by Toni DuGal | 8/24/15
In the last blog post “The Golden Era of Innovation in Document Outsourcing,” I discussed the role of the cloud and automation and how these innovations have delivered greater visibility into operational costs and led to improved efficiencies and workflows, which fueled growth in managed print services (MPS). For the third and final post of this series, I want to look into the MPS crystal ball and offer some insights and predictions about the industry’s future.
As noted in Banner’s report recap, which looks at growth trends for global document outsourcing over the next five years, the market is expected to reach $35 billion by 2020 – a $5 billion increase from 2014’s predictive report. Further, the research and analysis company Quocirca estimates that almost 50 percent of large enterprises (more than 1,000 employees) are using some form of MPS. Quocirca also predicts an “additional 20 percent are planning to outsource such services within the next year, reflecting the growing maturity of the MPS market.”
The companies utilizing these services have a simple goal in common: make more money, while spendingless. For many target markets, Fortune 500 companies are outsourcing a larger number of their back end operations at a faster rate. Increasingly, enterprise organizations are focusing on their core competencies and partnering with outsourcing firms to handle tasks that fall outside of those areas, increasing their own efficiency and creating opportunities for those of us who happen specialize in handling those outlying tasks in ways proven to reduce total cost of ownership.
MPS Transformation Continues With New Tech
As noted, the MPS industry has evolved to offer corporations invaluable end-to-end print processes, improving efficiency, cutting costs and streamlining operations, all in the name of enabling their clients to focus on the more relevant tasks at hand. ISO’s report focusing on the future of the outsourcing market notes that outsourcing “initially focused on highly transactional back-office processes or non-critical services, but now encompasses strategic functions, with some companies off-loading entire segments of their value chain.”
In part, the increased demand for MPS is the result of efficiency advancements made in the past five years that will continue in the future. While our comfort levels with mobile devices have grown, so has our willingness to look at screens versus paper assets. This has indeed reduced the overall amount of unnecessary printing.
It is also true, however, that people are still fairly careless about their print habits. To address this problem MPS providers are now utilizing big data strategies to collect and crunch massive amounts of information about our printing patterns, analyzing user behavior and implementing print rules and restrictions that will reduce overall print spend.
Creating a print strategy within corporations allows for MPS providers to share recommendations, implement specific practices, and monitor results making adjustments where necessary, overall reducing total cost, the amount of print, the number of devices, and vendors.
In short, many of the same technological innovations that have advanced in tandem with the decline in paper usage have created a boom in document outsourcing.
Adjusting the Print Paradigm
Historically, chinks in that value chain have come from some predictable places. Take this simple example: Companies have traditionally used the toner required by original equipment manufacturers (OEMs) of the printers themselves, because those OEM providers warned strongly of the great risks associated with less expensive options such as remanufactured toner comprised of a cartridge that has been used, recycled and filled with new ink.
Companies feared switching to a non-OEM toner could result in poor print quality, damage to printers or warranty forfeiture. Now, however, remanufactured toner has advanced and become more reliable and even less expensive than previously. In addition, warranty protections have generally lessened, as printers themselves have become commoditized, resulting in companies taking those stringent OEM requirements less seriously. In fact, according to the Turbon Group, a provider of toner and other print supplies that tracks the industry, remanufactured monochrome toner cartridge sales are now in the range of 30-35 percent market penetration and stable, speaking to just how comfortable people have become ignoring OEM scare tactics.
But commodity pricing and diminished fears of OEM retribution do not always result in overall savings. For example, the number of pages printed is declining at a rate of 12 percent per year, but the cost of color toner is increasing at almost the exact same rate. Also according to Turbon, color laser printer sales are increasing 5 percent or more per year as companies slowly phase out older monochrome devices, sales for which are flat to declining a few percentage points annually.
Remanufactured color cartridge sales register in the range of 10 percent market penetration and are on the rise. But while companies are moving more toward the use of remanufactured color toner as well, it is still more expensive than its monochrome brethren. In addition, color toner is in wider use in printed materials due to the increasing penetration of hardware that supports color printing. The result is a wash: the costs savings that come from diminishing paper usage are canceled out by the increase in the use of more expensive color toner.
Other opportunities for increased efficiency are emerging, however. Companies are realizing that they can combine their legacy multifunction devices (MFDs) and printer fleets into one streamlined process, further consolidating budgets, while still maintaining high quality results. A combined fleet will result in fewer overall pages, less toner consumption, fewer devices and reduced overhead related to housing the equipment.
The Latest and Greatest
As younger people enter the professional workforce in droves, it will be increasingly important to remain technically relevant. With boomers aging out and millennials taking over, organizations will need to continue make technological strides, such as updating those the antiquated printer fleets from the Clinton era that many organizations still use today. We can anticipate a major shift in workplace demographics alongside the purging of this outdated technology and reinvestment in the latest and greatest. After all, just because something works doesn’t mean it works well and organizations will need to make a commitment to innovation if they want to attract and retain talent.
This tech refresh in itself will introduce further efficiencies – but also create new problems on which MPS can bring decades worth of learned efficiencies to bear. MPS will then set its sights on newly emerging flaws, flattening out the creases and ultimately helping to create more graceful, lean organizations, all over again.
Toni DuGal is the Vice President of Solution Services at Novitex, where she leads the development of Novitex’s MPS practice. Prior to Novitex she was the Vice President of Professional Services and Transition at Xerox and Director, US MPS Service Delivery at Hewlett-Packard.