Managed Print Services, Size Does Matter - Just Not In The Way You Think

2009

I have been getting alot of "size" questions lately.

You know, how big is too big, how small is too small?

Is "small" ok if there are multiples?

What, exactly, is too big?

And by the time I find out its too big, is it too late?

Titillating queries with scintillating responses.

The answer, of course, depends on your sweet spot.

Get your mind out of my gutter -

I'm talking about how you define a Managed Print Services prospect - by number of employees, number of copiers, number of printers, fax lines, scanners or what?

Depends.

Great. What does it depend on?

It depends on what your organization can handle - more importantly - it depends on you.

Let's compare this in the most simplest terms and reduce MPS down to CPC - a prospect for a copier is anyone who has volume, wants to buy, or fogs a mirror, right?

I am not saying we should, but why don't some in MPS feel the same way?

Why is there a difference between how we qualify a copier deal vs. a MPS Engagement?

These aren't rhetorical questions, there are answers.

One answer is some do equate MPS with CPC - not that there is anything wrong with that, equipment optimization and capturing print volume is one component of MPS; indeed, just the beginning.

And, this is big, "equipment and volume" are easy issues for a dealer or Selling Professional to get his head around.

So, if your company's definition of MPS is simply equipment refresh, right-sizing, and supplies management, why not go after the 7,600 images per month deals? (Yeah, I am pulling 7,600 images out of thin air, just like everyone else is doing. But let's proceed on this assumption.)

That's 19 accounts per month if you use the 150,000 image quota per month, per rep figure being bantered about currently.

Now, if we further extrapolate an average of 3,400 images/month/machine(my accumulated studies numbers, HP shares the opinion) to reach the 150k/month, we need to sell or capture 44 machines each month, spread across 19 opportunities - just over 2 machines per deal.

Huh.

The Assassin, "I'm afraid, Captain, it's Worse than you Think."

Mal, "...it usually is..." -

These 19 deals need to take place over 20 working days each month - One, 7,600 image deal each day.

How much time, if any, would you, the Selling Professional in the field, spend on pursuing a MPS Engagement with a client generating 7,600 images a month? Would you even pursue? Is it worth your time?

As a Selling Professional, some studies say, your time is worth around $180.00/hr. $180.00 to you, personally.

How many hours of your time, does it take to close one deal?

Let's guess:

Drive Time - .5 hour
First appointment - 1 hour
Follow up/appointment summary communication - .5 hour

Drive Time - .5 hour
Second appointment - 1 hour

Assessment/Survey/Study/Data collection - 4-6 hours(?)
Analysis - 1 hour
Proposal generation - 1 hour

Drive Time - .5
Presentation of Findings and Recommendations - .75 hour
Agreement Execution/Implementation - 1 hour(?)

Close to eight hours; that's $180.00 X 8 hours for every deal you work on; or $1,440.00. So for every deal you put 8 hours of time into, you should bring home, in your pocket, $1,440.00. The bad side is, you are going to put more than 8 hours into deals you will never close - it's inevitable.

Further, 8 hours per deal, multiplied by 19 deals/month, requires 152 hours total - there are 160 hours/month available.

Roll in all the Monday Morning Meetings, conference calls, "training" sessions, your 4 hours/week of cold calls, and the all mighty, ever important, client service/problem resolution(cleverly disguised as toner delivery) and we are all upside down.

I know the numbers above are debatable, that's not the point, it's the process I am trying to illustrate. Does this make sense?

"Show Me The Money" -

Let's look at how all this fleshes out in terms of greenbacks, shekels, lire, cabbage, money.

The possible commission on that revenue, 150,000 images/month, is $150.00. This doesn't look all that enticing, does it? (150,000 times 0.020, times 5% commission equals $150.00)

But if you keep a run rate of 150,000 images added each month, after 12 months, your MONTHLY RESIDUAL COMMISSION should be $1,800.00/month, riding 1.8 million monthly images.

At this point, if you didn't sell an image for the next 24 months, you would still be collecting $1,800.00/month.

And watch out, there are all sorts of schemes coming to the surface veiled as techniques "not allowing the sales team to get lazy"; sunset clauses, equipment revenue and percentage of quota gates, etc.

So, how big is too big?

I dunno. I do know there is no magic bullet, no singularity. Unlike the copier world, for the MPS Ecosystem, THERE IS NO SINGLE ANSWER FOR EVERYONE.

And by everyone, I mean we on this side, and those soon to be Partners, our Prospects.

The best thing to do is plug in your own numbers and determine your ideal "size".

Everybody else has got an agenda, why shouldn't you?

HP LaserJet II: Whadda Mean, It's not Under Warranty?

Canon Down 54%, Ricoh Down 69%, Xerox Down 50% - Profits? We Don't Need No Stinkin Profits...

The third quarter was not kind, here are some numbers:

Canon operating profit was down 54% year-over-year and sales down 22%

Ricoh profits were down 69%, and

Xerox profit was down a little over 50 % and sales by nearly 20%.

Konica Minolta and Kyocera also reported fall-offs in profit and have readjusted their expectations for the year and have lowered profit predictions considerably.

I don't know about you, but I can not think of too many businesses that can survive these kind of numbers.

Thank goodness "O" can't get a hold of these...wait, is Xerox "too big to fail?" -

Stunning.

Absolutely stunning.

Here.

The New Document Management and The Help Desk

It's funny.

Managed Print Services North American Conference: May 3-5, 2010 San Antonio, TX

The second North American MPS Conference is scheduled for May, 2010.

A good time should be had by all.

Some of the themes so far:

Managing RFPs
MPS - Financial models for MPS providers
Moving customers to stage 3, how to know when you are ready. How to identify the right customers for stage 3 engagements.


Additionally, just like in Europe, there will be a pre-conference seminar aimed at participants with less background and knowledge in the world of managed print.

Pre-conference sessions will be offered for both end users and channel partners. These sessions will concentrate on providing a solid foundation of the subject and offering practical strategies when selecting an appropriate MPS partner or provider for first-time MPS engagements.

Last year was good, the European conference better, this May should be stellar.

See you there!

Seeking Alpha: Will HP Remain the Leader in Printers and Ink?

From the Seeking Alpha site:

"We estimate that HP's (HPQ) Printers and Ink Cartridges business constitutes 24% of the company's stock price.

HP's printer business makes money primarily through the sale of ink and toner supplies for its printers.

HP's market share in printers has gone from 35% in 2005 to 40% in 2008. We expect HP's share gains to continue over the Trefis forecast period due to HP's strong relationships with large business buyers and its traction with consumers through its PC business which has also gained share in recent years."

However, HP's printing business is continuously at risk of commoditization. The company has been able to maintain share and some pricing power in this market through printing technology designed to limit the use of low cost (non-HP) ink and toner supplies, with HP printers. As low cost printers and printing supplies become increasingly capable, HP's printing market share along with its printing profit margins will be at risk.

If HP's printing market share were to decline to 2005 levels of 35%, the company could lose $6 billion of its value or about $2 per share.

Here.

HP IPG folding into PSG? Someday, HP Won't Sell Printers