Photizo group mps white paper

HIDDEN ASSETS
REDUCING COST, IMPROVING PRODUCTIVITY, AND
PROTECTING THE ENVIRONMENT. HOW TO ACCOMPLISH ALL
THREE WITH MANAGED PRINT SERVICES.

The printers, copiers, multifunction devices, and faxes which reside in most
organizations represent the last bastion of uncontrolled corporate spending. These
devices, collectively referred to as the hardcopy fleet, do not appear on a corporate
expense sheet as a line item, nor do they typically appear as a key corporate asset
on the company’s annual statement. However, the hardcopy fleet represents one
of the single largest on-going expenses for most organizations (up to 3%1 of a
company’s revenues), they provide the day-to-day transactional and information
content that fuels the company’s revenues, and they represent one of the largest
users of corporate energy.

This white paper addresses the benefits companies can achieve from the
implementation of a Managed Print Services engagement which ‘outsources’ the
hardcopy fleet to an external vendor. The white paper utilizes research from a
large number of assessments and surveys to provide an objective, quantitative
evaluation of the opportunities.

Hidden Savings – A White Paper
Photizo Group (C) 2009 All Rights Reserved Page 1

INTRODUCTION
Hardcopy devices (printer, faxes, copiers, and
multifunction devices) are present in every
department of every organization across the globe.
These omnipresent devices print our memos,
presentations, bills, invoices, spreadsheets,
business cards, and every conceivable type of
document. The widespread adoption of modern
print, copy, and fax devices has been a tremendous
boon to productivity by giving individuals the
freedom to produce (and reproduce) the printed
page with astonishing ease and thereby enhance
the flow of communications within and across
organizations.

In fact, they have become an extension of the “I never imagined the passion individuals would
[TYPE individual’sFROM THE DOCUMENTevenTHE
A QUOTE working environment and OR an show towards their printers… until I tried to
SUMMARY OF AN INTERESTING POINT. YOU CAN
extension of their own ‘corporate persona.’ take them away.”
POSITION THE TEXT BOX ANYWHERE device is not
Gaining access to a personal printing IN THE CIO of a Fortune 500 Company3
DOCUMENT. USE THE TEXT BOX TOOLS TAB TO
only convenient, but it also says something about
CHANGE THE FORMATTING OF the organization
the individual’s status within THE PULL QUOTE
TEXT BOX.]
hierarchy. Hardcopy capabilities can have a
pages per minute and can fax, copy, and scan
meaningful impact on an individual or a
documents in addition to performing the classic
department’s potential output. For example,
function of printing. As such, many devices are
having access to color output allows the individual
utilized at a mere fraction of their capability and
to enhance their communications and become a
spend much of their time in an idle mode.
‘printing press’ of one.
As a result of these dynamics, the hardcopy fleet has
Like any technology innovation, hardcopy fleets
had a significant impact on the modern organization.
were embraced for their many advantages and
This white paper will examine three aspects of the
have generally been allowed to grow without
hardcopy fleet’s impact on the organization. The
significant management or focus by the executive
first aspect is the significant cost that can be
suite. Costs were perceived to be low and the
associated with printing and imaging devices. The
benefits of these fleets were generally expected to
second aspect is the impact on productivity for the
far outweigh any costs. At the same time the
information technology (IT) organization which
performance and capabilities of individual
supports the hardcopy devices. The final aspect is
hardcopy devices have been growing at an
the significant environmental impact of the fleet.
astonishing rate. Workgroup multifunction
printers (or MFP’s) have speeds exceeding 50
By examining the facts behind hardcopy fleet cost,
productivity, and environmental impact, our
PHOTIZO FACTS: intention is to provide executives with the insights
The average cost of a hardcopy fleet for a firm with they need to make informed decisions regarding this
750 employees is over $700,000 per year.    significant investment. The white paper will also
address how utilizing an outsourcing strategy
This fleet will require over 3,700 hours of IT support. (commonly called Managed Print Services) can
positively impact the cost, efficiency, and
The fleet will use over 33,000 kWh of electricity and productivity of the fleet and of your overall
generate over 189,000 pounds of carbon (CO2) organization.
emissions.   (This is equivalent to the total CO2 output
for 16 cars – for an entire year!)2


at the department level, with supplies being ordered by
the administrative assistant out of an office supplies
catalog. As a result, the true cost of operating the fleet
is hidden, and largely forgotten.

