Copyright Quocirca © 2012

Louella Fernandes Quocirca Ltd Tel +44 1753 754838 louella.fernandes@quocirca.com

Clive Longbottom Quocirca Ltd Tel +44 1189 483360 clive.longbottom@quocirca.com

Vendor Landscape: Managed Print Services

Global scale and market presence differentiate MPS suppliers, but value propositions are converging

March 2012

This report examines the competitive landscape for MPS, discusses the key market drivers

REPORT NOTE: This report has been written independently by Quocirca Ltd. During the preparation of this report, Quocirca has spoken to a number of suppliers involved in the areas covered. We are grateful for their time and insights. Quocirca has obtained information from multiple sources in putting together this analysis. These sources include, but are not limited to, the vendors themselves. Although Quocirca has attempted wherever possible to validate the information received from each vendor, Quocirca cannot be held responsible for any errors in any information supplied. Although Quocirca has taken what steps it can to ensure that the information provided in this report is true and reflects real market conditions, Quocirca cannot take any responsibility for the ultimate reliability of the details presented. Therefore, Quocirca expressly disclaims all warranties and claims as to the validity of the data presented here, including any and all consequential losses incurred by any organisation or individual taking any action based on such data. All brand and product names are trademarks or service marks of their respective holders.

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Conclusion MPS remain an attractive means by which organisations of all sizes can drive cost efficiencies in their print infrastructure. However, today’s market goes beyond device consolidation and cost savings to pursue business process transformation as businesses prepare to get greater value from their MPS engagements.

MPS Vendor Landscape EXECUTIVE SUMMARY Quocirca’s evaluation of the main providers of managed print services (MPS) shows Xerox, HP, Ricoh and Lexmark leading the market. They have over a decade of experience backed by qualified consultants across the globe, making them suppliers of choice for large, complex multinational engagements. However, there is increasingly little to differentiate between the core MPS offerings, which is serving to level the playing field. As businesses move beyond the initial phases of their MPS engagements, it will be the ability to add further value through business transformation that will set the leaders apart from the challengers.

Leaders appeal to organisations with global needs

Xerox and HP continue to dominate the market in terms of overall global scale and market presence. Xerox is in a class of its own, with a mature enterprise MPS offering that extends to business process outsourcing (BPO) and IT outsourcing (ITO), strengthened by its ACS acquisition. HP’s stronghold in the office printer market continues to boost its MPS business, and closer ties with its professional services arm is better leveraging its BPO/ITO capability. Meanwhile, Ricoh and Lexmark are both making strong progress. Ricoh’s major investment in its global MPS infrastructure is paying dividends whilst Lexmark continues to gain new customers, particularly those needing to manage print across disparate locations or countries.

Strong performers are narrowing the gap

Strong performers, such as Canon and Konica Minolta, continue to globalise their offerings and move further up the value chain by embracing a services-led business model. Canon recorded impressive growth in Europe in 2011, more than doubling its customer base. Konica Minolta has also made significant progress in harmonising its MPS programme in the US and Europe. Its increased investment in its MPS infrastructure and its expansion of IT service partnerships should help it increase its presence in the mid-market where it has a strong focus.

MPS is moving beyond the preserve of large enterprises

MPS is no longer the preserve of larger enterprises, as more vendors develop packaged services to target the small and mid-sized business, often targeted via the channel. Whilst Xerox is ahead of the game with a strong set of services for its channel partners, others are catching up. HP’s acquisition of Printelligent promises to expand its multivendor channel offerings, whilst Ricoh is also transitioning its channel partners to a services-led approach. The channel is not completely sold on MPS, and those vendors that are most reliant on channel partners will need to create a viable and simple proposition to compel them to fully embrace the MPS model.

Print security is a growing market driver

Organisations are only just starting to appreciate the risk that networked printers and MFPs can pose to confidential and sensitive information. MPS vendors are increasingly deploying secure or ‘pull-printing’, which uses authentication to ensure documents are only released to authorised users – at any printer in any location. As well as enhancing security, there are also tangible cost savings through minimising wasteful printing and promoting enterprise mobility. Quocirca expects security and associated offerings to become more integral to MPS engagements in the coming year.

The consumerisation of IT brings new opportunities

Although consumerisation, through the proliferation of smartphones and tablets, is considered a potential threat to printing, vendors report increasing interest in secure printing from mobile devices to help employees remain productive on the move. Most vendors offer some form of mobile print capability – sometimes a combination of hardware and cloud-printing software. With the need to print from mobile devices set to increase, MPS contracts should also track and monitor such printing. Some vendors, such as HP, Ricoh and Xerox, already offer mobile print services to their enterprise MPS customers.

Innovation and continuous improvement will shape next generation MPS

One of the most challenging aspects of MPS delivery is persuading customers to successfully innovate. Most providers emphasise innovation and continuous improvement in their offerings, but only a few of the leading providers communicate well as to how this provides business value. These providers are able to deliver direct, proactive and innovative partnerships and it is this capability that will be key in next-generation MPS engagements.

