A decade ago, managed print services was a relatively novel offering and something some service providers viewed as a point of differentiation.
Today, it's the managed print service itself that needs differentiation. The market for print management services, while still growing, is maturing, according to industry executives. Competition is keen as managed services providers (MSPs), printer manufacturers, copier dealers and printer resellers all vie for customers' attention. Market participants feel pressure to stand out from others in the managed print crowd. They also need to do more for customers that have been under managed print contracts for several years and are looking for additional benefits.
"When managed print services first became popular over 10 years ago, there was a lot of low-hanging fruit," said Holly Muscolino, research vice president for document solutions at IDC. "It was easy for a vendor to go in and right-size the fleet and ... there was a lot of opportunity to provide fairly robust cost savings."
But now, customers, particularly enterprise organizations in developed markets, have been through multiple managed print contract renewal cycles, Muscolino said.
The print services sector has been increasingly commoditized and there's more pressure on price.
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"They are looking for additional value ... out of these engagements, and vendors are looking for additional ways to provide that value," she noted.
Two methods stand out in that regard: the pursuit of vertical markets and the development of workflow services. Some print management services providers cultivate vertical niches such as health care and legal to get the jump on rivals. They are also exploring document workflow solutions that may touch upon additional IT areas such as enterprise content management and business process management.
Managed print services aim to ease the burden of running an in-house printing and document management shop. Service providers maintain paper and toner supplies, offer break/fix services and give advice on how to optimize the environment -- printer consolidation, for example. Providers typically use remote management technology of some kind to monitor printers and compile usage data.
In 2012, the worldwide managed print and document services market came in at $27.8 billion, according to IDC. The U.S. market was $11.7 billion.
Muscolino said she anticipates double-digit expansion for managed print in most geographic markets, with the exception of the U.S. enterprise market, which will, nevertheless, experience relatively healthy growth. The market has become more saturated, however, despite the generally upward trend.
"It is maturing and vendors need to find ways to further differentiate themselves," Muscolino said.
Vertical market specialization provides one outlet in that regard. Flo-Tech LLC, a technology and services company based in Middletown, Conn., follows that approach.
"Taking a vertical market focus has been very successful for Flo-Tech," said Leo Bonetti, the company's CEO.
Bonetti said Flo-Tech has become intimately knowledgeable when it comes to implementing and maintaining managed print solutions (MPS) in legal services. In that field, the company deals with issues such as volume requirements, confidentiality, back-end document management systems and proximity printing. He said the company supports hundreds of law firms including 36 out of the top 100 firms in the U.S.
The company also works in the health care environment. Here, the Health Insurance Portability and Accountability Act (HIPAA) -- and its confidentially requirements -- drives document and device security. HIPAA regulations heavily influence health IT, but there are other considerations particular to the health care sector.
"We also understand the dynamics that occur at a nurses' station and why it's not effective to consolidate devices in that environment and other nuances like scheduling service outside of staffing shift changes," Bonetti said.
Flo-Tech also supports the financial services, accounting, retail and pharmaceutical verticals.
"Each vertical market has its own unique requirements in an MPS implementation," Bonetti noted.
Auxilio Inc., a print management services company based in Mission Viejo, Calif., focuses exclusively on the health care sector. The company targets midmarket hospitals, starting at 250 beds, and larger facilities.
"Health care is a vertical that is very paper-intensive, and it will remain paper intensive for the foreseeable future," said Joe Flynn, CEO at Auxilio.
Flynn said knowledge of the health care setting gives his company an advantage. He noted that the typical hospital may have 30 clinical systems; printer drivers need to be compatible with them. Compatibility comes at additional cost, so Auxilio intercedes on a hospital's behalf with vendors to obtain realistic pricing, Flynn noted.
Helping customers save money is critical in a vertical Flynn said is under tremendous financial strain. He said service providers hoping to win business with hospitals must do more than take care of toner and offer break/fix services. Flynn suggested building volume-reduction targets into managed print services contracts and letting hospitals share in the savings.
Differentiation through workflow
Managed print providers with vertical market expertise are in a position to further differentiate. Vertical know-how helps pave the way for what IDC calls managed workflow services. Muscolino, in a January 2014 IDC opinion paper, defines that field as "professional and managed services that automate and optimize vertical and horizontal document-intensive workflows and/or business processes, with SLAs that are aligned with specific business outcomes."
Muscolino said she is starting to see more solutions around workflow optimization and automation. She noted that such projects may also involve the deployment and integration of enterprise content management systems. Business process management software, which lets organizations build and automate workflows, may also play a role in managed workflow services.
Overall, Muscolino said she believes business workflow knowledge will become increasingly important to managed print services providers as the market matures.
Bonetti said he agrees with that assessment.
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"We are always looking to find ways to add greater value for our clients," he said. "Really understanding their workflows and processes that drive their business allow us to add value at a higher level -- in areas that help them grow their business and impact their bottom line."
To develop workflow expertise, Flo-Tech has undergone the training and certification process to earn the HP Document Solutions Specialist Partner designation, Bonetti noted. Flo-Tech's national account managers and sales managers, meanwhile, have gone through CompTIA's Certified Document Imaging Architect (CDIA+) certification process. In addition, solutions architects in Flo-Tech's IT organization work with clients to understand their workflow needs and determine solutions that will meet those needs and work within their infrastructure.
Bonetti said workflow solutions include full-blown document management, document capture and routing, and integrations with a customer's back-end systems. As for partnerships, Flo-Tech has invested in training and certification on workflow solutions from DocuWare, Omtool, eCopy and Uniflow. The company also works with other third-party vendors.
Partnering is one approach for obtaining specific expertise. Managed print providers also hire to pick up the skills they need to build higher-value services. They may also pursue acquisitions.
"We are seeing a number of vendors hiring from the particular industries they are going to focus on," Muscolino said. "They are hiring ... people who understand the pain points in the industry and understand the jargon."
Muscolino said some vendors will take the acquisition route to gain strength in foundational technologies such as enterprise content management. Vendors may also acquire dealers who have expertise in particular verticals.
Kyle Farmer, vice president and general manager for managed print services sales and marketing for Lexmark International Inc., said the company has "cultivated vertical marketing expertise in traditional ways, such as through partners and hiring key talent within industries to our teams."
Farmer, however, pointed to the company's acquisition strategy as an important growth accelerant for Lexmark. He said Lexmark since 2010 has purchased 10 software companies, noting that several of those acquisitions have been specific to key industries. Farmer cited the acquisition of Acuo and PACSGEAR in the health care space and the purchase of AccessVia in the retail vertical as examples.
Charles Weaver, co-founder and CEO of the MSPAlliance, an MSP advocacy organization, said his group has been hearing that managed print companies are trying to acquire more broadly based MSPs. He said managed print companies want to expand into other types of services as managed print becomes commoditized.
"The print services sector has been increasingly commoditized and there's more pressure on price," Weaver said. "The more proactive [managed print providers] have been trying to get their way into less commoditized, higher-value, higher-margin managed services."
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