The Market for Managed Print Services

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2 Table of Contents 2 The Market for Managed Print Services 3 Printer Demand Is Growing. 3 The MPS Opportunity for VARs.. 4 What Are Managed Print Services. 4 What MPS Services to Offer 5 Beyond Paper Print Services.. 6 Managing the End-to-End Printing Process.. 6 Who is the Ideal MPS Client 7 Target Paper and Paperless Processes 8 The Need for C-Level Support 9 Keeping It Green 9 ROI from Managed Print Services.. 9 Savings on Material Costs Savings in Staff Costs and Operating Overhead. 10 Even More MPS Savings with Document Imaging.. 10 A Simple ROI Calculator.. 11 Using Document Imaging To Improve Document Security 12 Paper to E-file Conversion.. 13 Secure Digital Archives 13 Securing In-House Document Scanning 13 Securing Document Access. 14 Regulatory Compliance. 15 MPS Promotes Environment Responsibility.. 15 Companies under Pressure to Go Green 16 Promoting a Sustainable Office 16

3 The Market for Managed Print Services For value-added resellers, Managed Print Services (MPS) continues to be the buried treasure of enterprise profits; VARs continue to hunt for it but it continues to elude them. However, the tipping point for MPS is at hand. Sixty-six to 75 percent of enterprise customers have contracted for some kind of managed print support. For IT resellers who haven t seen profits in MPS before now, the time has come to take a hard look at the new profit potential from offering some form of print services to enterprise customers. Companies are actively seeking managed print alternatives and if they don t buy them from a reseller, they will look elsewhere. Printer Demand Is Growing The managed print market will continue to grow into the foreseeable future. According to industry analyst firm IDC, the worldwide small- to medium-sized business (SMB) market for MPS services is currently worth about $13 billion and will continue to grow at about 16 percent CAGR through There are more than 20 million printers sold each year in the United States. On average, there are four employees for every printer, scanner, fax machine, or multifunction printer. The average office worker generates more than 10,000 sheets of printed paper annually, or more than two cases of paper. Seventeen percent of those printouts are never used. And according to Gartner office paper consumption is growing at 25 percent annually. Office printing continues to be one of the biggest cost centers for SMBs. By implementing Managed Print Services companies can save 30 percent of their printing costs without changing any of their existing office procedures. 3

4 The MPS Opportunity for VARs Analysts indicate that the number of MPS providers continues to grow, forming a new service channel. VARs who are actively selling enterprise technology are adopting an MPS service channel as a means to learn more about customers and their in-house networking needs. More than 50 percent of SMBs are already purchasing some kind of managed print service, whether it is document scanning or just replenishment of printer consumables. Of those SMBs only 5 percent are under some form of MPS contract. By adding Managed Print Services as a discrete profit center within their service portfolio, VARs have an opportunity to create an ongoing revenue stream. It also gives them an opportunity to create a new kind of contractual relationship with customers; one that can open up other sales opportunities within the organization. This guide will provide additional insight into how and where to offer MPS services as part of your portfolio. What Are Managed Print Services As you consider how to include MPS in your current service offering, it s important to understand that managed print means different things to different people. No matter how you define it, it s more than just managing printers. Gartner defines Managed Print Services this way: Managed print services (MPS) are services offered by an external provider to optimize or manage a company s document output. The main components provided are needs assessment, selective or general replacement of hardware, and the service, parts and supplies needed to operate the new and/or existing hardware (including existing third-party equipment if this is required by the customer). The provider also tracks how the printer, fax, copier, and MFP fleet is being used, the problems, and the user s satisfaction. There are three primary service areas within Managed Print Services: 1. Assessment of a company s existing print and document creation environment, including tracking printing costs across all budgets; 2. Optimization of the print environment, including managing the number of printers per user and printing policies; and 4

