Between digital transformation, a hyper-competitive marketplace, declining print volumes and profit margins, and competitive threats from adjacent industries, office equipment dealers are looking for new revenue streams. To keep the arrow moving up and to the right, dealers are adding sticky products and services to their portfolio to get an edge on the competition and remain relevant to customers.
Some dealers have turned to managed print services or production print opportunities, while others are selling software to buttress their core business — all of which are potentially excellent opportunities well worth pursuing. There is also another route to consider.
I had the opportunity to sit down with Continuum’s new VP of Office Technology, John Schweizer, to find out more about his plans to establish managed IT as the reigning way to help dealers future proof their businesses.
If you can’t beat ‘em, join ‘em
Dealers don’t have to just worry about threats from within their own industry. The managed IT provider is coming to eat your lunch, too. “The threat of the IT vendor to the traditional MFP and MPS space is growing every day,” said Schweizer. He noted that in some cases, IT vendors have their own relationships with OEMs, and they’re more than willing to try and beat you at your own game. Schweizer’s advice? “Don’t let the IT provider get you; be the IT provider.”
The managed IT opportunity
Schweizer reminisced about his time working at an IBM Tivoli spinoff. “If you didn’t have $4 million a year to spend on software, then we wouldn’t pick up the phone.” But in the last decade or so, innovative sales models (selling subscriptions instead of one-time perpetual licenses) and advances in software development alongside an explosion of cloud-based and mobile technology, made it possible for smaller businesses to access the same technology that was typically reserved for the Fortune 500.
This created an environment where managed IT providers can thrive.
Managed IT providers target businesses that leverage a lot of hardware and software to drive their business, but don’t necessarily want to — or simply don’t have the resources to — manage it on their own. Typically, managed IT providers will bundle some combination of network operations center (NOC), help desk, security and disaster recovery services. And the amount of folks who want to outsource part or all of their IT operations is plentiful.
The managed IT business is booming.
Take the road less traveled
Schweizer acknowledges that it won’t be easy to get your IT division off the ground, and that there is a lot of risk involved. It is not the same as selling copiers and MFPs. The technology is complicated and constantly evolving, and labor doesn’t come cheap. In many cases, dealers won’t have the time, money, or resources to effectively deliver a managed IT model, let alone get it off the ground.
But dealers won’t have to go at it alone and take on all the risk. With the right partner, branching out into managed IT doesn’t have to be an almost impossible task. For example, Continuum is very supportive of dealers who want to enter the managed IT market. Schweizer said that Continuum will absorb most of the risk. “Roughly one-third of the cost of delivering services is on you — the rest lies on us,” he said.
Continuum has developed the resources to set up dealers with everything from go-to-market materials and job descriptions for who they need to hire, to proven compensation models and statement strategies. “We can help them scale up or down as fast as they want, because certainly one of the reasons people get burned is because they couldn’t scale fast enough, they lose a key customer or the dealer loses their skilled headcount and can’t deliver,” said Schweizer.
Just like so many facets of life, if dealers want to be successful, they need to be committed. “If you’re going to dip your toe in the water, you’re going to have a hard time,” said Schweizer. He used history as an example, pointing first to the days of fax and more recently to MPS — two cases where those who were fully committed to building those businesses cashed in on hundreds of millions in earnings.
The great thing about MFP dealers and MPS providers is that they are so good at building relationships with customers. It’s in their DNA. If you ask me, that’s the hard part. But the customers may no longer need as many printers and copiers as they did 20 or even 10 years ago. The good news? There are more options now available than ever before to diversify, made possible because of new cloud-based applications and software developments. It’s a smorgasbord out there — are you hungry?