History in Brief: Began as a typewriter repair company in 1956, 60 years later it offers an array of hardware, software and managed services to customers in eight states; in the United States, is a Top 10 dealer of Canon and Samsung, Top 10 reseller of Laserfiche, and is on HP’s list of Best in Class MPS Providers and the HP Dealer Advisory Council
Headquarters: Oklahoma City, Oklahoma
Locations: 13 (Colorado, Florida, New Mexico, Missouri, Oklahoma, Texas)
Employees: Approximately 400
Hardware Partners: (A3) Canon, Konica Minolta, Ricoh, Samsung, Sharp, Toshiba; (A4) Canon, HP, Konica Minolta, KYOCERA, Lexmark, Ricoh, Samsung; (Production) Canon, Konica Minolta
Noteworthy Software Partners: Canon (uniFLOW), Laserfiche, Nuance (eCopy), PaperCut
“It might be cliché, but it’s true: Our personnel is key,” said Pat Russell, ImageNet Consulting’s CEO. “What everybody can appreciate about our employees is that they’re focused on business and not into tooting their own horns. Especially me. I’m a nervous wreck before an interview.”
Self-effacing humor aside, Russell and the entire company have plenty to be proud of. This year marks the fifth anniversary of ImageNet’s acquisition strategy, which began with the purchase of a dealer in League City (a suburb of Houston) and culminated in 2014 with a handful of others, most notably in St. Louis. As the number of locations has increased, so, too, has the staff, from roughly 250 people in 2014 to over 400 today. And revenue? Well, the jump from $50M in 2010 to $107M last year is ridiculously remarkable.
As Russell explained, the ability to provide the kitchen sink to its customers is both the company’s biggest success and challenge. ImageNet was a single-line hardware provider but now embraces a hybrid style. MPS and ECM continue to help drive sales, while the recent additions of managed IT (MIT), displays and 3D print layer more color into the story. “We’re in several major markets and we also play in the underserved Four Corners territory,” he said. “Our knowledge and experience run as far and wide as the geography we cover, but it shouldn’t be a surprise to hear that it can be tough to keep all the tiles together.”
Despite the company’s offerings appearing to be balanced on paper, hardware still represents about 90 percent of the revenue (46 percent hardware, 46 percent service/contracts). ImageNet doesn’t have much exposure in production (high-volume specialists are needed, Russell admitted), but it is part of a select group that was approved to start selling HP PageWide wide format devices. More importantly, because office equipment consistently dominates share, the company has six A3 partners. “It’s a serious value proposition to have this flexibility in the wheelhouse of our business,” he said. “We’re outpacing the competition, but we have a ways to go to get to the 60/40 split that I’d prefer to see between hardware and the rest of our portfolio.”
…Which starts with MPS. “We were an early adopter, and it’s gotten to the point where our business is sort of built around it,” Russell said. “Not just with supplies and service but the more technical items, too. A lot of organizations do the ‘print services’ but neglect the ‘managed’—they don’t distinguish ‘managed print’ from the device that’s outputting the pages.”
Matt Schotten, Vice President of ImageNet’s Managed Print Solutions Group, shared some vital statistics on the MPS front: The company has 37K devices in the field (14K are HP), with a 60/40 split between MFPs and single-function printers—to the tune of 1.6B managed prints per year. “We had some Fortune 250 MPS wins, customers who wanted a single-vendor approach, and fortunately for us that’s been trickling down to other enterprises and large organizations, as well as SMBs,” he said.
“We’re in several major markets and we also play in the underserved Four Corners territory. Our knowledge and experience run as far and wide as the geography we cover, but it shouldn’t be a surprise to hear that it can be tough to keep all the tiles together.” –Pat Russell
While ImageNet has deployed Canon uniFLOW and PaperCut for countless clients, ECM is the primary contributor in software sales. “There’s more and more talk about the topic in the initial stages of the cycle, and our reps and specialists need to hit on the bells and whistles of what software can do, not just what hardware can do,” Russell said. “It’s a slow process, but I feel like we’re ‘turning the Titanic’ when it comes to educating both our consultants and customers.”
In fact, ECM software has been part of ImageNet’s lineup for a decade. Eight years ago, before all the flurry of acquisitions and rapid growth, the company partnered with Laserfiche and installed the system in-house, too. A testament to how well it works, ImageNet had three accounts payable employees then—and those same three remain the only ones in the group, even with the massive revenue spike. The company’s accounting department is virtually paperless, Russell noted, and he believes Laserfiche is efficient to such a degree that the average client can’t understand it. The goal is to teach, to get the word out, which leads to better engagement and higher profitability.
In 2015, ImageNet’s MPS and ECM revenue rose at a higher percentage than any other segment of its business. Much of that is due to the company’s proprietary four-month MPS and ECM boot camps; depending on position, a person has to complete the appropriate course prior to being assigned a region. “We used to study connect rates from copiers with a print board to the network, because devices with a print board meant more pages,” Schotten said. “Now we’re looking at connect rates from copiers to software and trying to improve that. And what we’re seeing is in cases where a connect rate is above average, we’re not losing as many deals because we’ve bundled in a product like eCopy.”
“We were an early adopter [of MPS], and it’s gotten to the point where our business is sort of built around it. Not just with supplies and service but the more technical things, too. A lot of organizations do the ‘print services’ but neglect the ‘managed’—they don’t distinguish ‘managed print’ from the device that’s outputting the pages.” –Pat Russell
Both Russell and Schotten enjoy the outdoors (Russell loves fly-fishing) and the competitive nature of sports (Schotten plays hockey), and they have two daughters each. The maturation of their children has of course been amazing to them—it’s a dance with peaks and valleys, giant leaps forward and false starts, incremental growth and harsh realities.
In Russell’s and Schotten’s current professional lives, the same could very well be said of MIT. ImageNet was “slow to the game” and has taken its time to set its strategy straight. The company began marketing MIT a little over a year ago in the two Four Corners branches, but in late 2015, the Tulsa office got involved and has created a stir; the opportunities are mainly with managing customers’ IT infrastructure, with some traction coming from hardware (servers, desktops and tablets, though these are one-time billable events). “You need to be specific about what your managed IT offering is and then don’t leave that box,” Russell said. “Even if we’ve lost a lot on the investment, the investment is still there and so is the excitement around managed IT.” The company is in the process of perfecting its MIT deliverables before rolling them out to the whole alliance.
“Many facets of the industry are either waiting to emerge or ready to blossom,” Schotten said. “Samsung opened new avenues thanks to its displays for signage, and we feel like Samsung hasn’t even scratched the surface of what apps can be. Maybe we’ll soon have custom apps by vertical? What about a true recurring revenue piece for 3D print? Cost per page had been trending up for a while, there were more MFPs and more color pages, but it declined slightly last year. So has color plateaued, or have customers become more cost aware? It’s probably a little of both, but that’s just all the more reason to focus on software and service.”