R.J. Stasieczko
The Imaging Channel's Position and Optimism
"Neither the Racer's starting position nor the Racer's optimism in winning guarantee a victory. It's the actions taken before and during the race, which leads to winning."
Too much Optimism Can Blur Visions.
Recently I heard a leader in the Imaging Channel optimistically say, "The Imaging Channel is positioned perfectly to pivot to Managed IT Services" My response to anyone using the term "positioned perfectly" is this. The Racer had their position in the front row; some thought they were positioned to win. However, the professional Racer knew his position at the start of the race had nothing to do with his skills during the race. In other words, one's position is a defining starting point and has nothing to do with where one ends up or if they win.
The Document Imaging Channel's unrealistic optimism to their perceived positioning for success in Managed IT Services is what I believe held many of them back in diversifying into or failing at the Managed IT Services deliverable.
It seems as the realities of their core print services deliverable's current circumstances were not sufficiently disturbing them enough to take diversification seriously, and they optimistically believed that when they needed to pivot, they could do so quickly.
Yes, there are some in the Imaging Channel who believes just being present or, in position, would provide them victory in delivering Managed IT Services. That thinking is as delusional as those who believe their customer relationships will last past their product's relevance. It is always through an out of alignment with market realities between customers and those who service them where industries become vulnerable to disruption.
The realities of delivering Managed IT Services seem to be out of reach for most of the Industry's optimistic actors. Unfortunately, after over a decade of good intentions, I would argue that no dealer or manufacture's direct operations are producing north of 20% of their print equipment and services revenues through a Managed IT Services deliverable.
The Industry believed that delivering IT Services would be easier if they could control the vision of its success so, when presented actions needed for success which could not be imbedded in the processess of the print deliverable they were dismissed as unrealistic. Instead of aligning their businesses to be IT services organizations capable of providing print services, they mistakenly remained Print services organizations that would attempt to deliver IT services. This mistake is costing the Industry's actors dearly.
The Managed Print Distraction
As I watched the Industry's dealers chase a fictitious diversification called Managed Print Services, I was concerned about the distraction over Managed IT Services. Managed Print Services was never a diversification; it was merely a reclassification of transactional to contractional revenue.
The thing which was common to both types of agreements was the revenue would continue declining. In other words, print equipment and its services would never grow within an account regardless of what one called, labeled, or classified its contractional component.
The marketplace realities of the declines in Print Equipment and its services have been and will continue to be clearly defined in the numbers. Regardless of any optimism that those numbers will keep growing. This pandemic has brought an awareness to all involved with the print deliverable. More importantly, the Industry's end-users will now be presented with alternatives from new actors who also became aware.
The Numbers are Coming will the alarm bells finally be heard?
Sometime in July, the Industry's manufactures will report earnings for the quarter ending in June. As we all remember, the previous quarter ending in March was a blood bath. It seems all signs would indicate that this coming quarter's end will be even worse. In reality, whatever the numbers, the cost cuts to achieve them are themselves redefining an industry's relevance.
"It's through the financial microscope where realities once blurred by too much optimism are clarified; it's through this clarity where visions must realign with realties."
The quarterly results of an industry's key players are the barometer for that Industry. For the Document Imaging Channel, those key players are the equipment manufacturers and those mega dealers who represent them. Over the last decade, as print volumes continued to decline, many of the Industry's key players denied the merits of the decline, believing that growth through acquisition would outrun the market's reality.
If the Industry's dealers are ready to expand their relevance, they must admit to the reasons why the transition to IT services failed. The Industry must acquire the needed human capital to make the IT pivot. For too long, the channel has ignored the fact that delivering IT services is not about its positioning; it is not about its optimums. The Industry's leaders must admit providing Managed IT Services is about the actions they take, which will lead them to victory.
While the Imaging Channel aligns its optimism with its realities. They must also acknowledge, that it will be much easier for IT Services providers to delver print equipment than print providers to deliver IT services. The IT industry was waiting for the evolution of A4 equipment to align with the declines in printed output. This pandemic has brought awareness to what the IT industry was waiting for.