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Introduction

Managed Print Services (MPS) continue to increase in maturity as providers expand and refine their capabilities. In a flat and commoditised hardware market, MPS is helping hardware vendors increase revenue and capture page volumes from both their own and third party devices. Whilst cost efficiency is always going to be the key driver, MPS is also a compelling way to reduce risk, improve sustainability and drive business improvement. Growing market adoption Businesses are increasingly turning to MPS to tackle the escalating costs and inefficiencies of operating complex and poorly integrated printer fleets. Quocirca research

1 amongst

125 businesses with over 500 employees indicated that 22% have fully rolled out MPS, with almost 15% planning to in the next 12–24 months. Adoption is much higher amongst larger organisations (1000+ employees) where 36% have already adopted MPS compared to 13% of organisations with between 500 and 1000 employees. Nevertheless, there is a strong interest in MPS in this mid-market category, with 30% either investigating or planning MPS. The mid-market is a ripe opportunity for MPS and many vendors are refining their MPS offerings to sell via their channel partners to encourage a transition from transactional hardware sales to contractual managed print services sales. Quocirca estimates that over half of enterprises will be using MPS by 2014. Enterprises reaching second phase of MPS engagements As some enterprises move to the second phase of their MPS engagements, they are increasingly looking for a more proactive stance from providers and more innovation. Consequently, leading MPS providers are placing greater emphasis on complementary capabilities such as print room and production services, business process outsourcing (BPO) and IT outsourcing (ITO) to maximise the value of an MPS engagement. As core MPS offerings become more commoditised, the major providers will continue to innovate and focus more on the delivery of business transformation. This report examines the competitive landscape for MPS, discusses the key market drivers and suggests the capabilities that will shape future generation MPS engagements.

Market drivers There are a number of factors that are converging to drive interest in MPS:

Security: MPS provides the ideal opportunity to assess the potential risks of an unmanaged print environment and deploy the appropriate controls to mitigate such risks. Networked MFPs and printers are an integral part of the IT infrastructure with the same network vulnerabilities as any other networked device. These risks include potential data leaks through unauthorised access to printed documents in output trays, recovery of information stored on hard disks within print devices and the interception of queued print jobs. Quocirca’s survey revealed that, whilst only 15% of respondents are concerned with data loss through MFPs and printers, 70% have suffered one or more accidental printing-related data breaches. Given the potential financial cost and brand damage caused by a data breach, organisations cannot afford to be complacent. Quocirca expects more MPS providers to offer security assessments and recommend embedded secure printing as an MPS component.

Consumerisation of IT and mobility: as employees become more and more mobile and work in an ever-wider range of locations and businesses find themselves supporting a diverse range of mobile platforms, some see it as necessary to extend the print infrastructure to the mobile worker. This need is reflected in Quocirca’s recent study

2, which revealed that

almost 60% of organisations say employees are interested in printing from their mobile devices. In order to ensure that mobile printing does not go untracked and is conducted reliably and securely, organisations need mobile printing to be included as part of a managed print environment. More vendors are developing mobile and cloud print capabilities. Quocirca expects this to be a growing part of MPS providers’ services over the next year.

Environmental drivers: not only can MPS deliver significant cost savings and productivity improvements, it also has environmental benefits, helping a business reduce its carbon footprint. By deploying energy-efficient printers and multifunction peripherals (MFPs) and implementing responsible and secure printing practices, MPS enables organisations to cut energy usage, eliminate unnecessary printing and reduce waste. Along with hardware disposal and consumables

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recycling, MPS can play a key role in an organisation’s environmental strategy. MPS providers are increasingly offering carbon footprint analysis as part of their up-front assessment services.

Business process improvement: many large enterprises are now in the later stages of their MPS engagements and looking for additional benefits beyond the initial attractions of cost savings as a result of device consolidation. Workflow integration through document capture, routing and management software can help leverage investments in MFPs and enable these devices to become document processing hubs. Quocirca believes more organisations will be looking for such productivity improvements as they move beyond the first phase of their MPS engagements.

Production printing efficiency: while most MPS engagements centre on the office print environment, there are significant further benefits to be gained by considering the wider enterprise print environment. Many document production processes are cumbersome and rarely integrated across the office and print room; for example, when jobs that could be done more cost-effectively in the print room are sent to office printers. Integrated workflow tools enable complex print jobs to be re-routed from office printers to the print room, ensuring better overall use of devices. Despite the different stakeholders for the office and production print, Quocirca expects to see an increase in integrated office and production printing MPS contracts as more vendors show thought leadership in this area.

Definitions Quocirca defines a “managed print service” as the use of an external provider to assess, optimise and continuously manage an organisation’s document output environment in order to lower costs and improve productivity and efficiency while reducing risk. MPS allows organisations to reduce costs and improve efficiency by rationalising the print environment. It also leverages existing investments in multifunction peripherals (MFPs) while continually monitoring usage so that the optimised infrastructure continues to meet business needs.

MPS covers a number of service areas across three broad categories:

Assessment – a review of the current print environment to provide recommendations for a rationalised print environment and estimated potential future savings. Assessments range from basic on-line assessments to full workflow assessments. Environmental impact analysis and document security assessments may also be included.

Optimisation – device rationalisation and consolidation to reduce user-to-device ratios, development of print policies to develop a governance framework for a full enterprise MPS, including change management and deployment and transition.

Management – continuous process improvement, business reviews, SLA monitoring, remote management and improving workflow.

These services fall under Quocirca’s definition of MPS when the vendor takes over responsibility for delivery under a contract of three years or more in length. Such activities may also involve the transfer of people or assets to the vendor or provider.

Methodology Quocirca has included the following MPS providers in this study: Canon, HP, Konica Minolta, Kyocera, Océ, Lexmark, Ricoh, Toshiba, Xerox, AUXILIO and M2. Vendor selection was according to:

Experience and skills in providing MPS services: all providers had to demonstrate a strong record of delivering MPS.

Geographical delivery capability: each provider was required to have the capability to deliver services across multiple countries.

Each MPS vendor was requested to complete a written submission detailing its strategy, capabilities and customer references to ensure key facts and figures were captured. These submissions were followed up with vendor interviews. The quantitative and qualitative inputs from the vendor research were analysed by Quocirca in order to determine each vendor’s score against a list of criteria for market presence and completeness of offering. Full details are provided in section 10. To highlight the broadness of the MPS ecosystem, Quocirca has also included profiles of independent MPS providers, AUXILIO and M2.

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The MPS ecosystem

The MPS landscape includes printer/copier manufacturers, systems integrators, software infrastructure vendors and consulting/audit firms.

