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

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

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    • 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 PaperPhotizo 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 aboutCHANGE THE FORMATTING OF the organization the individual’s status within THE PULL QUOTETEXT 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  Hidden Savings – A White Paper Photizo Group (C) 2009 All Rights Reserved Page 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 ofTHE HIDDEN COST OF hardcopy cost today is having too many devices. Based upon a study of 105 organizations in NorthHARDCOPY America, there was an average of two employees for each hardcopy device. In most cases, this represents aToday 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 ofminute to look around your office. In most supporting upwards of five to ten users each.cases, you can identify several hardcopydevices 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 devicesthe same time, the cost of maintaining these that are light-duty which are being used too heavily, ordevices, 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 printingdrivers and other issues, and supplying the volumes of documents to a small local, high cost perenergy to operate the devices has become an page, networked printer, while the higher performanceincreasing and undetected drain on the / low cost per page MFP device down the hallway sitsorganization’s bottom line. idle. The price variance between these classes of devices can be as much as 2 cents per page. ThisAccording to industry research firms, the cost doesn’t sound like much until you realize that manyof 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 ofrepresenting up to 3% of the typical thousands of dollars in operating cost.organizations revenues. This is almost aslarge as the typical organization’s research Suboptimal Service: Unlike many other ITand development budget! However, most infrastructure devices, such as servers, hardcopyexecutives 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 occasionallystatements don’t have a line item for require service and repair.‘hardcopy.’ Balance sheets do not listprinters, copiers, multifunction devices, and Many organizations simply call local vendors or theyfaxes as assets. subscribe to extended warranty/repair contracts which can be expensive, in order to obtain service for devicesInstead, hardcopy devices are often when they fail. A compounding problem is manypurchased on an individual basis. There may organizations have too many devices, resulting inbe an IT ‘approved device’ list, or some other excessive service costs for the entire fleet.standard, however in most cases hardcopydevice acquisition and operations take place Hidden Savings – A White Paper Photizo Group (C) 2009 All Rights Reserved Page 3
    • Supplies Mismanagement: The responsibility for Hours Spent Supporting Printerssupplies ordering often falls to the administrative 14,000assistant closest to the hardcopy device. Lacking 12,000proper technical training, they are prone to order the Company Size (Employees)incorrect supplies. Too many uncontrolled 10,000departments purchasing and stocking supplies have 8,000resulted in closet ‘landfills’ containing tonercartridges which are not actually empty, or have been 6,000ordered for the wrong printer. While this may seem 4,000inconsequential at the department level, it canrepresent a significant expense at the corporate level. 2,000 0 0 500 1,000 1,500 2,000 2,500 3,000AN EXPENSIVE PROPOSITION Annual Hours Spent Supporting Print DevicesThe 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 ofexpenses.’ As the following table shows, annual hours of IT support on an annual basis. Even for a smallcosts for a company as small as 200 employees can organization, it can be a burdensome task.be almost $100,000, and for large organizations canreach 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. LittleAgain, since these costs are highly distributed thought is given to the hardcopy fleet, which actually hasthroughout the organization and typically buried in a significant environmental impact. As the followingdepartmental budgets, few organizations know the graph shows, the impact of the fleet is directlytrue 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 andIT PRODUCTIVITY CHALLENGE carbon dioxide (CO2) emissions grow dramatically as theSupporting hardcopy device fleets represents one of size of the company grows.2the most significant challenges for IT supportorganizations. In fact, typically more than 10% ofIT’s time is spent supporting printers. The larger thefleet, the greater the amount of time spent supportingfleets.In today’s environment, most IT organizations arebeing challenged to bring enterprise-wide systemson-line which will result in business processimprovements and productivity gains. Taking timeaway from this mission-critical task to supporthardcopy fleets is frustrating, and frankly, asuboptimal use of a scarce and valuable resource.Hidden Savings – A White PaperPhotizo Group (C) 2009 All Rights Reserved Page 4
