Wednesday, February 10, 2010

Managed Print Services more than Purchasing decision

By Clint Bolte on February 10th, 2010

Recent posting by Purchasing.com to suggest that growth in Managed Print Services is being facilitated by the Corporate Purchasing Department is a shallow interpretation.

The Managed Print Services concept had its beginning with the management of corporate copier fleet(s). It began three decades ago with the bulk procurement – often leased – of remote analog monochrome copiers throughout multi-floor corporations or the corporate campus. In-plants were part of the successful implementation in many installations as they provided the daily operational management of delivering supplies to departments and monitoring the maintenance performed by the equipment manufacturer or distributor. The bulk buying contracts moved quickly to include the procurement of associated supplies and maintenance.

The copier technology improved and expanded in four directions; (1) inexpensive (under $100) desktop units that got hidden in the “other” column of departmental budgets and purchased by the user, (2) the integration fax, scan, copy, and print capabilities into a multi-functional device (MFD) or a multi-functional printer (MFP), (3) networking of these disparate units as the intranet took off, and (4) more cost effective multi-color digital printing.

Innovative corporate server mounted software escalated the “management of the copier fleet” to include (1) charge-back accountability, (2) feature usage for potential future upgrade justification, (3) and forewarning or “red-flagging” of needed maintenance back through the network to the copier manager. The current Managed Print Services definition has taken on a green tinge, as the next level of corporate administrative document strategy is to print less and therefore save trees.

This is accomplished by (1) training users to utilize the scanning and electronic faxing of documents on the MFDs to reduce the number of hardcopies made and later thrown away, (2) getting rid of the small desktop units altogether as their toner cartridges and therefore cost per copy are relatively expensive plus leaving a huge carbon footprint, (3) utilizing MPS software, which converts all digital copiers to a duplexing default mode rather than single sided copying (simplex) further saving paper.

Human Change Is Significant To Take Full Advantage of MPS

While each of these steps may seem to be incremental improvements, the overall MPS program is being perceived to be a significant cultural shift for many corporations. As a result of the human change magnitude and yet potential cost benefit, the MPS concept is gaining attention of specialized consultants to justify, prepare RFPs, and select the most qualified, full service digital print engine manufacturers or value-added resellers (VARs). Outsourcing of the management function is another issue on the table.

The inaugural gathering of 150 copier fleet aficionados committed to better control, cost reduction, and improved knowledge worker efficiency met this past spring in San Antonio, Texas. Digital print engine manufacturers, specialty software vendors, value-added resellers, consultants, and a few corporate end users heard Managed Print Services presentations on best practices and successful case studies. The MPS market research and strategic consultancy, the Photizo Group, organized this first topical conclave.

Corporate in-plants were not mentioned during this conference as playing any real or potential role in the successful implementation of the next level of distributed digital copier fleet management or Managed Print Services. The reason why is simple. The 16 digital print engine manufacturers, value-added resellers, and consultants all want to sell the implementation services along with the hardware and software.

The lessons learned of firms who are embracing MPS are simple. It becomes very obvious that the skills leading to successful implementation are often resident with in-plant organizations. This is an opportunity that in-plants must proactively and aggressively pursue well in advance of their corporation’s copier fleet renegotiation cycle.

The Photizo Group pegged the 2007 MPS market in North America to be $5.2 billion or about 14% of the total NA imaging market. They expect a 20% year over year growth for the next five years with MPS climbing to 35% of the total imaging market in 2012. One to three percent of corporate revenues, depending upon SIC category, are being spent on hard copy printing.

Converting a stagnant market to one of growth suggests a shifting or broadening of objectives by the corporate end users and an enlightened new business model by the manufacturing channel. Here are the proposed change elements from the low hanging fruit all the way up to moving the mountain;

1. Corporations of virtually all sizes have no idea how much they are spending in this space. The low cost of some desktop devices are under the corporate asset radar. Hence, most firms have much more equipment than they realize. As larger pieces of leased copier equipment come up for renewal, the clear, knee-jerk objective is to get control of this growing amoeba.

2. Contacting any of the sixteen hardware manufacturers and many of the VARs selling and servicing the equipment, a firm’s purchasing and/or IT departments learn that free equipment utilization assessments are available. Surprisingly simple software is linked to the print network and USB data capture ports are added to the stand alone devices to determine how much simplex/duplex, mono/color printing and by whom and how much downtime is experienced.

3. Proven cost savings venues are plentiful:
a. Economy of scale buying of equipment and supplies,
b. Moving the assets off the balance sheet as part of a cost per copy (cpc) contract,
c. Reducing head count by outsourcing the service,
d. Utilizing pop-up software on all equipment to encourage users to save money, such as default duplexing and sending the job to the least expensive device for printing, is a user behavior change initiative,
e. Utilizing the scan and fax features of the multi functional printers (MFPs) reduces unnecessary printing by capturing and moving documents electronically, and
f. Total chargeback capability via user code or card, i.e., no free copies, also contributes to fewer copies being made.

4. Process improvement adds to knowledge worker productivity:
a. Office mapping to assure that the appropriate equipment is convenient to all employees adds to efficiency and savings,
b. Client productivity and satisfaction climb with automatic software feedback embedded in the hardware; (1) forewarning potential maintenance problems improves up time and (2) controlling supplies reduces idle inventory investment,
c. Software queuing work (with user permission) to low production demand periods (nights) increased hardware utilization and
d. More energy efficient hardware, fewer copies, and recycling add to the corporation’s overall environmental efficiencies.

Free Assessments Aren’t Free

Ken Roche, Vice President of Sales and Marketing for the Print Operations Group (POG), offered several best practices for MPS benchmarking and assessment. Realize that “free assessments by VARs and/or manufacturers are not free” because of their inherent conflict of interest. They want to replace the prospect’s existing equipment with their own and prospect’s supplies sources also with their own. A clear and concise request for proposal (RFP) and service level agreement (SLA) based upon the actual current spend, integration with the corporate wide strategic objectives, quantifiable and continuously monitored key performance indicators, and issues addressed with the supplier on at least a quarterly basis are essential to a successful relationship. POG is one of several independent MPS consultancies with no ties to manufacturers or suppliers.

Measuring and compiling the key performance indicators of the copier fleet is the job of the specialty software. While some hardware manufacturers offer their own solutions, the independent VARs hold a strong market share. They include PrintFleet, PrintAudit, MWAi, fmAudit, Netaphor Systems, DocuAudit, and Compass Sales Solutions. The costs of their software can vary from $150 down to $9 per workstation depending upon the total volume of stations. This annual fee is typically rolled into the cost per copy (CPC) agreement. Many of these software vendors also provide training and marketing services to VARs, who are constantly improving their MPS skills. Hence, the end user may find this to be negotiable. Why can’t in-plants serve this same valuable monitoring and training function as the VARs?

Some best practices for MPS programs include gap analysis of where the user is and where they want to be. It includes four critical steps: (1) measuring the current state, (2) gathering end user input (and buy-in starting at the C-level), (3) identifying industry benchmark metrics, and (4) setting measurable objectives. He added that the end user input “was not creating a wish list.” A reliable source of metrics can be independent consultancies such as POG, Print Access, Newfield IT, and Photizo. Because the bar is always rising with users reaching for the business process enhancement stage, Crowley recommended that the MPS contract length not exceed three years. Again how much of this task cannot better be performed in house by the in-plant?