Printer/copier manufacturers: these vendors’ programmes are generally tied to their product offerings, although multivendor support is often offered. Service offerings include assessment, design, implementation and support services. They may also offer MPS programmes to their reseller partners. Vendors in this category include Canon, HP, Konica Minolta, Lexmark, Ricoh, Toshiba and Xerox.

Systems integrators/resellers: these are a channel to market for some printer and copier vendors, and may offer MPS as part of a wider desktop management offering. Systems Integrators that offer MPS include Atos Origin, Cap Gemini, CSC, SCC and IBM.

Software infrastructure vendors: these provide software tools for use in the print environment. Examples include assessment and print management products such as Equitrac, Print Audit, FM Audit and PrintFleet, and secure printing products from Equitrac, SafeCom and Ringdale. MPS providers often use such third party products to add value to a particular element of their MPS portfolio.

Consultants: these independent firms offer a vendor-neutral approach and may also focus on a specific geography, technology or market niche. Typically, their assessment and design services provide recommendations that are not tied to a particular manufacturer.

Vendor assessment

Quocirca has created a vendor scorecard for each MPS provider, based on a range of criteria that determines an overall score for market presence and completeness of offering. Each score is on a scale of 1 to 5 where 1 is weak and 5 is very strong. This evaluation of the MPS market is intended as a starting point only. Please note that Quocirca's scoring is based on an un-weighted model although prospective buyers may wish to weight the scores to meet their own specific needs. Market presence criteria

Enterprise customers: the strength of the vendor’s European enterprise customer base.

Strategy: how comprehensive is the vendor’s MPS strategy, the quality of its overall value proposition and its evolutionary vision for MPS?

Maturity of offerings: how long has the vendor been active in the market, how developed are its offerings?

Geographic reach: a vendor’s geographic reach, either directly or through partners or channels.

Overall financial strength: a vendor’s overall financial position and assessment of the scope for future investment in its MPS offering.

MPS revenue and growth: European MPS revenue and growth over the past year.

Market credibility: the effectiveness of vendor initiatives to promote its brand, increase awareness of its service offering and influence market development. Also includes the clarity, differentiation and internal/external consistency of the vendor’s market messages.

Alliances and partnerships: the strength of the vendor’s partner and alliance network.

Investment and dedicated resources: the vendor’s investment in its MPS portfolio, resources and innovation that will add improvements in approach, process or service offering.

Completeness of offering

Modularity of services: the flexibility and scalability of the service portfolio to provide a customised offering.

Breadth and depth of service offering: the range of services available, including complementary ones such as business process outsourcing (BPO), IT outsourcing (ITO) and document process outsourcing (DPO).

Help desk capabilities: centralised help desk capabilities and integration, remote diagnostics and support.

CRD/print room support: print room/mail room services and integrated tools such as variable data printing and workflow.

Multivendor support and maintenance: the vendor’s ability to support third party products.

Mobile printing support: capabilities to support mobile workers, either through mobile device printing or pull printing/authenticated secure printing.

Document workflow integration: integration with third party products and services.

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Figure 1 represents Quocirca’s view of the competitive landscape for printer and copier vendors that deliver enterprise MPS. A vendor’s market position is indicated by the size of the bubble, based on estimates of customer base. An indication of the growth in each vendor’s position is shown by a (+), (-) or (=). The following categories are used to reflect a vendor’s position:

Market leaders: vendors that lead the market in both strategic vision and depth of service offering. Leaders have

made significant investments in their service portfolio and infrastructure and are supported by strong delivery capabilities.

Strong performers: vendors that have established and proven offerings, supported by demonstrable customer success.

Contenders: vendors that have service offerings that are currently being aligned on a global or European basis. Contenders are typically investing in resources, infrastructure and partnerships to expand market coverage.

Figure 1: Quocirca MPS vendor positioning * Customer base: Please note that enterprise customer figures and estimated devices under management have been considered when determining customer base bubble size.

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Vendor highlights

Market leaders: Xerox, HP, Ricoh, Lexmark Market leaders possess diverse strengths and wide global presence. Xerox and HP lead the pack due to their global scale, organisational breadth and depth of capability. Lexmark and Ricoh are catching up fast, both having made significant progress in the market in 2011.

Xerox: Xerox is a long-established provider of MPS, with a broad range of services, a mature global delivery infrastructure and extensive market presence. Xerox has a strong value proposition and vision, as well as strength in extended services such as business process outsourcing (BPO) and IT outsourcing (ITO), strengthened by its acquisition of ACS in 2010. Integration of these capabilities will be a key focus for Xerox in 2012. It also offers a strong focus on continuous improvement and innovation, along with solid plans for growth. Its enterprise print services (EPS) offering is one of the most mature, integrating all major on-site and off-site print environments, including office, production, off-site commercial and mobile printing. It offers extensive skills and breadth of expertise across assessment and design, implementation, change management and ongoing reporting. A strong strategy for the continued refinement of its Xerox EPS offering should ensure it continues to appeal to global and multi-region enterprises looking to rationalise disparate enterprise-wide print management practices.

HP: HP articulates a strong MPS strategy along with a strong vision for security and mobility. With one of the broadest product ranges in the industry, from low-end consumer printers to production presses, it also scores highly for its geographical reach and broad partner ecosystem. HP’s comprehensive MPS offering leverages its strong product range and its broad software portfolio to offer a solid mix of technical expertise, strategy consulting and continuous management. Its vast integrated go-to-market infrastructure and IT and network integration expertise sets it apart from some of its competitors. HP scores highly for its deployment of software solutions, indicating that 75% of its direct MPS contracts include software, whether it is security, mobility, job accounting or document workflow. This positions it well to drive business transformation for its customers. To capture wider opportunities, HP is expanding its MPS portfolio beyond the office into the printing of commercial documents and marketing-related workflows and material as well as production printing.

