In the final part of an in-depth interview with ARN's BRIAN CORRIGAN, local Kyocera Mita managing director, David Finn, assesses the role of resellers in managed print services.
Print vendors would like to see resellers getting into the cost-per-copy model. What progress is being made?
David Finn, Kyocera Mita (DF): We kill everyone on cost-per-copy and offer that to resellers but the problem is that sometimes they just put the price up and take the margin. This means the user doesn't get the full benefit and the reseller runs the risk of being undercut. I think you are going to see a lot of big print fleets managed by vendors. We already have a program where big resellers can bring the deal to us and we pay them a value upfront on expected volumes. If you work it out, you are only talking tenths of a cent in commission and that might only be $100 per month. We pay $4800 in advance for the four-year contract and take over full maintenance of the fleet and they manage it if anything goes wrong. That is the only way it will work and it is safer for the resellers because they are paid upfront. We have no risk on the cash flows so we are not exposed unless the customer goes broke. Resellers want all this print management money but they don't employ technicians and they don't have break/fix capability. They think they can just put a box in and magically collect clicks without doing anything but it doesn't work that way. When you put a managed print fleet in, you need break/fix technicians to meet four-hour service level agreements. It might just be a paper jam but the customer doesn't care. There might be a charge if there are too many instances of user negligence but somebody has to go out and find out why a printer isn't working. How many resellers have technicians that can jump in a car with enough parts to fix anything that could go wrong? We have 50 technicians in Sydney and each van, which is topped up every night, has no less than $15,000 spare parts in it. A technician has to do eight jobs a day. That's how these fleets work.
Do you see the managed print model expanding and, if so, will we not reach a point where the vendors can no longer cover the scale of it?
DF: I can tell you now that anybody who services copiers can scale up to it because we all have a fleet of technicians. We have in excess of 5000 that we already play with. Our printer friends aren't there yet because they work with the old warranty model where they send a reseller to fix it. The perverse thing is that Reseller A might put a managed print system into a company and the vendor sends another reseller in to fix it. In our model there is no agenda. Our technicians are only interested in machines with a Kyocera badge and don't go around looking to pinch other people's work. We own the SLAs but the reseller still owns the customer and gets paid an upfront commission. Most customers insist on that model anyway so how are resellers going to get into it? The only one that has done it is Danka, and that's because they started off with a fleet of copier technicians and are moving into the print space. They have a call centre, helpdesk and software management. Our management software for services cost more than $1 million so that we can handle a couple of hundred calls a day to any branch with automatic scheduling of technician workflow. It is not toy town logistics. The copier guys are already there so they know what they are doing.
But that model must have come from somewhere. Is a copier so different from a printer?
DF: No but the infrastructure is. The copier dealers have about six full-time technicians on the road. That is what they do all day every day.
So maybe that is a business opportunity.
DF: But the PC industry had it years ago. In the early days of PCs when dealerships got going, IBM made it mandatory that you had technicians to install machines and the software. There was none of this plug 'n' play with users doing it. These were customer service engineers with degrees but that has gone away. Show me a metropolitan reseller today that has outbound technicians. The regional dealers do because they have to but a typical metropolitan reseller would struggle to cover a fleet of 20 printers on a four-hour SLA. We have a fleet of large devices at a major government installation and there is a guy onsite full time to service 200 machines. It's a bit like painting the harbour bridge; by the time he has gone around all of them it's time to start again. Part of our SLA is a four-hour response and they don't care if somebody has just left a drawer open. If resellers want to succeed in this, they need to specialise in it like Danka has. Printers are trying to migrate into that space but I don't think they can because it is vendor-led.
What is the biggest challenge to your business today?
DF: Finding good people; just like everybody else. We are currently looking for a marketing manager and have other positions available in sales, technical, general administration and marketing roles. It is difficult to get people to understand we are selling solutions rather than boxes.