Guest Author: Win – Win With Assessments: The Due Diligence of the MPS Consulting Process
19 June 2014 Reporting Company
By Petra Diener, James Duckenfield, and Neel Tikkoo NewField IT
Established in 2003, NewField IT is headquartered in London and provides state of the art software and services. The company also has offices in France, the Netherlands, and the U.S., operating across more than 40 countries worldwide. The company takes a holistic and analytical approach – from discovery through design to implementation and support – in order to accomplish streamlined print and document workflow processes. NewField IT is not a supplier of Managed Print Services (MPS) or Managed Document Services (MDS); rather it has two core lines of business: Consulting and Systems Integration and Support. Through its consulting practices, NewField IT assesses the requirements for print and document workflow and management and provides procurement assistance. It also provides automated assessments and modeling of office workplaces and reprographics, deploying its in-house-developed Optimization Toolsets: Asset DB® and Analytics Platform CompleteView®. Through its Systems Integration and Support implementing practice, NewField IT integrates and supports 3rd party accounting and print management software such as eCopy Equitrac, EveryonePrint, NSi AutoStore, RightFax, SafeCom, and YSoft SafeQ.
Assessments are the underlying bedrock and the genesis of any MPS strategy in a consulting process. They also represent an area where innovation is set to develop and accelerate. Mirroring the development of due diligence in the financial and legal industries, due diligence in the MPS Consulting Process demonstrates the efficacy of investing time, resources, and manpower to weave the strategic thinking and initiatives into the process at the start for a targeted approach. It is now “Best Practice” to perform multiple rigorous quantitative and qualitative layers of due diligence before any major transaction. What was once undertaken on a case-by-case basis – often mandated by law – has now become codified and structured, making the process accessible and repeatable.
Assessments used in a consulting process provide the oxygen and the catalyst that creates the potential for sophisticated and innovative solutions using software, enhanced security, cloud applications through MFPs, mobile print, workflow digitization, future state planning and more. The process helps to make the relevant decisions that will manifest the desired outcome for the user in terms of lower TCO, green credentials, enhanced and optimized business workflows, and document lifecycles that move closer to the paperless economy.
Basing its recommendations for MPS providers on their geographic breadth and the services provided, a third-party research firm suggested: “Choose a provider that can offer consultation, not just equipment, as the market transitions…” This advice reflects the structural changes in the printer industry and the fact that MPS has historically offered a means of adding value to a product through service revenue. However, the industry is now behind the curve in terms of the advances in, and importance of, assessments.
Assessments, like due diligence, are becoming a well-developed, in-depth process. As NewField IT says, “Assessment is not just installing a piece of software to gather some basic data.” The 19th and 20th Century American inventor Thomas Edison could easily have added, “Invention is 1% inspiration, 99% perspiration.” Edison’s invention factory had hundreds of perspiring “men in overalls,” demonstrating an appreciation of the use of human, financial, and technological resources. In considering the history of MPS, NewField IT muses, “Ten years ago the need to add value using proto-MPS to the amount of boxes the manufacturers were moving was evident. Initial data collection was unsophisticated and produced often incomprehensible reams of excel sheets, and decisions could be based on a perfunctory process.”
Geoff Hogg, Director Consulting Services, puts assessments into perspective: “When we talk to customers we are surprised by how little some of them know about their own document lifecycle environment often saying they are fully optimized without any factual basis, or when it’s only printing with no micro analysis.” For instance, a multinational pharmaceutical company reported that they had 250 devices, and when an assessment was carried out, it revealed 1,300 devices – outnumbering the staff in their offices. NewField IT reports the average cost for office copying and printing is £400 per employee per annum; the average like-for-like cost saving once the environment is genuinely optimized is at least 25 percent.
In its infancy, due diligence was similarly subject to instinct, unstructured, and fraught. Financial analysis, credit analysis, ratio analysis, technical, fundamental, and statistical analysis utilizing proven mathematical processes within the financial industry were a fact producing large amounts of significant data. In that environment, the process of due diligence was used to great acclaim in famous cases, such as the attempted RJR Nabisco breakup by KKR in 1988 by rivals, to apply a relevant valuation to gain favor with the shareholders. Due diligence was undertaken on a case-by-case basis, and was often inspired by the guidance of the financially gifted. Carl Icahn and other classic corporate raiders still remain part of that gifted elite – Icahn especially has been able to weed out weak management.
