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The Battle Between… HARD Cost & SOFT Cost

As Practice Director at Printlogix I am fortunate to be in the position of presenting our Managed Print proposals to potential new customers. In almost every instance this proposal is the result of an extensive current state assessment which after flowing through a team of analysts and future state architects we get to recommend usually two or more options for our client to digest. Often the client is part of the future state design, as we find that it actually helps us get to an end point much quicker that way.

Anyway, when it comes to presenting the proposal we focus solely on hard costs related to print, so power, paper, consumables, toner, hardware and service etc., on more than one occasion clients have asked why we do not build soft costs into our proposal? Our answer is simple, at PrinterLogix we believe that the cost comparison should support itself based on fixed costs alone, sure we mention soft costs such as print related tickets to IT helpdesk, physical document storage or reduced real estate on smaller or fewer devices but we do not build those costs into our proposal.

Is what we do the right way? Well to be honest we don’t really know, but what we do know is that our clients are far more capable of assessing the impact of the soft cost of their business, we make no apology for the fact that we consider ourselves Managed Print experts and we feel that if we cannot make a strong business case based on hard costs alone then we do not believe that there is any case to be made

Flat Rate Billing: Are the Days of Cost Per Page (CPP) Agreements for MPS… Numbered?

It’s a distant memory but I can just about remember the first time I heard of an all-inclusive cost per page agreement, it must have been around 1985 and a rep from one of the major leasing companies was in our sales office pitching this new type of contract. From a sales perspective it sounded great, allowing us to wrap hardware and service up in a single payment per page contract, and to a certain extent it must have worked because here we are in 2016 still selling print devices using cost per page.

Question is why? All of our other managed service contracts are based on per seat billing or flat rate monthly contracts, surely an organization like ours that is routed in managed services can drag managed print service kicking and screaming into the 21st century and close the case on cost per page.

So what are the pros and cons of CPP and fixed billing, well here are a few to get us started:

  • Cost per page is really clumsy to administer, data collection tools are much improved over the last few years but it’s still a battle with minimum billing, quarterly true-ups or credits. Both vendor and client feel the strain of accurately administering CPP.
  • For clients who purchase our whole suite of services it makes no sense. Why bill managed service offerings as a flat fee and Managed print as CPP, now we can “layer” print billing onto an existing managed service agreement – it makes it simple for the customer and our billing department.
  • Fixed fee or per seat billing provides a monthly benchmark for future improvements and rationalization, at PrinterLogix we can actually build in cost saving targets into agreements, it becomes a win/win when targets are hit.
  • Per seat or fixed rate is very easy to administer from both the supplier and client sides, if an additional service is required it’s simply layered on the existing agreement.
  • Costs around print become very transparent, companies can budget accurately as they know exactly what printer costs will be over a period of time.

Performance Targets in MPS Agreements

Is your managed print services contract just Cost per Page in disguise? A simple question will provide the answer. In my role at PrinterLogix I spend lots of time with potential clients who are currently committed to a Managed Print contract, I always ask what they feel the real benefit of the MPS is to their organization and I find that I consistently get very weak responses such as:

“Well they deliver the toner without us having to call to order it”
“The service is ok”
“They use remote monitoring to bill us”

Or

“we know that business is moving towards managed environments and so we just followed the trend” When I dig a little deeper it soon becomes apparent that in fact what the client has is not a Managed Print Services program just a printer and/or copier contract that is billed on a cost per page basis. There is a way you can ascertain whether you have true Managed Print within your organization, simply ask yourself one simple question:

At quarterly business reviews is your MPS provider regularly suggesting new initiatives to reduce volume or devices?

That’s it, if the answer is no then you do not have a true Managed Print program, remember the definition (according to the MPSA) of MPS is

“Managed Print Services is the active management and optimization of business processes, related to documents and information including input and output devices.”

At PrinterLogix we take the ongoing active management and optimization of the print fleet very seriously and although we find that clients benefit initially from the implementation of an MPS program they actually gain far more efficiencies as we manage, optimize and adapt over time. We actually integrate into our agreements performance SLA’s / targets, we commit to work to reduce your volume from day one, every day.

 
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