Lions and Tigers and Bears. Oh MPS!

Tom Callinan just wrote a very intersting article, MPS: the 30% Catastrophe.

While I don’t agree with everything that Tom says – this is where we are going. Over the next approximately 2-3 years I truly believe the IT/VAR space will consume the traditional dealer space or force a major drive for a fundamental and transformational business model change.

Why?

Here’s why:

1. Increased competition from the massive consolidation in our market,
2. decreased credit availability – reinforcing “cash is king” and forcing the small and mid-sized businesses to turn to services instead of traditionally fundable deals,
3. increased complexity and need for end-to-end solutions (requiring strategic partnerships and/or M&A – yet again),
4. and finally the fact that end-users really don’t care about the device – they care about what outputs (which is becoming electronic anyway).

My take, reinforced by several pointed conversations with industry leaders and business owners, is consolidation and extinction will be a theme we will continue to see to our detriment if we don’t change the paradigm now. For years, we pushed cost reduction. While one may argue that this is a “strategy”, I would urge you to look towards two giants: IBM and AT&T

IBM began reinventing itself many years ago and is now widely regarded as the model for a large services company. Don’t agree? Then look to the movements of HP and Dell. Do you think they are only competing against you with printers or PC’s?

AT&T (formerly SBC) now effectively controls the telecommunications market in America. They are effectively the telecommunication giant who rules by control of the infrastructure.  In other words, try getting something done without having to at least consider them for service in some fashion. While I might be tempted to write them off as a monopoly – even they are turning to services as an opportunity.

With all of this said – I agree 100% with Tom! Why are you trying to sell a service of reducing costs on one of the lowest value items in a business (hardware and supplies)? Instead, how about focusing on THE MOST IMPORTANT – the document!

Follow the yellow brick road…

Ken Stewart’s website, ChangeForge, focuses on the collision between the constantly changing worlds of business and technology in an information-centric world. Ken serves on the board of the new Managed Print Services Association, an international industry organization seeking worldwide best practices for the managed print services industry. He is also the founder of Seeking the Son. He is always interested in connecting with you.