5 3. Ongoing management of printer workflow, including replenishing consumables and equipment maintenance. Most successful VARs embrace two or more of these areas as part of an MPS offering. Much of the offering depends on what their customer demand. What MPS Services to Offer When considering which of these services to offer, consider the specific needs of SMBs. According to market research conducted by analyst firm IDC, the overwhelming reason companies adopt MPS is to reduce printing costs. Beyond cost savings, reasons cited for MPS adoption include: Changing user habits to reduce waste; Short-term cost savings; Fleet rationalization or equipment consolidation or optimization; Streamlining document workflows; Environmental sustainabilty; and Improving security. Print processing assessment: When you consider the demands cited by companies that have adopted MPS, it s clear that being able to assess how and where to manage printing for real savings is the first place to start. Aberdeen Group estimates that SMBs spend typically 10 percent of their overall budget on office printing. Being able to demonstrate how centralizing and managing office printing will result in immediate savings is a compelling sales pitch. Optimizing the print environment: One of the biggest expenses to result from office printing is waste. Not only is there waste paper and materials, there also is waste in terms of time 5

6 spent running to and from the printer, the space taken up by printing hardware, etc. By optimizing the print environment SMBs can realize savings in a variety of ways: Reducing the number of printers needed to support the office; Saving staff and IT time with printer management; Reducing user output and materials waste; Improving efficiencies and facilitating document workflow; and Improved efficiencies for stocking paper and consumables. These are just a few of the ways that MPS can optimize office printing and save operating overhead. All of these benefits have costs associated with them that can be easily calculated and incorporated into the savings formula. Ongoing print management: Once you can demonstrate the immediate MPS savings, it should be easy to make an argument for ongoing savings with an annual MPS contract. Contracted MPS provides ongoing savings for customers and sustainable profits for the VAR from Managed Print Services. With an ongoing MPS contract you can strategize with the customer on how to improve operations, including establishing new print protocols and workflows. As the relationship progresses, you can review other needs such as data archiving, document security, and equipment updates; opportunities that can turn into new revenue for your reseller business. Beyond Paper Print Services There is a fourth area related to MPS support that is often added later on as SMBs understand the value of managed print document imaging. Document scanning and routing can be ideal for companies dealing with large volumes of paper. Maintaining a digital archive of business-critical documents can prove beneficial in a number of ways, such as maintaining a secure data archive, having a searchable data repository for ediscovery, and the saving in office space by digitizing all that paper. Managing the End-to-End Printing Process As you can see, the best MPS providers do more than just manage printers. They provide end-to-end services to optimize print management and paper-bound services throughout the organization. MPS can touch every department and introduce new operating efficiencies and 6

7 tangible budgetary savings throughout the organization. Consider including these services as part of your managed print offering: Conduct a thorough initial assessment of the current printing infrastructure, including the number of printers per employee and costs associated with in-house printing. Optimize, monitor, and manage print output throughout the organization. Proactively identify and solve printing problems and replenish supplies as part of the contract. Demonstrate how MPS reduces waste and energy consumption and thereby reduces the carbon footprint. Support remote print services for telecommuters and third-parties. Provide IT support for network integration, including cloud-based solutions. Optimize workflow and business processes with ongoing monitoring, management, and reporting of print services. Train employees through change management to promote smooth operation and better productivity. Slowly convert paper-bound processes to digital processes that can be automated and managed through the enterprise. Your objective is to become an invaluable partner to customers by taking the pain out of paper processes. Demonstrate how you can immediately save customers from 10 to 15 percent of their current annual spending, and ultimately save them as much as 30 percent by outsourcing their print management. Who is the Ideal MPS Client Virtually any organization that deals with paper would benefit from outsourcing their printing services. Gartner research shows that actively managing office printing can reduce operating expenses by between 10 and 30 percent. Reducing the density of ink or toner alone by 10 to 20 percent would result in per-page savings of 5 to 10 percent, or up to $10 per user per month. A 1,000-person organization would cut up to 1.6 million printed pages from their operation with MPS, a saving of $33,500 or more. However, there are some types of companies that would see immediate returns and are the most likely candidates to buy Managed Print Services. 7

8 Target Paper and Paperless Processes Logically, organizations that consume more paper are better candidates for MPS savings. Paper-intensive professional service businesses such as law offices, accounting firms, ad agencies, and marketing firms are prime candidates for MPS. And then there are manufacturing and other companies that deal with paper invoices and paper processes. And what about offering managed printing for operations with business-critical paperwork, such as financial institutions, investment firms, and health-care organizations? Any organization can be a candidate for MPS, especially if they: a) Operate with paper-driven workflow processes; b) Need to file and track large amounts of paper documents; and c) Are concerned with security and regulatory compliance. The more critical paper is to business processes, the more valuable MPS can be. For example, organizations that have to maintain secure paper documents and deal with regulatory issues, such as HIPAA or Sarbanes-Oxley, can benefit from MPS in multiple ways: Secure paper processing using MPS. Secure document storage on-premises of off-premises. Digitization of sensitive documents for archiving and ediscovery. Performing a needs-assessment for the prospective customers is a good way to understand their business challenges and how MPS can be of benefit. 8

