YOUR SUCCESS IS AT THE CENTER - …. 374... · YOUR SUCCESS IS AT THE CENTER OF OUR BUSINESS Your...

YOUR SUCCESS IS AT THE CENTER OF OUR BUSINESS

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• 4 •

EDITORIAL AND PUBLISHING

Frank G. Cannata President and CEO/Editor-at-Large

Charles J. Cannata EVP and Publisher

Scott Cullen Editor-in-Chief

Carol C. Cannata SVP, Client Services and Events

Sharon Tosto Esker Editor/Chief Correspondent, Women Influencer Franchise

Doreen Borghoff Design Director

Cathy O’Brien Senior Public Relations and Marketing Consultant

Tetsuo Kubo Japanese Correspondent

Toni McQuilken Production Print Correspondent

Petra Diener European Correspondent

Mark Vruno Contributing Editor

Walter Geer III Executive Director, Digital Strategy

Saul Rosenbaum Senior Director, Digital Operations

Charlene Piro Executive Producer, Print

Joe “Dapp” Foster Digital Video ProductionDapp Studios | dapp.us

Matt Stauble Events PhotographyMatt Stauble Media | mattstaublemedia.com

THECANNATAREPORTtheCannataReport.com

The Cannata Report (ISSN: 0889-5880) is published twelve times yearly by Marketing Research Consultants LLC, P.O. Box 180 Hamburg, New Jersey 07419. Phone: (973) 823-6314; Fax: (973) 823-6316; email: [email protected]. Editor and Publisher, Frank G. Cannata. All rights reserved. No part of this periodical may be reproduced in any manner in any language without the consent of The Cannata Report. The information set forth herein and on its complementary website,thecannatareport.com, has been obtained from sources believed to be reliable but is not guaranteed by The Cannata Report and may be incomplete. The Cannata Report’s expressed views and opinions are based on the foregoing and should be viewed in this context. Printed in the U.S.A. SUBSCRIPTION RATES for The Cannata Report and thecannatareport.com are $475 (exclusive of hard copy) and $525 (inclusive of hard copy) for one year. Subscribe at thecannatareport.com/register or email [email protected]. Bulk subscription rates also available. Email [email protected]. POSTMASTER: Please email address changes to [email protected].

EDITORIAL ADVISORY BOARD

Keith Allison President and CEO I Systel Business

Systems I PO BOX 35910 Fayetteville, NC 28303

Paul Hanna President I Blue Technologies

5885 Grant Avenue Cleveland, OH 44105

Steve Reding President I C.A. Reding

4352 North Brawley Avenue, Suite 101 Fresno, CA 93722

Andrew Ritschel Owner/President I Electronic Office Systems, Inc. I 330 Fairfield Road

Fairfield, NJ 07004

Barry Simon President I Datamax

7400 Kanis Road Little Rock, AK 72204

Mark Steadman President and CEO I Stan’s Office

Technologies I 1375 South Eastwood Drive Woodstock, IL 60098

Subscriptions I Advertising I Licensing I Back Issues I [email protected] (917) 514-9501

hp.com/go/A3/cannata

© 2017 HP Development Company, L.P. The information contained herein is subject to change without notice.

at your serviceThe new HP multifunction printers transform the copier market with a reinvention of device management. Built-in technology

anticipates problems, schedules maintenance, and ensures that your printer is consistently up and running.

A3_Cannata_print_SERV_SEP_8.5x11_FIN.indd 1 7/31/17 9:23 AM

COVER STORY 36 I Channeling a Spirited Sense of Optimism: 32nd Annual Dealer Survey (Part II) 36 I Dealer Concerns, Partner Impressions, and Future Outlooks 38 I Executive Summary (Part II of II) 39 I Results and Analysis (Part II of II) DEPARTMENTS 10 I Hard Copy • From The Editor’s DeskNo. 35: I’m Optimistic TooThe Majority of dealers who participated in our 32nd Annual Dealer Survey are optimistic about future. 24 I Japanese HeadlinesRicoh’s ResetPresident and CEO Yoshinori Yamashita claims that the company’s“Restart” theme for its mid-term management plan has been movingalong quite smoothly. 26 I European HeadlinesAround the World with MPSManaged print services represents a growing global opportunity in many regions. 30 I CR LIVE: 2017 Dealer TourSolid as SteelEdwards Business Systems grows from a typewriter sales and services shop to one of the largest independent office technology companies in North America.