Drivers of Hardcopy Cost
There are four primary drivers of hardcopy cost:
having too many devices, deploying the devices in an
inefficient manner, supplies mismanagement, and sub-
optimized service.

Too Many Devices: Perhaps the largest driver of
THE HIDDEN COST OF hardcopy cost today is having too many devices.
Based upon a study of 105 organizations in North
HARDCOPY America, there was an average of two employees for
each hardcopy device. In most cases, this represents a
Today there are over 100 million printing significant over-distribution of devices and as a result,
devices installed in business, education, and significant underutilization of individual printers.
government organizations worldwide. Take a Typical network printing devices today are capable of
minute to look around your office. In most supporting upwards of five to ten users each.
cases, you can identify several hardcopy
devices within just a few yards of your desk. Deploying Devices in an Inefficient Manner:
These devices have become ubiquitous. At Another significant driver of cost is deploying devices
the same time, the cost of maintaining these that are light-duty which are being used too heavily, or
devices, keeping them supplied with toner, heavy-duty printers which are not being used enough.
providing staffing to answer questions about A classic situation is a large group of users printing
drivers and other issues, and supplying the volumes of documents to a small local, high cost per
energy to operate the devices has become an page, networked printer, while the higher performance
increasing and undetected drain on the / low cost per page MFP device down the hallway sits
organization’s bottom line. idle. The price variance between these classes of
devices can be as much as 2 cents per page. This
According to industry research firms, the cost doesn’t sound like much until you realize that many
of purchasing, maintaining, and operating organizations are printing millions of pages per month,
these devices has been identified as and at 2 cents per page, equates to hundreds of
representing up to 3% of the typical thousands of dollars in operating cost.
organizations revenues. This is almost as
large as the typical organization’s research Suboptimal Service: Unlike many other IT
and development budget! However, most infrastructure devices, such as servers, hardcopy
executives have little insight into the devices are not purely electronic. They are electro-
significant impact these devices have on their mechanical, with literally thousands of moving parts.
organization’s bottom line. Profit and loss Even though extremely reliable, they occasionally
statements don’t have a line item for require service and repair.
‘hardcopy.’ Balance sheets do not list
printers, copiers, multifunction devices, and Many organizations simply call local vendors or they
faxes as assets. subscribe to extended warranty/repair contracts which
can be expensive, in order to obtain service for devices
Instead, hardcopy devices are often when they fail. A compounding problem is many
purchased on an individual basis. There may organizations have too many devices, resulting in
be an IT ‘approved device’ list, or some other excessive service costs for the entire fleet.
standard, however in most cases hardcopy
device acquisition and operations take place


Supplies Mismanagement: The responsibility for Hours Spent Supporting Printers
supplies ordering often falls to the administrative 14,000

assistant closest to the hardcopy device. Lacking 12,000

proper technical training, they are prone to order the

Company Size (Employees)
incorrect supplies. Too many uncontrolled 10,000

departments purchasing and stocking supplies have 8,000

resulted in closet ‘landfills’ containing toner
cartridges which are not actually empty, or have been 6,000

ordered for the wrong printer. While this may seem 4,000

inconsequential at the department level, it can
represent a significant expense at the corporate level. 2,000

