end users' prospective - and it isn't pretty.

Because the subject is so vast and complicated, I have decided to post portions of the final white paper.

First off, I am familiar with leasing and all the "gotcha's" that contracts carry. I have seen, all sorts of leasing agreements in business technology and the Uniform Industry and I have been very fortunate to work with some of the most honest and open agreements in each industry.

For you I.T. folks, or anyone else who may not be familiar with leasing - here is a "Primer".

Leases are used to defer payments over time. If a company wants to avoid a significant capital outlay a lease is a great option. In addition, because the technology changes quickly, copier leases often include provisions to trade up to a newer model, allowing you to upgrade without buying anew.

You are paying extra for the ability to "pay over time".

For instance, if the purchase price of a machine is $20,000 and you would like to pay a monthly payment for 60 months, the monthly payment is NOT $20,000/60 or $333.33. The monthly would be closer to $586.00/month. If you multiply this out by 60, your total "cost" for the unit, over time, is $35,160.00 - this to say that you would be paying $15,160.00 for the service of paying a known monthly figure for a determined period of time.

The Vendor or Supplier does not usually make more profit on a lease vs. purchase. Although some vendors or dealers add “points” to the lease rate. This increases your monthly and adds to their profit margin.

After a client signs a lease and after the equipment is delivered and accepted, the leasing company cuts a check directly to the Vendor for the purchase amount of the equipment. You, the Customer now have a direct relationship with the leasing company for the equipment. You are establishing a "revenue stream" for the leasing company based on the equipment payment portion of the lease; when service is bundled into the payment, you are also working directly with your service provider, usually the copier dealer.

In a nut shell - When you sign a lease, you are forging a commitment to pay at least the dollar amount on the lease for the number of months stated. There is no other way to envision this agreement - there are no easy or painless methods of terminating a lease early once you "sign on the line which is dotted" - no matter what the circumstances. No matter what the "trusted" copier sales person tells you, you can not get out of the agreement easily and without paying for the privilege.

-- More to follow ---

A Return to Edgeline

Managed Print Services is Hot, but Edgeline is Hotter. Getting back to Edgeline.

To authorize by PIN or LDAP or Exchange, that is the question.

One of my recent installs required print, copy, scan and fax rights by authorization(login).

I know authorization is nothing new when it comes to connected copiers - I have worked with hundreds.

Yet imagine the impact on the end user in terms of the degree of "hassle" involved with walk-up copying.

- Example:

Copier sales person - "...it's easy, simply log into the copier the same way you do you computer at you desk"

I.T. guy - "...sure, our end users are familar with their login, and they don't need to remember two different accounts..."

End User(usually at the Executive Level) "...you mean to tell me, I need to log in completely, with my password, every single time I want to make a copy??? Forget that..."

Well, for this client, we decided to use the four digit employee number as the PIN. And each PIN has different rights, some can copy in color, some can not. Some users can scan back to a folder, some can not, etc. And all activity on the system can be tracked by PIN. That is to say, ALL printing, copying, faxing, scanning activity.

The four digits work much better then the network login. And with Edgeline, all the PINS with rights, can be copied or set remotely.

HP to acquire EDS for $13.9 billion

That's FOURTEEN BILLION...

HP said the deal, which has been unanimously approved by the HP and EDS boards of directors, will close in the second half of the year. HP expects that the addition of EDS will more than double HP's services revenue of $16.6 billion in fiscal 2007. At the end of 2007, HP and EDS had a collective services revenue of more than $38 billion and 210,000 employees, doing business in more than 80 countries, HP said.

Well, this certainly illustrates the level of HP's commitment to market domination

I found this statement by Peter Cohan, "...I think HP's most profitable business, printers, might be able to make better use of the $12.8 billion in capital. This Imaging and Printing Group earned a 13% estimated net margin. It grew a mere 4% to $7.3 billion in revenue and given that this unit is by far the most profitable in HP's stable of businesses, this would appear to be the best place to invest for future growth.

Now may be a good time to sell HP stock. Mark Hurd came into HP as a nuts-and-bolts operator. This deal suggests that Hurd has run out of growth options and that HP can't grow earnings through more cost cuts. I have no doubt that Hurd could cut costs once EDS has been integrated..."

This follows what Hurd said back in March, ""We are shifting our portfolio to drive growth and are aligning our portfolio to margin rich opportunities for investors," he said. "We continue to look for opportunity [for higher gross margins] in software and in services."

