Digital Support: The Cornerstone Of A Successful Digital Strategy31 Dec, 1969 By: Rick Clayton imageSource
Digital Support: The Cornerstone Of A Successful Digital Strategy
is no secret that the market for analog copiers is declining with the existing
installed base being replaced by digital devices. CAP Ventures research reveals
that in 1998, the installed base of black and white copiers in the U.S.,
Segments 1 through 6, consisted of approximately 1.8 million units. Of that
total, 81%, or 1.4 million, were analog; 165,400, or 9.3%, were digital
standalone; and 172,100 or 9.7%, were connected. By the year 2003, the total
installed base of copiers will be less than 1.7 million. However, 77.5% of those
devices will be digital, with 30.3% being standalone and 47.2% connected. The
remaining 377,800, or 22.5%, will be analog. This is a dramatic change in a
short period of time. As businesses face this shift, office equipment companies
are faced with problems in the support function and opportunities in solutions
and consultative services.
years past, major corporations focused on technology and hardware. Today,
corporate initiatives are no longer primarily aimed at technology and hardware
but at improving processes. The analog to digital transition has also created
the necessity for a paradigm shift by the entire office equipment industry.
Those companies that do not embrace new ways of doing business will have a
difficult, if not impossible task in attaining revenue and earnings targets.
Future revenue opportunities will shift from hardware to digital support and
solutions. As the speed of digital devices increases, there will be a surge in
the growth of the print-on-demand marketplace and opportunities for digital
support revenue and solutions centered on the document life cycle.
Of Service And Support
order to be successful selling into new environments, companies must adopt a
consultative sales model instead of the traditional hardware model that is often
centered on demonstrations and trials. This is a new concept for the office
equipment vendor and customer. As a result, the sales cycle now includes not
only the end user, but also the MIS and IT departments.
than high-end support for specific products, digital support services are a new
undertaking for hardware companies. Most have found themselves working off
traditional hardware sales models that include precise and identifiable costs.
These models could be validated because of the mature nature of the hardware
industry. However, these same models do not apply to the digital support and
solution segments. Only now are companies starting to formalize their business
plans regarding digital support services.
of the rapid shift from analog to digital, office equipment vendors were forced
to assemble loosely organized support groups that lacked direction and strategy.
For the most part, solutions were developed in “silos” aimed at specific
customer problems. Vendors now realize that they must take advantage of the
economy and efficiency of repeatable solutions. These solutions and services
must include training, generate demand, and have necessary collateral such as
references, brochures, sales kits, etc.
the office equipment companies have attempted to make this transition, mistakes
have been made and money lost. Today, more marketing hype exists rather than
implementation and execution. However, in the future, the companies that succeed
will be the ones that have a sound strategy that includes the components of a
successful business plan that is repeatable and can be rolled out on a global,
or at the very least, a national basis.
digital support was either bundled in the deal or in most cases simply given
away. Companies found that they were loosing potential revenue and incurring
expenses that impacted their margins. Now every office equipment vendor is
billing for digital hardware support.
acceptable guidelines for billable and non-billable services encompass are:
and analyzing customer requirements.
and validating the recommended configuration.
customer resources and skills required for successful solution
ng customer requirements for support services into the proposal and
a comprehensive customer-training plan to include users, technical staff,
third party resources.
management of solution implementation.
support for network connectivity and configuration.
design, development, and implementation.
From Hardware To Solutions
companies feel that a successful transition from hardware to solutions is
critical for their future growth. Mike Meron, Xerox’s former head of corporate
strategy, believes that a successful move into technology-based solutions and
services has the potential to fuel 20 to 50 years of uninterrupted growth for
the company. In addition, Xerox has stated that the new solutions marketing
initiative will grow to represent as much as 50% of the company's business over
the next ten years.
Carly Fiorina, CEO of Hewlett-Packard was quoted in Worth
Magazine saying, “…all of the changes are being made with one goal in
mind. The whole objective is moving from a product-centered company to one
centered on customer solutions.” Indeed, Hewlett Packard’s LaserJet Imaging
Systems Division (LIS) projects that these areas will grow from being 10% of its
current business to as much as 30% of LIS business within five years. The
technology is now available to focus on applications and solutions rather than
IKON’s last quarterly report, the company announced that there was an increase
in second quarter revenues compared to the second quarter of fiscal 1999. Jim
Forese, President, and Chief Executive Officer stated, “A revenue
increase is due mainly to our continued focus on customized solutions and a
consultative sales approach rather than geographic sales coverage.”
signs indicate that these companies are on the right track. CAP sees digital
support revenue having a compounded annual growth rate of 48% over the next five
years. The workgroup segment will represent the greatest revenue opportunity
with more than $1 billion by the year 2003.
those providers who have large installed bases of analog copiers at customer
sites, the message is clear: A transition must be made to digital. Service
providers, in order to protect and grow their market share, thus encouraging
this shift, must ensure that they have an adequate infrastructure in place, from
both a sales and operations perspective.
equipment vendors must look for ways of growing monthly revenues from existing
accounts by expanding the range of services available to include not only
digital copiers, but also other connected network devices and solutions. Vendors
must also examine current offerings, and determine the appropriate internal
solutions—or acquisitions/alliances--to keep ahead of the digital transition
in terms of the customer services provided. Ultimately, digital support must be
a well-conceived strategy that is uniform across the organization and has
well-defined revenue and profit objectives.
column is an excerpt of the CAP Ventures White Paper he authored, “Digital
Support: The Cornerstone of a Successful Digital Strategy.” CAP Ventures is a
strategic consulting firm for providers and users of digital business
communication technologies and services. CAP Ventures provide knowledge and
business strategies through timely research, analysis, forecasting,
benchmarking, counsel, market education and implementation. For more on
information onWhite Paper, or CAP Ventures, please call (781) 871-9000. or visit