Managed Print Services Market Heats Up
Purchasing supplies, maintaining printing equipment and maximizing productivity top reasons for outsourcing growth.
Staff Report -- Graphic Arts Online, October 16, 2009
Corporate America's focus on cost cutting is moving rapidly into the digital printing and copier department. Business efforts to exorcise inefficiency is fueling dramatic growth in managed print services. Major equipment makers such as HP, Xerox, Canon, Oce and InfoPrint Systems (a joint venture between Ricoh and IBM) are among leading firms seizing the opportunity, which in some cases dovetails with outsourced printing purchases.
Printing expenditures for desktop and copy room machines, including paper and toner, take up 3% of corporate spend. That startling statistic was revealed this week at the Smart Sourcing Summit (sponsored by Purchasing magazine and Graphic Arts Monthly), by Ed Crowly, CEO of market research firm Photizo Group. He noted that printing devices installed in businesses typically are used at just 1%-2% of their capacity.
Many companies have uncontrolled buying of printer supplies, says Crowley, resulting in "waste lands" of obsolete toner supplies crowding corporate closets.
"The ideal environment would have users having as much printing and copying capacity as they need with supplies being delivered only when needed," Crowley said. He noted that outsourcing an imaging fleet to a third-party managed print services provider, such as HP or Xerox, ends up "optimizing the imaging environment and optimizing document workflows."
Cost cutting has prompted many firms to pursue managed print services. Indeed, the market for offering managed print services is heating up, attracting interest from Xerox (last month spent $6.4 billion to acquire Affiliated Computer Services), Canon (entered the market last month) Pitney Bowes, Hewlett-Packard (added new global business unit, called Managed Enterprise Solutions), Infoprint and Ricoh, along with a bevy of business print services firms (think Workflow One) that don't sell machines
Crowley says when HP opens the doors of an expanded global managed print unit on Nov. 1, it will be generating $5 billion in business for 2,000 clients overseeing 475,000 printers. Since Xerox, which does about $3 billion in the arena, took global responsiblity for Dow Chemical's 16,000 printing devices at 162 locations in 42 countries, it has cut the number of printers to 5,000 and eliminated $7 million in annual costs. In some cases, Xerox stations personnel on site to run the machines.
Looking at the equipment spend, Crowley reported the lifecycle for a printer or copier is three years, yet uncoordinated procurement allows for out-of-date equipment to remain in service and operate badly. The problem is exacerbated since "less than 10% of total corporate print spend is for hardware," he says; most of the cost is consumables.
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There is a thread about "HP in the MPS Business" in the "Digital Printing" Group, on LinkedIn. This brings out several interesting points.
Curtis Johnson - 2009-18-10 10:16:16 MDT
