by Ken Stewart, Photizo Group
Many dealers and resellers on the edge of managed print services equate MPS with simply taking over the service and supplies for printer fleets. By this definition, you could assume MPS is naturally suited for existing account expansion. But simply taking over the service and supplies for printer fleets is just the tip of the iceberg. At the other end of the spectrum is the hybrid provider — a dealer or reseller who has made a complete transformation and is riding a wave of success.
Several years ago, Photizo Group identified the emerging convergence of the traditional office technology dealer and the information technology (IT) systems integrator. Hybrid providers possess the entrepreneurial spirit and document-centric expertise of traditional office technology dealers as well as the rigorous process mindset and technological savvy of IT system integrators. When combined with a services-centric go-to-market strategy, hybrid providers are agile in responding to customer needs while demonstrating core expertise in delivery of managed print services.
So what makes a hybrid provider?
Photizo studied best-in-class organizations — true hybrid providers — to identify trends, patterns and best practices among them, creating a Hybrid Provider Index. This index serves as a means by which to measure the relative success for all providers along the Hybrid Provider Development Model (Figure 1). Within that index, there were four rules by which every hybrid provider was governed.
Hybrid providers have dedicated executive leadership and resources.
They come in all shapes and sizes, but one thing is clear: The hybrid provider’s executive leadership is sharply focused on a services-led approach to market. A key indicator of the level of executive commitment to the services model is the willingness to invest in a dedicated services staff. This begins at the top with a dedicated executive responsible for overseeing the program’s effectiveness.
While the broadly adopted staffing models available have dictated a generally even distribution among sales, service and administrative staffing, the hybrid provider is once again challenging the conventional paradigms. The median response of a hybrid provider indicated that service personnel outnumber sales or administrative personnel two to one.
The level of executive commitment to and focus on execution is demonstrated most clearly in how a provider structures its sales team. All hybrid providers have dedicated resources supporting the MPS sales cycle but have made different choices as to whether they will approach the market with the addition of subject matter experts (SMEs) specializing in MPS or create entire sales teams specifically focused on MPS.
Hybrid providers offer more than basic fleet management.
It is important to understand that a services-centered business looks beyond traditional product-centered offerings such as break/fix hardware contracts alone. Photizo asserts that hybrid providers must offer services beyond those seen in typical Stage 1 (Control) and Stage 2 (Optimize) engagements. Offering Stage 3 (Enhance) services is a key differentiator for hybrid providers. See Figure 2.
Every hybrid provider counts fleet optimization and right-sizing, document management software, print management software, and service and supplies fulfillment on device fleets not originally sold by the provider as part of the set of core deliverables. Even more telling is the fact that an increasing number of hybrid providers are now including advanced workflow solutions and IT services.
Hybrid providers build a customer base through net new customer acquisitions as opposed to converting existing customers.
As Photizo continued to explore aspects of the hybrid provider’s customer base, each participant was asked a series of questions to highlight how mature providers have grown their customer base. Whereas conventional wisdom indicates that MPS is an excellent approach to expand same-account penetration, the hybrid providers Photizo worked with overwhelmingly indicated their base was predominantly built through new customer acquisition by a factor of almost three to one.
Providers who had transitioned from another overarching business model, which we categorized as heritage providers, generally outpaced service providers (defined below) when comparing actual numbers of customers converted or acquired. Given these providers are transitioning their business models from well-established and successful businesses, Photizo observed a generally larger number of customers under contract despite the lower percentage of MPS customers in their base. In other words, heritage providers are balancing both traditional and MPS customers.
Another class of providers are the service providers. Providers in this class derive more than 80 percent of their revenues from services-centric sources. Service providers reported a larger number of devices under contract across a fewer number of customers. This may indicate these providers generally focus their energy on customers that are larger in size or perhaps have a larger geographical footprint.
Hybrid providers have a high level of customer retention and are very effective at fleet optimization.
In Photizo’s Decision Maker Tracking Study, we consistently see that independent channel providers play a very key role in the delivery of MPS engagements. This is only natural, in that these dealers and resellers are members of their communities and understand that relationships with and proximity to their customers are decisive advantages when everything else is equal.
It should be no surprise, then, that the hybrid provider is extremely focused on customer retention, averaging a 93 percent customer retention ratio. Further, these providers are very focused on ensuring fully optimized and aligned customer device fleets, decreasing the device footprint by more than 60 percent. See Figure 3.
Hybrid providers share a significant lead over traditional dealers and reseller, but becoming a successful hybrid provider is not as easy as simply setting out to follow the four rules mentioned above. Many factors come into play, and for most, the transformation is a journey requiring strict goal-setting. Photizo’s Hybrid Provider Index provides research-driven benchmarks for those aspiring to build profitable service-centric businesses by which to measure and evaluate their progress as well as set realistic goals.