Ricoh To Invest $300 Million In Managed Services Blitz

Ricoh plans to invest $300 million over the next three years in Managed Document Services (MDS) as it looks to capture more global mindshare among print and imaging vendors and differentiate itself from other managed print services offerings in the industry.

That was the key message from Ricoh's global press event Thursday, held jointly in Tokyo, London and New York. The increased emphasis on managed services will be hugely important, argued Ricoh executives, especially as the industry continues to change and Ricoh's many competitors, from Xerox to Konica Minolta, also look to acquire and build services capabilities well beyond their hardware bases of printers and copiers.

Ricoh defines MDS as not only using managed print services and managing customer printing and imaging fleets, but also elevating those services to the level of influencing business processes, combining them with elements of business process outsourcing (BPO) and information technology outsourcing (ITO).

Ultimately, said Ricoh executives, the company is looking to position itself to do $3.3 billion in MDS revenue by 2013 and draw at least 28 percent of its revenue overall from services in the same time frame.

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Capturing customers means understanding the shift from merely managing an organization's printing and imaging infrastructure to helping them transform their business processes. Shiro Kondo, president and CEO, Ricoh Company, said that most companies are overloaded with information and often hard-pressed for efficient ways to manage it, but aren't often aware of just how much money is wasted by those inefficiencies.

"The cost of not managing your information is just too high," said Kondo, speaking at the New York event Wednesday.

Ricoh presented research from IDC suggesting that the average organization with annual revenue of $250 million in revenue, or about 1,000 knowledge workers, could save as much as $6 million a year in costs related to document management hassles, from searching for information to version issues to reformatting, and what they overspend on ink, toner and other supplies.

One of the biggest problems is that many C-suite executives don't realize how significant their document management costs are, said Crawford Del Prete, executive vice president, worldwide research, at IDC. And with 35 percent of the global workforce expected to be remote, or mobile, by 2013, so much inefficiently managed information also creates greater security issues.

Proper document management is a "latent asset," Del Prete argued, and that organizations -- and the vendors that serve them -- need to shift their strategies away from emphasizing devices and toward solving problems related to process.

"They're not just looking at hard dollar savings, they're looking at business processes to improve the bottom line," added Jeffrey Hickling, president and CEO of Ricoh U.S.

Next: Ricoh's Strategic Advantage

One of Ricoh's biggest advantages is in its MDS business, where it has a vendor-agnostic approach, Hickling said. What that means is that Ricoh will manage print and imaging infrastructure for companies even if their hardware fleets belong to a competitor.

It will encourage, but not require, companies using competitive solutions to migrate to Ricoh hardware, which Hickling said is a big difference from other managed print vendors who insist on rip-and-replace.

Among its recent moves, Ricoh has also invested in its sales and services training, including the launch of global managed document services centers in October 2010 for training its global sales force. It's developed a change management professional services offering based on Prosci's for changing document-related behaviors, and has also utilized ITIL, the commonly employed IT services management delivery framework.

Coming later this year, Hickling said, are cloud-based tools to help bulk up its MDS services portfolio, including asset management capabilities and other analytics.

Kondo and Hickling added that Ricoh's major acquisitions in the past decade have served the company's growth well. Ricoh's 2008 pickup of IKON Office Solutions, a former mainstay of CRN's VAR 500 listing has helped expand Ricoh's direct services and sales organization to where it now numbers more than 30,000 direct service employees worldwide and 10,000 in the U.S.