Phil Madders, Managing Director, PAE Business shares his views on the events of the past year, and looks ahead to the opportunities in 2022
The most pressing challenge by some distance in the managed print sector is not a new one. The reduction in the street price cost per page in the market has been in a downward spiral for longer than I have been sharing my views in this magazine!
However, going into 2022, it feels different because of two separate factors. The first is that margin has been cut to the bone. I have been told of numerous instances where the price offered is below cost, which is both damaging and unsustainable, even for larger dealers. These prices were not confined to large deals or public sector wins, but rather in run rate business which traditionally provided higher margin opportunities for the channel.
The second factor is a further decline in page volumes due to the shift to home/ hybrid working. The data we collect on devices our partners monitor shows that pages output has decreased by 13 per cent (end September 2021 to January 2020). However, the number of devices managed has increased in the same period by 3.5 per cent, which reflects more printers in home offices, which are more expensive to support or rely on cartridge technology and are not billed as a cost per page.
A perfect storm
It is almost the perfect storm of challenges – lower revenue, lower profit, significantly lower volumes, and more hardware to support.
I cannot see how this will be turned around – every forecast suggests the trend in office printing will continue to drop as the corporate world goes digital. Salespeople will have to learn new skills, adapt to new challenges, and become a consultative partner to their customers, offering advice and suggestions to improve existing processes. This is a world away from – how many pages do you print a month, colour or mono and do you need a finisher? Assuming we have a salesforce with the right skills and attributes, the next challenge is how to monetise a SaaS offering so it is flexible for the customer and can translate into a sustainable revenue structure you can pay commission on and build a business.
These challenges cannot be underestimated – at PAE, we went through the revenue transformation from capital purchase to complete subscription in 2012, and it is a challenging journey – but the recurring revenue model is very beneficial to any business.
With challenges come opportunities – and moving to a recurring revenue model for the provision of software and services is a fantastic example. As-a service is becoming the de facto standard for consumption of solutions and services. This means the channel must move forward with embracing the cloud and all the fantastic solutions available to improve customers’ processes, communications, and services.
The move to the cloud is going to define the next few years. There will be winners and losers as solutions battle or domination in this new space. If you consider cloud print management
as an example, the real sweet spot is stripping servers out and creating a cloud infrastructure to make organisations more efficient and productive. This means engaging with IT Managers at a strategic level, not discussing rules-based printing, or emails in black and white, instead focusing on making strategic changes to the infrastructure, management and support needed to look after the print fleet and users centrally via the cloud.
Cloud print is a very dynamic customer-driven opportunity. It’s new territory for traditional office equipment dealers, discussing IT Infrastructure projects related to print rather than print- related projects that they need to bring IT into for deployment, but it’s one that does present new sales opportunities.
Doing more with less
Our new device management platform has a remote device link which sounds uninspiring until you find out that it means helpdesk technicians can triage a device directly from the application by logging into the web page of the device and applying a fix at source.
No more TeamViewer sessions, going on-site for a minor fix, or setting up remote sessions that take up customers’ time. Instead you can do more with the same amount of people, be more productive and reduce support costs.
So, coming back to combatting a decline in volumes, and monetising SaaS offerings – how do we do it? Momentum is growing for a fixed monthly cost per device or per user, with services added
or removed as required, and provision of hardware and associated costs all included.
I fully expect to see this as a growing trend in the market as customers demand simple billing, and flexibility to react to changes in circumstances. It may help stop the downward spiral in service costs and enable the introduction of other revenue streams which the channel needs to flourish.
COVID-19 has been the biggest catalyst for change in my lifetime. How that develops will have a bearing on what happens in 2022. Like every one of us I hope the worst is behind us and that we can flourish in the year ahead.