Ricoh: Ricoh offers a strong customer-centric adaptive MPS approach, with broad global reach. It has rapidly expanded its market position, particularly helped by its acquisition of IKON in 2008, which has significantly enhanced Ricoh’s MPS capabilities and resources. Its global reach is supported by 5 regional competency centres, which serve the 180 plus countries it is present in. Since April 2011, Ricoh has signed more than 10 global customers, including one that operates in more than 70 countries. Its document lifecycle approach addresses the entire information structure and is a strong option for business process transformation engagements. Ricoh also offers flexible pricing models to drive greater levels of service transparency. Ricoh particularly stands out for its change management methodology, having now trained over 400 employees as certified change management professionals. Ricoh is building a worldwide IT infrastructure management service, based on its established capabilities in Japan. Ricoh expects to start promoting its IT services globally during the course of 2012.

Lexmark: Lexmark has emerged as a leading, well-established player in the MPS market, having offered MPS through its services organisation, Lexmark Global Services (LGS), for over twelve years. Lexmark has a solid service offering and strategy, particularly excelling in delivering scalable services from SMBs to large enterprises. Whilst Lexmark serves all sectors, it has particularly strong vertical expertise in retail and financial services, by virtue of a robust range of industry specific solutions. Its offering is also characterised by a strong global delivery model and a promising mobile print offering. A large proportion of Lexmark’s business involves multi-country MPS implementations, and this capability for distributed delivery is a key strength. This makes it a good choice for enterprises operating a distributed printer fleet across multiple locations or countries. Lexmark’s acquisitions of Perceptive Software in 2010 and Pallas Athena in 2011, along with is strong software customisation capabilities, positions it well to deliver integrated business process management.

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Strong performers: Canon, Konica Minolta

Canon: Canon indicated significant growth in its global MPS customer base in 2011. Canon is making strong investments in its global service delivery infrastructure with MPS now playing a central part in its sales strategy. Each Canon region now has dedicated MPS business development managers that support large and complex cross-border contracts. Its global approach is supported by its well-established direct service organisation and service partners, who are required to perform to stringent SLAs. A strong differentiator for Canon is its uniFLOW print management platform, which enables management and reporting on all scanning, copying and printing across both desktop and mobile print environments. Since the majority acquisition of Océ in 2010, it is actively promoting the benefits of the combined Canon and Océ hardware portfolio to drive potential integrated MPS opportunities.

Konica Minolta: Konica Minolta has continued to focus on integrating its MPS offering across the US and Europe to provide a more seamless, consistent experience for customers. It has successfully expanded its mindshare in the MPS market and has transitioned from being a relatively niche regional player to a global provider, having secured a number of global MPS customers in 2011. Konica Minolta should continue to gain the scale needed to be competitive for multiple global deals but, for now, it has a far stronger presence in Europe and North America than elsewhere, particularly in central Europe. Konica Minolta is actively pursuing joint IT infrastructure services opportunities, having made a number of acquisitions including All Covered Inc. in the US and Koneo in Sweden. Currently, IT services are being rolled out on a region-by-region basis and give Konica Minolta the potential to expand its MPS footprint, particularly in the midmarket.

Contenders: Océ, Kyocera Document Solutions, Toshiba

Océ: Océ has a long-established service offering, including improving document management processes, providing document outsourcing services, mail/print room management, printer fleet management and creative services. Although its position in the market has been impacted by low profitability in the past year, it continues to add to its MPS customer base. The US accounts for around 60% of its MPS business, whilst in Europe it has a particularly strong presence in both Germany and the Netherlands. It has developed a cohesive MPS offering, based on its established assessment, transition and operations phases. Following the majority acquisition of Océ by Canon, Océ’s multivendor approach is now transitioning to a combined Océ and Canon portfolio. Océ’s strong presence in the print room provides it with good opportunities to extend these contracts to wider MPS engagements. This will undoubtedly be boosted by the joint Océ and Canon portfolios, which will also help Océ attract new MPS customers. Océ operates in a highly competitive market, where it could be challenged to match the scale and infrastructure of some of the major enterprise MPS providers. However it has some strong customer references, which demonstrate its maturity in MPS delivery.

Kyocera Document Solutions: Whilst other major vendors have been stealing the MPS limelight, Kyocera Document Solutions has spent the past two years evolving its managed document services (MDS) offering. Although it remains limited in terms of market presence as a relative latecomer to the MPS market, it has a strong strategy for moving its business forward through both its strong channel network and direct global accounts teams to reach larger enterprises. Its global approach will deliver a unified approach across US and European markets. It has developed strong multivendor management capabilities through using best of breed print management tools, and provides a hosted service with low entry-level costs for its dealers. Overall, Kyocera Document Solutions is a good choice, primarily for European MPS deals that that require local or regional delivery. With a broader product range planned for the coming year, and plans to unify its offerings globally, Kyocera Document Solutions will be one to watch for the coming year.

Toshiba: Toshiba has a mature MPS offering in the US, which it extended to Europe with the launch of its pan-European Managed Document Services (MDS) strategy in July 2010. It has a stronger presence in the US than in the European market, although it has now aligned its European and American MPS strategies and is expected to align them for the rest of the world over the course of 2012. It has developed a modular MPS portfolio that includes multivendor support. Toshiba’s MPS offering is scalable from five devices upwards, making the service particularly good for SMBs. Toshiba is highly reliant on its channel partners to sell and deliver MPS and its success in the European market therefore relies on it developing a strong proposition for its channel. Toshiba does not have the scale or infrastructure to match its competitors, and needs to focus on a stronger, more visible, strategy for the future.