9 The Need for C-Level Support In most organizations, print operations and budgets are managed at the departmental level. Printer hardware, paper, toner, and ink are included in the departmental budget, although it often falls to the IT department to deal with maintenance and out of-the-ordinary issues. Managed Print Services are typically purchased on a corporate level, spanning an entire organization to realize economies of scale. To successfully sell MPS benefits you need to find an executive advocate. A study by Aberdeen Group shows that even though MPS can save the organization as much as 30 percent of its operating budget, only 38 percent of organizations see MPS as high value. With senior management support, it will be easier to get the organization to embrace MPS as a business-critical service that has a direct positive impact on every department s budget. Keeping It Green And then there are the environmental benefits. Adopting MPS is ideal for companies concerned about their environmental impact. The ability to demonstrate waste reduction and a reduction in the company s carbon footprint are compelling arguments for executives who want to show environmental responsibility. With MPS customers can monitor company-wide device usage and supply consumption. They also can see metrics that demonstrate energy savings, the resources conserved, reduction in wasted paper and materials, and responsible disposal and recycling of supplies and outdated equipment. Of course, there is nothing like a good argument for return on investment to justify making a positive environmental impact. ROI from Managed Print Services The ROI from Managed Print Services is well documented and you can make a strong argument for rapid ROI returns on MPS whether you are only doing limited, in-house print management or handling outsourcing for all printing, electronic document conversion, and archiving. 9

10 Savings on Material Costs MPS consolidates materials ordering and management which yields savings in a number of ways: Less wasted paper Companies can reduce their hard copy costs by as much as 30 percent by consolidating copiers, multifunction printers, and paper. Most of the savings comes from wasted paper and unnecessary copies. In fact, 50 percent of printed paperwork is never actually read. Fewer print supplies Consolidating print services means fewer machines, which means fewer types of toner, ink cartridges, and machine-specific supplies to stock. Fewer copies By eliminating departmental printers you will change employees printing habits. They will be less likely to make paper copies of messages for paper files, or printouts of their resumes or favorite recipes using MPS equipment. More cost-effective purchasing processes By centralizing print services companies centralize ordering. This means stocking enough print materials, rather than duplicating paper, toner, ink cartridges, and other supplies in each department. Savings in Staff Costs and Operating Overhead By its very nature, MPS makes more time available to staff members and promotes more efficient use of paper processes: Saving in staff time How much employee time wasted running to the printer, filing papers, and reprinting misplaced paperwork? Savings in IT resources The savings in IT resources is dramatic. On average, 10 percent of IT staff time is spent managing printers and print services. When you consider the average IT employee makes $80,000 per year or more, that s more than $8,000 per IT staff member for printer support. Fewer help desk calls More than 50 percent of help desk calls are for printer problems according to Gartner. Better business process management Contracting an MPS provider means better business organization. It formalizes paper flow in a way that naturally increases efficiency and reduces waste. Employees will think more carefully about processing the paper they generate. Even More MPS Savings with Document Imaging When you take the extra step to promote a paperless office, scanning and storing all paper 10

