Market analysts such as IDC began identifying in June that the enterprise printer market was commoditised and largely saturated, so it is no small wonder that vendors have increasingly been adding software to their hardware in an effort to boost sales.
Of these, document management - the capture, distribution, workflow, auditing and integration of information - has rapidly risen to the top as the application area of choice. In fact, in the space of a year document management has grown from being a value-add to printers, copiers, and multifunction devices (MFDs), to the core of vendor sales strategies.
How did document management get this far in so little time? As with any change, several drivers have conspired over the past few years to force change in the way imaging and printing vendors and their resellers push product.
Chief among them was end-user demand driven by new compliance frameworks and an ever-mushrooming quantity of data necessitating management systems. This had led end-users to look toward their imaging hardware suppliers for advice on solutions, Lexmark A/NZ channel business manager enterprise, corporate and government, Tim Champion, said. Vendors quickly discovered that consulting work often led to new hardware sales lead to a rapid rise in buzz.
"The major driver for us is that we have found that for every dollar on consulting services spent there is a five-fold spend on hardware," he said. "Then there are very lucrative consumable sales on top of that."
Canon Australia Business Imaging Solutions Group national marketing manager, David Gradwell, said document management was a way of dealing with the wiser issue of a shift in enterprise IT decision-making.
"Traditionally we would have worked with procurement officers looking at their printing and document requirements," he said. "As imaging devices are increasingly involving the network, there has been greater involvement of the IT decision maker. As such document management has become a way to talk to them in terms of IT solutions."
Vendors looking for new ways to sell into customer bases saturated with commodified single-function printers also drove the market, Fuji-Xerox Printers MFD marketing manager, Paul Harman, said. "What drives it most is that single-function printers are really just single-function printers," he said. "Multi-function devices more closely match up with document management requirements - like scan to digital, scan to email, getting documents in a single storage mechanism - than the multi-storage mechanisms traditional offices have had."
Impact on vendors
Arguing that document management was far more than the latest marketing gimick, Lexmark's Champion said the broader focus on printing and infrastructure strategy had seen Lexmark change its whole go-to-market approach.
"Document management has totally changed our business - we go to market with solutions now," he said.
Canon's Gradwell pointed to the company's research and development spend as evidence of how document management was also radically changing its business.
"Ten per cent of Canon's global revenue is invested in R&D and in the business imaging area, half of that now goes into software," he said. "While Canon is traditionally seen as a hardware developer, investment in software for applications like document management has become a key area for us."
Pointing to its ability to help gain, and hold, market share, the trend was also proving to be a crucial competitive tool, Kyocera-Mita MFD product marketing manager, Mark Valle, said. "It is really hard for another vendor to come in and offer an iron for iron replacement when you have a catered solution which affects a customer's day-to-day workflow," he said. "In that way document management is a way for us to lock-out other vendors."
Supporting this view, IDC market analyst, PC hardware, Michael Sager, cited a recent example highlighting document management's ability to allow vendors and their channel partners to additionally take hardware and consumables sales from competitors.
"A vendor working in the manufacturing vertical did a process analysis of a customer and found they needed an application to manage their labels, tags and printing," he said. "By implementing a document management solution, they managed to get all of their ink and paper sales too." For Kyocera-Mita's Mark Valle, document management was rapidly becoming central to the company's future growth.
"There is still a large demand for people to just print and we still have products just for that," he said. "But in order for us to move to solution selling with our MFDs, document management is key."
Approaches to market
With both traditional printer and traditional copier vendors converging on the document management phenomenon, it was of little surprise that a myriad of approaches were being trialled, Fuji-Xerox Printers' Harman, said. The heritage of each vendor also meant some were further down the development line than others.
"Vendors at the multifunction and copier level have been following this trend for some time," he said. "They have traditionally sold their products at a procurement level, so have dealt with issues around cost and requirements, so document management has been picked up on much quicker."
Agreeing with Harman, Valle argued that traditional copier vendors' sales approach gave them a leg up when it came to competing against traditional printer players.
"With document management there has to be interaction for the life of the machine, and traditional copier dealers have always dealt with ongoing maintenance," he said. "Printer vendors have generally been in the position of selling printers at a box level so solution selling is going to be something new for printer resellers."
