by Robert Palmer | 10/2/14
I recently attended the BTA East District Event in Baltimore, MD, where I was fortunate enough to lead a session and to moderate a panel discussion with representatives from three of the industry’s leading hardware manufactures. The BTA District Events provide a great mix of industry insight with a chance to hear directly from dealers — those in the trenches working hard to grow their business in the midst of transformation and a declining need for print.
I have attended many of these events over the years, but this was my first time participating in BTA East. I was immediately struck both by the size of the audience (number of attendees and not their physical presence) along with the diversity of representation from dealers, ISVs, OEMs, and others. The sessions themselves were exceptional, as usual, but the level of audience engagement and the questions presented by those in attendance offered great insight into the challenges currently facing our industry.
Time for a change
The two-day event kicked off with a keynote presentation from Scott Maccabe, president and CEO of Toshiba America Business Solutions. Maccabe cut to the chase quickly, explaining that dealers need to expand into new territory if they are to survive in a world that is increasingly moving away from print. It is not a new message, of course, but Maccabe stressed that dealers must evolve if they are to keep pace with changes occurring in the office.
Not surprisingly, Maccabe spent a great deal of time talking about the impact of mobility — noting that no technology has advanced further and faster than the mobile phone. “The advent of mobility has dramatically affected how we live and how we work,” he said. “One of the ways is the effect that it has had on the workforce, creating an entire shift in workforce behavior.”
The real challenge facing most businesses, he said, is dealing with the explosion of information. Citing various sources, Maccabe indicated that the rate of data creation is doubling every three years. That is an amazing statistic, made even more compelling when you consider the massive amount of data that already exists. According to Maccabe, 90 percent of the data in the world has been created in the last two years alone. “Consumers are driving all the growth in information creation,” he said. “Enterprises and businesses need to manage all of that data, and it is liability across the entire organization.”
Obviously, the shift to mobile computing combined with changes in workforce dynamics and information consumption is having a negative impact on the printing business. Maccabe pointed to numbers from various market research firms to back up that point. He noted that A3 hardware placements are declining at a rate of 3 percent year-over-year, and that all five of the OEMs that certify their numbers continue to report decreased A3 shipments. Meanwhile, hardware ASPs continue to decline, which is putting increased pressure on margin and profits.
As a result, smart dealers are searching for alternatives, such as A4 hardware, MPS, and color. But as Maccabe pointed out, pages are declining faster than hardware sales. He cited numbers from Gartner and other market research firms showing office page volumes declining at a rate of 6 to 8 percent annually. Maccabe says that dealers need to evolve to become managed service providers, focusing on adjacent opportunities such as digital signage, capture solutions, workflow, or IT security. The secret, he said, is to partner well to deliver these services and to understand the value that you bring to the customer.
What to do?
The keynote session set the table for a couple of interesting panel discussions — one comprised of dealers and the other of equipment manufacturers. The dealer panel provided great insight on transitioning into alternative businesses from three executives: Cindi Gondek of ACT Group in Cromwell, CT; Mike McCurdy of Integrated Technologies in Twin Falls, ID; and David Scibetta of Copier Fax Business Technologies in Buffalo, NY.
It was most interesting to hear that, while these dealerships have been successful driving alternative revenue streams, it has not come at the expense of their core business. There are obviously many different recipes for success, but for each of these dealers there seemed to be two common denominators: dedicating resources and committing to a business plan.
The audience was highly engaged during this discussion and there were numerous questions, mostly around sales strategies, compensation plans, and account ownership. “It is almost impossible to get a copier sales rep to sell IT,” said Mike McCurdy, whose company has branched into selling managed IT services. “Anybody in the field can sniff out somebody trying to fake the lingo in seconds flat.” On the flip side, McCurdy stated that it is relatively easy for an IT reseller to sell printers and print-related services.
Meanwhile, David Scibetta of Copier Fax Business Technologies indicated that the transition to document management solutions is perhaps less intrusive. “We made it extremely lucrative for our sales reps to sell solutions and we gave them bonuses based on revenue,” he explained. “The bottom line is they [sales reps] want more money than they are making on hardware, and we were able to provide that for them.” The overriding theme, regardless of the strategy, was to stay focused and wholly committed. Perhaps the best advice came at the very end of the session: don’t try to be too many things for to too many customers — pick one new adjacent business opportunity and master it.
The OEM panel provided interesting context for the dealer discussion. Dennis Amorosano of Canon, Phil Boatman of Lexmark, and Jim Buck of OKI Data discussed the transformation occurring within their own organizations. It was interesting to compare and contrast the unique perspectives from each of the panel participants, but again there were a couple of common themes. While there was much talk about the need to expand and drive alternative revenue sources, each stressed that their organizations remain committed to the printing business. At the same time, there was unanimous consensus among all panel members when it came to the importance of the dealer channel in helping to achieve transformation and long-term success. “We can’t do it without the dealers,” was a phrase that was heard more than once.
There were several other presentations to fill out the two-day event, including a very educational and informative session from Mark Mathews, president of Airwolf 3D. Mathews offered wonderful detail regarding various 3D technologies and market opportunities, but he cautioned dealers to approach the opportunity carefully.
While it is true that 3D printing is a growing market, it is also very competitive and it requires dedication and a specific skill set. “This is a B2B sale but it is a technical sale,” he said. “You have to understand your verticals and your customers.” At the same time, Mathews said that dealers need to be prepared for a lengthy upfront process. “This is going to take time, money, and manpower,” he proclaimed. “You are looking at probably a two-year deal to get fully up to speed.”
The content presented at BTA East was thoughtful and informative, but what makes this event so special is the ability to capture the current pulse of the dealer channel. Clearly, dealers continue to struggle with the notion of transformation, and the biggest concern seems to be how to pursue new opportunities without sacrificing the current business? Indeed, the most repeated questions during the event were around topics that were very much hardware focused: how to we deal with the threat of A4? How are dealers selling A4 successfully? How do we compete with OEMs taking A4 bids directly and selling A3? What is the ongoing threat of business inkjet?
It is not that these questions are unimportant. In fact, quite the opposite is true. Nevertheless, it is clear that many dealers are unwilling to stray too far from the comfort of selling hardware and pages. If you listened closely, there were many important lessons to be learned from the dealer panel session at the BTA event. Each of the panel members indicated that their printing and MPS business remains as strong as ever — and in fact continues to grow.
In other words, there are ways to pursue alternative revenue streams that are complementary to your existing business. Building expertise in other solutions and services helps to strengthen current customer relationships and drive incremental revenue, while at the same time opening up avenues for net new business.
Robert Palmer is chief analyst and a managing partner for BPO Media, which publishes The Imaging Channel and Workflow magazines. He is an independent market analyst and industry consultant with more than 25 years experience in the printing industry covering technology and business sectors for prominent market research firms such as Lyra Research and InfoTrends. In December 2012 he formed Palmer Consulting as an independent consultancy focused on transformation, mobility, MPS, and the entire imaging market. Palmer is a popular speaker and presents regularly at industry conferences and trade events in the U.S., Europe, and Japan. He is also active in a variety of imaging industry forums and currently serves on the board of directors for the Managed Print Services Association (MPSA).