Prized Print Partners
Prized Print Partners
After the IT spending bonanza that was Y2K, the IT industry felt the pinch in the intervening years. Organisations were forced to tighten their belts and make big reductions in their IT spend. Now that five years has elapsed since tech vendors gorged on the feast of panic buyers, almost every aspect of companies’ technology budgets have been scrutinised and rationalised. But one technology area that has largely escaped fiscal scrutiny is imaging and printing. Why? The reasons are varied, but as Stuart Finlayson finds out, it is beginning to change and hardware vendors are actually helping organisations keep their spending down.
You might ask yourself why a hardware vendor would encourage a customer to invest in less hardware, or in less expensive hardware in certain areas of their business. Well, that may be the case in the short term, but what the vendors are banking on is the long-term customer loyalty of a client.
And they’re correct to do so if Gartner’s suggestion that over 70 percent of Australian mid-to-large businesses do not track their total printing costs is even remotely close to the mark.Lots of potentially very grateful customers there then. But why so many, given that most company’s IT budgets now are, by and large, subject to intense scrutiny? Who better to ask than those immersed in the business?
Rebekah O’Flaherty, vice president and general manager, Hewlett Packartd Imaging and Printing Group, South Pacific, explains “Printing is often an afterthought, tacked on to the IT environment and not subject to the same scrutiny in terms of its efficiency, strategic significance, or total cost of ownership. The reality is that many Australian organisations have had their focus elsewhere, and their print and imaging systems have begun to spiral out of control due to inconsistent planning and a plethora of mismatched devices. The cumulative effect is a combination of business process inefficiencies, misdirected investments and cost overruns which undermine much of what has been achieved in other areas of IT.”
Graham Kittle, who was appointed as Australia and New Zealand (A.N.Z) managing director at Lexmark earlier this year, agrees that the typical printing environment is inefficient and out of control.
“The reality is a lot of organisations have no idea how many printers they have, let alone how many pages they produce. It is, by and large, an area that has not been particularly well managed.”
“It has not typically featured in the top ten lists of what keeps IT managers awake at night, but we think it is one of those last bastions in terms of potential IT savings. Compared to other projects that IT managers are grappling with at the moment, it is still a relatively quick win. That whole print environment is somewhat complicated when it’s unmanaged, but compared to rolling out a new core system or an ERP program, it is fairly easy to transform.”
Fragmentation of responsibility in the printing environment also contributes to the lack of budgetary control, offers Sue McGinley, general manager of marketing, Ricoh. “Day-to-day costs of running a printer can get swept into the ‘stationery supplies’ budget if the printing device is a stand- alone product and, with consumables purchased outside of the IT or procurement departments.”
“Depending on the performance and upfront cost of the printer, hardware may be more closely monitored and included in the IT spend for depreciation purposes.”
“Where printer running costs are still managed under ‘stationery supplies’, the budget is often increased annually without any analysis of where the increased costs have come from.”
But McGinley qualifies this by adding that there is a broad range of competency among Australian businesses in their handling of printing budgets: some are much better than others.
“Often very small companies or very large companies have their finger more closely on the pulse. The former because they have a need to keep costs down, and the latter because they are more likely to have systems and processes in place to manage budgets. Broader, medium-sized businesses may fall in between the cracks of not having the need or process implementation.”
The real cost of printing is certainly becoming a major factor for large corporates, agrees Paul Harman, operations manager, A.N.Z., Fuji Xerox Printers (FXP), but there remains much work to be done. “In years gone by, functionality and cost to buy up front were the major deciding factors. Now, on the whole, companies think a lot more about TCO. As a general statement however, the complete costs of running a large fleet of printing devices is still not managed completely by Australian companies.”
Turning the tide
While there may be plenty scope for improvement when it comes to managing printing infrastructure, industry insiders can see a definite increase in focus on doing so by organisations across the country.
