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Office Printing: What has changed? Returning to the printing industry. A personal reflection.

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I started my professional career half way through the 1980’s in the printing industry, participating in application development projects around production printing environments. Since then I have served a number of IT vendors within most technology silos. In the early days of this century I did a number of years within the document management and printing industry, serving Xerox, HP and Ricoh.

After a number of years within the wider IT sector I have now returned to this part of the industry, joining Brother Nordics. This article is my personal reflection on where we stand in 2019 and in some aspects a comparison to the early days of this century.

Executive summary

Upon returning to the document management & printing industry, I was struck by the fact that the industry, in many areas, has not changed much. Different to the wider IT Industry, consolidation has been very limitied. Most of the vendors on the market at the start of this century are still here. Despite tough market conditions and a shrinking market to compete for, some of the major trends and market drivers are as valid in 2019, as they were at the start of this century.

We are not even close to having a paperless office. Print volumes are now declining, however, recent findings surprisingly indicate that millennials expect the importance of paper to remain.
Service led deployments are growing at a steady pace but there is still huge scope for development and deliverable improvements.
Despite clear evedence of low A3 volume and share, corporate accounts are still implementing fleet deployment principally based around A3 device capabilities.

The paperless office

Around the millenium shift there was a lot of buzz around the so called ”paperless office”. Paper as a media was condemned and we were soon to have a pure digital workflow. But was there actually any evidence of this? When I temporarily left the industry in 2013, office printing volumes were still increasing. Being back in 2019, I see a marked change. Office printing volumes are now decreasing - in some verticals and territories faster than others.

However, an unexpected generational twist, uncovered in research done by Quocirca, challenges my new found perception on the importance of paper.

It signals that print is here to stay...

Where many have assumed that younger generations would bring about a decline in print due to their digital habits, the research indicates the opposite. Millennials actually expect print to grow in importance.

Quocirca’s survey reveals that:

74% of 18-34 year olds think print is important today
77% of 18-34 year old IT decision makers expect print to be important to their business in 2025. 
This contrasts sharply with respondents aged 45-54. 
82% of this category think print is important today but only 54% believe it will be important in 2025.

This emergent trend is not exclusive to Europe. It’s also prevalent in the US.

Of course, it is millennials (aged 18-34) who will represent more than 75% of the workforce by 2025. Not only will they have a dominant presence, they will also enter the boardroom.

So, does this research counter the notion that print will have a diminished role in the ever smarter, more virtual, connected work ecosystems of the future?

Paper has survived the onset of digital communications, the internet and the increasingly mobile workplace. If the thoughts of the millennials surveyed by Quocirca are anything to go by – it will survive in the era of the increasingly virtual workplace.

The shift to services: Managed Print Services

To a large extent the trends and transformation of the printing industry follows the pattern of the wider IT industry. One example of this is the shift towards service led deployments. At the start of this century we saw the birth of Managed Print Services. In my mind, this was mainly driven by three stakeholders:

1. Vendors under pressure to find incremental margin.
2. Customers with a growing appetite for solutions and services.
3. A strong analyst community identifying this area as a golden opportunity for productivity improvements, consolidation and substantial cost savings.

Gartner Group, amongst many others, kicked this off by a legendary report called ”Rightsizing Output Fleets: The Hidden Gold Mine”. In this report they stated that output equipment fleets can cost an enterprise between 1-3% of revenue per year and that rightsizing these environments could reveal as much as 30% in savings.

This is an area where I see a lot of changes. In many customer segments and verticals, service led deployments have become the norm. However, I believe there is still plenty of room for improvement.

Firstly, partly due to the convergence of copier and print based technologies, there has been substantial device consolidation. I’m not convinced that this has led to an optimal fleet deployment though. I will elaborate more shortly.

Secondly, one has to understand that visible hard costs (hardware, consumables and maintenance) is a small part of the total cost of ownership. Only 10% according Gartner Group. Administration, end-user time and productivity amounts to a much larger part. Striking the correct balance and getting the people, process and management piece of the equation right will be key in order to realize the full potential.

The A3 vs A4 conundrum

This is maybe the most surprising area. Again, at the start of this century we surveyed customers and found A3 print volume to be low - in many cases close to a couple of percent. In 2019, I find that this is still the case. Many customers’ A3 volume is now around 1%. Still, as I visit customers today and review the current state of many tenders coming to market, full-featured A3 devices are highly deployed and requested. How can this conundrum remain?

I’m puzzled and so are my colleagues and industry professionals. But I do have some ideas on what might be driving this strange trend.

First and foremost, the industry has driven this trend. The dealer channel has traditionally been very A3-centric as the copier dealers’ business model largely revolves around margin opportunity with higher hardware prices and long-term service contracts. Subsequently, sales representatives have been incentivised to sell a higher-priced A3 device. 

This has quite often been sold on the argument that the related price per page is low. This is partly true. However, it also means that a high number of pages will have to be consolidated to each device in order to compensate for a unit price that in many cases is much higher than alternative A4 devices. This will, in my mind, lead to one or two less favourable scenarios. 

Consolidating enough volume to each and every device in order to realise a favourable total hard cost, will require a low device to user ratio and subsequently damage productivity. In reality, many customers cannot accept this productivy loss. Hence, enough consolidation has not happened and the economics promised are not realised.

However, there is hope. 

We are now seeing a few customers getting this right by requesting a balanced deployment, re-balancing fleet deployment and paper size configurations. There is also change happening on the supplier side. Product line-up and mix are slowly changing to contain more A4 configurations. Gap Intelligence recently published an article covering some of these changes (https://www.gapintelligence.com/blog/2018/why-bigger-a3-is-changing-to-better-a4-when-choosing-a-mfp).

Ultimately, this comes down to process and how diligent we are in truly understanding customer needs and behaviour. Spending more time to make sure we understand the requirements and business needs of our customers will result in a different fleet design.

Conclusion

While the printing of certain documents will undeniably decline by 2025, this is not expected to herald the arrival of the paperless office – more the less-paper office.
Millennials may expect to remain reliant on print, but they also expect digitization and mobility to be more important. They therefore need the tools that enable them to work productively in both paper and digital environments.

Good things are happening and if we continue to develop our strategies, approach and capabilities, there are still great opportunities for improvement.

 

Quocirca: Print 2025
Gap Intelligence: Why Bigger (A3) Is Changing to Better (A4) when Choosing a MFP?

 

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