"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
The End Of The Day With Ray! A WOW Product
Will The Imaging Channel Imagine What's Possible or Rely on Memories?
"Imagination can destroy the thoughts of complacency's comfort; therefore, many will continue creating visions from memories rather than imagination."
Sometimes the greatest educations are realized from what no one expected. This pandemic is the classroom for the imaging channel's dealers, manufactures, and the customers they serve. More importantly, it's also providing an education to those outsiders who intend to disrupt a decade's old complacent deliverable.
"It's not the competitor we know and believe we can beat that should concern us, it's the competitor we never saw coming from places we refused to imagine, we must fear and get motivated to win against, I call this, The Uber Factor."
Unfortunately, some will exit their houses and quickly run to their existing customers and prematurity upgrade their print equipment. It is hard to believe that for many dealers, the 1980's business model is still in use today. For some, even a pandemic did not awaken their imagination to explore the awakened realities of the marketplace they serve.
Every living office worker in the world recently received an education in technology relevance, and many have learned that being digital is a great asset. The digitalization of the SMB and Enterprise marketplace will advance at unprecedented speeds over the next 24 months.
The question regarding the relevance for the decades-old Imaging Channel's deliverable is a simple one. Will the channel's leaders use memories to create visions, or will the channel's leaders use their imaginations and create what could be based on what should be?
Of my many warnings to the channel over the last few years, these two are now front and center to the channel's reinvention.
1) The A3 product's declining relevance.
2) The evolution of A4 MFP equipment will attract new actors who will create new processes disrupting the decades-old deliverable of print equipment and its services.
The channel must now react to accommodate these two realities. Realities that were extremely highlighted during these last few months as the world went through this pandemic. For the first time, the facts of oversold equipment will consume the end-users minds as they re-evaluate all expenses in their quest for digitalization.
Unfortunately, from some, we continue to hear the battle cries for saving yesterday based on memories of what was. There are still too many rushing out the door to oversell, and prematurely upgrade leased equipment continuing to chase revenue regardless of the high cost to their business this complacency creates.
Who else sees the insanity in a business model where there is an obsession with saving current customers money by prematurely upgrading their leased equipment, then adding in the buyout as they replace one oversold machine with another. This practice is what is defining an industry's actors as product-centric.
An industry saying, explains some of its disfunction. "We save our customers money" an industry dilemma 90% of our new deals are already our customers. In other words, our new deals lower our existing service revenue. Not to mention the realities of the higher cost to deliver services on new equipment during its first couple years of a new installation.
All the Imaging Channel's business model experts concluded decades ago that selling hardware is not a profit center for the dealership. The profit center is the service and supply revenue the product generates, and every time a dealer upgrades a customer, the customers save money. Does this not deify logic? Another flawed process is billing based on clicks or out-put when out-put is declining.
"The compensation program, by default, becomes the behavior path for the compensated."
Of, course the imaging channel's salesperson is paid to sell products, not services we all know the drill. The salespeople run back to the office ring the bell and holler-out as they write on the board the revenue of the hardware; of course, some progressive dealers emphasize the gross profit over the revenue.
Wait, what about the service? No, the salesperson does not write on the board the amount of service revenue, or how much of the service revenue was lost when the current customer was upgraded. This hardware first mentality is the reason so many dealers have failed in actually selling Managed Services PROFITABLY.
Let's imagine some changed behaviors
Imagine if the salespeople had to write on the board how much service revenue the dealership will be losing as compared to the customer's pre-upgrade amount?
Imagine if the service technicians could look on the sales board and see which salespeople cost the service department the most money as they upgrade current customers?
Imagine what dealer owners would change if the lease buyout amounts of current customers were also written on the board to show the cost of the revenue lost to leasing companies by pre-mature upgrades?
Some months the sales teams will finance more dollars in buyouts then new equipment the team sold. Everyone knows that customers who lease equipment are buying a payment. In other words, if the dealers weren't prematurely upgrading customers, they would be more profitable.