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Independent providers extend MPS reach

Although hardware vendors have been the predominant suppliers of MPS for decades, the market has reached a tipping point as it has evolved to include a wider range of providers. Historically, MPS has been widely and exclusively adopted by large enterprises, but the emergence of independent MPS providers that offer vendor-agnostic, niche market, and best-of-breed technology, software and services is promising to expand the penetration of MPS beyond the exclusive domain of large enterprises. Independent MPS providers play an important role in delivering impartial assessment services and unbiased MPS recommendations as the provision of multivendor services for break-fix, support, supplies replenishment etc. enables organisations to protect existing hardware investments rather than moving to a single-vendor standardised print environment. Having the flexibility to support devices from multiple vendors, independent MPS providers can innovate with the latest technology, introduce new capabilities and work with the widest range of print-related equipment vendors to ensure maximum savings. The independent MPS provider landscape is largely characterised by resellers that have extended their copier sales business to deliver broader vendor-agnostic MPS contracts. They have typically established a strong platform for MPS assessment and optimisation supported by a mature service delivery infrastructure. The more established providers, who have invested in MPS resources and skills, tend to have developed their own tools and processes rather than rely on turnkey solutions from the manufacturers. However, the emergence of multivendor packaged MPS offerings, such as XPPS from Xerox and chaMPS from Ricoh, are enabling a broader channel to participate in MPS engagements. Independent MPS providers are well positioned to extend the reach of MPS to a broader market, but are also acquisition targets. The market is already seeing some consolidation as hardware vendors acquire such providers to expand their own capabilities with those of their partners. In 2011, HP acquired the US MPS provider Printelligent and is now rolling out multivendor MPS capabilities for its channel in the US and, subsequently, will do so in Europe. Quocirca expects further acquisitions of independent providers as hardware vendors look to strengthen their multivendor MPS delivery and service capabilities. Quocirca’s report highlights two established MPS providers. Firstly, AUXILIO, a health care exclusive, vendor-neutral MPS provider in the US, and secondly, M2, a UK-based vendor-neutral MPS provider, focused on key vertical markets such as architecture, engineering, construction, support services and legal.

AUXILIO MPS drives EMR readiness in US health care

Market background: US health care

US hospitals are facing unprecedented pressure to lower costs, improve efficiency and enhance the quality of patient care amid reimbursement rate cuts and labour shortages. On top of this is the requirement to comply with the Health Information Technology for Economic and Clinical Health Act (HITECH Act), part of the American Reinvestment and Recovery Act of 2009, which stipulates that US hospitals must implement and demonstrate “meaningful use” of electronic medical records (EMR). According to estimates from Accenture, roughly half of US hospitals are at risk of incurring penalties when enforcement begins in 2015.

Central to the need for an MPS strategy is that hospitals currently operate in a fragmented and complex document production environment. It is estimated that the large volume of redundant paperwork in the US healthcare system accounts for $100 billion to $150 billion, or 17% of health care, waste in spending annually

1. This, coupled with economic challenges, an increase in

non-paying patients and reduction in patient volume, puts immense pressure on the nation’s 5,700 hospitals, which are struggling with the cost and implementation of electronic records or face Medicare-based penalties that are estimated at $3 million to $4 million per annum for a 500-bed hospital. These potential penalties are making implementation a primary concern for many hospital executives

2.

Health care institutions can achieve significant cost reductions through MPS by evaluating hardware investments, ongoing maintenance costs, printing usage and the cost of consumables, such as toner and service parts. MPS can further support compliance with the shift to better EMR management through implementing secure document capture and workflow solutions, and replacing resource and cost-intensive paper-based processes. With health care organisations often operating geographically dispersed deployments of mixed copier and MFP fleets, MPS can ultimately deliver substantial financial and environmental savings through device consolidation, optimisation and continuous management, as well as support the interoperability between hardware and software.

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Company overview

AUXILIO is currently the only independent MPS provider that works exclusively within the health care industry and with hospitals and hospital systems in the US. In 2011, AUXILIO performed strongly, growing revenue by 40% and renewing its largest customer’s contract for 5 years as well as retaining other large, long-term customers. Overall, it claims an impressive 100% customer retention rate.

AUXILIO has established a strong presence in the US health care sector, having evolved from providing just simple break-fix contracts in 2004, to delivering sophisticated end-to-end MPS strategies and solutions to more than 60 hospitals and over 1,500 of their affiliated medical, clinical and administrative facilities around the country.

Today, AUXILIO manages and maintains over 40,000 devices from more than 45 manufacturers, services over 150,000 end-users, and ensures successful integration and interoperability with hundreds of software applications, including the top EMR software products such as Epic, Meditech, Siemens, Cerner and in-house developed applications – and the legacy equipment and technology.

AUXILIO has 140 employees focused on delivering MPS directly and nearly 70 of those employees were hired since 2010, demonstrating AUXILIO’s tremendous growth pattern. The company’s success has gained the attention of business and management professionals engaged by hospitals to uncover opportunities for savings and efficiencies as part of the demands of health care reform. As a result, large health systems, with multiple hospital campuses, home health care facilities and affiliated physician groups are in the pipeline and multiple assessments are on-going.

In 2011, AUXILIO secured a number of new, expanded and extended MPS contracts with hospitals including Barnabas Health in New Jersey, Memorial Care Health System in California and Memorial Health System in Colorado. In January 2012, it announced a five-year contract worth over $40 million with Catholic Health East (CHE) to implement its MPS strategy in 19 hospitals, three long-term care facilities and a multitude of clinical and administrative entities in 11 states and 47 cities from Maine to Florida. CHE’s savings are expected to be approximately $12 million over the five-year term.

In 2012, AUXILIO will continue to augment its sales force and leverage its growing awareness in the health care industry with hospital management consultants to drive new business. Quocirca believes that AUXILIO, as a US health care specific independent MPS provider, is well positioned to help hospitals tackle printing inefficiencies, control escalating costs and ensure EMR readiness. However, hardware vendors such as Ricoh and Xerox are also active in the health care market, and are expanding their MPS portfolio to encompass BPO capabilities. Although such providers pose a competitive threat, AUXILIO’s risk-free model, with no upfront costs and advanced skill and knowledge of EMR readiness strategies by its in-hospital teams, without regard to software product type, should continue to resonate with health care institutions looking to make best use of existing hardware and software investments.

