4 conventional diversification opportunities to consider.
There’s a lot of chatter about diversification in the office technology dealer channel. Indeed, there aren’t too many events where diversification isn’t addressed. Meanwhile, various vendors are knocking on dealers’ doors with a new product or solution. Although there are many ways to diversify, we are going to make a case for four not-so-under-the-radar diversification opportunities that are cost-effective for most dealers and relatively easy to get started.
The Case for MPS as a Diversification Opportunity
We learned the hard way about MPS being a diversification opportunity after we deleted it as one of the options to choose from as a dealer’s greatest diversification opportunity in our Annual Dealer Survey two years ago. At the time, we felt that MPS was a given service offering. Well, dealers had a different perspective, and many identified it as a diversification opportunity in the “other” category after we deleted it. Because of that response, we again included MPS as a diversification option in our last Survey.
Further validation that MPS remains a viable diversification opportunity came from John Hey of Strategic Business Associates during the recent Executive Connection Summit. According to the consulting organization’s annual survey, managed print represents 20% of the imaging business. But, according to Hey, many dealers—small and large—aren’t offering managed print services. “We talk about diversification, and I think it’s great, but if you haven’t maximized the opportunity in managed print, a business you know something about, why are you doing IT, a business you know nothing about and is very hard to do and expensive to get in?” questioned Hey. “We think managed print should be about 30% of imaging revenue, but we’re far short of that, and the majority of the dealers are far short of maximizing the opportunity in managed print.”
Eric Crump, director of strategic alliances, FollowMe team at Ringdale, and president of the Managed Print Services Association, described the latest developments in managed print services as an industry reset. “In the old days, when everybody had a printer on their desk, it was a mess. MPS was one way to consolidate everything and place it on a managed contract.”
However, Crump contends that all the positives created by managed print services during the last 15 to 20 years dissipated during COVID and the supply chain crisis. As a result, many dealers scaled back their MPS offering and shifted their focus to selling toner and boxes again while figuring out how to do business in this new environment. “Now that the return to the office is real, it’s an opportunity to manage the mess again,” observed Crump. “There’s a big opportunity because with most of the fleets that are being managed, there’s probably still another 40% to 50% that’s not managed.”
For dealers who tried offering MPS in the past and failed, Crump suggested that one of the reasons was not having the right tools. He doesn’t view that as a problem anymore. “The tools and services available today are lightyears ahead compared to what they used to be,” he said. “There’s more choice and benefits.”
Crump wholeheartedly agreed with Hey’s comment about selling something you know. “I’ve had conversations with colleagues looking for a job, and I tell them, ‘You’re going to make more money doing what you know how to do than if you try to become an AI software expert, a cybersecurity expert, or something that isn’t core to what you’ve done for the last 20 to 25 years.’ It’s the exact same thing for MPS.”
The Case for UCaaS as a Diversification Opportunity
Unified-communications-as-a-service (UCaaS) is a diversification opportunity picking up steam in the office technology dealer channel. In our 38th Annual Dealer Survey published last October, UCaaS, which fits squarely under the VoIP/telephone systems umbrella, was identified by 31% of dealers as a leading diversification opportunity. That’s impressive, considering it wasn’t even on most dealers’ radars five years ago.
“One of the most fundamental elements of an office workspace is the phone system,” observed Noel O’Dwyer, strategic alliances manager, Intermedia Cloud Communications, a company with a UCaaS solution. “It’s a natural evolution of their portfolio as they expand into office technology.”
As O’Dwyer puts it, a phone system is not just a phone system anymore. “As people move from on-premises to the cloud, it’s taking voice or the phone system beyond just a phone,” he observed. “And it’s not just moving the traditional phone system to the cloud; it’s expanding it to take advantage of all the other elements of unified communications that allow people to communicate.”
Unified communications encompass voice, email, texting, SMS, video conferencing, contact center, and secure file sharing. Not to turn this into an ad for Intermedia Cloud Communication’s product, but it’s helpful to know that the company offers a fully integrated solution that addresses all those disparate communication methods. “People want to communicate in the style that suits them,” said O’Dwyer. “Unified communications allow that to happen.”
UCaaS is also ideal for a hybrid work environment, irrespective of whether you’re on a desktop, a laptop, an iPad, or a smartphone. “Everybody’s communicating and needs to be able to communicate in this hybrid environment,” emphasized O’Dwyer. His case for selling UCaaS revolves around a huge market opportunity. “We see it as somewhere between a $79 and $80 billion market, and it’s growing at around 30% per year,” said O’Dwyer.
Intermedia Cloud Communications’ reseller model should be familiar to dealers who sell solutions like print management, scanning, and document management. “They own the customer; they have a margin, they sell at their price, and invoice the customer,” explained O’Dwyer. “The interaction with the customer is always with the dealer, not a third party. And we support all of that.”
The solution also provides what O’Dwyer calls top-line monthly recurring revenue. “We allow for that flexibility, and in doing so, we have an infrastructure through our partner portal that allows the dealer to be successful in that model,” emphasized O’Dwyer. “They do the invoicing, but we handle all the taxes, a major complication in that industry. We also provide ongoing support from a marketing point of view to help them build the business. We engage with the dealer on all the elements of the business from the financial side, the onboarding side, the marketing side, and, of course, the sales side.”