I think it's important to highlight these transactions' insanity because this will be the insanity that the disruptors will highlight as they seek out first to educate then deliver to a vast majority of the channel's end-users a better experience.
"The hunting grounds for disruptors are in the fields of complacency."
Here's some of what I imagine is coming to disrupt the print equipment and its services delivery model.
I imagine, based on marketplace realities, iDaaS (imaging Device as a Service) will become a new normal for print equipment for millions of users as they welcome subscription models. Remember, subscriptions are the most widely used acquisition programs for both the hardware and software needed in an organization's digitalization.
I imagine, based on marketplace realities, the print equipment subscription model will gain in speed based on the evolution of A4-MFP, and the deepening decline of print. OK, please don't confuse that with some nonsensically distracting paperless argument. It's not about paperless. PRINT IS DECLINING!!!!!!!!!!! It will be outsiders and those forward-thinking dealers who build customer-centric programs to sell and profit off the decline who will prevail.
With the advancements in AI, predictive science from data collection will aide resellers to deliver closer to market realities. Subscription-based billing for print equipment and its services is not just possible but is now on the path to becoming mainstream. Also, alternative equipment service programs delivered through processes outside what is known as the Document Imaging Channel's business model will provide end-users an alternative means to both the purchase and services of print equipment.
Imagine the size and scope of those distributor organizations that currently provide products and yes, even services to technology resellers both in and outside the imaging channel. These distributors are positioned well to deliver alternative programs to the evolving office and yes, even the home office regarding print equipment and its services.
Imagine organizations like Field Nation or others who have been servicing some of the Document Imaging Channel's customers for decades on A4 desktop print equipment sold directly to these end-users by manufacturers and IT service providers. The A4-MFP and its continuous evolution is creating opportunities for new actors; actors which those unimaginative imaging channel dealers will never recognize as they have an unrealistic view of their importance to end-users. Very few dealers can comprehend their end-users appreciating alternatives in the selling and servicing of MFP's. Overconfidence based on out-dated processes will always welcome challenges from innovators.
New billing models and new service provider alternatives will impact a huge part of the imaging channel's customer base. These new models and alternative service providers won't concern themselves with those print applications unsuited for their innovative processes. However, the vast majority of customers who live in that legacy BTA type dealer model are ripe for disruption.
"Innovation to a delivery system is not for the faint, or those who use memory management over imagination management."
Of course, those who deny market realities have a place in the ecosystem of a disrupted process. If that's you, you will still be able to oversell to the unaware for a while, you can still think nothing will change, you can still deny actual data, and you can still think that status quo will remain till your retirement. Just remember, those things that some still think are the things their disruptive competitor bets they will continue thinking.
"Those who cannot imagine how they will be defeated will fall to the mercy to those who plan and execute their defeat."
"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
Ray Stasieczko
CEO/Founder TEASRA,The Innovation Channel and Host of The End of The Day With Ray! https://www.endofthedaywithray.com/
The Imaging Channel's Changing Business Model Must be Profit Over Revenue
"Regardless of industry, those who have participated in an obsessional quest for revenue regardless of disciplines towards profits will eventually find themselves without adequate liquidity."
Unfortunately, it does seem as some are still desperately chasing revenue over the importance of profit. There has never in the history of the Imaging Channel been a more critical time than now to control cost by aligning all the industry's business processes to the realities of the marketplace.
Nearly all print equipment manufacturers have presented their recent quarterly financials, and it is safe to say that no manufacturer is excited about the outcome. However, the worst is yet to come the last quarter presented ended in March. As most understand the months of April, and May will fair far worse. As for June, we will see. However, those with common sense can draw a pretty good description of the April-June quarter for the print equipment and services industry.
Throughout the last few months, we have seen nearly all manufactures making adjustments to human capital cost, and there will be more adjustments made through June. The industry known as the Document Imaging Channel will face many challenges, and aligning all costs is paramount to remaining although changed as ongoing entity. Both the manufactures and the dealerships who represent them must now focus on profitability.
