A Receptive Target Market: Yes, but replacing copiers with MFDs is not easy
By Michael Zeis
Thanks to a digital heart and network connections, the plain-paper copier, one of the most mature office product categories, is presenting a formidable challenge to Hewlett-Packard, Lexmark and others that have commanded office printing for the better part of two decades. Office product dealers are in a great position to increase their business, if they take a savvy approach to what can be a complicated sale.
Late in 2003, Blackstone Research Associates published "Office-Based MFDs: Going Beyond the Green Button." Starting with 20 on-site personal interviews and finishing with 150 in-depth telephone interviews in the fall of 2003, the staff at Blackstone Research Associates delved into multifunction device (MFD) purchase motivations and practices. The research investigated two principal trends:
Fallow Functions. When a company gets an MFD, it gets a tool that can be used to simplify and accelerate work processes. But the application and utility software packages vendors deliver with MFDs often go unused. We wanted to learn the extent to which MFDs are used for applications beyond printing and copying.
A Chink in the HP Armor. Over a couple of decades, HP has built a fiercely loyal following among office printer decision makers. But the copier industry's switch to all-digital (and virtually all-connectable) product lines is forcing customers to examine long-standing vendor relationships. The consequence is that HP is no longer a shoe-in, and copier companies have never had a more receptive target market.
Complicated Sale?
Many MFD sales seem so simple on the surface, especially in the common copier-replacement scenario encountered most often when current copiers are about to come off lease. What can make such a sale complicated?
First of all, partly because of the need to connect the product to the network, there is usually a wider (or different) set of purchase influencers. Usually IT is part of the equation. (In some organizations, IT is the whole equation.) Although politics, domain issues and traditional vendor preferences can present significant obstacles when including IT in the "copier" decision, making the connection is, in a way, merely a logistical or operational issue. Especially in larger companies, the office printing landscape can be shaken up by other forces — namely, executives in the finance area who are worried about cost. Reliable information about the cost of office printing is difficult to obtain, which only exacerbates executives' concerns that office printing costs too much. With the right argument and the right set of customer concerns, a competitor's "end run" around your favorite contact to a receptive finance or purchasing executive can result in a fleet sale.
You should be attentive to infrastructure software upgrades, too. Collaboration software suites from companies like SAP and PeopleSoft tend to affect the entire organization. Often, office printers and MFDs are upgraded as the software is rolled out. You have to make yourself aware in order to participate.
What About IT?
An IT department employee in a large bank explained how copier-style service and desktop inventory reduction have helped the bank's IT department: "Things are a lot cleaner for the service-desk people. They can look at a problem and know whether or not it is in their jurisdiction. Sometimes it's something that they can work on from a network side, or a server side. If it's on the machine, they know that they can basically pass the buck to our vendor, and everything's taken care of."
With a copier service contract, the phone call often is shorter than a call on a printer service contract. At the bank, IT has only to ensure that the network connection to an MFD remains intact; all other problems are forwarded to the copier supplier. "It's less work," said the bank's IT employee. "The more connected machines we have, the less (hands-on service) work we have to do. Therefore, we can deal with software and other issues that we never had time for before. So it's freeing up time to do other things that generally get thrown on back burners."
Having the copier vendor take care of service calls increases responsiveness. "Up time has increased tremendously," said the IT employee. "With the printers, the office staff has to go to the service-desk person, and that can take days. They get somebody out to see you, and usually they still have to bring somebody in from the outside, which could be another few days. Then they may need parts. The advantage of having an MFD is that I have a service contract and a cost-per-copy charge. I can generally get somebody out here on the same day, within a couple of hours. And 90 percent of the time, it's taken care of, and they're up and running. Now it's a question of two hours of down time, versus four or eight days."
(Of course, not all participants in the MFD decision are expected to recognize that lightening the IT group's work load is a compelling MFD purchase motive. The point is that with a strong dealer service staff, the IT group can put aside fears about unreliable equipment, probably the top reason IT wants nothing to do with copier technology. For this article, we are focusing on IT's role in the MFD decision. But survey respondents identified scores of other benefits, and provided a thought-provoking list of disadvantages, too.)
If you are selling connected copiers, you should expect IT to be involved. IT decision makers are fond of HP for a host of reasons. But end users told us about compelling benefits MFDs offer IT department employees, benefits that IT-based participants in the decision process should be made aware of:
Reduced work load. As you would expect, the reduction of desktop printer inventories that often accompanies MFD installation reduces the IT department's workload. In the wake of shrinking desktop device counts, some end users reduce their head counts. Others increase their service levels, or take on projects that had languished.