0
0 500 1,000 1,500 2,000 2,500 3,000

AN EXPENSIVE PROPOSITION
Annual Hours Spent Supporting Print Devices

The net effect of these cost drivers is significant. By As the chart above indicates, for large organizations,
cost, we mean actual hard cash outlays, not ‘soft hardcopy fleet support can require literally thousands of
expenses.’ As the following table shows, annual hours of IT support on an annual basis. Even for a small
costs for a company as small as 200 employees can organization, it can be a burdensome task.
be almost $100,000, and for large organizations can
reach millions per year. “My company is a small bank with 200 employees and seven
locations in seven different towns.  Our IT department consists
Hardcopy Annual Device of three people including myself.  We handle telephones,
"Typical" Cost Company Size Devices Cost networking, desktop devices, and printers / copiers.  Frankly,
Small 199 90 93,213 we just didn’t have time for printer support, but at the same
Medium 749 340 350,838 time, they were critical to running our bank.”
Large 2,499 1,136 1,170,554 IT Manager for a Small Bank3
Global 9,999 4,545 4,683,623

Photizo Group Analysis Using Primary Interviews and
THE GREEN FACTOR
MPS Assessment Data Increasingly, organizations are under scrutiny to enact
practices which are environmentally friendly. Little
Again, since these costs are highly distributed thought is given to the hardcopy fleet, which actually has
throughout the organization and typically buried in a significant environmental impact. As the following
departmental budgets, few organizations know the graph shows, the impact of the fleet is directly
true cost of their hard copy fleet. proportional to the size. In most organizations, there are
two to three times the numbers of devices versus the
minimum requirements. As a result, electrical usage and
IT PRODUCTIVITY CHALLENGE carbon dioxide (CO2) emissions grow dramatically as the
Supporting hardcopy device fleets represents one of size of the company grows.2
the most significant challenges for IT support
organizations. In fact, typically more than 10% of
IT’s time is spent supporting printers. The larger the
fleet, the greater the amount of time spent supporting
fleets.

In today’s environment, most IT organizations are
being challenged to bring enterprise-wide systems
on-line which will result in business process
improvements and productivity gains. Taking time
away from this mission-critical task to support
hardcopy fleets is frustrating, and frankly, a
suboptimal use of a scarce and valuable resource.


MANAGED PRINT SERVICES THE ACID TEST
Is your fleet under control? Ask yourself these three
Controlling and Optimizing the Hardcopy simple questions:
Fleet in Order to Enhance the Firm’s
Business Processes 1. Can you state, with confidence, exactly how
There is an answer to the hardcopy fleet challenge. many hardcopy devices you have in your
The answer is Managed Print Services (MPS). This is organization and how much it costs to operate
the term used to describe outsourcing all (or a these devices?
significant component) of the hardcopy fleet
2. Do you know how much time your IT
management. There are three essential components to
organization spends supporting your hardcopy
any MPS engagement.
fleet?
 The first component is planning. This 3. Have you measured the environmental impact of
planning should address setting objectives, your firm’s hardcopy fleet?
obtaining top management buy-in for these If you can answer these questions, do you know how
objectives, and identifying the goals which will you compare to the rest of the industry?
measure the level of objective attainment.

 The second component is to assess your
firm’s existing position by rigorously auditing were dramatic. As the following graphic shows,
your firm’s current status and to select a vendor the average savings were $1M in cost, or 30% of
who can meet your firm’s unique requirements. the total hardcopy fleet costs. Firms were able to
reduce the number of devices dramatically
 The third component is implementation of reducing IT support requirements and the fleet’s
the outsourcing strategy including the on-going environmental impact by up to 60%.
vendor management and gap analysis to ensure
the program stays on track. The MPS engagement will leverage all four key
cost drivers: device consolidation, intelligent
By implementing an MPS program, organizations are deployment, optimized service, and supplies
finding that they can reduce costs by an average of optimization in order to achieve significant savings
30%, free up scare IT resources, and reduce their for your organization.
hardcopy fleets environmental impact by up to 60%.2
Cost Savings: The Facts
ADVANTAGES OF MPS
As firms strive to outsource non-core areas and focus
on core competencies, the hardcopy fleet becomes a
logical choice for outsourcing in the form of an MPS Device Intelligent
Consolidation Deployment
engagement. By utilizing an external resource that Analysis of 105
Accounts: Typical
specializes in optimizing hardcopy fleets, a firm can Savings
free up critical resources to focus on those tasks which • $1M in cost
represent truly mission-critical activities, and leverage • 30% of total cost

expertise, instead of trying to manage the program Optimized
• Devices reduced by 60%
Supplies
internally, saving hours of frustration and mistakes. Service Optimization

