The US market has been the pioneer in MPS (Managed Print Services) with a huge growth rate until recently. But the growth predicted by analysts for the coming years is small, equivalent to a matured market. Has MPS in America matured? In terms of penetration the answer is a clear no. While in major accounts MPS represents 80% of the market, in SMB it is just close to 20%, far below the penetration of leasing. Far from being a flat market with no more opportunities, the reality is that the dealers are so frustrated that they no longer push the MPS model. How did we get to this point? Is this the end of the “bull market” for the American MPS market, or just a transition to new opportunities?
Dealers loose productivity.
In the last six years there’s been a massive arrival to MPS. A large list of dealers of all sizes have decided to build their own infrastructure to read meters, bill pages or even automate the supplies triggering. While customers were offered the control of their printing costs and a streamlined process, dealers experienced one of the most destructive effects on their internal processes, with a negative impact on operating margins.
All dealers contacted by Nubeprint, with no exception, confirm that the number of incoming calls has increased dramatically since offering MPS. Asked to which extent some calls are unnecessary, the percentage varies between 40 to 80%. In terms of meeting the expectations, less than 10% confirm they did. Their most common concern is the lack of capacity to trigger supplies automatically with accuracy, even though 19 out of 20 had invested in one or more tools that are supposed to do so. This is forcing the dealer to trigger supplies delivery manually (over the phone, email or web) with no easy and/or accurate control of it.
Despite all of this, most of them say that they are satisfied with their decision to address MPS, though they admit that nowadays they are being very restrictive or even not proactively pushing it because they take no margin out of it.
It looks as if now MPS is just a marketing approach, more than a real business for most of the dealers.
Looking for a companion.
Experience, and especially bad experience, is what makes independent dealers conclude that the road to MPS requires a companion. Dealers now know that MPS is not just billing pages, but efficiently managing from remote their customer’s printing needs. It requires not just a system to collect data (a tracking system), but a solution that manages costs (a yield management system). So, despite the fact that this business is still strategic for them, they just can’t afford the full effort. So they are raising their eyes looking for a solution coming from their closest partners: the distributors.
Distributors see MPS as an opportunity to reinforce their position in the market, and to tighten their links to the dealers. The advantage for those entering now is that they have learned from the errors of others.
Such is the case of Carolina Wholesale, a national distributor known for its excellence. It has been collecting the concerns of their dealers’ experience in MPS and analyzing them for over two years. In January it will launch its own MPS program (see more details at www.ctrlprt.com). The aim is to facilitate their dealers a profitable MPS business by controlling and reducing their costs, while ensuring excellence in service delivery.
The difference in size between the distributor and the dealer also makes a difference in its capacity to set up an MPS infrastructure that outperforms. The vendors in MPS are very fragmented. There is not a specific solution that is the best in everything. Because a winning MPS platform is built out of the following 3 pieces, the Distributor has to look for all three in the market:
1) DCA: this is the software in charge of collecting the data from remote printers in the most secure way. In most of the cases the DCA is given by the MPS engine tool, and this restricts freedom to the MPS infrastructure. There is only one company, Nubeprint, that does not force the dealer to use a specific DCA (see www.nubeprint.com for more details); this leaves the dealer the ownership to always use whatever is the most appropriate for each circumstance, including building its own DCA.
2) MPS engine: the data collected by the DCA has to be processed in order to identify and trigger the needs. There are 2 types of engines or motors in the market: tracking tools and yield management tools. Tracking tools capture the data from the printers and move it to either the ERP or to a triggering module with no processing or filtering of the data. These are the most common in the American market. Nowadays they are only being used as a way to collect counters in order to bill the pages at the end of the month, due to the amount of false deliveries that they trigger. Yield management tools are sophisticated, smart software solutions that process the data captured from the printer before any decision is triggered. They are inspired in the tools used in mature industries to streamline costs in order to ensure the profitability of the business. Yield management engines focus on cost control and reduction. Their accuracy turns the Assessment solutions into useful tools. The engine that outperforms any other is Nubeprint.
3) Assessment tools: they use the information generated by the MPS engine in order to identify new business opportunities. This is the most crowded segment. In most of the cases they include pre-sales, life contract and renewal contents. Many players in MPS are now considering an Assessment tool as a way to increase their sales. Though some build their own, most decide to buy. It is strongly recommended to keep in mind that the power of these tools is as large as the capacity of their MPS engine to generate accurate information. Therefore, if you don’t have the appropriate MPS engine in place, no matter how good the assessment tool you acquire is, you’ll be able to do nothing with it. This is indeed a source of frustration for software vendors that have an excellent product: their customers don’t benefit from it because the data they grab is just wrong, coming from a tracking tool engine.
The Distributors accessing MPS now know all this. As a consequence, they are building a unique MPS infrastructure by taking the best of each piece that is available in the market. Vendor agnostic, flexibility, connectivity, accuracy, adaptation to changing needs and tailor capacity are factors they consider.
MPS infrastructure: service provider or dealer owned.
Copier dealers and IT dealers with more than 4000 printers will still be managing their own infrastructure. But those smaller, the largest majority, will approach their distributor to rent the MPS infrastructure from them. They will request infrastructures that do not restrict their decision of what printers to deliver, manage or what consumables to serve.
Therefore, far from being the end of the “bull market” in American MPS, we are entering a change phase in which each dealer has to decide either to streamline its MPS infrastructure or either to outsource it, if it really wants to compete in services and have a healthy profit and loss statement. MPS in America has matured, no doubt, but just from an approach perspective: the objective is now to make it a profitable business, and not just a way to address a demand from customers.