“Anytime my imagination comes to life; it reminds me to imagine more.”
So, it’s been a busy week in the print equipment and its services industry. I say, hang on because the speed of its disruption is going to increase. Thanks, Carl Icahn, for hopefully wakening the industry’s leaders to disrupt themselves.
Throughout history, most industries were disrupted by outsiders. So, this move by Carl Icahn is welcomed by those insiders determined to kick the ass of the channel’s complacency and status quo.
Some believe Xerox and HP coming together doesn’t make a disruption. It’s incredible how some can’t look past what’s in front of them. Or, they find it easier to discuss why something won’t work over the discussions on why things will work. Who knows which one writes the check or swaps the stock. The bottom line is, Xerox started the game as they ante up.
“When leaders focus on why things won’t work, they are fighting to remain in the past; when leaders focus on how things could work, they are exploring the future.”
This merger will cause the remaining manufacturers to consolidate much quicker than many wanted. It also affects the Private Equity in the channel as they consider current and future investments. Soon the hype in roll-ups chasing the fiction of Managed Print Services growth will be questioned as those investments are held accountable to market realities.
We are witnessing the beginning of the industry’s most significant cost-cutting in its history.
I will call it.
“The era of aligning cost with market realities.”
When Carl Icahn set out to clean up Xerox, he did it to bring greater value to the company by aligning it with the realities of the market. Carl said he saw Xerox heading in the direction of Kodak, and he intended to change that direction.
Xerox had many out of control expenses, and Xerox was not addressing the overlapping and saturated distribution. Carl questioned the fact that GIS (Global Imaging Systems) was not focused on the Xerox brand.
These GIS Dealers which Xerox owned, were selling competitive brands; he also questioned why Xerox owned companies were still operating with their independent names over capitalizing on Xerox's name recognition? I agree with Carl on that. Why acquire distribution and keep it independently branded. I think its insecurity or a lack of confidence in the acquiring brand by the acquired.
Dealer Roll-Ups listen to Carl, unite the brand, and rein in the cost.
We still see today’s roll-ups using the GIS model, it seems as there is still a fear of what consolidation means to the end-users. Do these roll-ups really believe that customers would leave if the dealer changed its name? Do dealers think they are fooling the customer? I think this strategy does not align with end-user’s reality and destroys the entity’s chances of national recognition.
It’s not 1990 so, why are the acquisition strategies still being built on a 1990’s model?
Organizational unity creates esprit de corps; this unity becomes clouded by individualism. Roll-ups should be proud and praise their integration. I believe if you intend to be a national organization, then be national, in name, products, services, and core values.
“It is more important to bring together what is separate, over attempting an appearance of togetherness while remaining separate.”
Unity and brand recognition in the Imaging Channel is quickly becoming a must as the fast approaching pull-economy invades the channel’s deliverable. E-Commerce will play a significant role in the future of the channel. Those of you who understand Google should quickly realize the value in this paragraph and the next.
A national company all united on a customer-centric deliverable is so much more effective than a national company made up of independent organizations all working as they did in the past. It will be much easier to find your company in the digital world when its name is widely used. If you intend to sell nationally, you better be recognized nationally. I suggest all roll-ups take the parent's name and do it quickly. Because some in the channel will in-fact sell nationally.
Enough is enough let's move forward
Quite simply, Xerox needed someone to say enough. Carl Icahn said it. Who in your organization will say, "Enough is Enough?
All dealers’ manufacturers and those who provide services to the channel’s ecosystem must rein in and align cost. The inefficient ways of servicing and selling must not be ignored any longer.
Dealers must stop working with any consultant who is keeping them in the past or is telling them what they want to hear instead of what they need to hear. I am a supporter of NEXERA, BEI Services https://www.nexera.net/about/management-team and proudly say this.
All dealers and private equity in the space should contact Wes McArtor to understand the data. Wes McArtor and his team have the most extensive industry database in the world, and numbers don’t lie or get emotional. The future of the channel will take bold leadership willing to lead based on the realities of the market. A reality clearly defined by the data.
Xerox/Hp will bring a whole new game to the field which many still see as an unchangeable game.
Those who cannot muster the fortitude to make the needed sacrifices should move to the sidelines. The Imaging Channel will face many challenges as the market continues declining. However, the industry can reinvent itself and thrive if they stop trying to save yesterday’s relevance.
Now is the time to understand the value in replacing oversold A3's with A4's. Now is the time to understand e-commerce and implement it. Now is the time to imagine future possibilities over remembering past successes.
Print equipment, and its services business model is going to modify. Hopefully, this new era of consolidation and cost cutting brings a fresh perspective to a much-needed reality check.
It will be interesting to see how the deal pans out, but one thing is adamantly clear. Two of the major players in the space just slapped status quo in the face. It’s the time now for the rest of the industry’s actors to do the same.
“Status Quo is the killer of all that will be invented don’t get stuck in Status Quo.”