According to O’Dwyer, UCaaS is an excellent add-on for any size dealer, from one- or two-person operations to mega dealers. It is also a solution that dealers can sell to any size customer, even enterprise, although he noted that SMB is the sweet spot for Intermedia Cloud Communication and its dealers.
Need further validation that UCaaS has potential in the office technology dealer channel? O’Dwyer revealed that Intermedia Cloud Communications has already partnered with more than 250 office technology dealers. That means dealers have plenty of references among their peers to substantiate UCaaS as a diversification opportunity.
The Case for Document Scanners as a Diversification Opportunity
Document scanners are an excellent way to complement MFP sales, especially when the MFP customer is a heavy scanner and needs a more robust option than the scanner found on the office MFP. To make a case for standalone scanners as a diversification opportunity, we spoke with Joe Odore, global and U.S. and Canada portfolio marketing manager for Kodak Alaris.
“Standalone scanners come with a wider range of features for document imaging [and producing] cleaner images,” stated Odore. He explained that an MFP does a decent job of scanning a document and producing an image, whereas a dedicated document has features such as image enhancement and better software to create a higher quality scanned image and a searchable document.”
Odore added that MFPs lack the advanced imaging technology embedded in any document scanner available today. “If you think about documents that might be wrinkled, documents that may be less than perfect, have blemishes, document scanners have features designed to correct those images before they’re created as digital images,” said Odore.
Cost is another selling point. Desktop scanners range from $500 to $1,000, according to Odore. In areas with higher volumes and the need for a dedicated operator, products are available to accommodate those higher ranges. A typical MFP is not designed for high usage. “Even a small desktop scanner could do 10,000 pages a day,” said Odore. “It’s all about the advanced functionality you get with a document scanner that you don’t with an MFP.”
Reliability is another reason to consider document scanners. “If a customer does a lot of scanning on an MFP, the feeder might break down more frequently as opposed to a document scanner, which hardly ever breaks,” said Odore. “The cost of replacing a document feeder on an MFP is thousands of dollars.”
Selling extended service on the standalone scanner is another moneymaker, especially since Odore maintains that most desktop scanners typically require little to no service, and maintenance mostly involves occasionally cleaning the feed rollers. “Dealers could sell their service contracts, still make decent margins, and not have to worry about it breaking all the time,” he said.
As far as margins, even on lower-end products, Odore opined, “Any margin you make on something you never have to worry about again is a great margin. Profits are decent on scanners. It’s a competitive market, but if you’re making 25 points of margin for not ever having to worry about servicing it again or having an unhappy customer…”
The Case for Inkjet Production as a Diversification Opportunity
In an industry overwhelmingly consisting of toner-based imaging devices, the opportunity to diversify with inkjet technology has become more attractive as companies such as Epson America and RISO expand their inkjet offerings. Epson has been strong in A4 and has expanded its offerings, targeting the independent dealer channel with a line of A3 devices. The Cannata Report has been seeing the number of dealers who identify Epson as one of their top-4 A3 providers rise in our Annual Dealer Survey. Not to be overlooked in the inkjet discussion is RISO, which has been growing its dealer base as well, more notably in the light production and production segments. This is a different breed of device than those million-dollar-plus machines sold by Canon and Xerox that print on a variety of substrates. The RISO units sell for $450,000 at the top of the line and in the $125,000 range at the lower end, and fit between office inkjet devices and million-dollar machines.
For Andre D’Urbano, vice president of sales for RISO, the case for selling these light production and production inkjet devices is the growing opportunity in print shops and in plants. “Why are print shops tripping all over themselves getting into inkjet?” he asked. “Money. It’s super profitable. School districts, universities, colleges, hospitals, and municipal governments in-plant operations that no longer have a printing press and can’t do envelopes or NCR forms now have to outsource all this work.”
A more budget-friendly inkjet device like those sold by RISO allows these organizations to bring those jobs back in-house. One of the benefits, according to D’Urbano is that they work just like a copier, technology that users are familiar with. “It’s just printing with ink, not toner,” he said. He acknowledged that inkjet doesn’t look as clear and crisp as toner, but for the typical in-plant print job, it’s perfect.
Inkjet also offers print shop customers a cost-effective option for printing in color, whereas, in the past, it wasn’t an economical option on a toner device. “What these print shops are doing is calling those customers that are in the black-and-white world and saying, ‘You know that job we talked about last year, you said you couldn’t afford it, I’ve got a product now that will get us there,’” explained D’Urbano. “And if they can convert that black-and-white customer to color inkjet, they’re going to, at a minimum, double their profit.”
D’Urbano concluded his case for inkjet as a diversification opportunity with a message to dealer principals. “Just because you or your people are not talking about it, doesn’t mean it’s not happening,” he said. He reinforced this message by referencing one of the largest dealers in the U.S. that didn’t sell that many RISOs last year but started 2024 with a renewed focus on these devices. As a result, the dealer sold seven in the first month and a half. Another dealer found an opportunity in a Big Box hardware store where there was a need to produce handouts for customers as they entered the store. “When they talk about it, there’s opportunities,” said D’Urbano. “If you bring it up, you’re going to have a prospect. And just like that, you’re diversifying into this other realm of production. It’s not offset, it’s not toner, it’s diversifying into inkjet production where there is minimal competition. What could be better than that?”