Harman said the convergence of traditional printer and copier vendors into the same space also meant direct and channel methodologies were also moving on the same turf.
"You used to have a situation where printers were sold by the channel to the IT department, and copiers and standard MFDs were sold to direct the procurement department," he said. "Now, with the significant convergence of MFDs, printers and copiers, you have the channel and direct vendors really angling for the same space."
As a result, the channel had to get more sophisticated in their sales methodology to compete with direct vendors, Harman said.
"The channel is probably behind in its document management and solutions sell capabilities as they have been selling different products under a different structure," he said. "But vendors and channel partners are retooling themselves so they can provide the solutions capabilities which all the major customers are looking for."
Agreeing that the channel had in general been slow to respond to the trend, Lexmark's Champion said VARs had been unwilling to take on a print specific consultancy businesses.
"There are a whole range of consulting services that VARs can take to a customer, but printing has not been one as printers have been seen as a commodity," he said. "Consequently the level of expertise or exposure in printer services has been low."
With printer and copier vendors tackling the same market debate was also hot over what form factor made the best platform for a document management solution.
Canon's product development specialist, Andy Mackay, said MFDs - which had the ability to incorporate scanning, copying, printing and faxing into one machine - were the platform of choice. However, even they were beginning to fall short in meeting customer needs.
"The majority of customer needs fit inside the traditional print, scan, fax, copy area, but there are an increasing number of business needs which are outside of the standard MFD functionality," he said. "We have developed a new operating system running on the MFD to allow the development of applications which meet these new needs."
Despite this, the possible permutations extended much wider than MFDs, IDC's Sager, said.
"MFDs are growing within the market despite printing in Australia being largely saturated," he said. "However, document management as a trend is one that is being seen overall in printing. It's not just MFD but all devices that print."
Kyocera-Mita's Valle agreed, pointing to demand from key verticals for a single device approach.
"Printer resellers are still selling printers and scanners as two separate devices as verticals like banking like to have for security reasons," he said. "It's still talking about the same solution but it's just the different approach of not having all the functions in one box."
Lexmark's Champion went further, arguing a range of form factors should be considered when creating a solution.
"We think an MFD-only approach is completely wrong as if you go straight to an MFD environment you are over-capitalising on your hardware requirements," he said.
"You should really be deploying the features and functions which users need locally. Our approach is to use a fleet of A4 mono printers - as A4 is 98 per cent of what organisations print - with MFDs, A3 devices and colour devices added only where needed, plus management applications on top of that."
Despite the plethora of approaches available and general capability lag, Champion said the channel was beginning to capitalise on document management across verticals such as government, finance, banking and healthcare, instituting good printing models to aid cost reduction and add value to a business through a range of services.
Fuji-Xerox's Harman said such services were showing themselves in two main areas - auditing and cost per page programs.
"The argument for auditing is that a significant amount of business cost is tied up in running print requirements so let's see if we can consolidate your needs," he said. "That's something the channel is becoming quite sophisticated in. Individual cost per page programs - something we have just launched - give customers the ability to finance the printer, rather than buy it outright, and pay on a per page basis."
While these services were something the channel has added in recent times, they had been part of direct sales methodologies for years, Harman conceded.
Gradwell said direct vendors had moved on: "Traditionally the way MFDs have been purchased is as a financed asset. A typical sale involves a range of devices with financing and installation, configuration, onsite service and a pay-per-print plan.
"We have been very comfortable with that for a decade or so."
With software applications being the value component in any document management solution, Lexmark's Champion said ISVs stood to be the major winners of the trend.
"There are few business processes which don't involve paper, so the range of applications is almost endless," he said
With the value associated with document management, hardware sales would also prove popular again, Kyocera-Mita's Vella said.
"For resellers it is a way to develop new business. We've had instances where dealers have not been able to get into an account, but in taking a document management approach where able to get the hardware in without talking about it," he said.
Champion said opportunities still existed for resellers not able to offer services.
"If the channel wants to put together an integrated solution they will need system integration skills, project management, change management, and a lot of operational improvement skills," he said.
"For resellers who don't have those skills we have a professional services team which works with resellers on opportunities."
"Some people are mistaken in believing document management is only an opportunity for bigger players. The fact is we have some very successful smaller partners having success in SME as well. You don't have to be a Volante to do this."