CRN Interview: Paul Curlander, Lexmark

Paul Curlander, chairman and CEO of Lexmark International, met recently with Technology Solutions Group President Robert Faletra. Their discussion centered on several themes. Following are excerpts focused on Lexmark's aspirations in the area of digital workflow and business processes.

FALETRA: Our data shows the average solution includes four different technologies and 40 different SKUs. If that's the case, does it change the way you have to think about the market and how you treat your solution providers, the programs you offer them, even the way you brand your own company?

CURLANDER: In the end, printing is not on top of people's minds, and the customer is much more focused on their business and their initiatives and whatever you may have on that printer. ... So we came to the conclusion that [since] we put so much technology in, [and] we know all the things you can do with this, we need to start going to help our customers solve their problems utilizing the technology we see is available; some of it Lexmark, some of it not Lexmark. So we've been evolving our company that way.

And in our large-account business,this is a little bit separate from the solution providers, but I'll be back to that in a moment,we've been going in with our customers focusing on their processes and their business and what they do. And we focus by industry; and we go in and do things that we call discoveries, where we'll take a look at somebody's process over a couple of days and come back to them with a view of how they can go re-engineer that using technology we're familiar with,some of it ours, some of it not ours. And actually we've gone in and done systems integration work for people to actually implement these kinds of things. This is a small piece of our business, but we think this is the future for Lexmark because ultimately you drive the cost out of the whole process.

FALETRA: So what should solution providers be doing along these lines?

CURLANDER: What we're focused on right now,this is when I was going to bridge it back to a solution provider discussion,is we're doing this in large accounts, but we don't call on a large number of big accounts. What we want to do is we want to go engage in a solution provider channel. (And, again, we can't do thousands of solution providers, but we're looking for a finite number of the ones we think are best at potentially doing this; in the hundreds, not in the thousands.) And we're putting together a certification process [whereby] we can go in and transfer some of this capability to these partners and work with them.

So, in addition, it would be a certification training process. We will go in and actually do some of these engagements with them to help them get started. And then there would be a list of programs backing that whole thing up that relate to support,to having the installation support,whatever it is they might need to actually have to keep those kinds of things, because we've been out doing them. We share with them the experiences we've had with them in the large accounts, and all that stuff translates directly into small and medium [businesses]. You see a lot of the same processes. But certainly all the tools that we utilize translate indirectly.

So we're in the process right now where we're going out in what we call our initial pilot certification program where we're working with a small number of solutions providers to really pilot this thing so that we can pull all of our training materials together and see if we can't hone our programs. But ultimately we'd like to be in the hundreds [of solution providers] certainly over the next two years ... doing this. And again it's a broad spectrum of technology that people will be installing. Because what we do is only a small piece of what somebody would need. ...

FALETRA: So the certification part you're talking about right now, is that going to be for specific verticals?

CURLANDER: Right now we're trying to find our way. We work in verticals. We would like six verticals right now. So what we've done is we've gone out and we've taken a few solution providers. We did not pick these by vertical. So in general we find that with exclusive buyers, there are ones in verticals, there are some ... that are what I would call a little more horizontal ... kinds of guys.

The ones we picked, I think, are horizontal to begin with, but this would work best with vertical people who are experienced because they will have the ins with the accounts that we're looking for. But we're going to start with some horizontal ones and see how this starts for us. But we're just getting started.

FALETRA: So what does this mean for the future of your business? Is there more development work that needs to be done in software for a company like yours?

CURLANDER: When we look to the future, what we believe is the future is an information and document management future ... that ... includes computer electronic work flow. That's what we're talking about here. We're saying, 'Don't move paper. You don't want to move paper. ... What you want to do is eliminate pages, you want to minimize the number of pages that you have. This is where you want to go. This is the future.'

We believe, quite honestly, that long term there's enough content now coming to you in a distributed way that it's a good long-term business for us. If I step back, if you take a look at the total amount of paper used in the world, you're talking 60 trillion pages. The amount that's printed out by people at home and at the office is only 5 percent of the 60 trillion pages. What we're talking about is, of that 5 percent there are 3 trillion pages, a bunch of that stuff could be eliminated.But what we believe is that the other 57 trillion [pages], since it's paper and it's not what you're printing out, it means that's coming to you, it's coming to somebody in paper form. It's being printed centrally and shipped in paper form. Much more of this stuff is going to come electronically to somebody.

So the future is, it's going to come electronically and you'd get it and you'd print for your own productivity for whatever reason, only when and where you need it. So we believe that, yes, as a printer company it seems kind of counter-intuitive that you don't need to print that 3 trillion pages. But what we believe is even if you shorten the 3 trillion down to 2 trillion or 1.5 trillion, that the other 57 trillion is coming this way and a lot of that doesn't need to be printed but some of it will be printed. We think that that 3 trillion [number], actually, even with the kind of stuff we're doing, is going to grow at a 7 [percent] to 12 percent rate over time. ...

So we have three initiatives that we talk about as print, move and manage. These are the three initiatives we're driving.

In print, you could say that's the traditional initiative we're continuing to advance in technology. But we have a very different vision of technology.

Our vision of technology is that what you need is something that's very close to the user, a network device shared by some number of users,maybe four, five, six people,but you want it to be a low-cost distributed network device. But you want it to be modular, we believe, where you can drop a scanner on top of it; not necessarily to make it into a copier and a fax machine, although you obviously can do that.

FALETRA: So from a solution provider point of view, what should I be doing to kind of get myself in a position to be able to capture more dollars and sell more solutions around these kinds of things?

CURLANDER: The same thing that we're doing. It's a skill set. It's a very different skill set in terms of who we have go out and talk to the customer. It's a different mix between the number of salespeople you have now and the number of support people,still customer-facing support people,but specialists. ...

So what we did when we started moving to this is we actually reduced the number of salespeople to make room to put the special skills. So now we have what we call application consultants; people who can go out and do this workflow process analysis for the customer. I haven't talked about the managed piece of what we do, which is the services where we actually go out and help our customer. Once you do the analysis, you say, 'Look, you do this, this and this, and here's how you would re-engineer it, here's the business case.' Very often a customer will say to us, 'Gee, we don't have the resources to do this.' So now we come back in saying here's how we would re-engineer it, this is what we will save, and here's our proposal to do it. We'll take this much time, we'll charge you this much money, here's the overall business case with that rolled in. It's a turnkey kind of thing. So I think what the solution provider would need is the ability to have salespeople who can talk about these kinds of things, and that's a little bit different sales role. It would need the application consultants to be able to do this type of analysis, and then they would need that integration capability. Most of them probably have that integration capability already. But you've got to get them in the right mix.

FALETRA: Do you bring partners in at all with the large accounts?

CURLANDER: Very often what we would do with the large-account customers is we would be the direct contact and we would be the general contractor on it. But then we would bring a solution provider in very often to fulfill the hardware, to do the system integration piece for us. Yes, we use our partners very aggressively in trying to do that. Because what we don't want to do, we don't want to build some big field force that could go out and do this stuff. That's not what we're about. We're on the thinking end of this. We're not on the arms and legs side of this. Plus we don't really have the capability.

Where we're trying to drive our supply chain is I want to bring products,we make this stuff in Asia,I want to bring it directly in containers right to the channel. I don't want to touch it any more. I want to get rid of my distribution centers. I want to get rid of my capability to drop-ship to a customer because, first of all, I don't think I'm very good at it and secondly, it's just not what we need to be doing. There's lots of partners to work with to do this. So we have always been focused on delivering our hardware through the channel.