What does this mean for IPG, if anything? I don't know yet, but IKON sure as heck would not cost FOURTEEN BILLION dollars...

IKON Introduces New Printer Line

They are Ricohs with IKON labels. The Ricoh lasers are very good laser printers.

"While our customers utilize multi-function devices in the office and production environments, there is still a robust demand for single-function printers to complement these devices and meet workflow demands," explains Mike Dane, Vice President, Product and Services Marketing, IKON Office Solutions. "We created the IKON BusinessPro printer line to allow us to be a 'one stop shop' for customers by providing them with affordable, value-packed printers at three different price points, designed for a range of business environments." Centre Daily Times

Interesting, huh? Ricohs not HP's. Very interesting.

Well, been there, done that, got the T-shirt.

This has been in the works for almost a year - Ricoh has got to love it, and IKON can fill a market niche - I just wonder how well the copier techs are going to translate from copier to laser printer service.

And I wonder how much the CPC service will be on the Ricoh's - but I really wonder if any of the IKON reps will actually jump on this product and sell it.

Edgeline Success by being Green

Monterey Bay Aquarium Research Institute and Newcal – Saving the World One Printer at a Time

NewswireToday - /newswire/ - San Francisco, CA, United States, 04/09/2008 - Using HP Edgeline solutions from NEWCAL Industries, the Monterey Bay Aquarium Research Institute (MBARI) is taking another step towards saving the planet – one printer at a time.

...When it came time to replace one of MBARI’s copiers, Erin Lamb, Purchasing and Accounting Specialist, remembered the research institute’s goal of implementing innovative technology to reduce human impact on the environment. “We had done some research on other solutions, but nothing compared to HP’s Edgeline. We know we’ve made an eco-friendly choice and we anticipate cost-savings because the Edgeline doesn’t use as much power or ink as our previous copier.”...


Wow!

Opinions, Everybody's Got One

"...Xerox has shifted from selling copiers..."

I ran across this little Opinion from the L.A. Times - Here is an excerpt:

Conservation leads to innovation

By Gary Gardner, May 9, 2008

"A green industrial revolution?

...Does it matter if some staples..."(as in bread, milk, etc. not staples that hold pages together) "...run out...will the same ingenuity that produced oil refining in the late 19th century and the "green revolution" in the late 20th century save us again in the future?...

...Consider the idea of businesses offering services instead of goods in today's economy. Xerox has shifted from selling copiers (goods) to leasing them (a service), which gives the company, as perpetual owner of the leased machines, a strong incentive to manufacture them to be refurbishable. This greatly extends the life of materials and reduces waste..."

Well, if you read the above statement, what do you think?

When did Xerox stop manufacturing copiers?

When did leasing equipment (ANY equipment) become an act of “conservation”?

And didn’t Xerox sell off its leasing interest years ago? Xerox is not a “…perpetual owner of the leased machines…”. The leasing company owns the machines. This is the most basic, simplistic concept of leasing.

Also, these plastic, over-heated machines, which are designed with built-in serviceability, have an expected life of around 36 months with new machines hitting the market almost every 3-6 months.

The author's belief that copier companies have a "strong incentive to manufacture them to be refurbishable..." is naive and misguided. And unfortunately, naivety is a characteristic of the Greenie ilk.

Xerox/Ricoh/Canon/Toshiba/Konica/Sharp or NOT interested in being a "...perpetual owner of the leased machines..." they are interested in creating perpetual customers of new machines not used or referbed machines. And why would anyone be interested in “perpetual customers” ? The answer, of course, is to make more money and to increase profits – not save the world.

- Reducing costs can increase profit – again, a simple and basic micro-economic concept.

1. Managed Print Service programs reduce costs.

2. Lower energy consumption or machines that consume more intelligently reduce costs.

3. Printing on both sides of the paper reduces costs.

4. Reducing the redundancy of equipment (i.e. fax machine next to a laser printer, next to a connected copier) reduces costs.

These four issues reduce costs and impact the environment in a positive way. These four issues are customer driven and implemented to increase revenues, reduce costs and increase profits - CAPITALISM.

The Green movement is losing it's issue to it's arch nemesis - Capitalism.

