Mapping Your MPS Strategy in an Evolving Office Market

by Robert Palmer

MPS is growing both in size and scope, moving down market from traditional enterprise accounts where it began into large and midsize businesses. But with growth comes competition, and differentiating in a services business is always a difficult task. Meanwhile, the market has seen some commoditization of MPS – particularly in basic fleet-management services, where opportunities for differentiation are limited.

For the most part, MPS today is promoted as a means to reduce print costs, drive print reduction and, to some extent, improve overall sustainability. Most MPS providers take this narrow view on the MPS value proposition because it tugs at the heart of businesses focused on reducing costs. It is an effective message for capturing competitive devices, thereby increasing the number of pages under contract. But the focus on cost reduction could have a negative impact on productivity. At the same time, a narrow view on the value of MPS limits the opportunities for future value-added services.

Moving forward, MPS providers need to find ways to separate themselves from the competition, both in the scope of offerings and in profitability metrics. Meanwhile, the office printing market continues to mature, and several important trends will have a serious impact on future opportunities for managed print services. Managing these shifts effectively is key to longevity in the MPS space.

The long-term opportunity

Most market research firms continue to position MPS as a growth opportunity, although the aggressive growth rates that were projected just a couple of years ago are no longer the norm. Of course, the future of MPS is tied directly to the future of office printing. If office printing is declining, what are the prospects for MPS?

There is no question that office print volumes are declining. The challenging economy has put pressure on businesses to reduce costs, and printing is one area that has seen a substantial impact. Hardware placements have declined steadily, and it is unlikely that we will see unit shipments reach prerecession levels ever again. Most market research firms are predicting slight declines in page volumes over the next few years, but market indicators suggest that we might see even more aggressive declines.

The reasons for the decline in print are secular in nature. The transition from paper to digital format is an ongoing trend that is happening faster than some might think. Paper remains an important part of many business processes, but there is little doubt that there will be fewer pages printed as a result of the transition from print to display.

In short, today’s office printing market is saturated, with overcapacity and underutilization of current products to boot. This is one of the reasons why MPS resonates so well with customers looking to gain control of their printing fleet. Yet the overall market remains challenging for providers looking to grow their business. The installed base is declining slightly, with fewer pages printed per device. The result is a market with fewer pages, lower CPC rates and shrinking supplies profits.

MPS remains a growth opportunity, but it must be viewed as a means to grow revenue through value-added services and software. In other words, a successful MPS business will be rooted in much more than simply growing MIF and capturing additional pages. Future success will hinge on the ability to augment existing print business with alternative revenue streams.

Document services

The need to expand beyond print reinforces the need for MPS providers to invest in their ability to deliver workflow and other document solutions and services. To be truly effective, managed print service engagements should help solve fundamental problems with office documents – including document routing, security vulnerabilities, compliance risks and inefficient document workflows that lead to lower worker productivity.

The most effective MPS strategies are designed to not only consider workflow issues but, whenever possible, optimize and automate those processes. MPS should consider the entire document life cycle and involve every element within the document value chain. 

By driving document solutions through an MPS offering, providers can increase the value of their overall service. The higher the perceived value, the more customers will be willing to pay – especially if SLAs or business metrics are tied not only to reducing costs, but also driving productivity. Of course, that means greater margins and higher profits for the services provided.

The future of the MFP

The role of the office MFP has changed dramatically over the past few years, and it will continue to evolve over time. Most of today’s office MFPs (and printers, for that matter) are migrating from pure output devices to information management devices.

Today’s MFP is more like a platform, given its ability to run embedded software and connect directly to the Internet. Vendors are developing complete ecosystems around device platforms, providing the ability to download and run applications, connect to cloud services and even customize front-end systems to integrate with existing workflow processes. Once again, this emphasizes the need for providers to find the proper workflow software to ensure that the investments made from a hardware platform perspective align with future plans around document software and services.

At the same time, hardware manufacturers are putting a great deal of focus on areas such as security, usability and serviceability. As the MFP becomes more of an on- and off-ramp to the Internet, it creates additional security risks. Office printers and MFPs are no longer end points but access points to the network – and the information that sits on that network. Vendors are also driving the platform approach by creating a consistent user experience across all products and improving serviceability through remote monitoring, remote diagnostics and even self-healing technology. The transition to MPS has actually had a lot to do with advancements in these areas.

Mobility and the cloud

More revolutionary changes could be in store for future printing devices. As the market continues to transition to cloud-based services and a SaaS model, it is conceivable that printers and MFPs could evolve into service delivery vehicles. This would mean scaled-down hardware in terms of embedded features and functionality because the value would actually be delivered through customized service and software that runs independently of the machine itself. Apple’s iPad is a perfect example of hardware that has been built for a services business model.

The transition to mobile devices along with the ongoing movement to mobile workflows and cloud-based computing are having a significant impact on the way we do business today. As a result, mobility should be an integral part of any MPS solution.  

This raises a number of important issues: the supporting of mobile devices, the delivery of secure mobile printing and the fostering of mobile workflow integration into existing processes, to name a few. Most organizations today continue to struggle with these issues – particularly the conversion from paper to digital format. The reliance on paper-based business processes limits the opportunity a customer may have to take advantage of advancements in mobile and cloud-based services.

MPS providers should understand the changes occurring in the office printing landscape to capitalize on market shifts, separate from competitors and create a sustainable business model. Invest in document solutions and the ability to sell and support them, be prepared for changes occurring to printing hardware, and talk with customers about their digital transition plans. At a minimum, make sure that you have the training, expertise and software tools in place to help them through that transition.

This article originally appeared in the October 2013 issue of The Imaging Channel.

About the Author

Robert Palmer is an independent market analyst and industry consultant, and BPO Media’s chief analyst. With more than 20 years of experience in the printing industry, he has covered technology and business for prominent market research firms such as Lyra Research and InfoTrends. He was managing editor of the Hard Copy Observer for six years and more recently served as director of office document services for Photizo Group. Palmer recently formed Palmer Consulting, an independent consultancy covering the imaging market.