Key differentiators

AUXILIO differentiates its MPS offering around the following:

No up-front costs. AUXILIO’s program requires no upfront investment and no purchase of new equipment, personnel, software, consulting etc. AUXILIO also conducts risk-free, no-cost print assessments and maximises efficiency by reorganising equipment and re-negotiating contracts.

On-site staff. Full-time, on-site resident teams that consolidate the MPS process under one function and one centralised cost-centre that is transparent and reportable.

Operating council. AUXILIO’s MPS program is structured through a collaboration of customer executives, other end-user representatives, and AUXILIO’s full-time, on-site team members and corporate staff. This ensures a collective decision-making process.

Utilisation rate pricing. AUXILIO’s Utilisation Rate (UR) guarantees a price point that is lower than that which customers spend on a per-page basis prior to the MPS implementation. Each page is charged at a flat rate, whether it is a copy, fax, or print (scans are charged at a reduced rate). This rate is fixed for the life of the contract and includes the total managed cost to create a page.

Data security. With data security a key imperative in the health care industry, AUXILIO’s technicians are fully trained on security measures for all hardware and software and, because of its print vendor-neutral status, the company has access to proprietary information regarding security protocols for each manufacturer’s equipment and technology.

EMR readiness: AUXILIO’s vendor-neutral business model with devices and technologies, including electronic records software products, puts them at the forefront of EMR best practices in the MPS space to achieve end-to-end

Company Snapshot

- Established: 2004

- Employees: 140

- Headquartered: Mission Viejo, California

- Geographical coverage: USA, all states regions and counties.

- Route to market:

Direct: 70%

Health Care Management Consultants: 30%

- Customer base: Currently AUXILIO has MPS contracts in 64 acute care hospitals and over 1,500 affiliated medical, clinical and administrative facilities.

- Web: www.auxilioinc.com

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interoperability across all platforms, devices and technologies. Its on-site teams are all engaged with EMR implementation strategies in the hospitals they serve and are therefore able to provide new customers with advanced skills and knowledge.

Sustainable print campaigns. In 2011, AUXILIO designed and piloted a high-end volume reduction and sustainability campaign called ‘Go Green. Print Less.’ The objectives were to effectively reduce its customers’ print volumes and realise quantifiable cost savings, build awareness of eco-friendly print solutions and educate and train staff systematically in order to achieve long-term, sustainable results.

Case study: AUXILIO streamlines EMR software implementation

Orange Coast Memorial Medical Center is a 162,000 square foot modern facility that delivers the latest diagnostic and treatment options to a major metropolitan community. It is also one of six leading hospitals in the Memorial Care Health System, a not-for-profit patient care system that is widely recognised to be an innovator in providing quality health care. Memorial Care Health System has over 1,500 beds, more than 10,000 employees and a medical staff of over 2,300. Business challenge

Orange Coast Memorial Medical Center was one of the first hospitals in Orange County to launch a fully integrated EHR system. The selection of an enterprise-wide EHR software service requires the analysis of, and change to, the underlying clinical information workflow processes and the development of a new infrastructure that guarantees the delivery, privacy and security of critical patient data. Each EHR system has different data format specifications and may use the available standards differently. Consequently, device connectivity and interoperability is essential in order to be able to adapt easily and exchange information in the right format from one system to another. One of the primary challenges for Orange Coast Memorial Medical Center was to ensure its EHR software system connected seamlessly to other devices in its information infrastructure and met its high standards for using technology that will enable the hospital to share secure medical records between all care providers and the patient. Service chosen

As an existing MPS partner since 2003, Memorial Care Health System selected AUXILIO to be an integral member of the project team and help develop a comprehensive EHR implementation strategy. AUXILIO designated a full-time, on-site team comprised of document management workflow and process efficiency experts to provide 24/7 support and design practical solutions for EHR that are customised and interoperable. After a thorough RFP discovery process, the team selected Epic, a fully electronic and integrated medical records system that provides multiple utilities for medical practitioners in one patient-centric database. AUXILIO conducted a comprehensive audit of the hospital, evaluated all components of its space and operation, created a detailed inventory of all documentation, mapped the location of all equipment and delivered a strategy to successfully integrate the hospital’s devices and software constructively and ensure maximum connectivity and end-to-end interoperability. AUXILIO oversaw a number of critical steps that included:

Assessing and relocating devices for better workflow

Ensuring connectivity for multiple device types, especially legacy ones that did not have built in network connectivity

Integration of the printing of Microsoft documents with the printing of Epic’s forms

Planning and executing the hospital’s equipment infrastructure expansion plan

Reducing the hospital’s original new printer purchasing assessment from sixty to just five devices

Executed a primary and secondary redundancy plan for Epic printers Benefits

The hospital’s new state-of-the-art information system guarantees the efficient delivery, privacy and security of critical patient data. As a result, the hospital staff is now better equipped to manage critical documentation and advance patients, information and resources through the health care continuum and, ultimately, improve its overall patient care and hospital staff satisfaction. The hospital’s early adoption links it with an EHR user community that meets all federally required meaningful use standards and allows the hospital to focus attention on the next phase of its EHR strategy — partnering with physicians to install ambulatory EHRs in their offices and fulfilling its vision of sharing secure medical records between all care providers and the patient. References 1 Thomson Reuters (October 2009)

2 Accenture Health Practice, (January 2011)

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M2 expands presence in UK market Company overview