“I think that the light is definitely coming on,” says Lexmark’s Kittle. “In geographical markets such as Queensland, we have in the last year or so started to see a lot of RFP’s (Request For Proposal) and RFT’s (Request For Tender) coming in, specifically around helping them to reduce the cost of their printing. Companies were saying to us: “we know we spend a lot; we are not sure how much; we are not sure how to reduce the cost; but we know that you have been working with other organisations in our market to help them cut costs.” That has only started to happen last year, so I think that organisations are starting to mature and understand that they have got an issue there but most of them don’t know the extent of that.
HP’s O’Flaherty concurs with Kittle’s view that Australian organisations are really tuning into the potential benefits that obtaining a firmer grip on their printing environment would offer them. “Australian businesses want to understand the total cost of running their imaging and printing infrastructure and to better manage this infrastructure. They want to focus on their core-business and are looking at vendors like HP to help manage this for them. Businesses are also coming to grips with outdated copier contracts that no longer reflect their output environment, and that represents an opportunity for them to improve this infrastructure.”
Arrested development?
So the tide may be turning in terms of companies looking to assume greater control of their printing infrastructure, but by no means is everyone swimming with it - far from it. There must be more to it than a general lack of will or know-how.
Part of the problem, believes O’Flaherty, is that printing and imaging have not developed in the way that many people thought.
“The paperless office, it was assumed, would consign the office printer to the brink of obsolescence. The reality, however, has been quite different but many organisations - diverted by other IT issues - have been slow to notice.”
“Email, in fact, actually means more printing, not less, and has boosted print volumes by as much as 40 percent. IDC, for example, projects the number of document pages printed annually by U.S. companies and consumers will burgeon to 2.56 trillion by 2006.”
At the same time, O’Flaherty notes that there has been a shift away from copying and towards printing as users have transitioned from making copies to printing multiple originals on devices closer to them.
“Also, printing is often consigned to an afterthought and therefore many organisations suffer from fragmented planning and responsibility for their printing assets.”
For example, network devices, such as printers and scanners, might typically be maintained by the IT department, while standalone copiers and fax machines that may be located next to the networked devices are often managed by a separate facilities department within the same organisation.
“The overall result is often inefficiency because no single department can ensure that hardcopy devices are optimally deployed. There is no coherent, overarching management strategy for the print environment,” laments O’Flaherty.
Lexmark’s Kittle chips in: “You could put it down to the fact that a printer is a fairly simple device, which can cause the misconception that output management is a simple area of the business. I think that because print, scan, fax, copy, paper supply, toner, and tech support [for the printer environment] is not generally viewed by organisations as a single category yet, the total cost is not visible and until organisations start to look at it in this way that the situation will be addressed.”
“Once organisations can identify their print output on a departmental basis, the visibility of inefficiency will be that much greater.”
Ricoh’s McGinley echoes Kittle’s thoughts on the general lack of transparency of printing costs.“Printing costs are generally hidden/invisible costs, often within the stationery budget. Capital cost and depreciation of hardware can be measured. However, when it comes to total cost of ownership, most companies don’t have systems to handle or measure coverage, toner usage etc.”
“Full TCO utilisation potential is often too difficult within normal or typical reporting capabilities of most organisations.”
Interestingly, according to McGinley, many of the benefits that organisations bought devices for in the first place may never be fully realised. Not very few companies put the procedures in place to properly utilise them.
“Although cost reduction functions are selling features of the product, it is usually taken for granted that these benefits happen by default after the fact. The accepted reduction in running costs based on features such as user access controls and duplexing are probably never measured.”
FXP’s Harman also believes that the reason why companies pay less attention is due to some having the hardware as an IT line item and consumables as a stationery budget, “so the same people aren’t looking at the real cost, they are only worrying about the component that they are looking after. The more proactive companies are trying to consolidate their budgets and put all infrastructure under one department, these organisations are the ones who are most interested and are pushing for aggressive CPP (Cost Per Page) programs.”
State of independence
Despite their best intentions, vendors will still be subject to a certain degree of scepticism from businesses when it comes to the purchasing advice they offer. After all, at the end of the day, everyone still wants to make a few dollars. Would the advice of an independent entity be more likely to hold the ear of a organisation than that of a vendor?
