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Solutions Sales: Paying the Price of Admission

15 Feb, 2005 By: Jeff Clark imageSource

Solutions Sales: Paying the Price of Admission

The notion of having to spend
money to make money is not alien to the independent copier dealer, or anyone
involved in the business world for that matter. So, just as in any new venture,
an investment is required when it comes to successfully implementing a document
management solution (DMS) component to the traditional hardware, supplies and
service business model. 

Effectively adding solutions
offerings, however, does not have to be as sizeable or complicated as you might

“DMS providers recognize that
copier dealers represent an outstanding opportunity for a highly successfull
distribution channel,” says Jamie Sinden, dealer manager for London,
Ontario-based Global Document Solutions (Gdox), a document management software
provider. “As a result, most have developed programs and services designed to
help dealers add a software solution offering without a significant investment
or business infrastructure change.”

Commitments required by DMS
providers vary widely, but most start with an initial licensing or authorized
reseller fee. These fees range from $2,000 -$5,000 for solutions that, generally
speaking, are suitable for both a variety of dealers and end-users, to upwards
of $10,000-$15,000 for larger, enterprise-level solutions.

Just as the costs vary, so do
the packages DMS providers offer to help dealers get started.  And it takes some
homework by an interested dealer to determine what application is best for their
dealership in terms of the marketplace they serve, software functionality and
dealer support programs. 

For example, DMS provider
InfoDynamics, which is based in Indianapolis, Indiana, offers dealers two
partnership levels for its “Intact” document solution software.  The Premier
Level partnership requires a $2,800 buy-in and offers comprehensive technical
and sales training, a higher margin for software sales, a co-op marketing
program, and other perks. 

With the Pro Level partnership,
dealers operate under more of a “finder’s fee” arrangement. With no buy-in
required, dealers work directly with InfoDynamics on the close, installation and
ongoing support. This program translates into initial lower margins for the
dealer, but allows dealers to work their way into becoming a full-scale

“Like other providers, we try to
differentiate ourselves not only with the capabilities of our application, but
with the programs we offer,” explained Russell Johnson, InfoDynamics’ director
of business development.  “It’s important for dealers to do their due diligence
on both fronts and then fully commit to achieving success.”

Newburgh, New York-based
software company DocuWare, on the other hand, recommends dealers go a step
further and use the application themselves.

“Incorporating the DMS
application into a dealership’s own operation is an excellent way to become
expert at the solution,” explained Steve Behm, regional sales director for
DocuWare. “We highly recommend that our dealers do this. There’s much more
credibility in selling a solution you believe in and use yourself.”

The DocuWare program requires an
annual $2,250 licensing fee, which includes the full version of the application
that dealers can use themselves. Additional DocuWare start-up fees include
$4,900 for two separate, comprehensive training courses—technical and
sales-oriented. As part of the initial licensing fee, most DMS providers
typically offer various levels of training and ongoing support.

“From there, the dealership is
fully capable of successfully going forward with selling the solution with
plenty of ongoing support directly from us,” Behm said.

The Gdox solution, by way of
comparison, offers hardware/server components as part of its solution, as well
as a financing option for participating dealers. 

“We’re not necessarily looking
for a return on our investment from new dealers for the first year,” Sinden
explained. “Every partnership is different, with different opportunities and
challenges. That being said, a dealership that fully commits to success can see
a return on their investment even after the first couple of solution sales. So
the sooner, the better.”

In addition to initial licensing
fees, dealers face another key cost in adding a solutions selling component to
their business—staffing. DMS providers almost universally agree that dedicated
personnel is required to achieve complete success.

“To really do it right, a
dealership needs a technical person and a sales representative— both fully
dedicated to the DMS solution,” Johnson explained. “From there it really takes a
commitment incorporating the sales effort into the day-to-day operation of the

Compensation structure becomes a
tricky issue for dealers taking on the DMS model.  The solutions sales cycle can
be dramatically different than the 30-45 days it takes to make a copier sale.
Dealers should consider a base salary plus commission of 40-45 percent of
projected gross profit, with consideration toward compensation-levels based on
ongoing activity levels. Constantly feeding the pipeline, and starting with a
dealership’s existing customer base, is critical.

“There’s no way you can fully
train everyone on your staff to understand everything about your DMS offer,”
Sinden added. “Giving your copier specialists enough of an understanding to
identify solid opportunities and open the door for your specialists is really
the way to go.”

At the end of the day, the
question regarding the cost of getting into the solutions business might not be
an issue. If industry prognostications hold true, and the traditional model is
impossible to sustain, the actual cost may be the future of your business.

There are plenty of choices out
there. Some estimates indicate there are more than 500 providers of various
forms of DMS applications—from enterprise-level solutions to vertical
market-specific programs developed in garages. Taking the time to make a choice
and make the investment will more than likely be worth it. The Gartner Group
estimates that the document management market will be an $8.2 billion industry
by 2006.

“Dealerships have an outstanding
opportunity in front of them,” Johnson concluded. “Those that are successful
will offer a suite of hardware and software products that best meet their market
need and technical competence, and will focus on selling the complete solution.”

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