M2 is one of the major independent specialist suppliers of managed print and IT services in the UK. Its customer base covers a range of sectors including legal services, financial services and support services. Clients include Atkins PLC, Balfour Beatty PLC, Compass PLC, RR Donnelley, Prudential PLC, Skanska, Close Brothers PLC and JLT PLC. Its contracts cover more than 5,000 customer sites across the UK. M2 has transitioned its business from the traditional break-fix copier model to a service-led approach over the last 7 years. It currently employs approximately 200 people and manages 16,000 devices, of which around 15,000 are under an MPS model and integrated with IT solutions. It has around 90 field engineers and 25 people in its IT and professional services team. It has a strong proactive account management team which focus totally on managed service delivery. It has developed a bespoke technology platform called M2 Intelligence, which integrates its customer helpdesk, IT technical teams, engineers and supply chain, providing the customer with a fully integrated one-stop service. M2 has an outsourced strategy for non-core activities using other providers for greater efficiency, better service and to lower costs. This includes CEVA, Supplies Team and Relay for logistics, warehousing, toner and parts fulfilment. M2 works with the four leading MFP and print manufacturers - Ricoh, Canon, HP and Xerox as well as the leading software providers such as Equitrac, SafeCom and UniFLOW. In December 2011, M2 won Canon’s European managed print services (MPS) award at Canon Europe’s 2011 Premier Partner Conference. After only a two-year partnership, Canon selected M2 for its strong MPS approach in securing the business of a large financial services customer following a highly complex integration of UniFLOW, as well as a large office and print room solution nationwide on a 10 year outsourced contract. In 2011, M2 retained its top 5 customers on a non-competed renewal basis. M2 also won many major new business contracts with mid and large sized businesses, reinforcing the trend it is seeing where organisations see the value of a trusted advisor who is agnostic to brand choice and ensures best fit for the customer with strong emphasis on a managed service environment. M2 continues to target mid and large scale organisations in key verticals, both directly and through a growing portfolio of strategic affinity partners, which now totals 10. These range from office supplies, IT, facilities management, BPO and specialist reprographic organisations. With its national operational infrastructure, strong MPS technology platform and bespoke MPS tools and integrated capabilities, M2 is now starting to offer support services to other resellers, acting in a white label capacity for their own businesses. M2 is looking to extend this service offer throughout 2012 to UK resellers seeking to access MPS. MPS approach

M2 offers complete end-to-end managed print service: - Audit, solution design and consultancy services - Project management, change management and implementation services - Operational services including installation, out of hours services, break fix, 1

st & 2

nd line helpdesks, toner fulfilment,

fleet utilisation, pool fleet management, refurbishment services and end of life services - On-site print room management, engineer technicians and IT resource - IT technical support services, IT consultancy, software configuration, implementation and support and service

management - Real-time remote management of faults, toner, volumes, diagnostics and proactive assert management of print

infrastructure - Proactive account management, management information reporting, customer MI portals, benefit & SLA tracking - Customer innovation and continual improvements programmes

Company Snapshot

- Established: 1992

- Employees: 200

- Headquartered: Manchester & London, UK

- Geographical coverage: UK

- Route to market: Direct.

- Hardware partners: Ricoh, Canon, HP and Xerox

- Software partners: Equitrac, SafeCom, Microsoft, UniFLOW, Ecopy, Docuware

- Customer base: Over 500

- Devices under management: 16,000

- Web: http://www.m2.uk.com/

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Key differentiators

M2 differentiates its MPS capabilities as follows:

Comprehensive consultancy services. M2 provides a range of tiered services embracing physical, electronic, environmental and document management reviews nationwide providing the customer with a truly independent assessment of the ‘as is’ state and recommended transition to best practice.

IT expertise. M2 has invested in skilled IT architects, programmer managers and developers. This has enabled it to offer its customers IT-related print expertise from server management, configuration, to enterprise-wide consultancy as well as the integration of software within a customer to ensure maximum ROI from software investment.

Remote management platform: M2 intelligence. M2 has developed a highly integrated platform providing a full end-to-end system over all MPS operations that provides the customer with total transparency and therefore confidence in the control and service performance of M2 within its fleet and infrastructure. This enables fault, toner and volume remote management, enabling leading service level performance as well as a total asset management system to ensure total control.

Service excellence and customer loyalty. M2 operates nationally and provides consistent service performance regardless of location. M2 sets high SLA standards against stringent KPIs, whether its 3 hour response times, 20% of calls managed within 20 minutes through remote diagnostics, 98% next day just-in-time toner fulfilment or 99% fleet uptime. M2 demonstrates its service delivery quality through regular and detailed reporting to its customers.

Account management and continual improvement. Through a proactive approach, M2’s account managers ensure it is delivering on its service promise. Its continual improvement programme aims to provoke new ideas, offer advice and demonstrate new opportunities for further benefits.

Case study: M2’s Managed Print Services helps the JLT Group reduce print costs

Jardine Lloyd Thompson (JLT) Group PLC is an international group of risk specialists and employee benefits consultants and one of the largest companies of its type in the world. The JLT group is quoted on the London Stock Exchange and employs over 6,500 people worldwide and, through the JLT International Network, provides services in more than 130 countries. Business challenge JLT Group assessed its print usage and identified that printing was costing the London operation approximately £980,000 per annum. It was operating approximately 470 devices from eight different vendors across 10 offices. Document scanning was a key business process, yet JLT’s document management system did not have the facility to integrate with electronic documents. The Group sought a MPS with the main aim of reducing print expenditure, while also aiming to consolidate the number of devices, reduce suppliers and update its print technology. As part of a select tender process, M2 was chosen to provide a MPS solution that would reduce costs while providing one supplier able to service and support software and hardware through the benefits of independence. Service chosen M2 conducted a full analysis of the JLT Group’s current print environment, assessing print and device usage. M2 formulated a plan to help JLT Group reduce print costs and the number of devices, while providing new technology and innovation. M2 now provides a fully integrated MPS with JLT’s IT helpdesk and IT outsourcing organisation whilst providing on-site technical expertise on its main sites. M2 additionally developed an integrated scanning service to support JLT’s business critical processes, as well as a pull printing process to aid policy application and document security. M2 has also developed an innovation forum to evaluate new ideas and changing business requirements based on JLT’s business direction and vision. This allows concepts to be discussed, assessed and feasibility studies to be driven from agreed joint project work. Benefits As a result of M2’s involvement to reduce print costs, JLT indicates it has saved approximately £300,000 per annum. Following a successful initial five-year contract, JLT has already renewed for an additional five years.

