Models That Just Won’t Mesh

Some things in life were just not meant to go together. Of course, this hasn’t stopped humanity from attempting to do so. Take the dinner classic of spaghetti and meatballs washed down with a nice glass of milk. Appetizing eh!  How about the Canon calculator/mouse?  When introduced, this combination seemed like pure genius. Almost every desk in the business world contains these two tools, so why not put them together? Certainly, a novel idea, but in terms of results, an abject disaster. Some things just don’t work together.

Over the course of the last 30 years, the office technology industry has seen its share of changes and attempted combinations. In fact, one could argue that the industry is in the midst of its biggest change to date as it attempts to make the transition from the sale and support of hardware to software and services. Getting to this point hasn’t been easy.

It wasn’t that long ago that the idea of software and services was a distant thought for both OEMs and dealers. Enter the MFP. The idea of combining individual office technologies into a unified system, the MFP, changed everything. This is one combination, like peanut butter and chocolate, that has been a stroke of brilliance and ultimately ushered in an unprecedented period of growth for all industry players. Of course, combining these functions — and in particular, the network printer — ushered in a whole new set of required skills and interoperability ultimately leading to the introduction of software and network services.

While both OEMs and dealers adapted to these changes, one thing that didn’t was the industry business model. Initially, most industry players attempted to maintain their familiar hardware business model and integrate software and services under the same structure. And why not?  With strong customer relationships and extensive sales resources, why wouldn’t the same model be just as effective in selling these offerings as it is with hardware? And why would anyone want to hire a whole new set of resources anyway?

With major investments in training the existing sales organization, OEMs and dealers embarked on a journey that would, in many cases, encompass well over 10 years and many failed attempts. If rewards were given for perseverance, the industry would be flush with riches for sure. Unfortunately, despite the best efforts of many, combining the sale of hardware with software and services under one model just didn’t work. Were there examples of success?  You might say the sale of document distribution software was an example of success, but this business only accelerated after it was packaged for sale similar to hardware. Outside of document distribution software, one would be hard pressed to find another example of even moderate success (managed print services and enterprise print management don’t count, given their strong link to hardware).

As with many new initiatives, the industry has adapted, and while it would have been ideal to leverage one sales organization and one group of technical resources for the entire business, dealers in particular have found that legitimate success in the fields of software and services require organizations that are separate and distinct from the traditional hardware business. By structuring in this manner, successful organizations have been capable of building skills, marketing initiatives, compensation plans and business models that are unique to each part of their business, thereby positioning themselves for the greatest level of success. And those players who have found prosperity have figured out how to create the necessary incentives to stimulate cooperation between the distinct parts of their business.

So, is there a magic elixir that holds the promise of creating a combined business model that would permit OEMs and dealers to lessen their overhead and operating costs by taking a unified approach to the market?

Time will tell; however, subscription-based business models and PaaS (print as a service) may hold the key. While these models don’t address the skill-set gaps, sales cycle, or compensation plans between hardware and software/service sales and support resources, they do offer a means of effectively approaching the customer. These models simplify customer acquisition of products and services, offer predictable revenue streams and tend to be stickier than traditional hardware sales models.

Now if the industry can only figure out how to move to such a model, we might actually have the makings of a combination much more appealing than milk and spaghetti.

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Dennis Amorosano is the president and founder of Dendog Strategy Insights LLC, a management consulting firm focused on strategic planning, new business development and go to market execution. Providing services in the areas of strategic business planning/execution, new business development, content creation/marketing automation and technology sourcing support, Dendog Strategy Insights brings 30 years of technology marketing, sales, product planning, software engineering, and professional service experience to help clients implement strategies that yield success.