Carsten Bruhn, president and CEO of Ricoh North America, explains the current state of the North American market during a digital services briefing.
Above: Japanese, North American, and European speakers who participated in the briefing.
On December 7, 2023, Ricoh conducted the Ricoh Digital Services Briefing, where Takahiro Irisa, president of the Ricoh Digital Services Business Unit, along with business leaders from Japan, North America, and Europe, explained the company’s focus on digital services, a key area of emphasis for Ricoh.
The company announced its transformation from an OA (Office Automation) manufacturer to a digital services company, planning to increase its revenue composition of digital services from 44% in fiscal year (FY) 2022 to over 60% by FY 2025. Despite the shift, Ricoh still values its traditional office printing business and aims to secure stable revenue through stronger organizational structures and operational processes, contributing to its overall transformation.
Ricoh Digital Services Revenue
Fully 37% of Ricoh’s digital services revenue comes from office digital services and 7% from digitalization of field operations. In the first half of FY 2023, the revenue ratio for digital services was 46% (39% from office services and 7% from field services), with a plan for FY 2023 to reach 49% (40% from office and 9% from field). The target for FY 2025 is to exceed a 60% revenue ratio in digital services (50% from office and 13% from field operations).
The newly released regional office digital service ratios (reference values) for fiscal year 2022 through the first half of fiscal year 2023 were as follows:
- Japan 48% → 49%
- Europe 40% → 43%
- Americas (North America + Latin America) 27% → 30%
- APAC 16% → 16%
Ricoh North America Digital Services Growth Strategy
Carsten Bruhn, president and CEO of Ricoh USA, Inc., who also serves as general manager of the North America Management Division in the Ricoh Digital Services Business Unit, spoke about the current status and growth strategy of Ricoh’s digital services business in North America. He highlighted that Ricoh USA’s revenue has grown significantly to $3.5 billion, supported by a large customer base of 55,000. The company operates 1,900 customer sites covering business process services (BPS), where employees directly interact with customers, deeply understanding their needs. Ricoh USA employs 15,000 people, including 1,300 in sales and 9,600 in service delivery, with a dealer channel of 370.
Bruhn further explained that Ricoh USA has made three significant strategic acquisitions contributing to its digital services transformation: IKON in 2008, which expanded its BPS coverage; MindSHIFT in 2014, which grew its IT services business; and the recent 2022 acquisition of Cenero, which expanded its communication services (CS) business.
In North America, Ricoh’s channel is composed of 20% dealer and 80% direct sales. The customer segment pyramid is topped by enterprise customers, which account for 66% of direct sales, followed by mid-market (including public sector) customers at 25%, and small businesses at 9%. These segments are provided with more standardized and self-service level products and services.
Bruhn emphasized the importance of BPS and CS in driving digital transformation, with BPS being a large (63%) and growing segment. The Workplace Experience portfolio, although smaller, is rapidly growing in CS and becoming an essential part of Ricoh’s growth. Bruhn stated that Ricoh is at the forefront of workplace innovation, helping customers unlock the potential of data held within their businesses.
Ricoh USA, Inc. is implementing the following four strategies:
- Talent and Culture – “We consider this to be the foundation of our strategy, where the right talent and the right culture are essential to our success,” said Bruhn. “This leads to higher productivity, which has grown by about 30% over the past three years. This also contributes to employee retention, customer satisfaction, and increased revenue.”
- Customer-Centric Portfolio – “We are changing our go-to-market strategy and creating a customer-centric portfolio,” observed Bruhn. “We are not just selling products as a vendor; we are providing solutions and resolving real business challenges for our customers as partners. We are creating a more meaningful customer-centric portfolio and are driving services through joint innovation. We are investing in growing areas of process automation, such as business process services, workplace experiences, and communication services. This is transforming our company.”
- Focus Industries – “We have identified four key industries in North America as high-growth sectors: health care, retail, financial services, and manufacturing,” reported Bruhn. “We have developed a dedicated sales force with high skills to support our most strategically growing accounts.”
- Agile Automation – “We are implementing digitization and modernization through automation,” added Bruhn. “This is to maintain agility and a digital-first approach, taking a customer-centric approach to provide value and assist our customers in automating their businesses.”
Ricoh Accelerates Automation with Business Process Services
Bruhn reported that business process services (BPS) have become an essential component of Ricoh’s digital transformation strategy, accounting for 63% of its service sales in North America. “Customers are demanding the digitization of their businesses,” he emphasized. “By having an onsite presence, we are able to thoroughly understand our customers’ needs and collaborate with them to create solutions. BPS transitions manual processes into automated workflows, which can then be captured in digital form. This allows us to create automated and integrated information workflows.”
Bruhn added, “Onsite, we provide value to our customers and offer an enhanced experience through our last-mile capabilities. Since 2021, our offsite business approach has shown double-digit growth. We complement knowledge workers with a digital workforce, provide critical insights, and create value-based services connected to data. Business process services support sustainable and profitable business growth. There are many opportunities, and based on our strong heritage, we believe we can provide process automation. We are not just selling products; we are providing solutions. By doing so, we resolve customer challenges and simultaneously achieve higher profits through amenity services. Based on our strong relationship with customers and our track record of providing value, we intend to continue growing in this significant business sector.”
Ricoh Expands a Customer-Centric Portfolio with Communication Services
According to Bruhn, there are opportunities for growth within the communication services business. Last year, Ricoh acquired Cenero. With this acquisition, Ricoh has not only expanded its digital workplace portfolio but also created new synergies, thereby strengthening its existing offerings for its customers. Cenero’s portfolio complements the Ricoh suite. “This has allowed us to solve the challenges of enterprise leaders in remote and hybrid workplace services,” said Bruhn. “For example, we can improve digital agility, foster innovation, and involve everyone in high-performance teams through a fluid workplace.”
He concluded, “The North American CS market is projected to grow by 5.3%, but we anticipate our sales growth to exceed 30% in the fiscal year 2023. This growth demonstrates the strength of combining our heritage business with Cenero’s offerings. By working together, we can offer more services and value to our existing customers.”