11 documents as part of MPS, the efficiencies increase and the ROI returns are even more dramatic. Here are some of the savings from document imaging: Eliminating document duplication Every paper document is duplicated an average of 19 times, and many of those copies are unnecessary because the original copy was misplaced or misfiled. If you can create a central archive you can regain control of document duplication. Rather than making paper copies and worrying about version control or circulating outdated reports or paperwork, creating a single repository for business-critical paperwork means everyone has access to the same documents. Easier document accessibility By using a centralized document storage strategy, such as cloud storage, documents can be accessed from anywhere. You can share electronic files with partners, suppliers, coworkers, or anyone more quickly and efficiently. Better document tracking More than 7 percent of all business documents are lost and 3 percent are misfiled. Much of employees wasted time is spent hunting down lost paperwork. Using a searchable central data archive means all paperwork is catalogued, tracked, and stored so it is never lost and available for easy retrieval at any time. Savings on storage space Many managers fail to appreciate how much space paperwork actually takes, and office space is usually the second highest business expense after payroll. There are 15,000 sheets of paper in the average file cabinet drawer; a lateral file drawer holds 22,000 sheets of paper; and a standard size Banker s box can store up to 3,500 sheets of paper. With office real estate space going for a national average of $23.23 per square foot and climbing, that s a lot of wasted office space that you can reclaim by eliminating paper document storage. A Simple ROI Calculator If you want to help a customer or prospect visualize the ROI possibilities from MPS and document imaging, just run some simple calculations to demonstrate the potential savings. There are a number of factors you can use in an ROI equation, including the number of printer 11

12 models in use, the number of employees per printer, the number of sheets of paper used, the price of toner, etc. Over the life of any office printer, the cost of operating and maintaining the printer will dwarf the initial purchase cost. You can use any one of a number of online calculators to make your point, or you can use a simpler formula. First, determine the average yield of an ink or toner cartridge based on the manufacturer s specifications. Then apply this calculation: Toner Cartridge Cost Page Yield = Cost-Per-Printout X Y=Z For example, $ ,450 = $0.039 per copy For color printers, assume there are four cartridges instead of one (black, yellow, magenta, and cyan) and use the same calculation, only multiply the cost of the cartridge by three: [(Toner Cartridge Cost of 1 Color Cartridge Page Yield of 1 Color Cartridge) x 3)] + Blackand-White Cost-Per-Print = Color Cost-Per-Print [(A B) x3] + Z = Color Cost-Per-Print Or from our example: [($ ) x 3] + $0.039 = $0.16 per copy To drive the point home further, you can include some of the statistics we have shared in this guide, such as the number of copies wasted by the average employee, the cost of IT support, and so forth. Using Document Imaging To Improve Document Security Document imaging can be a highly valuable part of Managed Print Services for customers who can benefit from electronic document archives. One of the biggest advantages of using document imaging is greater security for sensitive business documents. Document imaging has historically been described as a means of using software-based computer systems to convert, capture, store, and reprint paper images. Scanning and archiving paper documents can be incredibly time-consuming, which makes it logical to consolidate it within a single in-house service dedicated to handle document scanning and providing secure storage and access to scanned paper documents. 12

13 Paper to E-file Conversion The first step is to convert paper documents into digital files. Today s multifunction devices make it as easy to create e-documents as it is to make photocopies, although the process can take time and usually requires an established workflow using tools like Microsoft SharePoint. Once the documents are converted to electronic form, they need to be catalogued, organized, and stored in an archive for ready access, usually on an enterprise server or in the cloud. Paper documents can be converted on-site and sent electronically to an offsite document storage or cloud server for safekeeping. Once the physical paperwork is converted to digital form it is much easier to manage and secure. Secure Digital Archives Digitizing business-critical paperwork and archiving it in a central repository provides better security. Paper documents tend to get lost or misfiled. Sensitive paperwork also has to be securely stored in fireproof files or some storage facility that offers protection against fire, flood, or natural disaster. However, the paperwork is still in paper form, which means it can be susceptible to the ravages of time, mold, and pests. With a digital archive you have eliminated the paper problem. All business-sensitive documents are stored on secure server or in the cloud. Since the documents are now in digital form, secure copies can be backed up to mirrored storage devices or even to disk or tape and secured off-site. Securing In-House Document Scanning Centralizing electronic paperwork also means you have more control over who can access documents. 13

