Managed print services is essentially another name for contracted print sales. The customer gets some peace of mind while the service provider enjoys desired attachment rates, revenues, and the industry oasis: the shift from the box price to the total cost of ownership (TCO). By this definition, one would think MPS engagements are an ideal win-win scenario for both customers and service providers. If the printing industry wasn’t so commoditised, customers’ peace of mind wasn’t so difficult to achieve, and providers’ margins didn’t keep shrinking rather than booming, it probably would be.
So is MPS a dead end, misunderstood or is there still a way to successfully deliver profitable services? Here is a different angle on how service providers can improve their bottom line without killing their margins.
Before you roll your eyes, yes this is an area that is easier said than done. Traditional MPS negotiations concentrate on hardware and click price, but the benefits of the print oasis are quickly lost to the reality of pricing competition in the imaging industry. For some reason, the true cost of MPS processes such as supplies or service management is often overlooked by service providers who focus their commercial discussions on the tip of the iceberg – the click price. There are still very few providers in the market who think of a the back end costs associated with manual order creation and management, disputing data, unnecessary helpdesk calls, finding lost information or covering the cost of toner cartridges lost in shipment.
Automation is a new big word in the industry and if it’s done well, it will not only free up your resources and improve your operations internally but also improve your service level agreements (SLA), minimise toner loss as well as profit loss, and improve your customer satisfaction. A not so obvious caveat is that automation needs to be fully automatic which means zero human intervention, as only fully automated processes will give the service providers true and uninterrupted value and control of their businesses.
Coverage, increasing cost of supplies, and loss of toner are all valid risks to service profitability.
A risk is not necessary a bad thing: the beauty of risks is that they often come with higher returns. Most of the OEM programs in the market will let you mitigate those risks, but often at a cost or for a share of your profit. So how can you manage your risk while keeping the reward in your pocket?
Invest in tools and programs that will let you define the level of risk you want to take, yet give you the infrastructure to monitor and manage that risk throughout your contract. Samsung’s newly launched Print+ MPS program gives you control over your margins as well as your profit and loss (P&L) by providing you with a platform to compare your contractual versus actual coverage and if the latter is higher, the platform lets you generate an invoice for overused toner, fixe supplies pricing for 3 years and, in Samsung and PrintFleet’s LINK Automated Supplies Fulfilment programs, you track and trace your supplies delivery to assure your supplies always arrive at the desired customer location, thus eliminating the risk of lost toner.
3. Back-End Efficiency
Many service providers invest at the forefront of their organisation as this is where they typically see a clear link between sales and profit. This is correct, but in such a competitive environment you need a lean and efficient back office organisation to support your clients more effectively and keep your costs down.
How much time is your business spending analysing meter readings and creating and disputing invoices? How much time does your administrator spend switching between different systems or worse, transferring data from one system to another? Consolidating your systems and putting automation at the forefront is a great way to keep the back-office simple, lean and efficient so more time can be devoted to other things like selling.
If you don't already have a managed print program, find out how much you could be making by adding MPS to your existing offerings. Download our free MPS Margin Calculator to find out what your margin is!