R.J. Stasieczko
The Document Imaging Channel's Customers Are Already Using Options
With the financials for the quarter ending June now reported. The harsh realities of sub 30% declines in revenues, and evaporation of profits have opened the window into the Document Imaging Channel's future.
The Channel's leaders have experienced what massive declines in service revenues look like firsthand. They can also visualize how the deep dips in hardware revenue will challenge the sales structure, along with the channel's entire go to market business model.
One can easily visualize that even as the industry returns to a post virus world, the revenue will continue eroding as service volumes continuing declining, and the lower cost A4 hardware replaces A3. The A4 momentum will erode the A3 placements in record numbers over the next few years.
For decades, print equipment manufacturers relied heavily on the Document Imaging Channel's dedicated resellers to sell, supply, and service print/copier equipment to its SMB and Enterprise end-user customers.
Of course, there are alternatives for end-users to acquire print equipment, supplies, and services outside the Document Imaging Channel. These alternative actors have been delivering the future of print for over a decade. These alternative providers will gain substantial market share as the industry consolidates and realigns its supply chain to equalize supply and demand.
Alternative providers such as IT Vars, Office Products Resellers, Managed IT Service providers, brick and mortar retailers as Staples and Office Depot, and of course, Amazon. Does anyone in The Document Imaging Channel believe that Amazon didn't sell any of its customers, both print hardware and supplies, in the last few months? They did, and they have been for a decade, along with all those others mentioned. There are billions of dollars in print equipment, supplies, and services delivered to end-users through these alternative actors in the supply chain.
The Document Imaging Channel is rapidly becoming out of alignment with its end-users. The commoditization of any product or service is caused when its end-users accept that the lower price aligns closer to how they value the means to their desired outcome.
The industry's end-users will determine the industry's value. Anytime some of the industry's actors double down on delivering to end-users out of alignment in value; Other actors in the supply chain will seize the moment to add those customers to their portfolios.
Ironically for over a decade, we watched some in the supply chain focus on getting the alternative providers to deliver in the ways of The Document Imaging Channel. I think about the obsessions to provide all printers their supplies, and services through a contracted means MPS as example.
Today we realize there are millions of devices, supplies, and services delivered outside contracts. The alternative providers were emulating what many more customers will do as the deliverable continues to shift from A3 to A4.
Pre-Virus, being out of alignment by a lack of understanding or misunderstanding from customers, had a longer tenure. However, once end-user awareness gains momentum being out of value alignment with them will be crippling. The Pandemic is and continues to bring that awareness to bear.
The End-users of The Document Imaging Channel will not remain customers through an outdated means just because its actors insist, they do. The majority of the Document Imaging Channel's End-users will instead align with those who deliver through a means which aligns in expectations based on market realities.
Here are some coming changes caused by End-users the industry must prepare to address quickly.
First, The manufacturer's direct business model is extremely vulnerable to extinction. Unless it goes through a massive overhaul and must deliver additional services just as the dealers must. A manufacturer's cost to maintain a direct to an end-user business model built to sell products and its services based on growth cannot survive as their products and services sold are rapidly declining in cost while commoditizing.
The A4 Printers and MFPs will replace a massive population of A3 equipment. The industry's actors must get past arguing against this reality.
Leasing and contracted A3 equipment with services will shrink dramatically as more end-users purchase much less expensive A4 through a transactional method. The practice of premature buyouts and contracts designed to keep the mystery of the margin are fading fast.
The Business Color A3 MFP will not be required in ways of the past as more information is consumed behind glass, and as business processes demand less hard copy color. Think about all the churches who have not printed their bulletin over the last six months instead they posted them online.
The B/W MFPs will also be reduced in quantity and replaced with print-only devices as end-users reduce in need to input paper as a business process function. Today's business processes are eliminating scanning and faxing. Think of all the documents which were once printed just to be signed and scanned as an example.
Both SMB and Enterprises will shrink and eliminate their populations of walk-up MFPs as the WFH movement increases.
Enterprises and SMB organizations continue ramping up digital processes, keeping the structure to information digital and cloud-based, replacing paper-based input, and output. The need for paper-based business processes will still exist. The only question is, at what level will it decline from those per-virus volumes?
