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Managed Print Services: Doing the right things …but not making enough money at it! 3/5

By Jean-Louis de la Salle

This article tells the story of a fairly large business that is experiencing growth and selling great projects. When we first met this company, their solid MPS understanding impressed us. Our initial perspective was that our contribution was going to be little, too little maybe…

Significant investments had been made, which affected financial performance, but that sounded as though it was part of the plan, and the economic slump was the accepted cause of slower than expected return.

 

Learning 1

What we in effect discovered was that there was growth and projects were won, but it did not translate in a high level of profitability. We could be confident in stating this as a fact, as we were able to benchmark against other resellers.

The real reason was that although there were highly competent people who knew exactly what they were doing in the accounts, there were too few of them. The rest of the team was not able to offer these new services to their customer set. There was a competent team, but a bottleneck in the spreading of that competence to the rest of the organisation. The effort to transfer knowledge was not well balanced with the investment made. This created a sort of elite team and a classic team. Financially this is extremely difficult to manage as you have a strong investment in the best part of the business, and the standard business is already under market pressure and suffering from price competition.

 

Learning 2

Similarly some systems investments were in the plan, but again implementation was limited by time availability of the experts and management to define the proper requirements. We are sure they will eventually do the right job, but timing is also an important part in a successful transition.

MPS is very much an automation game. Off the shelf MPS software has become readily available over the years. SaaS Solutions make the investment much lower and affordable. We hear too many discussions on Software still based on provider’s choice and functionality, when the goals are efficiency and productivity. This is where our benchmarks come in. We help ensure that automation is efficiently executed and kept competitive.

What this says is that MPS is not a “à la carte” proposition. If you decide for it, it is your whole company that has to get there. This can be with a phased introduction, but you do not have the luxury to wait for too long. This is a core item for discussion. Do I keep a part of my traditional business? Do I phase it out quickly? slowly? never?

To be honest, the reality is not straightforward. It is very company dependent. However to have an intelligent discussion on this, we need to have both a good data set and a dynamic reporting mechanism that allows revision at regular dates. How quickly is the MPS business growing? Is it profitable now? Or maybe tomorrow, and if so, how do I ensure that it is investment and not too low pricing? Is my current business already losing money? Is it over structured for what it delivers, which we often see due to fading margins, lack of automation and more reliable machines on the market? And how quickly is the market place changing? Is my current customer set the right one for both businesses? And last but not least, you need the people (competence and numbers) behind the processes that drive and ensure you steer your company in the right direction.

 

In this series of real life examples, we insist on one or two key take-aways that we found important in this particular dealer environment. We stay high level not to disclose any confidential information. What is important to you is that when we go in, we address real strategic problems. If they are not addressed in time, the company could become at risk.

One Comment

  1. […] By Jean-Louis de la Salle This article tells the story of a fairly large business that is experiencing growth and selling great projects. When we first met this company, their solid MPS understandi…  […]

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This article was written on 13 May 2013, and is filled under Managed Print Systems.

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