Focus on Pages Helped Laser’s Resource to Succeed in MPS

by Emily Offshack

The philosophy at Laser’s Resource is that they succeed when they help their clients improve their business and lower costs. They achieve this by offering printer fleet analysis, print and document management solutions, affordable printer supplies, and the expertise of their professional staff and innovative partners.

Transitioning to MPS

When Laser’s Resource started in 1991 in Grand Rapids, Mich., they were a printer service, supplies and cartridge remanufacturing company. They became an authorized Hewlett-Packard reseller in the late 1990s, and when HP released their multifunction printer line in 2002, they were told by an HP representative that they were the fifth dealer to be accepted into their VIP Reseller Program.

Laser’s Resource started offering cost-per-page contracts around the time they began selling HP multifunction devices. Prior to this, everything in their business had been transactional. Their service calls were transactional, toner sales were per line item, and the few customers they had with hardware maintenance contracts still purchased toner separately. Recognizing that they needed to change their business model led to their first step into the MPS market.

“We saw copier dealers taking away page clicks from our printers and we felt like we needed to get into the copier business or the multifunction business and start offering and figuring out cost per page,” said Tom Senecal, president of Laser’s Resource.

MPS Program Components and Infrastructure

The MPS program offered by Laser’s Resource includes optimization and management of the customer’s printing fleet, supplies and service fulfillment, and assisting the customer’s help desk through various electronic means. They are also beginning to offer work flow solutions to further help their customers optimize their business processes.

To execute their MPS program, Laser’s Resource uses a variety of software applications. “We are running e-automate like most other successful MPS dealers out there,” said Senecal. “We’re using all the features of e-automate around remote technician dispatching and coordination.”

In addition to e-automate, Laser’s Resource uses other products from Digital Gateway: Remote Tech, an e-automate add-on that gives service technicians the ability to get information, manage service activities, and input data from their mobile devices, and e-info, another add-on that allows dealers to set up and manage their own e-commerce web portal to share information with their customers.

For meter collection, Laser’s Resource uses FMAudit, which automatically submits meters to their e-automate system. When they go to bill contracts, most of the meters are already present in the system.

Laser’s Resource purchased and owns their FMAudit server. Senecal explained why he has chosen, so far, not to participate in any of the programs offered by various industry vendors that provide use of the software for little to no cost. “I don’t want to incur a high switching cost and have my business primarily tied to a certain vendor because of the automation they provide,” he said. “If I could benefit my business by lowering my toner costs and my parts costs with another vendor, I want to be able to make that change. I’ve probably done this differently than a lot of the industry where they’ve picked up the free tools through these vendors. I’m just kind of refusing to do that at this point.”

While Laser’s Resource has had success with automating meter collection using FMAudit and e-automate, they have had less success with automating supplies fulfillment. “We have piloted automatic supplies fulfillment, but I believe the vendors still have a ways to go on that, because by using the percentage of toner remaining, you still end up shipping toner when it’s not necessary and not shipping toner when it is necessary,” explained Senecal. “I think the concept is great, but there is still work to be done in the third-party software area.”

Senecal said that although they have tried almost every software product out there over the years, not all of them have stuck in their organization. “I have a whole shelf of unimplemented software and failed implementations,” said Senecal. “We got distracted trying to sell a lot of software solutions a few years back, and after losing traction in our MPS sales, we essentially turned the company back around and got everybody refocused on one thing and one thing only—pages. Everything we measure is about how many pages did we do last month versus how many pages are we adding next month. From a leadership perspective, you have to really try to keep your focus on one main goal, and all of the goals in our company have been page-oriented.”

Despite several failed software products, Laser’s Resource does offer a variety of software solutions, beyond printer management, that work for their business and their clients: several fax service solutions, Informa as a document management solution, and Omtool as a middleware document capture and routing solution.

