Managed Print Emerges As SMB Opportunity Due To Rising Demand, Mobility

Printers may be more than three decades old, but Josh Justice knows that there's still room for innovation.

Justice sent two of his technicians with a coding background to a Xerox personalized application workshop last spring, where they sharpened their skills and figured out how to put a 2010s twist on a classic computing device.

The two returned, and in late summer helped Southern Solutions roll out a custom app mounted onto Xerox ConnectKey printers that allows customers to provide feedback, request supplies and order Eco Boxes for returns directly from the printer.

[RELATED: Xerox Combines Agent, Reseller Partner Programs Under New President]

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"It seems that no one likes to talk with you on the phone anymore, and a lot of people don't like emails," Justice, president of the Waldorf, Md.-based solution provider, told CRN.

Southern Solutions has, in just five months, signed up more than 200 of its 1,000 customers for the Contact Us App, Justice said.

In fact, Justice's presentation on the Contact Us App at a Xerox meeting in the fall garnered such rave reviews that 15 other resellers partnered with Southern Solutions to offer the app to their customers.

Since November, Justice estimates that other resellers have introduced more than 100 of their customers to the Contact Us App.

The Southern Solutions app Is a novel way of offering customers access to managed print services (MPS), a bundle of remote monitoring, device management and ongoing optimization services intended to save customers money, make their print activity more visible and reduce their IT burden.

Technology research group IDC expects the MPS market to enjoy an 8.8 percent compound annual growth rate between 2011 and 2016, expanding from an $11 billion industry to a $17 billion industry over that time.

"Somebody needs printing somewhere within the organization every day," Toni Clayton-Hine, Xerox's vice president for global marketing and value proposition, told CRN. "It may not be super-sexy, but it's critical."

That growth extends down the food chain, with print and imaging distributor Supplies Network of St. Charles, Mo., witnessing double-digit expansion of its managed print business for each of the past seven years, including 31 percent annual growth for the past year, said Sarah Custer, the company's MPS and equipment solutions manager.

Plus the burgeoning market is largely open to solution providers, with IDC finding that 63 percent of basic print services revenue in the United States comes from the channel.

Although MPS has been around for at least seven years, it has existed mostly in the enterprise space.

Kevin DeYoung, CEO of solution provider QualPath in Pompano Beach, Fla., said most enterprise businesses have already taken a look under the hood and performed the audit and analytics necessary to figure out where their companies can save money or be more productive.

But MPS has yet to meaningfully penetrate the small and midsize business (SMB) space, with the Photizo Group finding that 72 percent of SMBs have no MPS program.

DeYoung sees a big need for solution providers to help SMBs assess their printing productivity because they, too, wish to save money but lack the internal resources to do so on their own.

NEXT: MPS Moves From Growth Strategy To Competitive Threat

As printing devices move from sitting on the edge of the network to being connected to the entire environment, Clayton-Hine believes solution providers have an amazing opportunity to capture and manage printers in the same way they do PCs, servers and the data center.

"We definitely see these worlds coming together," she said.

While little groundbreaking technology has been seen in the managed print space in recent years, DeYoung said faster processing and more efficient software have made it more understandable and easier to offer.

"There's very little new technology," DeYoung said. "Technology is more about scaling."

Though managed print is starting to mature, Custer believes there's still some room for innovation, such as a pricing model that's more closely correlated to fluctuations in materials cost.

Clayton-Hine views MPS as a low-risk way for solution providers to develop recurring revenue, with margins on supplies and ink running as high as 25 percent.

"Print is money," she said.

From Custer's perspective, MPS has actually moved from being a growth strategy for VARs and MSPs to a competitive threat as the traditionally print-oriented Business Technology Association (BTA) looks into offering an array of managed IT services.

"If you don't do it, somebody else will," DeYoung said.

Some 84 percent of customers would prefer to use a single provider for both print and IT services, according to Xerox.

