RoI on Printing? Yes

When the CFO of a leading organization summoned the CIO to his office, the IT

head was sure that it would be to discuss further about the CRM roll out he had

proposed to the company's top management a week ago. But his assumption turned

into surprise when the CFO quipped: "How much do we spend on managing the

printers?" Well.... hmmm...may be around...the CIO mumbled-he was perplexed

by this question as he had never bothered about the output devices so far and

hence had no clue. 






But, when the CFO rummaged through an Excel file and highlighted the whopping
costs associated with acquiring new printers, buying consumables, AMC costs, the

list just went on. Humbled by his ignorance, surprised at such an unsuspecting

pain area, the CIO set to evolve an output device management strategy. This

episode might read like a dramatized version, but it is based on a real life

case. The point it drives home is: Printing is no longer an elementary task and

calls for a definite strategy.

The CIO in question is not alone-he has lots of company. For instance,

according to an IDC report, "Almost 90% of enterprises do not track their

spend on producing and maintaining documents, or the costs associated with

output device management. At the same time output volumes in the office are

increasing by up to 21% per annum, driven by changes in the availability brought

about by new technologies." A report from Gartner states that up to 3% of

corporate revenues could be spent on office output devices like printers,

copiers and fax machines.

RoI on print?



A few years ago if anybody had queried about RoI on print, chances are, one

might have laughed at him. This was also the time of the eCommerce and the ERP

boom, when the CIOs were more bent on justifying their larger IT investments

like new software, servers, storage, networking et al. Hence, most organizations

adopted new technologies, but failed to measure their investments on output

devices like printers. 






But since 2004, RoI on print is becoming a hot issue with increasing amount of
IT spend going for managing these output devices. Contrast this with the IDC

study done on similar lines recently. The study says, "Just like

enterprises spend time on many elements of the IT infrastructure like storage,

servers, and bandwidth among others, they have started paying attention to their

imaging, printing and document distribution environments. After years of

inattention and lack of coordinated management, the imaging and output

infrastructure in most enterprises are fraught with high costs." The report

also says that employee productivity levels go down due to frequent device

downtime and inefficient document workflow.

Quips LV Sastry, associate director, Xerox Global Services, "The

starting point of any enterprise in managing its output devices is by performing

a due diligence office document assessment on the current state, and then

comparing this with the industry standard norms." According to experts, the

output device management strategy will help organizations choose the right kind

of print technologies and bring down the costs significantly, thereby boosting

employee productivity. 






Says Thomas Suresh Anand, business head and chief technology officer, WeP
Peripherals, "Measuring RoI on IT assets is a daunting task, with printers

being the device with highest recurring cost. The fact that different

stakeholders might, in some enterprises, own various components of printer

purchase, makes this RoI calculation for printers a little more complex. For

example, the printer is bought by the IT department, but the paper and

consumable might be bought by the administration department-now collecting costs

from various stakeholders and then arriving at the overall TCO is a complex

equation."

Get the grips on cost



Today, most enterprises have realized that 85% of the expenses they incur

from printers is consumable cost and close to 5% goes for spares. The

realization here is that they spend just about 10% on acquiring the printer,

that is not actually a big deal, and this cost equation is arrived for a

three-year period for a non-impact printer. So, after the passage of three

years, the printer gets old, and with new models with higher speeds hitting the

market, enterprises are forced to buy the new technology printers, which leads

to another round of acquisition and consumable costs.

This leads to the fundamental question: How to cut costs? Let's look at some

of the RoI models available. Here, vendors are pitching various initiatives. One

is the traditional standalone printer selling, and what has changed here now is

vendors' help in rolling out an output device management strategy. For instance,

print major HP has been pitching hard its Balanced Deployment Strategy in India.

Similarly, Canon has come out with its RoI Calculator. Meanwhile, companies like

Lexmark bring to the table the USP in centralized document management benefits,

through its devices. Beyond the standalone market, a model that is fast gaining

credence is outsourcing print. Here, players like Xerox and WeP Peripherals

dominate the market.

