2013 Konica Minolta Dealer Meeting: Thinking Past the Document (Part 3 of 3)

For the past four years, Senior Vice President of Business Intelligence Services for Konica Minolta Business Solutions U.S.A. (KMBS) Sam Errigo has spearheaded the company’s vertical market-based solutions initiative. At “Shape the Future,” he noted that the strategy has differentiated Konica Minolta from the competition: “The days of simply selling hardware are diminishing at a rapid pace, and customers’ expectations will continue to challenge the industry. We need to think differently about how we service our customers and the services they value most. This requires a new business perspective in order to shape the future of your organization.”

KMBS estimates that, currently, 30 percent of its hardware sales include software and services, and it’s hoping that the figure will jump to 50 percent by the end of the fiscal year. To reach that goal, Errigo urged dealers to engage with the company so a joint business plan can be developed on a one-by-one basis, then implemented to achieve complete customer satisfaction. The five-step approach advises dealers to define customers; organize a solutions portfolio—less is oftentimes more; design the plan so it’s something that can actually be executed; train engineers and sales associates; and select partners that will foster growth.

Over the course of his presentation, Errigo enumerated all of Konica Minolta’s software activities, from MPS/OPS (optimized print services) to mobile printing, IT services to EnvisionIT, which now covers seven vertical markets (there were three when the campaign was introduced in January 2012). Also, the bizhub MarketPlace, which provides apps that can run on the control panel of all the company’s A3 devices and select Konica Minolta A4 hardware, was discussed earlier in the program.

The most interesting statement made at the event came from Errigo, who said, “Part of our strategy is being close to the device, but everything we’re trying to do moving forward is in the cloud. We’re running 1,200 servers and have the capacity to stretch beyond the box. However, if you do it too quickly, your core business drops and monthly revenues can’t offset that. So our long-term strategy is for recurring revenue to outpace hardware sales, and by virtue of having solutions and moving to the cloud, we’re building this monthly revenue stream.”

“As an industry we decided that MPS was a good idea, ‘let’s consolidate volume onto less devices and give a combined cost per page at lower rates,’ we said,” declared KMBS President and COO Rick Taylor. “But the current trend is that print is decreasing by 2 to 3 percent per year, so the mindset requires a less-print strategy.” Regardless, the company continues to improve its MPS offerings, OPS (BLI has yet to test it) and bizhub vCare, because both are crucial cogs in the effort to lower costs and make customers happier. OPS, which is now being used only by Konica Minolta direct operations but will roll out to the BTA channel sometime during the summer, allows for management of not only Konica Minolta devices but third-party hardware, too; the three enhancements that were highlighted were its more robust integration with ERP systems, the ability to perform better and faster assessments, and that administrators are now able to auto-generate customizable proposals. With vCare 2.8 (see our Solutions Test Report on v2.7), a software piece for service providers who primarily handle the company’s equipment, two key new features are support for Konica Minolta single-function printers and integration with Digital Gateway e-automate, the second of which brings with it the welcome benefit of automated meter reading and billing.

Taylor stated that, according to IDC, the mobile workforce will comprise roughly 1.3 billion people by 2015, or one out of every three workers. He added that, because there are already more devices in the United States connected to the Internet than there are people living in the country, KMBS has constructed an ecosystem of cloud-based and mobile connections to support on-the-go professionals, beginning with its PageScope Mobile app (see our Solutions Test Report from July 2012) that allows users to print from, and scan to, iOS or Android devices. Just two weeks before the Las Vegas event, the company announced a partnership with Lantronix, which has an appliance that enables wireless direct printing and compatibility with Apple Airprint (for $20, up to 50 imaging devices can be attached to one appliance). The rest of the menu includes Konica Minolta Dispatcher Phoenix Mobile Print and offerings from Equitrac/PrinterOn, Pharos, NSi (also for document capture, comes with mobile eForms and supports secure pull printing), OpenText, PlanetPress, Prism, and Hyland. And proving that it will continue to expand in the mobile arena, KMBS Director of Product Marketing Dino Paglierello told us that NFC printing is slated to be supported by Konica Minolta hardware beginning in Q1 2014.