This profitability focus will cause many changes to the industry. As I have repeatably said, "The manufactures and those dealers who represent them must develop strategies to capitalize on prints decline."
Those who attempt to continue overselling and over-spec'ing to maintain outdated business processes will find themselves defeated. That defeat from a broken business model comes as a market's end-users become more aware of what is broken. This pandemic is elevating that awareness to both the industry's end-users and those innovators who intend to disrupt the industry's actors.
Like all technology resellers, the Document Imagining Channel must pay attention to the lessons from this ongoing pandemic. With regards to print and copy equipment end-users are getting along without the equipment, end-users are questioning their print equipment and its services expenses. This questioning is causing end-users to evaluate their print applications and their needs themselves. End will quickly fallout of trust in those providers who will attempt to sell them based on pre-virus applications.
Both Dealers and print equipment Manufactures must face the post virus reality and shift their business models to customer-centric approaches. Manufacturers who sell and service directly to end-users in the old BTA model must diversify just like the dealerships who represent them, as we have seen with Konica and its All Covered Group.
Those Printer/MFP manufactures who were more focused on A3 print equipment will face many storms ahead without migrating to A4 platforms. The reality of the migration to A4 equipment will become mainstream. This shift to A4 will provide numerous innovative processes to the print equipment and services deliverable. These innovative A4 processes will cause a major disruption as it improves the print equipment and its services deliverable to a vast majority of that BTA business model's end-users. People will still need and buy some A3 equipment, but not enough to support an industry who has depended on A3 equipment to support its business model's processes.
The A4 Revolution I began in 2018 is not just about a product type. It's about the processes of how the product is delivered and serviced through innovative ways, which will highlight the old ways dysfunctions. Innovators will look for ways to improve the experience of a product's end-users then set out on a path to educate those end-users in the better way, the better experience.
In a recent End Of The Day With Ray! Episode I predicted that the manufacturers would all begin promoting A4 equipment, align with other manufacturers and relabel brands if necessary to implement an A4 program. Manufactures must pivot and consolidate. Supply vs. Demand must be aligned, and no outdated marketing will win against an innovator's remarkability.
The days of any manufacturer being obsessed with winning or continue in the contest of being the largest A3 provider are done. It will be curious to see if our HP friends will continue in their pre-virus discussion of disrupting the world's A3 manufacturers by replacing them with HP A3 products: products they acquired in their acquisition of Samsung's printer division in 2017.
Of course, we will also see consolidation through more acquisitions. We will all have to remember that in the year after new mergers, it won't be organic growth in the acquirers' revenue increases. It is not hard to imagine headlines in 2021 or 2022, declaring an acquiring manufacturer's massive growth in revenue as a form of propaganda attempting to highlight growth in a declining use industry.
As print equipment continues to evolve in abilities that align closer to the marketplace's end-users, the industry will face new competitive challenges. The old business model of over-spec'ing and outdated financing models will become the Achilles Heal to any legacy organizations that believe the tenure of pre-virus circumstances will continue.
Those dealers who participated in the growth through acquisition strategy themselves now realize that buying declining bases without diversification is a recipe for disaster, and the good intentions to diversify over time become disastrous when unforeseen events cause you to run out of time. Hopefully, this crisis has taught an industry that buying growth in a declining use market without enough diversification to offset the revenue and declines of the core deliverable is a bet against logic.
Print will play a role in the business process for foreseeable years; however, those who misinterpret its function or value add in delivering both print and its services will lose to those who understand how to deliver profitably based on the realities of a quickly changing marketplace. Dealers must focus on cost to deliver based on the needed changes to the deliverable, and dealers must also acknowledge that end-users will begin replacing A3- MFPs with A4-MFPs and its services in ways which were once unimaginable to that BTA business model.
The cure against the sickness caused by chasing revenue over collecting profit is simply a new mindset and the ability to create what could be based on what should be.
"Status Quo is the killer of all that will be invented."