Is India Ready For MPS?

This services-led offering is intervened around opex and vendors are eying it as a viable business opportunity

Post recessionary phase, the CXOs are increasingly leveraging technology to optimize resources and reduce cost at a significant level. Beside others, imaging and printing is one of the critical aspects of a cost-conscious organization. Within the organi­zational periphery, the document and print output is still an unmanaged frontier of the IT infrastructure. Managed Print Services (MPS) facilitates the document management, the way they are printed and shared in accordance with the business needs. This model brings copiers, printers, fax machines and devices under the management of a single vendor. The adoption rate is at very nascent stage in India, but fortunately it has some reasons to rejoice. This services-led offering is intervened around OPEX and the vendors are eying at it as a viable business opportunity. The customized solution deployment, and integration of software and hardware in this outsource-based model is extremely critical. Reduction in carbon footprint is an added value preposition.

MPS has been largely overlooked by the organizations, including SMBs. Implementation of a proper strategy can address the price pain points. The Springboard Research India, in its study said that India is the fastest growing market for MPS amongst the countries in the Asia-Pacific region, and is expected to reach $70 million by 2011. The vendors that include HP, Canon, Xerox, Lexmark and Ricoh are betting high on this service-oriented model for document work flow management. The next focus of these Managed Service Providers (MSPs) will be HaaS expertise. Arnie Bellini, CEO, ConnectWise has been recently quoted as saying that MPS will stay on and never fade away as it offers perpetual revenue stream for vendors. Photizo Group, which is one of the leading consulting and research firms for the MPS market believes that it will account for 35 percent of the total imaging market in 2012.

Edward A Crowley, CEO of Photizo Group is optimistic about the Indian market and said that, the most significant trend for MPS in India is the fact that a number of large MPS contracts have been signed this year. “This is a result of increasing awareness by CIOs about the advantages of utilizing an MPS contract to reduce cost, improve the IT department's productivity, and to significantly reduce the carbon footprint of the imaging fleet,” he said. The demand and growth, is however expected from the BFSI, education, telecom and government/PSU segments. Another key trend is an increasing interest by resellers, and particularly IT integrators that MPS is a significant business opportunity for them. Until recently, this was an area that was not a focus of the reseller community. This will have an ultimate impact of increasing the availability of MPS for SMBs.

Puneet Datta, Assistant Director-Marketing for Business Imaging Solutions, Canon India agrees that there is an exponential rise in demand for the managed document services. “The slowdown in 2009 forced the CIOs and CTOs to start focusing their energies into core business areas, ones which would lead to business growth or competitive advantage for the company. Also, as the companies shifted their business procurement models from Capex to Opex, managed services saw a dramatic rise in need. The trend seems to continue in 2010 and a recent study suggests that the total addressable MPS opportunity in India will grow at a CAGR of around 20 percent,” he said. The reason for this growth will be the inherent advantages and benefits that MPS will bring to an organization. Although it has gained ground primarily on the pretext of cost reduction, the most looked upon advantage is the increased productivity and security that it confers. According to Datta, some of the key advantages include: nearly 40 percent reduction in IT support costs for print, copy, fax and scan user issues; up to 25 percent reduction in costs for consumables and their inventory; and about 10 percent reduction in costs for installation, upgradation, print, copy, fax and scan devices.

Crowley feels that, the biggest pain point is lack of infrastructure that include technical capabilities (asset management software, Internet access for remote device monitoring, and other technology tools) and the knowledge capabilities (how to price MPS contracts, best practices in deployment, and other items related to the firms ability to effectively offer and deliver an MPS contract). According to him, MPS programs have been widely available in North America and Europe for over 10 years. This has led to development of significant infrastructure, which is not available in many emerging countries. “The second major pain point is the general lack of awareness among corporate decision makers about the advan­tages of engaging in MPS contract. This is certainly growing in India, but is at a very early stage,” he added. Despite of advantages, the adoption rate is low. The lack of awareness and education about this emerging business solution is generally seen as a major roadblock to its deployment activities. Datta believes that MPS players should educate the CXOs of organizations, and this remains a big challenge in India. According to him, this requires change management apart from putting thrust on the some of the intangible costs that usually go un-computable in India. The diversified geographic span of various large-and-medium organizations leads to a vast amount of time being spent in gathering actual print infrastructure data in real time.

The unorganized consumable market plays a dampening effect on the sector. The potential organizations and customers are largely unable to get a first look at the real savings in up-front run cost as compared to genuine consumables supply. “The real challenge ahead of any MPS provider is to get its channel infrastructure geared up for handling MPS customers. This will be the core reason for success going forward,” he said. The SMB market is the fastest growing market for MPS. Crowley said that they have found that the same basic dynamics (cost savings and a positive environmental impact) are drivers in small business just like they are in large business. “IT productivity can be of bigger advantage and driver. Many SMBs have a very small IT organization. By signing an MPS contract with an external vendor they are able to free-up these scarce resources to work on other critical IT projects,” he said. Thus, MPS deployment can be a tremendous advantage for a small company. “One of the things that have absolutely amazing, is the tremendous creativity and flexibility in Indian businesses have shown in the effort to 'make do' with what they have in order to reduce costs. I believe the vendors have a tremendous opportunity to leverage this flexibility and creativity that their SPs/SIs partners have to offer in order to create an efficient and effective offering for the SMEs. It will require 'out of the box' thinking by the vendors, and this is the key to penetrate in the SME market,” he said.

“The SMBs are increasingly recognizing the monetary and workplace efficiency benefits of migrating to a managed services solution. The relevance of managed services in SMB sector is gaining traction on account of lack of in-house skilled manpower, high capital investments required for an infrastructure apart from the cost and efforts that go into running such an infrastructure,” said Datta. The MSP users with appropriate contract and optimization of processes with automated supplies, controls around the usage, job accounting and rules-based printing, provide significant cost savings. He is also in the opinion that when these companies reduce costs and release resources to focus on other important tasks that are more directly connected to organization's main goals, MPS becomes the obvious choice. According to IDC study, printing is one of the few remaining areas of IT spending, where substantial savings can be realized with little risk.
The SaaS model however facilitates organizations to feel comfortable by providing external access to vendors or even hosting data remotely. Crowley said that, it's hard to argue that one can't let a vendor monitor your devices remotely for usage when they are having your ultra-sensitive customer data being hosted on outside vendors server thousands of miles away. “There is a lot of room for vendors to help in educating the market and help it to understand how these security concerns can be addressed. The vendors still have an obligation to provide sufficient insight into their technology, processes and procedures in order to make customers feel comfortable about their data and networks being safe,” he said.

Datta said, “The IT infrastructure manage­ment services have already become the norm for India over the past couple of years, and most of the SIs have gained from this significantly. They have entered this space for long term benefits. As the demand for MPS grows in India, more of SIs that were into IT manged services space now see a lot of synergy into taking care of the extended IT infras­tructure including all network peripherals as this not only becomes a logical progression but also adds to their revenue and bottom line growth.

“We see a number of key vendors in this space. Canon having significant success in this market, and frankly, a bit of a lead, they are clearly winning deals and have a strong focus on MPS in India. One can't count out vendors like HP, Xerox and Ricoh,” said Crowley. There will be a few 'new' players entering the market that may catch a few people by surprise! “Our market intelligence services, industry initiatives, and educational programs are the critical resources for our clients,” he said. The group has global contracts with many of MPS providers, and their goal is to continue to strengthen their relationships within the Asia Pacific region with a focus on India.

Muntazir Abbas
(muntazira@cybermedia.co.in)