MPS: Avenue for growth

As enterprises look for additional avenues of bringing down costs and building efficiency, printer manufacturers have turned to Managed Printing Services as a means to drive growth. By Pupul Dutta

With the overall economic environment becoming harder to predict and business dynamics changing every now and then, firms are looking to make do with less, growing but keeping costs in check, expanding their portfolio and geographical reach but with few additions in manpower—all this even as they strain to execute projects faster in an attempt to stay ahead of the competition.

Effective management of print and electronic information help achieve these key business requirements. From internal document workflow and print management to managing external communication with customers or stakeholders, everything needs to be well managed and organized.

Managed Print Services or MPS as it is called helps facilitate document management, in a way that they are printed and shared in accordance with the business needs of a company. As part of this model, copiers, printers, fax machines and devices are used under the management of a single vendor.

Although MPS as a concept has been in existence for quite some time, companies have just started to adopt it on a larger scale.

With the adoption of MPS, CIOs are free to focus on more strategic issues and also are able to reduce cost at the same time. With more organizations continuing with the practice of corporate cost cutting, MPS is fast becoming a popular option for CIOs to consider as it improves workflow efficiency and reduces IT costs. Lately, there has been a significant increase in campaigns run by vendor companies to increase the adoption of MPS.

Year that was

Over the past couple of years, MPS has become a hot topic among companies in the imaging as well as government sector, including resellers, software developers, aftermarket vendors and OEMs. The current economic situation has provided an incentive for companies to cut costs wherever they can. Companies incur huge expenses on document printing and MPS programs can help these businesses track printing costs and devices and get printers back online faster when a malfunction occurs.

According to available industry figures, the MPS market grew 30-35% in 2011 with revenues growing to about Rs 600 crores.

Bhaskar Joshi, Marketing Manager, Multifunctional Devices, Office Imaging Solutions (OIS) Division, Canon India, said, “Last year proved to be a good year for Canon as it added about 21 new clients to its MPS business. For the industry too, we saw about 30-35% growth. MPS was a major focus for office automation companies. The market that is divided into two segments—transactional or bill printing and corporate.”

Given the situation, there has been some growth in the industry though for vendors it has been more of vertical growth than horizontal; meaning the existing customers added on to their portfolio but there were not many new companies coming on board.

“While we grew vertically last year what was more important was the horizontal expansion of business. We are attracting customers in various verticals but there is a long way to go,” said Shekhar Agarwal, Director, Managed Enterprise Solutions (MES), HP IPG India.

Most hardware vendors and their end users define the service they deliver or receive as MPS, but what they are referring to is the traditional hardware agreement with a bit of management. The majority of MPS suppliers still believe that if they have software deployed at the client and if they intelligently handle deployment of assets, it makes it an MPS solution.

“MPS is equally about productivity, connect to market and security,’ Agarwal added.

MPS has also seen some new customers especially from retail and manufacturing.

Predictions for 2012

MPS would be driven by the increased awareness and adoption of the Cloud. Within the printing industry, the saving of information on a server and access and sharing via the Internet points to the need for increased collaboration within a company, especially from a print management perspective.

“As the need for the management and sharing of content becomes a necessity, MPS offers a host of solutions through intelligent printing devices that allow companies to transfer files and collaborate online in a more effective manner. This has accelerated the uptake of MPS as a result of the managed print services’ utility-based model. We expect it to pick up exponentially this year,’ said Shailendra Aragula, Country Manager, Lexmark India.

Another key driver for the use of MPS is the increasing awareness among organizations that they need to move beyond rudimentary print solutions and focus on data management and protection. As issues like the security of information within an organization become pertinent, the management of content from print devices is now a priority, further driving demand for MPS capabilities like software maintenance and professional services.

Joshi of Canon said, “We are looking at almost 30% growth in 2012 and the entire large enterprise segment in India will be moving from CAPEX to OPEX model owing to cost cutting and this would fuel growth in the MPS segment. Competition too is gearing up and many new things are expected to happen.”

Currently, MPS in India is restricted to only printing pages. Going forward more value-added services (VAS) will be offered including mailroom services, wherein when a company gives a print command it not just prints the document but will also mail the same to the customer and subsequently gets a receipt from him that ensures that the bill has been received.

Trends 2012

According to a report by Springboard Research, the MPS market in Asia-Pacific (excluding Japan) region is estimated to grow to $1 billion by 2012. The report also shows that the Indian market is expected to be the fastest growing market in the region, with a CAGR of 22.6%. Another study done by InfoTrends stated that the market size for Managed Print Services in India will reach close to $200 million in 2012; and further exceed $275 million by 2014.