The WFH user will purchase sub 300.00 MFP's, and there will be no excitement or movement from end-users either enterprise or SMB to provide any MPS programs to these WFH workers. Yes, of course, there will be applications, but one-offs are not a scalable deliverable.
My friends, the convergence of reseller channels, and providers' consolidation through all the supply chain. Will cause significant shifts to all resellers that deliver services and products to both the SMB and Enterprise End-users.
The Document Imaging Channel must replace the declines of print and its services with diversification or completely realign to deliver print equipment and its services in a much less expensive way. As the vast populations of walk up A3 devices are eliminated what remains will not sustain the Document Imaging Channel dealer in the comfort of their pre-virus circumstances.
Those who can replace the mindsets to save something with mindsets to create something different in ways that align with the end user's expectations will win.
"Status quo is the killer of all that will be invented."
CEO/Founder TEASRA, The Innovation Channel, and Host of The End of The Day With Ray! https://www.endofthedaywithray.com/
Ray Stasieczko
The End Of The Day With Ray! From 30% to 5% holy crap!!!!!
The Alternatives Are Awakening
The below statement must invoke The Imaging Channel to a new passion for change.
"While The Document Imaging Channel's Dealers and Manufacturers are refunding unused contracted service agreements, Alternative providers are collecting many of those refunded dollars as they sell the Imaging Channel's at home customers both printers and supplies."
Over the last half-decade, I have fought against the arguments screaming paperless office. I have and continue to describe those arguments as foolish distractions to the real crisis facing The Document Imaging Channel. A crisis now being exposed through this pandemic.
When the industry heard these arguments for the paperless world, the industry's actors focused on all the reasons that would be nearly impossible and continued as they were. However, this misguided threat created a blind-spot in visualizing the real threat facing the Channel.
"The greatest threat to a company's willingness to innovate is its perceived stability in the status quo."
As I have previously exclaimed
Again, it's not about paper-less; it's about Annuity-less. It's not the evaporation of paper!! It's about LESS PAPER; it's about a significant decline in supply needs and service annuities. It's also about the evolution of A4 Products. These are the things the Channel should have already been prepared for.
The document Imaging Channel's obsession with continuing over-selling A3 devices and pursuing MPS fantasies, instead of MPS realities, is seeing more and more of their customers going to alternative suppliers. The tipping point is fast approaching.
The Channel's DCA, tools reveal 5-7 A4 uncontracted print devices for every contracted one. Over the last twenty years, the Imaging channel lost billions to alternative providers by refusing to sell and supply print equipment outside an MPS contract.
Even though the industry boasts the best salespeople in the world, they failed in contracting all their customer's print equipment. This fact should enlighten them on what an overconfident strategy didn't accomplish, especially as the industry enters into IT services.
Two Immediate Actions Needed
- It's time for the Channel to pay attention to where their print customers are, going, instead of insisting that all customers buy in the same manner through a process contrary to an existing and changing marketplace. The Channel can no-longer, through their stubbornness, continue losing billions in transactional business.
- The Channel must diversify and now. SMB Service Providers with print only services will not continue as a sustainable business model. Dealers must explore Managed IT Services, Security Services, or even merging with Office Products Dealers who are deep into Janitorial services. Many of which are already selling A4 MFPs and their supplies successfully. The more sophisticated dealers who are already delivering Managed IT Services should re-evaluate acquisition strategies to include CPA financial services organizations. Buying more copier companies won't move the needle.
So, those who still believe that there is no need to redefine your 1980 print deliverable. I hope you are not basing that on the disbelieve of the paperless world. Remember it's not now and never was a Paper-less argument for change, It's about Less-Paper, and the massive populations of A3 MFPs vulnerable to being replaced by much less expensive A4 MFPs the industry must address.
"Status Quo Is The Killer Of All That Will Be Invented."
If not already Let's connect here on Linkedin and I welcome everyone to subscribe to my YouTube Channel https://www.youtube.com/channe...A?view_as=subscriber
CEO/Founder TEASRA, The Innovation Channel, and Host of The End of The Day With Ray! https://www.endofthedaywithray.com/
Ray Stasieczko
Changing Titles Won't Change The Industry
"Those who Continue To Fool themselves will Remain Foolishly Confident In their Continued Relevance."
I have and continue to vocalize that human capital adjustments must be part of the Document Imaging Channel's prescription to keep in relevance. I am defining these human capital adjustments as the need for new blood, over merely changing the titles of those currently in charge. This article will highlight those thoughts.
