Growth Game Plan: Asset Optimization Vs. Consolidation

Think long term and resist the urge for temporary gains.

It’s not surprising that many solution providers are asking themselves, “How do I stay in business during this recession when I’m not selling anything?” It’s also not surprising that the answer for many may be an attempt to turbocharge printer and multifunction product (MFP) sales through aggressive up-selling strategies.

But no matter how tempting it seems, it’s probably counterproductive trying to sell a client on a large-scale print fleet investment when he has something more modest in mind, argues Gary Gillam, Xerox’s vice president of channel operations for the North American Reseller Organization.

“When the transaction business is way off, there’s a tendency for solution providers to want to boost sales by getting a customer to refresh all of the print assets. But that’s not going to happen in this economic environment,” he says.

A more successful approach is to understand the difference between “asset consolidation” and “asset optimization,” which can help successfully guide solution providers through the downturn and beyond.

Know The Difference

Asset consolidation attempts a significant reduction of a client’s overall hardware footprint, typically by replacing stand-alone printers, copiers and fax machines with fewer numbers of high-margin networked printers and MFPs for workgroups.

But the more surgical asset-optimization approach tries instead to align a customer’s still-reliable existing printing assets with select additions of new equipment and services. The larger goal: Maximize productivity and reduce costs with a minimum initial investment. Although there’s less chance for an immediate payday for the solution provider, the optimization strategy plays better in today’s market and offers hope for more returns in the future.

One important way to balance a customer’s current and future needs is hardware leasing, which when combined with managed-print services (MPS) contracts, can keep revenues flowing for VARs as customers upgrade where necessary without straining their capital budgets. For leasing details see Three Good Reasons To Add Leasing To Your Managed Services Mix.

Ongoing Gains

Long-term, annuity relationships made possible with leasing and MPS contracts can help solution providers avoid the plight of transaction-oriented resellers. “The market is particularly weak for DMRs because they don’t have ‘stickiness’ with their customers. Instead, those transactional customers are simply buying fewer products, or when they do buy something, they either try to negotiate lower prices or choose a lower-priced solution,” Gillam says.

Consequently, for asset optimization to work, solution providers need to act as trusted advisers who understand that attaining the right mix of printing hardware and services for customers is an evolutionary process. Ultimately, this evolution will require not only an accurate inventory of current assets but also an action plan that aims for better efficiency and reduced costs. “It’s a question of determining what’s relevant today and what will be relevant based on an ongoing relationship with the customer,” he says.

But assessment veterans warn that merely inventorying the current printing infrastructure isn’t the same as a professional assessment. The latter approach also weighs print volumes, consumable costs, equipment redundancies and any opportunities for remixing equipment allocations to improve performance. Reports created from these types of comprehensive assessments have the added benefit of significantly boosting close rates for managed print services (MPS) contracts, according to Xerox research.

Conversation Starters

One of the best ways to promote a relationship that makes customers open to asset-optimization plans is for solution providers to capitalize on their own status as a small or midsize business (SMB) that shares the same challenges and opportunities as its SMB customers.

“The conversation can begin with a VAR telling a customer, ‘I want to come in and share with you what we’ve done with our own business,’ ” Gillam explains. “Even before that, the solution provider should do an assessment of its own print capabilities and transform them to become more efficient. So you essentially become a case study for the benefits of asset optimization. In short, the expert user becomes the user’s expert.”

Regular newsletters can further spread the word that the solution provider understands the needs of SMBs. “Some VARs are pretty sophisticated and transparent in their newsletters about what they’ve done within their own businesses,” Gillam says. “Many VARs that are finding success with managed print services today are using newsletters to help them get in to speak with customers.”

Other SMB-to-SMB communications tools include a variety of resources available to members of Xerox’s Peak Partner program (see related story, “How To Get The Most From Print Partner Programs”). These include:

  • A Xerox Web site that allows partners to attach their logos and contact information to Xerox products and services brochures. Xerox then prints out the materials and delivers them to the VAR.
  • A Promo Builder Web site where solution providers can create self-branded cover letters and proposals for optimization plans and equipment recommendations.
  • Prebuilt PowerPoint slides and voice-overs about Xerox MFPs, printers and services.
Reason For Hope

Another aid to facilitate successful asset-optimization engagements comes when VARs cement relationships with printing vendors that offer a broad portfolio of products. This can help a VAR more easily deliver a range of hardware — from single-user and networked printers to workgroup MFPs — for a solution tailored to each customer’s needs.

Gillam says that despite the economic gloom, there remains some good news for solution providers in the printing and imaging market. “End users themselves are recognizing that there are opportunities to drive up productivity and reduce costs in the print area because that’s a place where most of them haven’t looked closely,” he says. “This is important for solution providers that are already in a managed-services relationship with their customers in other technologies and have a track record for demonstrating how they can save clients time or money. Now those VARs can come in and say, ‘We’ve overlooked this other area — printing. And there may be ways we can optimize these operations.’ ”