In terms of technology, the print landscape alternates between impact and

non-impact. On the impact side the dot matrix printer (DMP) is becoming very

niche in the Government and BFSI verticals. DMPs are the most favoured devices

for high volume text inputs like printing railway tickets, insurance policy

premiums, and bank statements among others. On the non-impact side the inkjets,

lasers and the MFDs rule.






However, much of the action is happening on the non-impact side, which, due to
rapid price slides, has increased the overall penetration levels of the laser

and MFDs in the last two years. Single function entry level inkjets, as a

category in non-impact, is fast declining with market only for mid- and high-end

inkjets that are being consumed by photo studios and the niche segments. The

current focus on printing revolves around lasers and MFDs. With these technology

options available, how does a CIO figure out which device or print technology is

right for the enterprise.

Quips NV Mahadevan, product manager-printers, TVS Electronics, "While

there are multiple types of printers available in the market, the selection of

the right printer is extremely important to give the right cost-quality

requirements. There is a print auditing software available in the market, which

invisibly screens all printing in a corporation without the users' knowledge.

Printing habits are monitored, collected and analyzed, providing management with

a clear picture of the printing needs of the company."

But it's easier said than done. A lot of preliminary analyses, in terms of

print demand patterns from various work groups, placing of the printers

strategically in a multi-storied spread across office environment, deciding on

mono and colour printers, and host of other aspects make up the output device

management strategy. What makes the whole print paradigm complex is divergence

in terms of acquisition of the printers and purchasing the consumables and

spares. For instance, printer buying would be reflected in the IT spend budget,

while purchase of ink cartridges and paper would come under the overall

administrative expenses. So, this disparity is the key to the RoI on print

coming under the microscope.

Says Anand, "A capital investment in a printer has many connected

recurring costs like TCO, consumables, after sales service, and high product

obsolescence. All these four factors make the investments on printers pretty

high, and hence are very high on criticality on any CIO's watch-list. Given

that, there are a host of technical aspects a CIO has to consider when making a

printer purchase, like the type of printout-multi or single copy, paper sizes,

number of users, print volume, type of input-images or document that is printed,

finishing options among others."

Agrees PG Klamath, general manager, Lexmark International India, "The

selection of the print technology depends on requirements of the enterprise. For

instance, among verticals, Insurance and Banking segments have come into focus

in the recent times. Both the segments are going for entry level laser printers

as they have numerous branches. They mostly use it to print forms, policies.

While IT companies mostly prefer networking printers, either entry level or mid

range lasers. They prefer to put it near each work group to further increase

productivity and avoid workplace congestion. Colour lasers are the choice of

advertising companies which need volumes of colour print outs."

Print outsourcing



The choice in terms of devices and print technologies are huge. And, output

device management is not a core activity for the CIOs, given that a concept that

is fast gaining credence is outsourcing an organizations print requirements.

Here two models are gaining ground. One, the organizations acquire their choice

of devices and outsource the maintenance, consumable and spares. Two, complete

end-to-end print outsourcing. In complete outsourcing, there are two models-the

onsite and the offsite model. 

These models are adopted by enterprises as per their outsourcing readiness.

Says Sastry, "Office Document Assessment enables more objective decision

making by providing a professional and standard method to identify and analyze

office requirements with factual data and knowledge collection. Completed

assessments have identified measurable savings of 20—25% in costs (equipment,

supplies, support) by the optimization of an output fleet and implementation of

Xerox Office Services."

Meanwhile, WeP is also a leading player in the print outsourcing space that

provides various models for the enterprise. WeP has large mandates for print

outsourcing from the Government verticals. WeP's Anand is bullish about the

value that print outsourcing brings to the table. He says, "Customers

derive significant cost saving by going the outsourcing way. One is that they

come to grips with printing costs and the other is in terms of manageability,

which the outsourcing partner takes care of. Overall, it gives more time for

enterprises to concentrate on core activities and outsourcing definitely ushers

in greater print RoI."

A movement towards print management has just begun but still has a long way

to go. What it also creates is totally a new form of selling print solutions.

For instance, vendors no longer can adopt the plain vanilla marketing

strategies. They need to present the cost-benefit ratio for each device they are

selling. The competition has become intense and new models for managing printers

are emerging by the day. So, the enterprises have to wake up to this new reality

and adopt an output device management strategy for optimum returns on their

print investments.