Corporate Structure and Strategy

At Laser’s Resource, they see themselves as an MPS provider, rather than MPS being one segment of their business. When they first heard the term “hybrid dealer” from Photizo Group, they immediately thought that described them. “We are not an IT VAR, we are not a printer seller, and I’m definitely not a copier guy,” said Senecal. “We’re now getting referrals from IT firms in our local market. We’re non-threatening for IT firms because we’re like a single-practice referral partner, in that we’re not going to go compete against them in their areas of expertise and they can refer customers over to us for MPS.”

In terms of the employee structure at Laser’s Resource, some additions and changes were made to accommodate the transition to MPS. One important addition for them was someone who could manage all of the new technology. “We do have a dedicated technical consultant that sits between our sales force and our service department and is basically the person that handles all the software solutions, the management tools, and is an expert on all the integration between FMAudit, e-automate and Informa,” Senecal explained. “He’s the guy that had to learn all the software and has become a really key and valuable part of the organization.”

With the adoption of MPS, there were also changes to the Laser’s Resource sales team. “We had to change our sales force and really heavily recruited from both IT and business backgrounds,” said Senecal. “People with a business background should really be successful in this space.”

Their sales representatives are all certified MPS specialists with both HP and Xerox. “We are strictly HP and Xerox—HP OPS Elite and PagePack 3.0 certified, respectively,” said Senecal. “It really helps the customer understand that we are the local dealer representing to the medium-sized businesses in our market the strategies offered to the largest corporations in America, through our reseller relationships with those two organizations.”

For client software installations, Laser’s Resource leans towards performing these on-site. “We do a combination of both remote installs and on-site, although we’re very high-touch and tend to do a lot of this on-site,” said Senecal. “We want to build that face-to-face relationship and believe it to be of the highest importance.”

Their marketing strategy also had to change as they focused on MPS. “We now are more focused on marketing results than marketing the cost of toner,” said Senecal. “We’re not talking about the cost of our particular SKUs. If you go back to the old days, it was always ‘we sell our toner cheaper.’ Now it’s ‘we’re going to reduce the cost of your printing.’ We talk cost at more of a holistic, TCO level.”

Senecal said their website was initially revamped with their change in strategy, and it is currently undergoing another refresh. Their new website, expected to be launched in January 2011, will focus more specifically on their managed print services role and their partnerships with their vendors.

One of the most important strategic moves that Senecal believes Laser’s Resource has taken was to join the Office Printing Strategies Group. To extend the support offered by this group, the OPS Group has recently joined the Managed Print Services Association. “Joining OPS Group has probably been the single biggest factor of our success over the years, in that it’s a peer group of people who have similar backgrounds, and similar goals and aspirations,” said Senecal. “We’ve all gone from a transactional business to an annuity type of business in the MPS space.” The OPS Group currently has 10 members and they are looking to add a couple more.

The first goal set for the Laser’s Resource MPS program was to convert their existing transactional customers to MPS. This was primarily to increase their engagement with those accounts, and also to defend against losing pages to copier companies. “After a period of time, that kind of ran out of legs,” said Senecal about that strategy, “and we had to, in essence, now go spend more time looking for net new customers, and that is a much longer sales cycle than it is to convert an existing customer. It’s always easier to sell to your existing clients than it is to get new ones.” Despite the longer sales cycle, Senecal said that they have been consistently achieving double-digit percent increases in their year-over-year page volume.

Vertical Market Strategy

Laser’s Resource particularly targets companies with document-intensive work flows, specifically medical, legal, insurance and financial services organizations. Being in Michigan, they also have a strong base of manufacturing clients.

“We have taken on and have had great success with some services designed expressly for the medical market,” said Senecal. “We have worked closely with Hewlett-Packard to bring secure prescription printing, HIPAA compliance, pull printing and wristband printing solutions. That’s a key focus area of our business right now.”

One vertical market they have avoided is education, because in their local market, education accounts tend to hunt for the lowest cost per page using RFPs. “It’s hard to take an assessment-based optimization approach inside of an RFP response,” said Senecal. However, after hearing many dealers talk about their success in the education market, Senecal said that they may try to target this market in the future.