Copier-style service. The self-contained replacement cartridge and monocomponent toner were key enablers in fostering the growth of the desktop printer industry in the first place. Because of the systematic replacement of most of the service-oriented components, desktop printers, by and large, maintain themselves. Conservative desktop printer purchasers cover themselves with service contracts for desktop printers. But service contracts are very different from the maintenance and break-fix service that a copier dealer delivers with a connected copier. Instead of getting sucked into a quagmire of paper jams and toner-out messages, IT managers who "switch" to MFDs seem delighted to wash their hands of service altogether.
Copier-style pricing. Per-page pricing is a boon to those who are worried about cost.
Seller Beware
Earlier, we suggested that office equipment dealers need to have a savvy approach to a complicated sale. Ironically, just as end users can install MFDs and never connect them, dealers can make only a rudimentary effort by selling MFDs as copier replacements, dooming many products to be under-utilized. When any sale is made, the foundation for future sales is being laid. When an MFD is sold as a direct replacement for a copier, the dealer may be laying the foundation for a competitor's future sale. "Office-Based MFDs: Going Beyond the Green Button" found two principal areas where the sales and account effort must do better.
Better needs assessment. Most of the time, a needs assessment is not part of a copier-replacement sale. As customers become familiar with using an MFD, the document flow within the organization changes. Dealer sales management should be suspicious of direct swap-outs of machines of like capacity, because, in practice, the usage model of the MFD will be different from the usage model of the copier it replaces. For one thing, in the print-one/make-copies mode, document production was an off-line task. Great numbers of survey respondents said how much they appreciate being able to print to a device that has copier-style speed, document handling and document finishing. Ironically, the penalty of offering such capabilities to the rank and file is that the machine may become overloaded, especially if the customer starts to remove office printers. Sales and account teams should help their customers anticipate changes in usage, and be ready to recommend several lower-speed MFD units instead of a single like-speed copier replacement.
Post-sale efforts. When customers start sending work to their MFDs, some load balancing may be required as office workers get used to a new document flow. If print jobs are to be submitted directly to an unsupervised production machine by a wide group of office workers, one can expect a certain amount of inefficiency, especially in the beginning. The result may be lost jobs, staff waiting by the machine for output, short runs delayed while long ones print, and jobs run with incorrect document handling or finishing specs.
Customers should be warned to watch for signs of overload or training lapses, and the dealer should offer to help resolve such problems. In the words of a director of IS at a hospital that was trying to help his company adjust to new MFDs: "We found that being able to send print jobs to a device people were not looking at was unreliable and disruptive to the operations of other people who wanted to use it for the other functions. Sometimes paper would run out. The department where the copier was located didn't want to reload the paper every time some turkey in another building decided to send the Gutenberg Bible to the machine."
Sad to say, but in this hospital, the MFD is not on the path to success. With an eyes-open, up-front needs assessment and attentive post-sale support, the dealer sales and account teams should have used their expertise to help the customer avoid these problems.
Customers may have little motivation for using the broad range of scan-enabled MFD functions that come with MFDs. The account management team should take a leadership role, and help the customer learn about MFD scanning, even if it's only the elementary scan-to-e-mail function. The scanner on an MFD can unlock extraordinary workflow and collaboration efficiencies which, if understood and leveraged fully, will create company-wide demand for MFDs.
The objective for you and your customers should be the successful integration of connected copiers into the fleet of office equipment. It is important to understand the office equipment landscape, get an accurate reading of the document flow in the organization and help the customer use connected copiers to their fullest. Those who take these steps will become more important to their customers, an ideal position for organizations whose business formula is based on equipment sales, supplies sales, and service revenue. The Blackstone Research survey about MFD adoption underscored a simple truth: people send their work to the products that work the best and do the most for them. Install MFDs and help your customers make the most of them, and page volume will migrate to MFDs from the desktop.
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Michael Zeis
Michael Zeis, president of Blackstone Research Associates, has been studying technology adoption practices for more than 25 years. Since 1981, Zeis' research activity has focused on the computer printer and copier industries. In addition to publishing market reports such as Office-Based MFDs, Blackstone Research publishes the monthly Color Business Report newsletter and conducts custom proprietary research studies. Zeis can be reached at (508) 278-3449 or mike@blackstoneresearch.com.
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