The device is irrelevant

The device is irrelevant

The future of information management could be filled with leasing deals and vendor financing, as services become the new focus.

By Paul Montgomery

Look at the usual way you buy imaging products in your organisation. Every two years or so, you might decide your current hardware has depreciated back to nothing, and you send out a request for tenders to replace the whole shebang with shiny new boxes. You make sure the boss gets his state-of-the-art desktop widget, and the rest of the senior employees are allocated devices for their own private usage, based on what they claim to be their individual needs. Networked printers, scanners and copiers, that are obsolete before they are unpacked, have to fulfil the onerous duties for the rest of the office.

This indulgent, inefficient cliche, which most of you would be familiar with and may be experiencing right now, may be superseded by the packaged service. The merger of Hewlett-Packard and Compaq is the strongest indication yet that large companies are channelling more and more spending through a single megaprovider, which then has the power to dictate the hardware and software that the client company buys.

The only option for those vendors who don't want to play by the rules of HP, IBM Global Services or EDS is to set up their own services organisations. Canon has made the loudest move into this area so far, saying devices were "irrelevant" and users would focus more on management and software in future.

Mark Deere-Jones, general manager of Canon Australia, said that Canon would try to bypass the usual system of organisations putting out tenders every couple of years, by offering managed solutions.

"We would send in an audit team to talk to not only [the IT managers], but the users and the CFO, to see what their requirements are," he said.

The move by Canon into services brings up an obvious issue as to how the company would work with other professional services companies, such as the Big Five consulting firms and outsourcing companies like IBM Global Services and CSC. Mr Deere-Jones claimed that Canon would not compete with these providers, and would instead seek to partner with them, especially when users had existing relationships with other consultants."The outsourcers try to be everything to everyone," he said. "Our goal is for them to use us as their core competency for imaging."

Mr Deere-Jones said that the company would probably not announce official alliances with consulting firms or outsourcers in this area, instead relying on a more organic approach.

Mr Deere-Jones admitted that the printing and scanning devices that Canon had built its imaging business on were "irrelevant," with management of distributed imaging networks being more important to users. While Canon's 300 Australian support engineers have been largely trained on hardware, their expertise on software would be significantly increased.

Canon has established a team of 200 employees based in Sydney to work on "intelligent" imaging solutions. The company will also provide financing through its Canon Finance division for selected users.

The shift in focus to services would also help in getting spending on imaging through increasingly tight budgets, by exploiting tax laws to their customers' advantage."Capital expenditure is very tight at the moment, but operating expenses are okay," said Mr Deere-Jones. "We can find a way to expense [users'] spending."


The power of the giant services organisations was also seen in August when storage hardware vendor Maxtor suddenly pulled the pin on its network attached storage business, blaming larger competitors and disappointing growth rates in the sector.Maxtor said it would discontinue production of its MaxAttach hardware, although it promised to ensure an "orderly wind down of the business" by supporting current customers to the end of their existing service contracts.

"Since we entered the network attached storage business in the [northern] fall of 1999, the growth rate of this market has fallen far short of expectations," said Mike Cannon, president and chief executive officer of Maxtor.

"Over this same period, the NAS market has become rapidly commoditised by the entrance of a number of global OEMs with their own branded products. This has placed us in competition with some of our largest hard disk drive customers. Exiting the NAS business will allow us to focus on our core hard disk drive markets, further reduce expenses and accelerate Maxtor's return to profitability," said Cannon.

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