ITEX Keynote - Jeff Hayes InfoTrends
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The document discusses trends in the office equipment and printing industry. It identifies different strategic approaches companies can take, referred to as "strategic paths", including operations-driven or innovation-driven. It also identifies different types of companies in the industry, including "superstars" that achieve high growth and margins, "falling stars" with low growth, and average companies. The document provides recommendations for companies, including anticipating continued disruption, determining a strategic path, building recurring revenue streams, and improving productivity.
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ITEX Keynote - Jeff Hayes InfoTrends
- 1. 1© InfoTrends www.infotrends.com© InfoTrends Strategic Paths and Superstars Jeff Hayes Managing Director March 7, 2016
- 2. 2© InfoTrends www.infotrends.com Agenda Industry Trends Falling Stars and Superstars Strategic Paths 1 2 3 4 Recommendations
- 3. 3© InfoTrends www.infotrends.com September 1, 2015 February 8, 2016 September 1, 2015
- 4. 4© InfoTrends www.infotrends.com $0 $10 $20 $30 $40 $50 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 Office Production U.S. Office and Production Revenue – Equipment, Supplies & Service ($B) Includes printers, MFPs, rollfed and cut sheet HS printers
- 5. 5© InfoTrends www.infotrends.com 0 400 800 1,200 1,600 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 Business IJ Workgroup Toner LV Production HV Production U.S. Office and Production Print Volume (B)
- 6. 6© InfoTrends www.infotrends.com U.S. Document Solutions and MPS ($B) $0 $5 $10 $15 2010 2015 2020 Document Solutions Managed Print Services • Value shift from HW to SW and Services • New business model and skills • Opens door for new opportunities • Exposes companies that don’t master
- 7. 7© InfoTrends www.infotrends.com Classic Market Development Curve Market Rapid Competitive Development Growth Turbulence Saturation Decline Sales/ Growth Time Fax MFPs PCs Managed Services Security Mkt Automation NLPQuantum computing IoT 3D Mobile Big Data AR Cloud R&D, Entrepreneurial Operations, ServiceMarketing, Sales Accounting Workflow WFPs Presses
- 8. 8© InfoTrends www.infotrends.com Are You Ready? 23 months
- 9. 9© InfoTrends www.infotrends.com "For 240 years it's been a terrible mistake to bet against America, and now is no time to start."
- 10. 10© InfoTrends www.infotrends.com 0 300 600 900 1,200 1,500 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 Technology Disrupts, Recessions Clarify U.S. Office Copy and Print Volume (B) Source: InfoTrends US Economic recessions “Company”MFPs Workflow Services Digital No recession forecast Recession forecast We are here Average Expansion Longest Expansion
- 11. 11© InfoTrends www.infotrends.com Strategic Paths Innovation Driven Operations Driven Greater • quality • efficiency • productivity • customer service New • services • products • customers • business models Continuous investments in … •technology •business processes •sales & marketing that lead to … Lagging Mainstream AdvancedSurviving Striving
- 12. 12© InfoTrends www.infotrends.com Where Are You? Operations Driven Fax Forms SMB Break/Fix A3/A4 Innovation Driven Workflow MPS Production Security Back-up Predictive Visualization Marketing Automation Analytics 3D Managed Services Mobile Cloud Figure out the right mix of operations and innovation initiatives ERP, CRM Verticals Email Website Regions
- 13. 13© InfoTrends www.infotrends.com InfoTrends State of the Channel Survey 96 U.S Independent Office Equipment Dealers 356 locations across 41 states $2B in aggregate sales
- 14. 14© InfoTrends www.infotrends.com Who We Spoke With Source: InfoTrends State of the Channel Report COO, Exec VP, Sr VP 12% VP, Director 3% CEO, President, Owner 85% • 97% C-suite respondents ‒ Key operating metrics ‒ Mix of business ‒ Infrastructure ‒ Initiatives & priorities ‒ Challenges
- 15. 15© InfoTrends www.infotrends.com Source: InfoTrends State of the Channel Report Growth MarginRevenue >$100M <$1M 50%+ –25% 40%+ –10% $20.7M 5.1% 12.4% Profit margin defined as revenue minus cost of goods sold, labor and other operating expenses as a percentage of revenue.
- 16. 16© InfoTrends www.infotrends.com -30% -20% -10% 0% 10% 20% 30% 40% 50% -30% -20% -10% 0% 10% 20% 30% 40% 50% Margin Source: InfoTrends State of the Channel Report Profit Maximizers Average 5.1% growth 12.4% margin Superstars Growth DriversFalling Stars Revenue Growth Among the largest dealers Highest service/supplies revenue % Highest recurring revenue % Highest vertical solutions revenue % Highest SMB revenue % Highest sales rep quotas Lowest sales rep annual compensation The largest dealers Highest equipment revenue % Highest % with marketing department Most sales reps 2nd highest sales rep quotas Highest sales rep annual compensation Most variable comp % for sales reps The smallest dealers Lowest recurring revenue % Lowest Office Tech & Svcs revenue % Major product categories Lowest revenue per product category Lowest sales rep quotas 2nd lowest sales rep annual comp Mid-size dealers Highest Office Tech & Svcs revenue % 2nd highest recurring revenue % Least likely to offer Managed IT Fewest major product categories 2nd highest revenue per product category Average sales rep quotas and compensation
- 17. 17© InfoTrends www.infotrends.comSource: Jerry Maguire – TriStar Pictures Show Me the Money!!
- 18. 18© InfoTrends www.infotrends.comSource: Glengarry Glen Ross – New Line Cinema Always Be Closing!