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End Users, Clients - Technology Challenges

The weakest links in any system are the people. It's Friday, I saw this, and couldn't resist -

The best is the gentleman who gets toner blown all over him and then takes the monitor over to the copier to make a copy of his screen!

glumbert - Bad Day at the Office

Enjoy - Click


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Edgeline...and the BreadCrumbs...

A seemly trivial function "wows" the end users. AutoNav.

How many times have we walked past a copier that has been "tagged", a sheet of paper taped to it with the "Broken AGAIN!" message written on it?

Or, how often have we gone to the connected copier "de jour" to pick up a print job, and find not a stapled, 43 page Powerpoint presentation but the "blinking wrench of Death" on the control panel?(I know I shouldn't revel in the misfortunes of others but, HA!)

Or, who in the office becomes the "Chosen One" to Clear Jams"?

Or, how many support calls come into our IT Help desk from the folks in HR who can not print out next weeks company picnic agenda because the Toshiba/Canon/Xerox/Ricoh/Konica/Sharp is jammed?(first level support cost is about 20 bucks per call, additional if IT staff is dispatched to HR)

Well, HP saw this too often. So the scientist(I call them "Propeller Heads", and it is a complement) noticed that most, not all, errors at the copier or driven by mis-feeds coupled with the end users' perception that "they can not fix it" - the end user walks away!

That's right, the end user WALKS AWAY. Want to learn more? Click Here.

Enter Hansel and Gretel and the Bread Crumbs

Never mind that the Edgeline utilizes a new, 4 billion dollar in inkjet technology, or that it is built like a tank, or sets up and connects as easily as the HP LaserJet II, or that the 10 inch diagonal, color VGA control panel shows video of somebody clearing the exact jam the machine is currently experiencing - nope, users love to be lead around the machine by a series of yellowish LEDs!

It's like a mini-field trip.

Small LEDs placed all over the unit light up in sequence leading the end user directly to the source of the problem. And with Edgeline, the paper is usually in the finisher or stuck between the engine and finisher. Once the objectionable sheet is removed(or more) the system walks the user out the same way. And the the Edgeline recovers completing the original job.

As impressive as this is during the product demonstration(as is everything covered during the demo) the lasting and most significant features are the ones remembered and experienced 30, 60 days or 36 months after install.

Salute the Propeller Heads...and Gretel...

PS - this must work, the feature is on the newest color systems, the CM6030/40 - by the way, if you see the "M" in the model number, it denotes the common user interface for the control panel - CM4730, CM8060, CM6040.

I Know One Name - Canon

Should Canon buy IKON ? The rumor has been around for at least 4-5 years; Canon is going to buy IKON. I have no facts to back this up. Only guess work and conjecture.

Imagine:

The mature copier industry is consolidating; more mergers and acquisitions will take place. Kyocera? Sharp? Toshiba? Panasonic? We all know Oce is partly owned by the Dutch government, so very unlikely to be purchased.

Consider Canon - CBS:

With the purchase of IKON CBS becomes the largest provider of Electronic Document Management software and solutions in the US - with a very large staff of highly trained Professional Services people.

And don't forget the small, Canon facilities management presence - with the addition of the IKON FM client list, Canon FM becomes a large force to contend with.

And consider Ricoh - Canon could in one motion, force Ricoh to lose it's largest distribution channel. Both Canon and Ricoh have stated the IKON (at one time) represented a majority of their business. As in nearly 50%.

Of Course, the price. Apx 3.0 billion?

What about the investment firm that owns some IKN stock ? I wonder what they think...

More to come...

KonicaDankaIkonHP - Fallout?

IKON - the only large, nation wide, independent distributor of printers, copiers and MFPs in the U.S.

From one of the most respected industry analysts in the world, "...This deal, which comes just one year after Xerox's $1.5 billion dollar acquisition of Global Imaging Systems, will have significant ramifications throughout the U.S. enterprise print market.

HP is not likely to stop distributing its products through Danka (although its long-awaited Edgeline products could be affected; HP is reliant on Danka with these products, which have a high-touch sales model).

But Canon USA can be expected to stop selling products through Danka. Though Danka accounts for 5% of Canon USA's revenue, such a move would be consistent with Canon's stance when Xerox purchased Global..."

The report goes on to recommend to existing Danka customers, "...You must soon choose to:1) stay with Danka and switch to Konica equipment, or 2) keep your equipment and switch your service and supplies to someone else (Canon direct sales or dealers or IKON)..."

For Those of Us In Managed Print Services - Wow!