“I think that like anything in IT, it’s about developing a relationship and demonstrating that you can bring about improvements to an organisation. That way, concerns around vendor neutrality tend to go away if you are bringing genuine value to the customer,” believes Lexmark’s Kittle.
HP’s O’ Flaherty reckons that if they can demonstrate clearly to a potential customer the substantial savings they could make, there ought to be no need for an independent consultation.
“Research houses such as IDC analyse the costs of printing and imaging infrastructure and estimate than an effective implementation can deliver average annual savings of 23 percent. When you translate this into dollars, this means that if a company’s annual print spend ranges up to $20 million - which is fairly typical for an Australian business, then savings could be as much as $4.6 million a year.
“Given the significant gain customers can make and that 70 percent of Australian organisation don’t track their printing costs, demonstrating to a customer how HP can help them better manage and control these costs is a conversation many of our customers are happy to have. And, the proof of our capability is how we have helped other Australian companies, for example, DaimlerChrysler Australia. HP analysed the company’s requirements, workflow and office structure, as well as 12 months of their output data, and developed the concept of kiosk printing—where a group of users would share a facility through a network. This consolidated their printer fleet and delivered significant economies of scale without disrupting normal business. With this solution DaimlerChrysler has reduced its fleet from 123 devices to just 41, and is enjoying savings of more than 15 percent per year on previous printing and imaging costs.”
Ricoh’s McGinley acknowledges the attraction of independent advice on the face of it, but adds that the relationship between the vendor and the customer should render the commissioning of independent advice unnecessary.
“Depending on the credibility and recognition of the independent source, it would be human nature to assume this as a preference. However, the link between a vendor and customer is very relationship driven. The customer is always looking for value-add over and above the product they buy today. This often comes from the service they receive from the vendor contact, in addition to the value-add product-associated services offered by the organisation. And it comes down to trust. The vendor really should be the expert—and optimistically the relationship between the customer and the vendor will instil trust in the recommendations presented.”
Paul Harman, of FXP, sees it a little differently, and readily admits that advice from an independent source can possess a great deal of sway.
“Certainly independent advice and research has always held a lot of weight, particularly in Australia. Independent advice from both a reseller and a consultant hold a lot of power as it is not coerced, these people have a choice of what they offer, and their advice is what they get paid for.”
Tell me more
So are vendors doing enough to educate customers on how they can more effectively manage their printing environment? Lexmark’s Graham Kittle, for one, feels that vendors could certainly do more.
“I think that vendors need to be seen to be taking an overall approach - not a thinly veiled opportunity to sell more hardware. Vendors must take a comprehensive look at customers’ output strategy and how they are managing information in their organisation so they can come up with a way of fixing their problems. At the moment, I don’t think vendors are doing enough in this area.”
The feature-rich technology that is now available, as Ricoh’s McGinley mentioned previously, must be fully explained to the user so that the cost benefits can be capitalised on.
“Technology available on devices these days has continued to improve at a rapid rate. This involves indirect costs such as time saving features as well as hard cost saving features. The sales process is often a matter of training the customer on how to maximise these benefits within their business. Functions such as user control access for colour, auto duplexing, scan-to-email or folder, IT support or network administrators can benefit from the software functionalities designed to minimise their interaction on-site,” says McGinley. “With technology changing at such a rapid rate, it is up to us at vendor level to effectively train our sales teams to ensure the best case can be presented to the customer in terms of efficiencies and productivity. Budgets are forever being scrutinised so it is then up to the organisation to implement on our advice especially if they are not in a position to genuinely track TCO on an ongoing basis.”
The final word goes to FXP’s Harman, who insists that all vendors are trying to educate the customers about how to better manage a fleet of print devices, but as the areas is still quite embryonic for a channel business, the print solutions concept is still in early days.
“The best organisations at getting the education message across will be the most successful. A lot of effort is being made by vendors in areas such as providing CPP programs, and independent auditors to assist corporate organisations. As these skills sets are still competitive to find, the uptake is still a little low. You will see more consistent and stronger uptake of these services as the market understands more of what is being offered, and how it can help.”
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