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Paradigm Shift to a New Stream of Revenue

1 Oct, 2012 By: Ron DesMarais imageSource


There are two closely related storms on the horizon for copier sales organizations: the need for a new revenue stream from their existing (and prospective) clients and the coming obsolescence of the copier. Regarding the new revenue stream, all the copier companies know what it is, and internally they have talked about going after it for a long time. However, they realize that whoever draws first will get riddled by their competitors and face a severe uphill battle to remain solvent and regain semi-equal footing. As for the obsolescence of the copier, the precursors are first; a paradigm shift in how businesses distribute, store, and retrieve the information they need to run, to remain competitive and grow; and second, an ever increasing societal bent towards environmentalism.

When a copier is sold/leased to a client, it is not the revenue generated by the sale that is the boon for the copier company; it is instead the service contract that goes with the sold/leased copier that is the prize. Copier companies largely rely on the revenue from service contracts to stay afloat, grow, and become profitable. When a copier is placed in a client location, the overwhelming method of transfer is a 36, 48, or 60 month lease. Along with that lease comes a service contract whose monthly payment to the copier company is based on (an estimate of) the number of printed pages the copier spits out each month. This contract is typically 12 months, is renewed each year, and each year it is renewed it increases by 10%. The more times the service contract is allowed to experience its annual increase, the more profitable that contract becomes to the company; however, every increase brings with it greater risk that a competitor will be able to come in and displace the copier (and its service contract) at a lower cost to the client.

To prevent this, it is rare that any leased copier will ever run its full lease term, as a copier company will beat its competitors to the punch: they will terminate the client’s existing lease contract and get them to enter a new one, and with it they will attach a new service contract. To make the whole shebang financially appealing to the client, the copier company will roll back all of the previous service contract increases and start a new one from Ground Zero. In the long run, this does nothing for the copier companies because all the increases and new beginnings when averaged out demonstrate that there is no increase in revenue coming to them…they are just treading water. A new stream of revenue is needed.

Okay, Suppose That

Whispers of a new stream of revenue were heard over seven years ago and revolve around the scanning side of things. At that time, counters to tally the number of scans a copier did were included in the manufacture of a few copier lines, and by now those counters should be universal across all lines of copiers. With the recent shift in how copiers are being seen and used (as more scan-centric devices and less as hardcopy output devices), it seems logical to start charging clients for scans. Not only would copier companies be able to replace the decreasing number of dollars they are losing as clients print less, they might even start bringing in more revenue than they have lost as the number of scans increases. However, therein lays the Catch 22: the company that draws first will be cannibalized by the others as they race to scoop up that company’s alienated clients with chants of, “We will never charge for scans - until all of you have been sequestered with no other options.” Spooky.

Okay, now suppose that a few years have passed and that all copier service programs out there include a ‘charge for scanning’ component. Will the copier companies be out of the woods? No. In its most basic description, a copier is really nothing more than a printer with a scanner on top. As businesses move from hard copy distribution of information to digital distribution for greater distribution speed, tighter security, and a lower cost, the scanner part of the copier will be used more than the printer portion. Also, as a society, we are going green, and in the office going digital via scanning is far more environmentally conscious than sucking trees into a paper mill to
ream ourselves so that our copiers can spit out momentarily viewed hard copy documents.

With the increased attention and use of the scanner on the copier, its shortcomings when compared to less expensive Kodak/Fujitsu scanners are becoming more a severe pain point for end users. For the same reason many clients were/are resistant consolidating a small fleet of (slightly more expensive to run) HP printers into a single output device known as a copier (that will stack all printer jobs in a single line and then spit them out one at a time no matter how important the last one in line might be), there is a looming need to go from a single scan station (residing on top of a copier) to several smaller scan units spread around the office. For $2,500 less than the cost of a $10,000 55 page per minute (ppm) copier with its single scanner, a company can instead outfit itself with a more nimble fleet of three 67 ppm/134 image per minute scanners and a 50 ppm HP printer.

The lower cost and greener bent are not the only benefits of a decentralized print/scan solution. A recurring nightmare for copier service departments is a copier’s inability to print envelopes; something HP’s can do all day. Further, don’t even talk about the fun copiers have with labels! On the scan side, try placing a single bundle of documents that includes checks, receipts, letter size documents of various paperweights, and a few ledger size pages in a copier’s document feeder; it “ain’t gonna” happen. Instead, the job build feature is going to have to be engaged and this will require placing each piece of the bundle that is less than the size of a half sheet of letter paper on the glass, and then combining each of those scans with the remaining documents that can be fed through the copier’s document feeder. Doing this is especially fun when you have two sighing people waiting behind you to make a copy of a single page. On the other hand, a Kodak/Fujitsu scanner can do this single bundle without issue.

Time To Get Busy

Scan

So is it all gloom and doom for the copier companies? It could be, but the first step to retaining relevance is accepting that water is rising and now is the time to get busy building an Ark. All facets of a copier organization (sales, service, and administration) need to be educated to the coming flood so that the needed changes a company must undergo will be understood and not questioned. Upper management will have to evaluate which scanner brand and which printer brand they will embrace. Sales teams will have to learn how to piece together a decentralized scanner/printer solution for a client in much the same way they currently configure a centralized copier/printer/scanner for a client now. An end to separate tech teams within the organization’s tech department must take place: the printer tech and the copier tech must become one and the training to do this must begin right away. Further, those techs will also need to know how to perform maintenance on the organization’s scanner of choice. The tech focus is key for there are great techs in every company and losing them because they weren’t prepped would be a shame. Last and probably the easiest department to train for this paradigm shift will be the administration department. Adding another line item for scans to a client’s invoice will be a breeze.

Yes, there is a lot of change a copier company will have to undergo, but the need is best summed up by retired Chief of Staff, General Eric Shinseki: “If you don’t like change, you’re going to like irrelevance even less.”




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