MFPs: Beyond the Hardware Sale

Since opening its doors in 1974 as a small office-supply store, reseller Cannon IV has managed to evolve its business model to survive three decades of change in the printing and imaging market.

It was seven years ago when Cannon IV decided to make the transition from selling boxes to providing solutions. After several years of hard work, the company today is a full-fledged provider of managed services for print solutions, servicing nearly 20,000 printers and MFPs in the Midwest.

"We all come from the world of printers, fax machines and separate scanning devices, and sometimes those are on the network and sometimes they're not," says Jim Fall, vice president of strategic planning at Cannon IV, Indianapolis. "The opportunity of MFPs now is that there's a computer built into a device that has a printer, scanner, copier and fax, so the MFP now becomes the hub of creating and moving documents around in an organization. The world of network computing has really changed the entire landscape. We've gone from the world of printing a document once and then making lots of copies to creating documents electronically."

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Four years ago, MFPs accounted for about 3 percent of the VAR's hardware sales; now they account for nearly 25 percent, with the bulk of MFPs costing from $2,000 to $10,000. But most telling is that these MFPs have served as a springboard for other sales. Cannon IV, for example, sells software or a document-management solution with 75 percent of the MFPs it moves out the door.

The solution provider doesn't develop its own software; instead, it partners with software providers such as Capella Technologies, which makes document-output-management software. Cannon IV has installed Capella's software on Hewlett-Packard MFPs for law firms so they can more easily bill customers for the printing they do.

The VAR takes a two-stage approach to sales, Fall says. At the outset, it works on assessing an end user's printing environment and selling new hardware as part of a cost-per-page solution. That solution, which includes services and supplies, ensures that the VAR receives a postsales recurring revenue stream. Cannon IV also deploys HP's WebJetAdmin asset-tracking software tool, as it sells mainly HP printers.

Once the customer feels that its output costs are under control, the VAR works with software providers like Capella to implement a solution aimed at managing the production and distribution of documents.

The strategy so far is paying off for Cannon IV. In the past three years, its cost-per-page business has grown at a compound annual growth rate of 300 percent.

"The cost of printing and distributing documents is one of the last unaudited and undefined areas within most corporations," Fall says. "You may look at the traditional hard costs of buying a printer or an MFP, but you don't think about supplies, the administration of that device, network-related costs, controlling documents and other costs down to the point of what you do with the printers and cartridges when you're done with them."

NEXT: Assessing your client's environment