Quantifying the Benefit
So just how significant is the benefit? The Photizo Source: Photizo Group Analysis, Printer Operations Group

Group has analyzed data from over 100 MPS
engagements in order to understand the full impact of
Photizo Group Analysis of 105 Organizations
MPS on an organization’s cost structure. The results representing over 187,000 devices


A Key Metric
In analyzing the benefits provided by MPS
engagements, one of the key metrics to use is to
examine the employee per device ratio. This ratio
identifies, in a very rudimentary way, how effective
MPS Customer Adoption Process
STAGE 3
your organization is at distributing the fleet and is
2
Document Mgmt
STAGE Consulting
often the foundation of significant savings through Industry Expertise

device consolidation (i.e. replacing a fax, copier, STAGE 1 On-Site Support
Asset Management
and printer with a single multifunction device Financing Customer
Objective:
capable of all three functions). Equipment
Assessment
Customer
Objective: Enhance

Customer Optimize the Fleet
Objective:

Control the Fleet THIRD ENGAGEMENT

SECOND ENGAGEMENT

FIRST ENGAGEMENT © 2008 Photizo Group, LLC

Additional Benefits
In addition to dramatically reducing costs by
rationalizing the fleet, an MPS engagement can set
the stage for significant improvements in both
regulatory compliance and business process
As the chart above shows, prior to implementing an improvements. As the diagram above shows,
MPS engagement, most firms have a ratio of 2.2 organizations typically go through three stages of
employees per hardcopy device. However, once an MPS adoption. At each stage, organizations will
MPS engagement has taken place, firms are engage in the three basic activities with the vendor:
averaging almost six employees per hardcopy planning, assessing, and implementation.
device, clearly a dramatic improvement.
As the diagram indicates, it is important to ensure
In turn, as organizations implement an MPS that your vendor is able to meet the requirements for
program and reduce the number of devices, they that stage. The first two stages focus primarily on
achieve significant savings from reduced cost and productivity savings in addition to
maintenance and support fees (which are typically achieving environmental benefits. The third stage is
bundled with the MPS engagement). They also the point at which most organizations can begin to
reduce their carbon footprint in direct proportion to achieve significant business process enhancements.
their hardcopy fleet reduction effort.
The Photizo Group has surveyed over 700 MPS
As the following table shows, this savings can engagements in North America and Western Europe.
reach into millions of dollars. In this survey the respondents validated that the top
benefits of MPS engagements were related to cost
reduction and productivity improvements. This is
Hardcopy Annual Device Typical
"Typical" Cost Company Size Devices Cost Savings
shown in the graph on the following page.
Small 199 90 93,213 27,964
Medium 749 340 350,838 105,252
Large 2,499 1,136 1,170,554 351,166
Global 9,999 4,545 4,683,623 1,405,087


