The following article was written by Louella Fernandes of Quocirca
It is not the strongest of the species that survives, nor the most intelligent, but rather the one most adaptable to change. Leon C. Megginson.
Low margins, hardware commoditisation and the growth of cloud computing is dramatically changing the landscape for traditional print channel players. Many are keen to take advantage of the growing managed print services (MPS) opportunity which promises longer term customer relationships and recurring revenue. Although the shift from the transaction-based hardware sales to an MPS model can be a challenging process, Quocirca’s recent channel MPS study reveals that channel partners who have made the commitment to adapt their business model, are reaping the benefits.
The SMB market opportunity
SMBs are actively exploring MPS as a way to reduce the burden associated with managing their uncontrolled print environments. Most SMBs are reliant on printing, but with typically no or very few IT staff, it is often a distraction from their core business. In addition to their primary job responsibilities, business staff may have to order ink or toner, book service calls or deal with daily printer problems. Only 10% indicated that their print related IT burden was decreasing, with 30% expecting it to rise over time. The ad-hoc approach to print management is both a cost and productivity drain for SMBs, with many now turning to MPS to address these concerns.
According to Quocirca’s study, the top driver for MPS adoption is to reduce consumables expenses, which many SMBs are seeing rise as a result of increased colour printing. At the basic level, an entry level MPS (or basic print service) wraps hardware (leased or purchased) with service and supplies on a cost per page basis, paid for either monthly or quarterly. Often this is supported by proactive service and automated supplies replenishment, SMBs get the benefit of predictable expenses and a reduced IT burden as an MPS provider handles support and consumables delivery automatically. This avoids the need to manually order new ink and toner, or stockpile consumables, freeing up SMBs to focus on running their business.
The need for better vendor support
With SMBs showing more interest in MPS, they are looking for trusted partners to work with. Quocirca’s study revealed that while the channel overall recognises the value of moving to MPS, most individual organisations are still at the early stages of their journey. While almost 60% of channel partners are transitioning to MPS, less than a quarter have evolved to a full MPS model.
Those that are making the transition are certainly expecting growth. On average, MPS is representing about 18% of reseller revenue today with expectations for this to rise to 25% by the end of 2014 – with the UK and German markets most optimistic about growth. Quocirca expects MPS to rapidly mature over the next two years, as more vendors and distributors drive more channel engagement through their MPS programmes.
In a market characterised by a range of diverse competitive offerings, the channel is having mixed success and face mounting obstacles in its transition to MPS. Much of this is due to the diverse nature of the channel – smaller channel partners may not have the resources or acumen to make the shift, while larger resellers, who might be better equipped, may still be taking measured approach, still primarily focusing on their transactional business.