- 20. 20© InfoTrends www.infotrends.com The Goldilocks Company Too Hot Too Cold Just Right Porridge Temperature Monitor
- 21. 21© InfoTrends www.infotrends.com Some of the Superstars
- 22. 22© InfoTrends www.infotrends.com Recommendations • Anticipate more disruption and “clarification” ‒ Value shifts and channel consolidation • Determine your strategic path – and push way out ‒ Operations and innovation • Be focused, be open ‒ Deep expertise and natural extensions • Build recurring revenue streams ‒ Service & supplies, “services”, relationships • Continually improve productivity ‒ Your operations – Sales, Service ‒ Your customers’ work processes
Editor's Notes
- Welcome Thanks for joining us Great to see so many familiar faces and many new folks too JH Prez Tell you what we are up to and share some perspectives on the industry
- U.S. economy is doing well Among the strongest around globe Consistently see headlines Auto sales – record high. Exceeds post recession Construction – new post-recession high. See it in Boston, NYC 2Q GDP figure were very good at 3.7%. Compare with under 2% in Euro zone. Always some concerns – China, interest rates, income growth Overall economy is doing well
- How about the Office and Production equipment industries InfoTrends historical data and forecast Total sales value of equipment, consumables and service including clicks. Office includes printers, MFPs; toner and biz IJ. Not fax or software and solutions. MPS & contract sales Production include LV and HV; CS and RF; Toner and IJ – not software Huge market – over $40B annually Down from pre-recession levels Has been flat last several years despite economic expansion– not like after previous recessions We forecast the market will be flat – assuming no economic contraction in next 4 years
- What about print volume. Similar story, but lots of nuances Despite growing economy, total pages are lower than pre-recession levels Basically flat last 5 years Forecast it to be flat next 4 years Shifts within market Office volumes are declining overall. Shift to color helps keep up revenue. Effects of MPS and BPA BIJ becomes meaningful, potentially disruptive. Product line expansions, HP, others HV production growing – rise of IJ, capture offset pages. LV pages are declining. Outsourcing, digital distribution. Value still decent with rise of color.
- In search for growth need to remember classical market dev curve - applies to our market Time, sales growth Market development – working out technology, new business model, can take long time – crossing the chasm Rapid–critical capabilities, economics, new entrants, broader offerings, awareness, sales outlets Competitive – continued growth, shake out, loyalty – customers, resellers, more promo Saturation – stability, small share shifts without M&A or innovation, efficiency, cost cutting (logistics, inventory, product), heavy focus on loyalty Decline – milk for profits, fewer competitors, pruning of product line, reduce marketing and product dev, phase out outlets Product examples Different skills dominate - Need a mix of products and skills for sustained growth and profit
- Economics degree – fascinated Recent article – Current expansion is 16 months longer than average since WW2 None has been longer than 10 years Chances are we are closer to the next Recession than we are from the last Are you ready for it?
- It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve). As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do. That view is dead wrong: The babies being born in America today are the luckiest crop in history. American real GDP per capita is now about $56,000 , a staggering six times the amount in 1930, the year he was born. U.S. citizens are not intrinsically more intelligent today, nor do they work harder than did Americans in 1930. Rather, they work far more efficiently and thereby produce far more. This all-powerful trend is certain to continue: America’s economic magic remains alive and well.
- Technology disrupts – business models, price performance Amazon, Google, Uber, digital cameras, mobile phones, constantly happening Recessions clarify – tightening of resources and spending, forces choices, winners and losers become apparent Total office print an d copy volume, excludes production, last 3 economic expansions Average expansion Longest expansion We are here No recession forecast = flat Recession forecast = drop of 15% from today’s volume and then flatten out again Common force has been digital – more digital economy, business, personal life Winners got into and mastered - MFPs, workflow, managed print and other services Next is Digital Company – every aspect of how you run your business
- Your strategic path – Ops vs. Innovation – often somewhere in between Continuous investments Operations – quality, efficiency, productivity, service, etc. Innovation – NEW services, products, customers, biz models Lagging – no new opportunities, cost disadvantage, less productive, inferior service Mainstream – some movement out, but not enough to transform – zone of vulnerability Surviving – some infrastructure improvements – business systems, staff, marketing – keep costs down, but not growth in core markets – need to gain share at rate of market decline to maintain profits Striving – expanding into new product areas, changing business model – attracting new customers, but not as efficient as others in core areas – losing share faster than growing new business – leaky bucket Advanced – pushing way out, clear competitive advantages in GTM, op costs, service, sat. know where make money, winning new accounts, keeping accounts all in core biz Expanding into new areas, going up learning curve, developing the market, getting premium
- Need to assess and benchmark your company to determine where you are Need to consider your strengths and determine which direction to go Lower left – traditional product offering, biz model, “manual” processes –squeezed out Some moving into new areas – MPS, Production, WF, Mobile, even 3D Significant investment (equipment, people, mgmt. time, marketing), steep, long learning New customers, new competitors. Long time for ROI in many cases, important for long term Some investing in operations - website, email marketing, biz systems, SME in verticals Leaders pushing further out – analytics, visualization, predictive – deeper insights on where making money, more effective marketing, increased sales productivity Neither path is easy – long term commitment, make progress every day Your jobs as CEOs, principals – figure out the right mix of initiatives, keep pursuing
- Understand growth & profitability Identify key initiatives and challenges Help dealer community thrive
- Tools (mobile, SW), marketing, motivate and measure, training, empower, IOT, mobile