“A surge in demand is expected for MPS from the financial sector (BFSI), government, telecom and IT services companies. These verticals are the front-runners in optimizing business processes to cut costs and also meet their corporate social responsibility by reducing their carbon footprints. This will lead to adoption of MPS at a significantly higher rate than by other verticals,” said Aragula of Lexmark.

In fact, UIDAI is expected to be one of the biggest contracts that a MPS player can expect given the volume of data and the hassle of managing the same.

2012 will also witness seamless integration of the business workflows within the organization. Indian companies can significantly improve business workflows through customized managed print solutions that suit the unique business requirements of each customer. The centralized nature of the solution helps reduce devices within an organization. This, in turn, enables the consolidation of workflow processes including maintenance, training and help desk functions, further allowing customers to increase cost savings.

“We can also see more companies outsource infrastructure or professional services. This is important to Indian companies as they adopt aggressive expansion strategies and need to focus on driving business profitability without being hindered by the management and maintenance of technology used in the workplace. This can be done by outsourcing the management of print infrastructure to a skilled vendor,’ said Amrita Choudhury, Principal Analyst Gartner. Choudhury further explained that the process reduces resources dedicated to IT management and is enhanced with consultants who provide strategic expertise on print strategies that best suit the organization. This allows employee to increase work efficiency and eliminate unnecessary printing costs.

H Sivaramakrishnan, Director-Marketing, Pitney Bowes India, said, “The market will be driven by BFSI and telecom given the heaps of paper that they need to print in the form of bills and mailers. Basically, any company that has more customer interactions would be adopting MPS.”

Shift from hardware to services

Lately, the trend in the market that is visible is that all the hardware vendors have adopted the services route in order to tap into a fresh revenue stream while, at the same time, meeting the clauses of their service level agreements. This way not only do they meet their SLAs but also reduce downtime.

Explaining this shift, Agarwal of HP said, “MPS is not purely about services and hardware. Rather, it is a combination of both of these aspects along with value-added services in software. Unless the software effectively manages the prints and also does value addition, the effectiveness of the services will be limited. To get the real value of the printer, the software should be able to manage the hardware efficiently. How would the staff know that the ink in the printer is exhausted and needs replacement? Either one walks up to the printer or there can be software asking you to do the same. It’s a lot more than fulfilling the SLAs and providing effective management.”

Most Indian enterprises are shifting towards an OPEX model paving the way for the adoption of MPS. MPS is a technological approach that ties into a company’s sustainable business model. It allows companies to control their print infrastructure, rationalize the hardware they use, and maximize their investment by creating a customized service level agreement with a strategic partner.

Further, there are not many companies who are equipped with handling multi vendor capabilities. In such situations, the contract is awarded to just one company thereby reducing duplication or downtime. Also, with so many vendors fighting for market share, service is the only differentiator that separates one from the other.

Generating a ‘single bill’ is another reason that has promoted such a shift with companies wanting to pay just one vendor who does it all for them.

Challenges

Though the sector has seen some high double digit growth but then it is also marred by a few challenges. To begin with the gray market machines that come to India pose a threat to the established players with their ‘cheap pricing’. Secondly, expectations of large enterprises are increasing leading to a rush in developing affordable solutions.

“Companies want affordable solutions given the economic conditions in the country,” said Joshi of Canon.

Security remains in question. The faith in such software is yet to develop. Further, like any other IT deployment, this too is plagued by concerns on RoI. People want a quicker RoI and want to have shorter agreements with SLAs ranging from one to two years or even shorter.

Moving On

Companies across India have placed a consistent focus on efficiency and doing more with less. This is not expected to change in the near future. The trend to offset unnecessary expenses is set to drive the popularity of MPS.

In line with this expectation, companies need to continuously develop intelligent document solutions and innovative software that enables a business to optimize processes in a sustainable and scalable manner. To do more with less, vendors also need to extend their capabilities to provide content management services.

This year, it is expected that people would go for solutions that would help them reduce their printing budgets.

The sluggish economy helped fuel the growth and acceptance of managed print services. Although many aspects of MPS have been available for a decade or more, end users are beginning to understand the concept. The prospect of saving money by using managed print services has convinced many businesses to consider trying these services, and vendors need to know what aspects of MPS appeal to these companies. Lastly, with growing Internet penetration it is expected that there will be more physical data and hence the need to organize and digitize them would prove to be a boon for MPS.

pupul.dutta@expressindia.com

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