    • MANAGED PRINT SERVICES THE ACID TEST Is your fleet under control? Ask yourself these threeControlling and Optimizing the Hardcopy  simple questions:Fleet in Order to Enhance the Firm’s Business Processes  1. Can you state, with confidence, exactly howThere is an answer to the hardcopy fleet challenge. many hardcopy devices you have in yourThe answer is Managed Print Services (MPS). This is organization and how much it costs to operatethe term used to describe outsourcing all (or a these devices?significant component) of the hardcopy fleet 2. Do you know how much time your ITmanagement. There are three essential components to organization spends supporting your hardcopyany 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, intelligentBy implementing an MPS program, organizations are deployment, optimized service, and suppliesfinding that they can reduce costs by an average of optimization in order to achieve significant savings30%, free up scare IT resources, and reduce their for your organization.hardcopy fleets environmental impact by up to 60%.2 Cost Savings: The FactsADVANTAGES OF MPSAs firms strive to outsource non-core areas and focuson core competencies, the hardcopy fleet becomes alogical choice for outsourcing in the form of an MPS Device Intelligent Consolidation Deploymentengagement. By utilizing an external resource that Analysis of 105 Accounts: Typicalspecializes in optimizing hardcopy fleets, a firm can Savingsfree up critical resources to focus on those tasks which • $1M in costrepresent truly mission-critical activities, and leverage • 30% of total costexpertise, instead of trying to manage the program Optimized • Devices reduced by 60% Suppliesinternally, saving hours of frustration and mistakes. Service OptimizationQuantifying the Benefit So just how significant is the benefit? The Photizo Source: Photizo Group Analysis, Printer Operations GroupGroup has analyzed data from over 100 MPSengagements 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  Hidden Savings – A White Paper Photizo Group (C) 2009 All Rights Reserved Page 5
    • A Key Metric In analyzing the benefits provided by MPSengagements, one of the key metrics to use is toexamine the employee per device ratio. This ratioidentifies, in a very rudimentary way, how effective MPS Customer Adoption Process  STAGE 3your organization is at distributing the fleet and is 2 Document Mgmt STAGE Consultingoften the foundation of significant savings through Industry Expertisedevice consolidation (i.e. replacing a fax, copier, STAGE 1 On-Site Support Asset Managementand 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 1,405,087Hidden Savings – A White PaperPhotizo Group (C) 2009 All Rights Reserved Page 6
    • 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 theyhave 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 providebut you are looking at vendors with only local coverage, you with the facts you need to consider yourthe vendor must be able to form partnerships and organization’s hardcopy fleet status, and whetheralliances to deliver a global program or your program Managed Print Services may be a solution forwill 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 hardcopydepth 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 environmentalspecific needs and requirements. If you have unique benefits.requirements can the vendor deliver? Have they shownthis ability in the past? There are many resources available for further reference and to assist you in your analysis ofAn MPS engagement is an IT outsourcing engagement. your next steps. We have included several ofAs such, it is critical that your vendor understands that these resources in the appendix of this whitedelivering hardware, maintenance / service, supplies, paper.and supplies monitoring is only part of the solution.They must also be able to deliver advanced servicessuch as end user training, help desk, deploymentplanning, and advanced deployment support such ascustomer end-user ‘hotlines’.The vendor’s willingness to partner and support yourrequirements is critical. Are they willing to work withyour existing fleet in order to provide you a seamlesstransition path to your stated objectives? Does thevendor have a ‘win-win’ approach or is their objectivesimply to sell more hardware?Finally, after the vendor has built and implemented thesolution, what next? There should be ongoing follow upto ensure your goals are being met in your dynamic andchanging environment. Hidden Savings – A White Paper Photizo Group (C) 2009 All Rights Reserved Page 7
    • 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.comHidden Savings – A White PaperPhotizo Group (C) 2009 All Rights Reserved Page 8
    • 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 firms 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 2008Hidden Savings – A White PaperPhotizo Group (C) 2009 All Rights Reserved Page 9