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The hallmarks of next generation MPS

MPS has the potential to play a key role in delivering strategic business value. Not only does MPS save money, but it can also mitigate risk, promote enterprise mobility, improve environmental credentials and transform business processes. As MPS increases in maturity, businesses will be increasingly looking for further value from their MPS engagements. This will put more pressure on MPS providers to deliver true business value and transformation. Quocirca expects the next generation of enterprise managed print services engagements to be characterised by the following:

Partnership based: a successful managed print service partnership depends on quality, scale and flexibility, along with

capabilities and experience. It is vital to identify and build a trust-based partnership between the customer and MPS provider and partner with a company that can leverage its scale and experience. This may begin with an initial standardisation of services that will provide consistency and then a roadmap of innovation that will take the business forward. This requires that the MPS provider to be fully supportive of its customers’ business goals.

Creating business value: the prime driver for first-generation MPS is the need to control costs. As businesses move to second-generation MPS engagements, there is a need to leverage existing investments to create more business value. A true next-generation MPS looks beyond the hardware to examine the entire document workflow and lifecycle and identify ways to change or improve these over time. This requires a full assessment of existing processes and the deployment of document workflow services that leverage investment in networked MFPs, which can operate as sophisticated document processing hubs. The implementation of software such as secure printing, document capture or document routing can minimise paper usage, significantly enhance document security and improve employee and overall business productivity.

Transformational service delivery: whilst cost efficiency will grab the headlines, service quality must be at the forefront of any MPS decision. To differentiate delivery, MPS providers must be able to guarantee delivery of SLAs and provide extensive and sophisticated levels of ongoing monitoring and support. Continuous review of MPS agreements and operational SLAs is key to ensuring that the originally defined outcomes continue to meet the business’ strategic needs and, if not, to decide on how best to deliver more relevant ones.

Sustained change management: effective change management will be the cornerstone of successful, next generation MPS relationships. This requires a collaborative effort between the customer and MPS provider. Whilst transition planning and vendor delivery capability are key elements of an MPS, change management and communications are critical to gaining employee support and achieving the desired outcomes. Sustained change management means demonstrating top-down support and showcasing successes of initial MPS deployments.

Innovation: as businesses move to the next phase, they will expect to derive substantially greater business and transformative value from their MPS agreements, driving innovation, not just operational efficiency. Although MPS can free an organisation’s in-house resources to innovate, it is ultimately the relationship with the MPS provider that can drive the most innovation. Its access to wider resources, geographic coverage, research and technology development can be vital in helping businesses develop and evolve.

Conclusion

MPS has a key role to play in delivering strategic business advantage, enabling business transformation as well as saving money. MPS providers must be able to articulate a clear strategy on how they can support their customer’s business transformational goals on an ongoing basis. It will be those providers that will be in the best position to strengthen their MPS business, by helping their customers contain costs, improve efficiency and support ongoing innovation.

Further Reading

1 Closing the Print Security Gap: http://www.quocirca.com/reports/624/closing-the-print-security-gap 2 The Mobile Print Enterprise: http://www.quocirca.com/reports/653/the-mobile-print-enterprise

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Competitive summary

Key: Full support Partial support No support

Canon HP Konica Minolta

Kyocera Lexmark Océ Ricoh Toshiba Xerox

Assessment

Basic assessment Advanced Assessment

Environmental assessment

Security assessment

Implementation

Deployment planning

IMAC/D Project management

Support

Centralised help desk

On-site support Service portal

Remote monitoring and supplies management

Full multivendor remote monitoring

Proactive supplies replenishment

Continuous Improvement

Change management

On-going SLA monitoring/review

CRD/Print Room Services

CRD/print room Document workflow solutions

Industry solutions Third party solutions portfolio

Complementary Services

Business Process Outsourcing (BPO)

IT Outsourcing

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About Quocirca

Quocirca is a primary research and analysis company specialising in the business impact of information technology and communications (ITC). With world-wide, native language reach, Quocirca provides in-depth insights into the views of buyers and influencers in large, mid-sized and small organisations. Its analyst team is made up of real-world practitioners with first-hand experience of ITC delivery who continuously research and track the industry and its real usage in the markets. Through researching perceptions, Quocirca uncovers the real hurdles to technology adoption – the personal and political aspects of an organisation’s environment and the pressures for demonstrable business value in any implementation. The capability to uncover and report back on the end-user perceptions in the market enables Quocirca to provide advice on the realities of technology adoption, not the promises. Quocirca research is always pragmatic, business orientated and conducted in the context of the bigger picture. ITC has the ability to transform businesses and the processes that drive them, but often fails to do so. Quocirca’s mission is to help organisations improve their success rate in process enablement through better levels of understanding and the adoption of the correct technologies at the correct time. Quocirca has a pro-active primary research programme, regularly surveying users, purchasers and resellers of ITC products and services on emerging, evolving and maturing technologies. Over time, Quocirca has built a picture of long term investment trends, providing invaluable information for the whole of the ITC community. Quocirca works with global and local providers of ITC products and services to help them deliver the promise that ITC holds for business. Quocirca’s clients include Oracle, Microsoft, IBM, O2, T-Mobile, HP, Konica Minolta, Ricoh, Xerox, EMC, Symantec and Cisco, along with other large and medium-sized vendors, service providers and more specialist firms. Details of Quocirca’s work and the services it offers can be found at http://www.quocirca.com