2008 MPS Decision Maker Tracking Study™ – Purchase Report
What Are The Key Benefits Obtained from the MPS Program?4

Other

Mitigate risk

Focus on other business priorities

Avoid adding more devices

Reducing the number of imaging devices

Improve security

Introduce new imaging or workflow

Improve the level of support to end users

Reduce staff time related to imaging devices

Reducing maintenance cost

Lower printing cost

0% 10% 20% 30% 40% 50%

The second requirement for the vendor is to ensure they
have the ‘geographic scope’ to match your WHAT’S NEXT?
requirements. If you require a global MPS program, Our goal in this white paper has been to provide
but you are looking at vendors with only local coverage, you with the facts you need to consider your
the vendor must be able to form partnerships and organization’s hardcopy fleet status, and whether
alliances to deliver a global program or your program Managed Print Services may be a solution for
will fall short of its goals. your organization. Clearly there are many
considerations as you move forward. However,
In addition, it is critical to understand the vendor’s if your firm has not implemented a hardcopy
depth in terms of the number of services they offer. A fleet strategy, you are probably missing out on
‘one size fits all’ program may not be right for your significant cost, productivity, and environmental
specific needs and requirements. If you have unique benefits.
requirements can the vendor deliver? Have they shown
this ability in the past? There are many resources available for further
reference and to assist you in your analysis of
An MPS engagement is an IT outsourcing engagement. your next steps. We have included several of
As such, it is critical that your vendor understands that these resources in the appendix of this white
delivering hardware, maintenance / service, supplies, paper.
and supplies monitoring is only part of the solution.
They must also be able to deliver advanced services
such as end user training, help desk, deployment
planning, and advanced deployment support such as
customer end-user ‘hotlines’.

The vendor’s willingness to partner and support your
requirements is critical. Are they willing to work with
your existing fleet in order to provide you a seamless
transition path to your stated objectives? Does the
vendor have a ‘win-win’ approach or is their objective
simply to sell more hardware?

Finally, after the vendor has built and implemented the
solution, what next? There should be ongoing follow up
to ensure your goals are being met in your dynamic and
changing environment.


THE WHITE PAPER SPONSOR THE PHOTIZO GROUP
The Photizo Group is the leading strategic
Ricoh Americas Corporation sponsored this
resource for corporate decision makers,
white paper. Ricoh is a leading provider of resellers, and vendors who need to understand
Managed Print Services globally.
the Managed Print Services market. The firm
Managed Print Services (MPS), the foundation is the thought leader in MPS and is the leading
of Ricoh’s Managed Document Services provider of MPS market research and
(MDS), is a powerful way to streamline your consulting to the technology industry.
organizations document management
environment. The Photizo Group conducts on-going studies
into the adoption of MPS, key decision maker
MDS enables CONTROL of output-related requirements, key market trends, best practices,
costs and assets, OPTIMIZES the fleet and and distribution channel trends. The firm hosts
ENHANCES your company’s document the MPS Conference series and publishes a
management environment. Through on-site and quarterly journal (MPS Insights Journal)
off-site services we improve workflow, covering the industry.
productivity and the end-user experience.
This report was developed by the Photizo
Group team which included Ed Crowley (Sr.
Ricoh Americas Corporation Partner), Mike Huster (Sr. Partner), Rob Sethre
Fay Latimer (Sr. Consultant), and Scott Hornbuckle (Market
Services Marketing Manager
Analyst).
Strategic Marketing
Oﬃce: (973) 882-2046

Photizo Group
209 N. Main, Suite H.
Versailles, KY 40383
Phone: (859) 873-4518
Email: info@photizogroup.com
WEB: http://www.managed-print-services.com


APPENDIX I – ADDITIONAL RESOURCES
Ricoh Corporation: http://www.ricoh.com

Photizo Group: http://www.managed-print-services.com

APPENDIX II - RESOURCES USED IN DEVELOPING THIS
REPORT
2008 MPS Purchase Decision Maker Study™ is an on-going survey of over 700 decision makers in
North America and Western Europe. This study tracks decision makers and brand dynamics.

Survey of 105 MPS implementations in North America, which include over 187,000 devices.

The Photizo Group has conducted over 50 in-depth one-on-one interviews with organizations who
have implemented MPS in order to define key issues facing these organizations.

Environmentally Friendly Hard Copy: The Environmental Impact of Managed Print Services – A
White Paper by the Photizo Group.

APPENDIX III - ENDNOTES

1
Research firms IDC and Gartner estimate document production and distribution costs can be equal
to up to 10% of a firm's revenue. The Photizo Group estimates this number to be close to 3%.
2
Environmentally Friendly Hard Copy: The Environmental Impact of Managed Print Services – A
White Paper by the Photizo Group.
3
Interviews with MPS decision makers and channel members conducted by the Photizo Group.
4
2008 MPS Decision Maker Tracking Study™ - Purchase Report, Q1-Q3 2008


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