It was not until April 2002 that the venture fund Valhalla Partners was created by Marks, Riechers, and Johnston for the purpose of executing superior due diligence in the finance industry. They had spotted a gap and a flaw in the market. Marks recounts, “First, we realized there were no established “best practices” for due diligence despite the fact that thousands of smart people were doling out billions of dollars in investments each year. Second, none of the partners had ever developed a “framework” for analyzing deals. They had certainly looked for many of the same elements across deals – the strength of management, the size of the market, the density of competition, etc. – but the methodology they’d used had tended to vary from deal to deal.” Valhalla discovered that finding out more about a company made things both easier and more complex. Analogous to assessments producing complex data and workflows, the use of sophisticated business intelligence tools and the visualization of present and future state data cut through the complexity to present data that is clear, easy to understand, and easy to manipulate.
Valhalla first applied their new structured due diligence approach to Telco Exchange a company that developed software to help companies strategically manage their telecom assets and reduce the cost of managing their voice and data networks. Marks added, “The big problem during the bubble was that no one had time to do due diligence. The key thing is to go slow, and there was too much competition too much pressure to move fast.” For print life cycles and MPS, the increasing speed with which office processes are changing towards digitization and multifunction devices necessitates the need for in-depth assessment in order to avoid untested management decisions to acquire and adopt new technology without professionally examining and analyzing the effects on TCO and workflow processes.
Assessment is a process underpinned and automated by software which, just as structured due diligence provided and proved, is a testable, repeatable, definable, scalable process that relies on the experience and insight of the analysts and the quality of the data collection and optimization software toolsets. Valhalla Partners produced flow charts that were easy to follow, and similarly produced a repeatable and provable process that, while requiring a greater input of human and financial resources and producing a greater set of data, led to proven quantifiable benefits to all involved. The increasing volume of data points in the sets now being generated by assessments will soon allow an adequate sample size for accurate benchmarking against similar industries and sizes, adding a further dimension to assessment and performance indicators.
Barron’s points out that the legally mandated due diligence in investment presentations was superficial, manifesting meaningless requirement and results. Investment brokers soon realized the risk of recommending an investment without very careful in-depth due diligence. Likewise, assessments in MPS gather information directly from key personnel and end users in order to produce a targeted approach and to prove the veracity of data they are being provided with. Printing is a much younger industry than the institutional investment industry, and the business critical processes that are vital to cost control and effective decisions need to adopt assessments to avoid negative financial ramifications and poor management decisions.
The finance industry continues its history of undergoing structural changes, whether from anti-trust legislation, enhanced risk management, sovereign debt write-offs, or consolidation and M&A. Rigorous due diligence has been an essential part of this process. The printer industry changes at a slower rate – “glacial” according to James Duckenfield Managing Director of NewField IT UK, because of the competing forces of copier dealers, IT resellers, and supplies. However, change is accelerating with Systems Integration companies entering the arena. The changes are increasing the need and demand for assessments. As Duckenfield states, “All the companies being successful are doing assessments, there is a direct correlation.” He carries on to say, “No way you can take over or be involved in the managed service environment unless you’ve performed the assessment to allow the compelling business case to be built up.”
The creation of a structured due diligence process in the financial industry by Valhalla Partners in 2002 proved that the innovation was not exclusive to the solutions or to the complexity of a deal structure or offer, but included and depended on the first vital step: the due diligence where the strategy and the initiatives were really set and implemented. A major MPS provider reported that with an assessment performed their business win rate was 85 percent, falling to 30 percent without an assessment. The need for assessment is as vital as due diligence and will similarly be as accepted as “best practices” as it is in other areas of business. Assessments will allow companies to effectively keep up with the speed of technical innovation in order to make effective investments based on accurate data and analysis. By integrating the management plan and initiatives to cut costs and mitigate risks from the start, assessments will drive strategic thinking using a software based process that is repeatable and testable, resulting in a win – win outcome.
NewField IT
Regal House, 70 London Road Twickenham, Middlesex TW1 3QS United Kingdom
Email: info@newfieldit.com Web: http://www.newfieldit.com/
Josie Heskje
Director, Strategic Marketing/OEG
Tel. 319.261.4087 Fax 319.261.6087
jheskje@greatamerica.com