MPS Market Summary Introduction Managed print services have become increasingly popular over the last five years. Almost everywhere you look in the printing and imaging industry someone is talking about MPS. The problem is that while MPS is the buzzword of the year, not a lot of people really know the inner-workings of MPS and the market. Most people would be surprised to know that in the first year of implementing MPS, 50 percent of dealers/resellers fail to thrive (Hybrid Dealer Report, 2009). Understanding the market, the customers, and the dealers is the essential first step to implementing and continuing an MPS program. State of the Global MPS Market The MPS Market Size, Share and Forecast Study is an annual publication by Photizo Group that compiles revenue data for hardware, supplies, services and management. This information can be viewed globally, by country, or by vendor. The graph below shows the total manufacturer MPS revenue forecast through 2013. MPS revenue has more than doubled from 2006 to 2008. This upward trend is expected to continue with the MPS revenue being more than 7x higher in 2013 than it was in 2006. Total MPS revenue is also broken down by individual manufacturers. In 2006 and 2007 Xerox was ranked as the number one manufacturer in terms of revenue. HP, Ricoh, Canon and Lexmark finished off the top five spots. In 2008, HP moved into the top spot and Xerox was moved into second place. The other three places stayed the same. The chart below shows the percent of the market MPS comprises, or will comprise, and the percent of the market that non-MPS comprises, or will comprise. Photizo Group predicts that in 2010, the MPS market will comprise 29 percent of the global market. The percent of MPS in the market has almost doubled from 2006 to 2008. Most importantly, by 2013, MPS will account for over half of the industry’s revenue. Customer Adoption Model Photizo Group developed three stages to give a framework for describing the customer adoption process used for MPS. The stages have been expanded to better address the steps within each stage. Stage 1 is the control stage, which includes assessments, understanding the user requirements, and planning. Stage 2 has been expanded into Stage 2a and Stage 2b. Stage 2a is optimizing, which includes fleet consolidation, right sizing, and asset deployment. Stage 2b is asset management, which includes on-going, proactive fleet management including redeployment, updating, changing, and deleting devices based on the economics of operating costs and expected savings. Stage 3 has been expanded into Stage 3a and Stage 3b. Stage 3a is document management, which includes simple document management, document workflow, and document archiving. Stage 3b is business process optimization, which includes process analysis, consulting, workflow analysis, and business process improvement. This is all shown in the expanded customer adoption model chart to the right. These stages represent the “typical” life cycle for adopting MPS. This process can take months or several years depending upon the complexity and size of the organization. Competitive Positions Photizo Group’s MPS Decision Maker Tracking StudyTM provides insights into the trends for North American and Western European companies. Using data from this study, we have developed the competitive positions of leading vendors along the stage continuum. The scores for each vendor were averaged across North America and Western Europe so that we could obtain a global stage position. The chart to the right shows the positions of the leading vendors in terms of their stage adoption and MPS market share. What is interesting about this graph is that most MPS decision makers have reported their MPS engagements are in Stage 2 heading toward Stage 3. From a competitive standpoint, this shows that MPS vendors need to put emphasis on developing Stage 3 capabilities including workflow analysis, document workflow, business process automation and ROI analysis. Over time we would expect companies to move toward Stage 3 activities to find additional cost savings over and above the device consolidation drive fleet cost savings. This will require new skills in that business processes need to be understood in their entirety before a solution can be implemented. Vendors that have business process automation software and skills will be prepared for this trend. Professional services with an eye toward business process optimization will also see an uptick in demand in the future. Hybrid Dealer Adoption Model In the past there has always been a copier fleet and a printer fleet, with two separate departments responsible for each one. The copier dealers offered services while printer resellers/VARs offered products and IT. When MPS became popular and started being implemented heavily, the two separate departments merged into one. Now companies have a single decision maker for a single fleet. With only one fleet, the dealer has to be versed in services, IT and products. These changes have required a new type of dealer to emerge. At Photizo Group we termed this new dealer, the “Hybrid Dealer.” Photizo Group developed a Hybrid Dealer Evaluation to help dealers better understand the changing landscape. This evaluation gives dealers a quick assessment of where he or she is at on their MPS journey, and provides key milestone guides. The four stages that a dealer can be in are shown in the chart to the right. The stages are Fence Sitting, Testing, Committed and Hybrid Dealer. In Fence Sitting, the dealer is not convinced MPS is worth the risk so the dealer is waiting. In Testing, the dealer has made the initial investment, but the progress is slow. In Committed, the dealer has sustained executive focus, energy and budget. In Hybrid Dealer, the dealer has a fully developed professional services business. Our research has shown that 80 percent of dealers are in the Testing or Fence Sitting Stage and 20 percent of dealers are in the Committed or Hybrid Dealer stage. At the bottom of the spectrum, the dealer is product focused. The level of MPS ability is low and the level of MPS commitment is low. As the dealer moves up the spectrum, the focus is on services and the level of commitment and ability must grow. Moving up the spectrum takes time and can be a tough transition on the dealer. In fact, only 10 percent of dealers/resellers have made a successful transition to a hybrid dealer (Hybrid Dealer Report, 2009). Transitioning requires a high level of commitment, but it is important to be successful in the MPS field. Conclusion It is important to always stay informed of the direction the market is heading. Making the transition from a traditional dealer to a MPS dealer is not easy, but it is necessary. Photizo Group predicts that by 2013, half of the hardcopy imaging devices will be under MPS. This means that if you have not made the transition, at best you can only access half of the market. Above we have given information on the forecast of the MPS market, Customer Adoption Model, the stages, and the Hybrid Dealer Adoption Model. This knowledge can help you to be prepared for the obstacles that you will inevitably face along the way. The important, and key, point to keep in mind is that to transition your business to MPS, it has to become your focus. MPS is not a fun, sideline venture to experiment with. It takes focus and commitment to succeed. This white paper is prepared by Photizo Group and can be downloaded for free at www.mpsinsights.com . You can email Ms. Hutchins at ahutchins@photizogroup.com .