By Ted Ardelean, Director of Product and Segment Marketing for Océ
In the print services business, 2009 saw the rise of Managed Print Services (MPS). Most service providers announced new or improved MPS offerings. This article discusses what MPS is, how it differs from typical Print Services, and what procurement professionals should know when challenged to reduce document output ( print/copy) cost, replacing, and refreshing aging office print/copy fleet of equipment.
But, first, I’d like to highlight two points to help put my view in context. These points include some important data about the office print/copy processes and a brief look at the primary ways office print/copy services are contracted.
Putting MPS in Context
My first point about important data begins with money: The total cost of office print/copy is estimated at 3% of revenue according to studies from leading analysts such Gartner, IDC, and InfoTrends. On a per employee basis, the average monthly cost can be $200-$300. Most organizations utilize one machine for every two employees. The optimum ratio is one machine for every 10-20 employees depending on the nature of the business. Most organizations do not know their total cost of office document production; most also admit they are not in control of the vendors, contracts, and process. Depending on the type of service purchased, the cost-per-page for black & white can range from $0.01 to $0.12. Color cost-per-page can be four to six times higher. Color printing volume is growing at a rate of about 25 percent annually.
My second point spotlights the three main ways office print/copy services are purchased:
• Print/copy Equipment Pricing Plans – the bundling of the cost of print/copy equipment maintenance contract and supplies (toner, ink) into a multi-year contract.
• Print Services - a multi-year service contract for a fleet of printers/copiers/fax (or MFP) machines. The services include: equipment, supplies (toner, ink) and maintenance contract (or just supplies and maintenance without equipment); electronic remote monitoring of the equipment under contract; one bill and basic reporting for the machines under contract.
• Managed Print Services (MPS) – a service provider takes responsibility for managing the entire document output process. MPS is equipment agnostic. The service includes: pro-active machine maintenance; supplies replenishment service; lifecycle management of the equipment; real-time electronic monitoring of the machines that are connected to the network; technical support provided by on-site or off-site helpdesk service; on-going optimization (assessment) of fleet to maximize productivity and reduce the total cost of print/copy; and on-site support in large locations.
MPS v. Print Service and Pricing Plans
Unlike Equipment Pricing Plans or Print Services, MPS does not automatically replace all existing equipment with new. Instead, MPS re-deploys useful equipment to optimize the total cost. MPS requires the machines be networked and a monitoring system be used to collect meter readings, send alerts, collect data for analysis. At least once a year the fleet is optimized to maintain alignment with objectives – cost, user satisfaction, and performance. Organizations typically bring their fleet equipment under an MPS program in stages rather than just replace when the lease expires. They start with shared MFPs (copiers/printers). Then they migrate (consolidate) high cost single function desktop printers to shared MFPs. Third, they bring central reprographics and specialty outsourced print functions under the MPS program. MPS centralizes all the print/copy activities and provides one point of accountability and one monthly bill.
What procurement professionals should know
Organizations that are not actively managing the print/copy process now can reduce the total cost by 10-30 percent over 2-4 years using MPS. We frequently replace 10 desktop printers with two to four MFPs, resulting in hard cost reduction. Print/copy volume and paper consumption can be cut 20-40 percent using technology, user training, best practices, and controls under an MPS program.
The best approach to implementing MPS is to begin with a document output needs assessment. The assessment helps clarify the current state – costs, consumption, contracts, equipment, user satisfaction, and service needs. This provides a baseline for setting goals and measuring progress. The assessment also outlines the future state – equipment needs, total costs, strategy and controls. A key to success is to hire a professional with experience doing assessments. The cost of the assessment can be recovered in a matter of months from future savings.
Our experience also suggests that organizations shouldn’t be afraid to change. MPS requires new strategies to reduce costs and improve service. Print/copy services are similar to IT. Standardization, centralization, organizational control is necessary. Customization and exceptions lead to high costs and lack of accountability. The MPS provider can help navigate the change process and overcome any resistance.
MPS can be provided internally but, because it requires active management with dedicated support and specialized enabling technologies, organizations prefer to outsource to a specialist. MPS shifts the focus from tactical metrics such lowest cost equipment contract today to outcomes such as reducing total cost of print/copy process during the contract lifetime, improving office productivity, reducing IT workload, improving sustainability, and instituting accountability and budget control.
Ted Ardelean (Ted.Ardelean@oce.com) is director of product and segment marketing for Océ Business Services, a leading provider of document process management services and technology.
P.S. Océ will cover MPS and managing the cost of document output enterprise wide in more detailed in the upcoming SIG webinar on March 23.