Gartner @ XplorEffective Management of Office Document Output Systems

Andrew Johnson

Managing Vice President

The Opportunity and Dilemma

Document output and management spending worldwide is $180 billion

Represents 1 percent to 3 percent of most businesses’ revenue

Savings of 10 percent to 30 percent are common when businesses actively manage products and processes

Quest for savings is opportunity for businesses and threat to some vendors

Worldwide Spending on Devices is Slowly Declining

Worldwide Copier, Printer and Fax Forecast Revenue ($M)

1Q02 2Q02 3Q02 4Q02 2002 YOY (%)Actual Spending 15,212 15,048 14,480 16,269 61,008 -3.3

1Q03 2Q03 3Q03 4Q03 2003Best Case 14,762 15,020 14,750 17,059 61,592 1.0

Most Likely Case 14,452 14,668 14,364 16,535 60,019 -1.6Worst Case 13,684 13,934 13,673 15,711 57,002 -6.6

1Q04 2Q04 3Q04 4Q04 2004Best Case 14,687 14,884 14,706 17,176 61,452 -0.2

Most Likely Case 14,232 14,400 14,182 16,522 59,335 -1.1Worst Case 13,499 13,669 13,453 15,624 56,245 -1.3

YOY = Year over year

Best Case Most Likely Worst Case

Economy and Politics

Political settlement in Iraq or thewar ends quickly withoutglobal consequences.Economic recovery followssoon after.

Iraq War concludes in thesecond quarter of 2003 withoutglobal consequences.Economic recovery will follow inthe second half of 2003.

Iraq War is prolonged and hasmany negative globalconsequences (high oil prices).Economic recovery is delayedinto 2004 or later.

Normal ReplacementCycle Resumes

First half of 2003 Second half of 2003 First half of 2004

Product Mix Color and MFPs

Rapid adoption of office colorprinter, copier/printer.“Universal” printers becomepopular as color becomes afamiliar part of many internaloffice documents.

MFPs boost ASPs and createincremental spending onservices and software

Modest adoption of office colorproducts in external-facingdocuments only.

Color usage in internaldocuments is still a novelty.

MFP replacement strategykeeps fleets of copier, printerand fax stable — boosts ASPs.

Restricted budgets preventcolor output in all but the mostimportant documents. Inkjetprinters are removed from offices.

MFP prompt reduction in fleetsizes suppresses demand forSingle-function products.

Pricing

Vendors increase ASPs in faceof stronger demand by sellingricher configurations.

ASP declines continue withsome positive impact ondemand.

Products are seen as “commodity”— sparks price war amongvendors and channel.

Regional MarketIssues

U.S., Western Europe and Japanmeet expectations.

Latin America, China and EasternEurope demand exceedsExpectations.

Two out of three developedmarkets meet expectations.

Mixed success in developingmarkets

Only one of the developedmarkets meet expectations.

Developing markets struggle.

Worldwide Copier, Printer and Fax Market Forecast Scenarios by Major Issue

Shift in Client Issues

Pre-2002 — Most clients searching forproduct advice

– Speeds, feeds and bid review

– Separate from content management initiatives

Spring 2002 — Most clients searching for different advice

– Cost savings

– Asset consolidation and optimization

– Vendor selection

– Solutions linked with services and software

By 2005, the number of copiers, printers, MFPs and fax machines installed in businesses in developed markets will be 10 percent lower than in 2002 (0.8 probability).

Strategic Planning Assumption

Time and Effort

TechnicalSolution

BusinessSolution

ProductOptimization

ProcessOptimization

S a v i n g s O p p o r t u n i t yS a v i n g s O p p o r t u n i t y

Consolidation andStandardization

Alignment of IT and Business

Solution ManagementOptimization

Automation,Centralization

Document Cost-Saving Model

Time and Effort

TechnicalSolution

BusinessSolution

ProductOptimization

Solution ManagementOptimization

ProcessOptimization

Procurement, FMIT Management

CIO, LOBC-Level or

LOBBoard Level

Consolidation andStandardization

Automation,Centralization

Alignment of IT and Business

S a v i n g s O p p o r t u n i t yS a v i n g s O p p o r t u n i t y

Document Cost-Saving Model

Time and Effort

TechnicalSolution

BusinessSolution

ProductOptimization

ProcessOptimization

S a v i n g s O p p o r t u n i t yS a v i n g s O p p o r t u n i t y

Tools ManagementServices

Assessments, MFPs

ContentManagement

Solution ManagementOptimization

Document Cost-Saving Model

Time and Effort

TechnicalSolution

BusinessSolution

ProductOptimization

ProcessOptimization

Software VendorsHardware Vendors Services

Tools ManagementServices

Assessments, MFPs

ContentManagement

P a r t n e r s h i p s

S a v i n g s O p p o r t u n i t yS a v i n g s O p p o r t u n i t y

Solution ManagementOptimization

Who Can Help Deliver the Savings?

What is the size of the market? What is the competitive structure of the market? Which technologies will play a prominent or disruptive role? How do we cost-effectively plan our document output devices

around current and future road maps? What product type and configuration should I choose for each

user type? What are the key criteria to determine if a vendor meets our

organization's requirements? Which contract, relationship and vendor management practices

lower the total cost of ownership? What are the trends of the color segment of the market? What are the promises and pitfalls of outsourcing?

Gartner Research Agenda

Agenda

Ken Weilerstein, Gartner Research Director

– Best Practices for Copier, MFP, Printer Fleet Management

Malcolm Hancock, Gartner Principal Analyst

– How to Put Color in Your Office Documents — Effective management strategies that deliver the value of color documents, without all the cost

Peter Grant, Gartner Principal Analyst

– Output Outsourcing: Promises and Pitfalls of Turning Over Document Output

Agenda

Vendor Executive Panel

– Get your questions ready for IBM, HP, Xeroxand IKON

User Panel

– A reminder of the real world

Ralph Witcher, Gartner Director,Software Specialist

– Vendor Selection Software Tool