The company estimates that, at this time, 20 to 25 percent of its dealers have a relationship with a branch of All Covered, the IT services firm that Konica Minolta acquired several years ago. Errigo cited SMBs and mid-market Fortune 1000 businesses as the focus areas, and speculated that IT services revenue could wind up being $200 million by the close of the fiscal year, while Taylor shared the fact that the KMBS has bought five or six other IT services organizations since the start of 2013. Additional announcements included a further shift to the cloud, in that customers can run their server needs through Konica Minolta’s highly secure data center, which features enterprise-class software and hardware, plus backup servers to provide redundancy; more security such as expanded levels of email encryption and archiving; and enhanced application development, particularly for Microsoft SharePoint or .NET Framework.

Like the expo at the January 2012 dealer meeting, the product fair was broken up by each vertical market included in the EnvisionIT portfolio, which now includes these seven: education, healthcare, and legal, with the new additions of finance, government, manufacturing, and production print. The announcements about solutions were flying fast and furious as the company looks to move horizontally within these verticals…

“I haven’t heard a speed or feed in ages, but the software arguments are endless,” said KMBS Senior Vice President of Marketing Kevin Kern. “Much of the conversation about solutions has centered on a single question: how can we become a trusted advisor to our customers?” One of the ways KMBS can accomplish that, he suggested, is through the bizhub MarketPlace, which can be accessed via a browser or, after an i-Option kit is purchased, at the display on Konica Minolta hardware. The company releases a new app every month and currently has 17, with the How2 instructional guide launched at the show and the bizhub Connector to Evernote introduced in December. Some apps are free, while others such as the embedded connectors carry a cost of $240 per year; accessing the MarketPlace from the desktop is free (some similar tools from competing manufacturers use a fee-based subscription model). Kern also noted that the apps for corporate announcements and the weather—both are free—have been downloaded more often than any of the others to date, and that the company is seeing a big uptick on the SharePoint side. About this Kern said, “Some of our apps can certainly lead to consulting jobs and a better understanding of your customers’ workflows, which are other ways to build your business.”

Konica Minolta’s software strategy is well thought out and impressive in scope. By fully supporting its dealers in this endeavor and with coverage in every area, the company seems to be setting itself up for years to come as it looks to shift a bigger portion of revenue from hardware to solutions. The notion Errigo described of increasing recurring revenue derived from software isn’t much different from what we were hearing five, ten years ago with consumables, but it’s exciting to ponder, as well as to see if KMBS delivers on its prediction.

With MPS, until the manufacturers figure out a way—partnering with other manufacturers?—of providing the same amount of granularity as those tools developed by third parties, manufacturer-developed software used for MPS engagements simply won’t be as feature-rich. That said, vCare is still a worthy option, especially for Konica Minolta-exclusive dealers, and the new additions do take the platform to a higher plateau.

The same could very well be said about the company’s mobile print offerings. Though it’s fair to say that KMBS has been slower to react to the mobile printing movement than traditional A4 manufacturers like HP and Lexmark, again, it’s doing what it can to ensure that its customers have plenty of options from which to choose.

“We don’t have an All Covered office in our region, but we’re still taking advantage of the vouchers they offer to help pay for tablets,” said President of Copier Fax Office Technologies Al Scibetta. “If dealers don’t have a solutions specialist or somebody younger on staff who really understands the marketing, selling and implementation of software, it goes without saying that they’d be scared of change. But having All Covered in the fold will hopefully help flip that, because solutions and IT services aren’t just the future of our business—they’re the present.”

And then there’s EnvisionIT. In not much time at all, this program has morphed from a catchy marketing name to one that, by all accounts, has made it easier on dealers to understand the solutions strategy—and is producing results. The seven verticals the company has chosen to lead EnvisionIT are big ones for sure, and while some of the solutions are more or less the same “skin” with slightly different functionality, it’s still impressive to see the sheer depth and volume of Konica Minolta’s software lineup.

Now…any wagers about what the next three vertical markets will be?