by Mike Huster

Since Photizo Group was established in 2006, focusing its gaze upon the managed print services (MPS) industry, there has been an amazingly quick growth rate of the MPS market. The journey has taken us from simple copier contracts with a monthly cost per page to comprehensive document management and business process optimization. Today, there is a buffet of new MPS programs and opportunities for dealers and decision-makers to choose from.

The MPS market has shown that once a shift starts, it can be very swift, as we saw with the shift from connected devices to services. The shift from companies purchasing printing and copying devices to purchasing MPS likewise occurred very quickly. These issues have caused angst in the industry. And on top of this, the number of new MPS programs — from major OEMs to distributors, leasing companies, VARs and office products companies — has created no lack of new competition today. As shown in the chart to the right, MPS grew slowly until the three critical years from 2008 to 2011.

Managed Print Services Huge Growth

 What’s implied by the portion of the graph from the inflection point to where the line is today is the sudden and brutal rise in spend shifting from transaction-based purchasing to the new MPS model. And today we see the imaging market going through complete business model transformations in order to adapt to these changes. Xerox now generates 50 percent of its revenue from services — a complete 180-degree turn from just a few years ago.

MPS has also provided a huge value proposition — a compelling 30 percent reduction in cost for customers and higher margins for winning vendors — which has supported the fast move.

Transformation is driving consolidation toward larger vendors, and the industry’s landscape is becoming a “winner takes all” type of scene. The reality is that leadership in the MPS arena was determined in just three critical years, and the businesses that were prepared for it are the current leaders.

The rapid customer adoption of MPS has driven change across the entire value chain. The chart below shows an increase in all types of ecosystem participants, which include professional services firms, resellers, infrastructure providers, software providers and OEMs.

Ecosystem Growth & Technology Adoption

Economic factors have driven higher levels of MPS adoption, aided by growth in the number of ecosystem providers as well as in technology adoption. Originally, it was difficult for a dealership/reseller to build its own MPS program, but over the past few years, MPS-in-a-box programs have come on the scene, making it easier and more profitable for anyone to offer services to customers of all sizes, from small and medium-size businesses to enterprise clients.

With so many entrants, the MPS market today has become commoditized, and it will no longer be enough for an MPS provider to just provide asset management and optimization (Stages 1 and 2 of MPS). These will be considered basic services that are “table stakes” for competing. Even the firms that were leading optimization through document workflow and document processes (Stage 3) will find increasing competition as more and more firms build their capabilities to compete in this lucrative market.

The real value-add will increasingly flow from companies that enable business process initiatives. The firms driving business process initiatives will be the key influencers who have the ear of executive management. These companies will be in the decision-making seat and will drive decisions relating to the basic building blocks for business processes, including BPO, ITO and even MPS.

For manufacturers, resellers and other MPS vendors, some questions remain: What role do you plan on playing in this new stage of MPS? Are you going to be a partner for an ITO or BPO firm? Or are you going to own the MPS engagement and use it to leverage yourself into the BPO/ITO space?