Financials

Laser’s Resource has had great success transferring from transactional-based revenue to annuity-based revenue. “Over 60 percent of our company’s revenues today are annuity-stream,” said Senecal. “If I add in the hardware that those annuity revenues drag along with them, we’re over 80 percent MPS and only 20 percent transactional; very few straight hardware, supply or service sales anymore.” Senecal said that MPS has also had a positive impact on their overall gross margin.

Laser’s Resource has some clients who buy hardware outright, and then fold that hardware into a cost-per-page contract for supplies and service. Other clients have the cost of the hardware rolled into their CPP contract through a leasing agreement with GreatAmerica Leasing, and Laser’s Resource is looking to do more of these types of contracts.

Despite the poor economy, Laser’s Resource has managed to continue to grow. “I am in the state of Michigan, and Michigan has the highest unemployment and one of the worst economies in the nation, and so far this year our sales are up 4 percent year to date,” said Senecal. “In this economy, we feel like we haven’t gone backwards at all, but I’m also frustrated that I see so much opportunity. I wish we could grow more, but the new accounts we are adding are basically offsetting the accounts we have that are going out of business. Hopefully, if we get things turned around, we can increase that 4 percent growth into 40 percent growth.”

Challenges

Getting customers to consider an MPS program continues to be the biggest challenge they face at Laser’s Resource, and Senecal says it has to do with how client businesses are organizationally structured. “In our area we still see facilities buying copiers and IT buying printers, and it’s hard to get the two parties to the table with the common goal of looking at their overall print infrastructure from an IT perspective,” said Senecal.

Successes

Laser’s Resource is very proud of their relationship with a local hospital, Metro Health, which has about 210 beds and 14 regional medical centers. When Laser’s Resource first made contact with Metro Health, they had a fleet of copiers through a copier company and an unmanaged fleet of HP LaserJet printers.

“Toner was being sourced from three different organizations,” said Senecal. “Some devices were getting repaired and some devices were getting thrown out as they had an error. We transitioned that account originally by just taking the HPs under maintenance and cost-per-page for just supplies and service. As the relationship began to evolve, we brought Hewlett-Packard into the account. Over time we were able to roll the copier fleet out of there, and they are now 100 percent on an HP MFP fleet.”

Previously, Metro Health spent approximately $40,000 each month on printing. This consisted of paying about 6 cents per page for their copier fleet, all-in with leases and maintenance agreements, and about 2.5 to 3 cents all-in for their HP fleet. “Now we’ve been able to wrap everything up inside of a total managed print agreement for around 2.5 cents a page,” said Senecal. “We drove significant savings.”

In addition to cost savings, Laser’s Resource has helped Metro Health improve their work flow and reduce page volumes. “We are now helping them use the work flow capabilities of what we call Secure, Connected, Digital Glass Everywhere,” said Senecal, “and this has been included in their new electronic medical record system. We’ve actually helped them reduce their page volume from 1.7 million pages per month down to about 1.2 million pages per month—a 30 percent decrease in their page volume. While that has obviously decreased our revenues from this client, we also knew that if we didn’t do it, our competition would.”

By transitioning from a transactional business to an MPS model, Laser’s Resource has grown their business while helping clients lower costs and improve business processes.

MPS Tips from Tom Senecal, President, Laser’s Resource

  1. Don’t try to be too sophisticated too fast. Focus on pages. Focus on delivering the customer experience while keeping printers fed and the machines running.
  2. Be very careful when selecting software tools. There are a lot of automation and software choices being offered. In fact, it’s kind of like a gold rush right now with all the vendor partners bringing more options to the market. Go very slowly in adopting these tools.
  3. Learn from your peers and partners. Organizations, including the Office Printing Strategies Group and the Managed Print Services Association, are a great resource for learning best practices from your peers. Choosing the right vendor partners for your business also makes a big difference.

On the Web

Laser’s Resource