I.T. is taking over the fleet...This article is very revealing and confirms pretty much what I and my collegues are seeing in the field every day.

I have taken some excerpts - the data was revealed after interviews of both MPS providers and clients; approximately 100 companies interviewed in the first quarter of '08.

Ed Crowley Founding Partner and CEO of the Photizo Group -

“Perhaps the most interesting detail is what is happening within brands. Each brand’s dynamics are unique, and it is important to understand what levers to pull -- awareness, consideration or product offering -- to improve your brand’s performance,” said Crowley... “For decision makers in both IT and non-IT roles, HP is the leading brand in terms of unaided awareness and consideration for printers and MFPs. While HP and Xerox are very close in terms of brand consideration rates, HP has almost twice the unaided awareness of Xerox as an MPS vendor among IT decision makers...”

And something that reflects what I see all the time:

“...It is important to note that the decision making process is less collaborative than might be expected. The market is shifting to an IT-controlled, printer-based MFP-centric environment, and study results indicate that IT is winning the battle to make the MPS decision for the entire fleet, including printers, MFPs and copiers..."

Interesting...

I.T. and Facilities and Your Copier

Big companies are learning what the SMB market has known for a few years: the people who purchase the unit should be the ones to support the unit.

"Convergence"

All copiers connect to the network "just like" printers. In the beginning, the decision criteria for copiers was the sole responsibility of either a facilities or purchasing department. That is to say, the people in charge of finding the cheapest roofing contractor at 9:00AM are the same people determining what device is going to hang off the corporate network, copy and print and scan at 1:00PM.

Purchasers have the company's best interest at heart; choosing a copier isn't Brain Surgery it's Rocket Science! But in some P.A.'s world, vendors fit in a cell on a great big spreadsheet and with copiers, one column on that spreadsheet is labeled, "first copy out speed". And the lowest bidder, the Winner, is highlighted in yellow.

Once the P.O. is issued, the agreement signed, and delivery scheduled - IT is notified. And then one day, "poof" and shiny, new Bland Brand copier shows up waiting to be connected, configured, end-users added, authentication, scanning installed and tested, user folders set up on the copier, user folders set up on the network somewhere, and drivers installed at each workstation. And then end-user and admin. training scheduled.

Who is in charge of ordering supplies? Who does the end-users call with print questions? Do we call the vendor directly or do service calls go through the corporate Helpdesk?

"...you better start swimmin', or you'll sink like a stone. For the times they are a-changin'"

So why are I.T. departments moving into the "copier" decision process? Basically,

- The units are Networked
- I.T. needs Central Control
- Network, Document Security
- Standardization - "one throat to choke"
- Compliance
- End-User support- "PC load letter...what the heck is that?"

What is new to I.T.?

Cost Per Copy programs.

- Most laser printers have a one-year on-site or can be upgraded to 3 or 4 years i.e., HP's Service Packs. What I.T. people are not familiar with is an agreement that includes all the supplies and the service calls and the maintenance parts for a monthly amount. Most information service departments are used to the "buy, connect, forget about it and let the departments order the supplies" model.

Leasing.

- Why lease an HP laser printer? And how does that leasing thing work? Check this post.

Output management, scan job management, Color management

- These new systems can do an awful lot of "stuff", is this good for the network?

Right-Sizing the print fleet

- Faster machines, volume changes, and machine refresh or retirement

Service Calls

- The concept of printer jam support calls has got to throw a chill down the spine of helpdesk operators everywhere.

End-user driver support

- A possible increase in ID 10T support calls

Last but not least:

- End User Culture Shock - Sales VP to IT tech, "no way are you taking my DeskJet 500 off my desk, no way."

Here's the challenge in a nutshell.

Purchasers know how to get the most out of vendors for the least amount of money.

I.T. folks have the depth of analysis and technical savvy to sort out the "riff-raff" and match first-level end-user requirements to technology but don't know that a "Dollar-Out" is going to cost more monthly than an FMV lease. And overages are routinely discussed in the Purchaser's world but are as strange to an I.T. person as a Tribble is to a BSG fan.

Fear Not

Just like everything else new, things have a way of sorting themselves out. This change in the business world is driving changes in the IT Services realm as well. Managed Print Services is the hot subject right now and lots of very good players are getting into it. And to fill this need, IT Firms are brushing up on the "copier" world dynamics - lookout. This is just a sample of what the copier salespeople's requirements might be.

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