14 If the company is scanning images in-house using a shared device, such as a departmental scanner, be sure they have a protocol to authenticate network users who can access the scanning device. Using an existing network security system along with password authentication will help secure the documents imaging process. Using a network document management system allows the IT department to control scanner access rights, such as the ability to share files via . Another advantage to managing in-house resources is it creates an audit trail. The activity log shows who has used the system and what documents have been scanned. This is not only useful for document security but can help with administrative functions, such as billing specific departments or clients for usage. For extra security, scanned documents can be encrypted before they are archived or sent over public networks. Encrypted digital documents can be shared via with a password or decryption key sent separately to unlock the file. Or files can be encrypted for secure transfer for off-site digital storage. Securing Document Access Once documents are digitized it s easy to secure document access using a document management system. Document management allows you to secure electronic documents using authentication, password protection, and other security protocols. For example, you can program the system so that only authenticated users in the finance department have access to payroll records. Or sensitive strategic documents can be locked for access only by specific senior managers. The beauty of using electronic documents is you have centralized control. That means you can monitor who accesses paperwork with login/logout protocols, create audit stamps, and generate access logs. It also provides version control so all users have the same version of the same document, including rollback support to previous versions. Centralizing document access also lets you control how documents are accessed. For example, documents can be locked for access only by authorized users on authorized devices. Users can be prevented from accessing sensitive documents on mobile devices, or prevented from printing or copying proprietary material. 14

15 Regulatory Compliance For customers in highly regulated industries, the ability to securely archive and retrieve documents for ediscovery may be more than enough justification to implement document imaging. For example, financial service companies are monitored by FINRA, and medical providers need to comply with HIPAA. In the event of an audit, if they can t produce specific documents on demand and prove those documents are secure and properly managed the fines can run into millions of dollars. Document imaging as part of document management solves regulatory compliance concerns. It provides secure data storage protocols which can be structured to conform to any regulation. It also provides the necessary access and audit trails and can prove that sensitive data such as patient records are being properly stored and handled. Most importantly, documents don t get lost. All the organization s paperwork is catalogued with Meta tags for identification, and the content is searchable. In the event of an audit an ediscovery request will yield all the necessary paperwork without having to hunt through paper files or worry about misfiled or mislaid paperwork. MPS Promotes Environment Responsibility The move toward greener business practices is a major motivator for many organizations, and migrating to MPS to save paper and reduce carbon emissions is an important part of their environmental commitment. Ninety percent of manufactured paper is made from trees that are not sustainably harvested. In fact, the United States is the biggest consumer of paper, using 30 percent the world s paper products although we have less than 5 percent of the world s population. 15

16 And it takes more than trees to make paper. In fact, it takes 2.6 gallons of water to make a single sheet of paper. Even recycling paper requires energy and bleaching agents that have a negative environmental impact. Being able to demonstrate a reduction in paper use and toxic consumables sends a positive message to stockholders and customers and is generally good for business. Companies under Pressure to Go Green Organizations are painfully cognizant of their contribution to the world s pollution including greenhouse gasses. Whether a company maintains manufacturing operations or merely consumes office paper and supplies, they understand they are contributing to the growing environmental crisis. That s why many organizations are seeking different ways to promote and publicize their green business practices. We have already touched on many of the cost incentives for reducing paper consumption. Other motivators for green business practices include tax credits from being able to demonstrate ways the companies saves paper, energy, and consumables. A greener workplace is also a healthier workplace. Statistics from the Green Business Bureau show that promoting a greener work environment reduces employee sick days by as much as 20 percent. Greener businesses that can demonstrate environmental responsibility reap marketing rewards as well. Not only can organizations tout their green corporate citizenship; greener businesses tend to attract better job candidates and more environmentally conscious customers. Promoting a Sustainable Office More corporations are disclosing their Corporate Social Responsibility performance, offering metrics to demonstrate how they are reducing carbon emissions and using green business practices. Some of the ways they are proving environmental responsibility include: Reducing paper consumption using MPS and paperless office strategies. Printing double-sided documents whenever possible. Buying greener paper, using recycled paper or paper from sustainable suppliers.

17 Printing green using environmentally friendly inks and materials. Recycling ink and toner cartridges as well as paper. Using Energy Star equipment to reduce energy consumption. Companies are actively looking for ways to promote green practices within the office and deliver measurable savings in toxic waste and greenhouse gas generation. Creating a green office action plan that delivers measurable results can serve as an added incentive for adopting MPS. Managed Print Services offer a winning combination for valueadded resellers and their customers. The potential saving from implementing MPS are easy to demonstrate and will more than justify the cost of centralizing print services. And the environmental benefits are appealing to most customers as well. At the same time MPS can provide an ongoing revenue source for VARs, and a means to learn more about customers operations and how you can offer additional reseller services. MPS is truly a win-win for both VARs and their customers. Contact your Ingram Micro representative today to learn more about MPS and how you can get started. 17