Here's my thinking; if the current leaders were going where the customers were going, they would have already changed their titles on the way there. Leaders don't wait for directions; they create the directions others will follow. Changing the title to include the word digital won't cause digital disruption. Which frankly is already long over-due inside the Document Imaging Channel.
When this pandemic started, I said that the SMB print equipment customer would increase their digitalization speed by five years. This thinking was not of a crystal ball; most realistic businesspeople have also come to that conclusion. Over the last six months, we are all watching the world's businesses scurry towards digitalization.
For the first time, the Channel's end-users are asking tougher and new questions of themselves and their providers concerning the need for printed documents. The industry's fate resides in these new questions and those who provide relevant answers.
"As an industry's relevance faces challenges, its leaders have no choice other than to create the new relevance."
Clarification for my friends selling and servicing print equipment is this. Digitalization won't eliminate print; it will merely rapidly decrease the need for many of the A3 MFP equipment's applications. Some say, and I agree volumes will also reduce by at least 10-12 percent per year.
Those decreasing volume percentages and diminishing needs of equipment's applications will cause opportunities for outsiders to change the industry's business model; The how print equipment is delivered, supplied and serviced is extremely ripe for disruption to a massive percentage of the Document Imaging Channel's end-users. As the pandemic exposed, many businesses could function without going down the hallway and retrieving the sets of stapled documents for the weekly management meeting. Or printed reports to handoff from one person to another.
Today, most agree that the need to modify the decades-old deliverable of print equipment and its services is past due. However, some are not entirely in-line with the realities of what's needed to make those transitions successfully.
The Document Imaging Channel has been behind on many fronts. The Channel's obsession in saving its nostalgia and this pandemic was not the beginning of the industry's challenges. It does seem as many out-dated deliverables are now blaming the pandemic for their rapidly fading relevance. In the case of the Document Imaging Channel, its end-users have been leaving the Channel's preverbal stores for over a decade.
The obsessions for the manufacturers and the dealers who represent them to insist on every transaction being a contractual agreement forced many of their customers to seek alternatives—these alternatives aligned with the market's realities.
I predict that history will reveal that the Document Imaging Channel's obsession with controlling every printer, its services, and supplies in a managed print agreement within the SMB sector cost the Channel's dealers and those manufacturers with direct operations billions in revenues. As those end-users who wanted to buy without restraints went to alternative sources. The industry's dealers and many manufacturers made and continue making the means of getting print equipment way too complicated.
In that complication, the SMB end-users flocked to Amazon, IT Service Vars, and the Office Product Reseller's Channel. These organizations welcomed the Document Imaging Channel's customers to their customer roles with more straightforward programs such as e-commerce platforms where one can click buy now. These alternative options provide a business model that is void the complications of the Document Imaging Channel's contractual leases and MPS models.
Even as data showed from all DCAs that there are 5-7 devices not under contract for every device under an agreement, the Channel refused to modify. Those non-contracted devices are A4, and the Imaging Channel's end-users are buying them, servicing them, and supplying them from outside the Channel's borders. These end-users will soon look for more advanced A4 MFPs as they will determine A3 and its complicated contracts are out of alignment with the new relevance the pandemic exposed.
Six Months in a Pandemic, What's changed? Hopefully, more than titles.
Today the Channel's leaders will not be able to pivot just because they got a new title. Unless these re-tilted leaders were already outspoken, determined, and already presenting arguments for changes before the pandemic. If not, the question to ask - is, why or how will they now?
The Channel needs to bring in the human capital, which understands the realities of today's buyers. The dysfunctions of the Document Imaging Channel's deliverable are clearly being exposed. A decade of some denials, and believing the comfort of current circumstances got in the way of bold action.
Still their are significant dysfunctions much of the industry continues ignoring. Even after six months as a global pandemic, brought a new awareness to both the Channel's end-users and all the actors who service and support them.
The Channel still struggles in selling with modern billing arrangements such as iDaaS meter-less billing or subscription-based billing. Subscription-Based billing is how nearly every other component of technology and its services is transacted.
The Channel is still ignoring data, data that has and continues to emphasize deep-rooted issues pertaining to the services model and its cost misalignments.