That being said, Supplies Networks has not seen many new channel players enter the MPS space. Instead, Custer said solution providers who have already been successful in selling MPS are turning to the distributor for help with managing operational expenses behind the scene.

Resellers are often in for a rude awakening after scaling up their MPS practice, Custer said, frequently finding they're not realizing the margins they set out to achieve.

But SMBs, too, need relief, according to a January 2014 Quocirca study.

Quocirca found that 39 percent of IT departments at SMBs devoted between 20 percent and 30 percent of their time on print, while an additional 31 percent spent between 10 percent and 20 percent of their time on print.

And 66 percent of SMBs said the need of IT to support print is increasing, Quocirca found, while just 5 percent said it's decreasing.

MPS helps turns routine break-fix matters into a help desk issue, Clayton-Hine said, freeing up time for internal IT departments to focus on a corporate vision or strategy.

Southern Solutions' Contact Us App also helps employers save time, Justice said, and includes a smartphone version of the app that allows office managers to order supplies and services right from their phone.

The desire to save time -- rather than a push to consolidate devices -- is what attracts many companies with between 50 and 100 units to MPS, according to Sam Errigo, a senior vice president at Konica Minolta Business Solutions.

Errigo said these smaller businesses are looking for outside help with managing devices, automating processes and building workflows into their programs.

NEXT: How MPS Can Optimize Printer Usage

For large and midsize customers, the focus is on optimizing printer use and figuring out ways to eliminate printers, lower paper usage and reduce the energy footprint, DeYoung said.

Much of this effort centers on evaluating how printers are juxtaposed with end users, identifying underutilized printers and redeploying the right printers in the right places, DeYoung said.

"If we don't do it, the next company that comes in will certainly point that out," Errigo said.

MPS also seeks to ensure that the right jobs are sent to the right printers.

For instance, DeYoung said 45 percent of requests sent to single-function printing devices are for more than 50 pages; given that single-function printers typically have a higher cost per page, DeYoung said those jobs would be better suited for a multifunction printer.

Another wrinkle involves color printing, which 67 percent of SMBs surveyed with Quocirca reported is growing, while just 2 percent said it's shrinking. Likewise, Quocirca found that 71 percent have been forced to increase their spending on color printing while just 2 percent have decreased spending.

This increase in color volume has prompted customers to seek out devices that can handle color printing in a less expensive manner.

Konica Minolta typically encounters customers relying on ink-jet devices and high-cost labor to fulfill their printing needs.

Even though the company is consolidating customers onto fewer devices, Errigo said it still represents an opportunity for Konica Minolta to generate new revenue by growing market share and taking business away from competitors.

Another piece of the puzzle, DeYoung said, is figuring out ways to digitize documents and move them across the organization in a more streamlined fashion, especially as they try to become more efficient.

"You can't pretend that people aren't using tablets or portable, digital devices," he said.

Yet, few tools are available on the market today to seamlessly integrate hard copy with the digital world, according to Elizabeth Fox, Xerox's vice president for SMB MPS. She said it's something Xerox plans to invest in more heavily going forward.

Konica Minolta has focused on bolstering its offerings, such as PageScope Mobile, that connect mobile devices directly to printers, Errigo said, as well as products that allow customers to scan directly from one machine to another without a centralized platform.

The vendor also has invested in automatic authentication offerings that would allow employees to seamlessly interact with printers from their mobile devices in outside offices, Errigo said.

And, given its initial resounding success, Southern Solutions plans to continue investing in, and improving, its Contact Us App.

Justice said the company is looking into creating a dropdown box on its printer app that would allow customers to request service on other devices, including those that predate ConnectKey.

The solution providers also hope to soon roll out a service status box that ties into Southern Solutions' ticketing system, Justice said, and, akin to Uber or an online pizza delivery order, gives end users progress updates on their request.

"We're in the era of realtime communication with customers," he said.