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CEO/Founder TEASRA, The Innovation Channel
Long Answer Follows
With the recent ConnectWise acquisition of Continuum, one of the largest Master Service Providers, I thought it was the right time to share some thoughts regarding IT services and the Imaging Channel.
It is approaching ten years; where's the momentum?
It has been nearly a decade since Master Service Providers started courting the Imaging Channel in an attempt to assist the Channel in delivering IT services to their print services clients. Unfortunately, in this last decade, there seem to be very few success stories.
There must be a better way
Is it time for better options? Is there a better solution for the Channel than hoping the current Master Service Providers can help dealers move up-market to higher-end clients and gain more control over their SLA's? Is it time for a new hybrid approach? I think it was time five years ago.
When does the Channel recognize the failure to deliver? The inability to gain momentum in the Imaging Channel should cause both the Channel's dealers and the Master Service Providers to question the lack of success - and the future.
Most of the Imaging Channel is far behind the target of 30% plus of their overall revenue represented by a profitable IT services business. It's important to note that those Channel dealers who appear to be performing well in IT services are doing so without the help of a Master Service Provider. Dealers should listen with caution - or even skepticism - and question those who are recognized as leading the pack in the IT services deliverable.
Who and by what measurement are they leading?
Can Dealers succeed in the IT Services Deliverable? Yes, they can, and I am honored to have worked with an MSP who continues to raise the bar on their extremely successful Managed Service and Security platform. #ImageQuest headquartered in Nashville, TN. Led by Milton Bartley
It simply takes leadership
Until a dealer is ready to invest and hold themselves accountable to the growth of the IT Services deliverable, they will never gain enough traction to achieve a meaningful percentage of revenue needed for diversification.
Dealers don't need a babysitter directing them or controlling their IT deliverables. What dealers need is a rock-solid leader with courage and a proven ability to build something. The dealers need to put their minds to the IT deliverable. Maybe the Channel should adopt this as their motto.
"Putting our minds to IT"
Who in the Channel remembers the Master Copier Service Provider? Right! There never was one. Instead, some dedicated entrepreneurs transitioned outdated deliverables or built companies from the ground up that sold products and serviced the products they sold - profitably. These pioneers were determined leaders. I expect none of them hired babysitters.
Like the dealers they are courting, the Master Service Providers are focused on their growth. As they gain dealers, they grow, even if the new dealer is only marginally successful. And there are too many marginally successful dealers in the Channel to honestly call the past decade a success as it relates to IT services.
I can't be alone in thinking that Master Service Providers are stifling the individual dealer's operational maturity. As those dealers become increasingly dependent on the Master Service Provider, they fail to develop the critical skills internally, increasing their reliance on the Master Service Provider. It's a vicious circle.
Conversely, when you look at the dealers who have found success in IT services, you see little or no dependence on Master Service Providers. These successful dealers have a uniqueness to their IT service deliverable - a boutique quality if you will - that Master Service Providers cannot emulate as they build platforms to maximize the commonality among their dealers and their clients.
What's good for the Master is not good for the dealers and MSP's
Successful IT service providers clearly understand that yes, there must be a commonality among their clients - a consistent stack and a similar belief in the value of the service they are receiving. The problem for the Master Service Provider is that the most successful MSPs will define their deliverable, standard stack, and ultimately their ideal customer profile without regard to the Master Service Providers.
The successful MSPs are building boutique business models. It's this uniqueness that separates them from their competitors and ultimately makes them unlikely to engage a Master Service Provider.
The Channel's business leaders are smart enough to explore options on their own, and now is the time for them to start looking for other options. The current approach isn't working. It's time to take the bull by the horns and find your success in IT services; it's time to look in new places.
The Channel must avoid commonality which leads to commoditization
The dealers who have aligned themselves with Master Service Providers have helped to create a commoditized, albeit watered-down, IT services deliverable.
Recently I published an article on how I believe Master Service Providers are commoditizing their IT Services deliverable. Here's a link to that article if you want more background on my thoughts in this area. (article link)
My friends in the Imaging Channel, maybe it's time to look for alternatives in your IT services plight. Will the Channel spend another ten years doing the same thing and expecting a different result? We all know that spells insanity.
Instead, I suggest that the dealers who find themselves stuck with little or no movement reach out to the MSP community - outside the Imaging Channel - and talk with those service providers inside the channel who figured out how to be successful without relying on a Master Service Provider.
Yes, there are a few who are successful using a Master Service Provider, but we intelligent minds can agree they are the exception and not the rule.
Tough conversations - both internally and externally are required to create improvement and real change. That said, the Imaging Channel has to start having these tough conversations. It's a disservice to the Channel's reputation as one of innovation and growth to continue avoiding the realities of the marketplace.
"Status Quo is the Killer of all that will be Invented, don't get stuck in Status Quo."
I welcome all to subscribe to my YouTube Channel https://www.youtube.com/channe...A?view_as=subscriber
Also, send invite if you wish to connect here on Linkedin.