The Channel is still without digital engagement (E-Commerce) The in-ability for the Channel's end-users to purchase online is extremely contrary to the buyer's desires and marketplace realities.
The Channel is still discussing Managed Print Services for the SMB end-users like its 2000. This out-dated MPS talk track has misled the Channel's actors. After nearly two decades, does anyone believe the SMB customers want contracts to manage print?
What customers want is printed or copied pages when they need them. It is safe to say that most print end-users know that tomorrow they will print less than today. These end-users have long ago stopped in the policing of print.
The Channel's Dealers and Manufacturer's Direct operations are still over-spec'ing A3. Regardless of what data is telling them. The reason, many in the Channel saw no threat from outside competitors regarding the delivery of A3 equipment. What the Channel's Actors miscalculated was the outsiders had no intention of selling A3. After-all the end-users were moving towards A4, these outsiders knew that in time the A3 customers would increase in their movement to A4, and as they do they will welcome them through a much better delivery means.
The Channel has still not diversified Into Managed IT Services past 30% of its core print revenues. They continue focusing on products first and services as a function of the product. This product's first mindset is contrary to the Managed IT Services business model. Thereby explaining the lack of diversity.
The Channel is still attempting to close new and upgrade existing businesses by lowering out-put service costs as the out-put itself is declining. The reason they do this is to inflate the lease dollars dedicated to hardware. The business model of compensating sales on hardware revenue and profits has nearly destroyed the service profitability of the entire Document Imaging Channel Industry.
The Channel has still not ended the lunacy of prematurely renewing leases in desperation to increase declining revenues. As deliverable increases in its commoditization along with marketplace's competitiveness. The ability to sell, supply and service in the Channel's outdated model is playing havoc on its revenues and its profits. I fear post-pandemic. We will see some very questionable deals that were written in desperation to increase Dealer or Manufacturer's cash flows over any value to the actual end-users or real profitable value to either the dealer or manufacturer.
The Channel is still promoting the glories of production-print. However, they do not address how a 2% marketplace of production-print, which is extremely out of alignment with excessive supply versus demand, can honestly be a worthwhile endeavor. Many Dealers and Manufacturers are currently hiding the profitability of production-print. Either through unawareness or ignoring the awareness, however, as their massive customer bases of non-production print customers move from A3 to A4, Along with declining print volumes, all the misunderstanding or mismanagement of production print's losses will painfully surface.
Unfortunately, some of the Document Imaging Channel's actors are not in-line with the skills needed to respond to their quickly changing end-users as these end-users align their print equipment needs with today's reality. It's those competitive alternative platforms residing on the Channel's border, which will continue gaining momentum as the end-users' needs and the advancements of A4 move closer and closer together.
The time for providing the needed talent for transformation is now. That transformation won't come from business card promotions. Attempting to replace one's out-dated skills with new titles such as Digital Transformationist or other buzz words without executing the needed skills the titled describes will lead to defeat.
"During evolutionary events - on the job training will not align favorably with the speed of disruption the event is causing."
If those charged with leading digital transformation are ill-equipped, they must surround themselves with those equipped. Sadly, during times of unprecedented disruptions, egos can highjack good intentions. The Document Imaging Channel has been going through disruption for at least a decade. Many of its leaders remained silent or ill-equipped to navigate diversification and align to market realities. Pandemics don't create one's skills. However, they do expose the skills missing and the skills needed.
The Document Imaging Channel has an excellent opportunity for those willing to align with market realities regardless of its pain. Of course, those believing everything will continue as it was or are being fooled as temporally still does - have already lost.
The Document Imaging Channel's future will result from their actions so, as the digitalization continues to challenge yesterday's deliverables. The Channel's leaders must look to their borders and welcome those who already live where their past customers went, and more and more current customers will continue heading.
The arguments are not about print going away; the arguments are about the evolutionary improvements of A4 print equipment and the evolution of end-users' awareness. As those two things continue evolving, they will align and create a massive disruption to the circumstances of The Document Imaging Channel's out-dated Business Model.
"Status quo is the killer of all that will be invented."
If not already Let's connect here on Linkedin and I welcome everyone to subscribe to my YouTube Channel https://www.youtube.com/channe...A?view_as=subscriber
CEO/Founder TEASRA, The Innovation Channel, and Host of The End of The Day With Ray! https://www.endofthedaywithray.com/
Ray Stasieczko