65 I Young InfluencersTalent ScoutAn intimate understanding of the millennial mindset helps Young Influencer Hunter Woolfolk identify young sales talent for his dealership and dispel some clichés about his generation. 68 I From the Vault: 1982–2017October HighlightsRelive memorable moments and milestones as featured in several past October issues of The Cannata Report. 68 I Up NextThe Cannata Report prepares to launch our November Production Print Issue and gets back out on the road again for ACDI Solutions Summit, Sharp’s National Dealer Meeting, and a CR LIVE: 2017 Dealer Tour stop at New England Copy Specialists.

FEATURES 55 I That One ThingKonica Minolta presses dealers to expand their revenue streams beyond core MFP business at FUTUREADY Dealer Meeting. 60 I Should I Stay or Should I Grow?Acquisitions reshape independent dealer landscape and challenge established norms of the acquisitions game.

63 I Imaging Reality CheckVirtual and augmented reality impact world of print.

Visit TheCannataReport.comOctober 2017

• 6 •

Celebrating 35 Years

36 Quote:

“Running down a dreamThat never would come to meWorking on a mysteryGoing wherever it leadsRunning down a dream…”

–Tom Petty, (October 20, 1950–October 2, 2017), American singer-songwriter, multi-instrumentalist, record producer, and actor

Industry Announcements, Awards, Acknowledgments & Sightings

12 • Living It Up at Konica Minolta’s Hotel California 16 • Toshiba Elevates Larry White and Ted LeBlanc to New Senior Roles 16 • Marco Acknowledged as CRN Triple Crown Award Winner 18 • POA Renovates and Opens Historic Building in Salem, Oregon 18 • HP Names Supplies Network “Partner of the Year” at HP Reinvent: World Partner Forum 20 • Marco Acquires KOPI in Jefferson City, Missouri 20 • GRAMMY Museum at L.A. Live Selects Toshiba as Venue’s Digital Signage Partner 22 • Anaheim Ducks Name Toshiba Official Document Solutions Partner 22 • Claw and Order: AIS Annual Customer Appreciation Lobster Dinner

I N K

2017 Special Survey Issue

Channeling a Spirited Sense of Optimism

In business,“can-do” does.

“World’s Most Ethical Companies” and“Ethisphere” names and marks are registered trademarks of Ethisphere LLC.

Member FDIC ©2017 U.S. Bank. 17-0111 MMWR-102140 (2/17)

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To find your company’s possible, contactDan Nack David TurnerDirector of Sales (East) Director of Sales (West)715.381.0207 801.756.0653

THIS MONTH ON Imaging Reality Check:

Video Series

When you hear the term “virtual reali-ty,” the odds are good your first thought isn’t about print. It’s probably not even your second or third thought. But virtualreality (VR) and augmented reality (AR) are where many brands are starting to turn when it comes to marketing their services and products.That means print needs to follow.

Watch how five brands, including Mc-Donald’s, Pizza Hut, and Garage mag-azine truly innovate a variety of printed items for increased engagement.

TheCannataReport.com

Check out these features and more in “This Week,”“Live Wire,” and “Video” at thecannatareport.com

NEW

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LDI Celebrates Celebrates Opening of New Facility

Puttin’ on the Ritz at BPCA PSIGEN Looks Beyond the Document and the Cloud

DEALERS SOFTWAREDEALER GROUPS

Under Pressure Designtex Set as Beta Text Site for Ricoh Pro T7210

Konica Minolta Prepares Dealers for the Future

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CAPTURE NEW BUSINESS

• 10 •

No. 35: I’m Optimistic Too Whew! The second part of our annual survey is finished and in the books, or should I say in the book, as in this book.

I had a general idea of what I was getting into when CJ asked me to take over the bulk of the survey this year. Little did I know how much blood, sweat, and tears Frank has devoted to this survey, until I found myself immersed over the last four months crunching numbers over and over again, making sure they were correct, working with our graphic designer to create charts that populate these pages, and analyzing the findings. Frank deserves a lot of credit for tackling this monumental task, year after year, for 31 years. And truth be told, he helped crunch a few numbers this year as well and provided me with many valuable insights throughout the process.

It’s only fitting that the second portion of our survey ends with dealers sharing their degrees of optimism about this industry. Spoiler alert: The majority is still optimistic about the future of this industry and their businesses.

Just as they are optimistic about their businesses and the industry, I feel a sense of optimism as well. I just returned from PRINT17 and although traditional office technology dealers were not in abundance at that show, I finally saw the light that Frank has been shining on commercial and industrial print. He has been one of the biggest advocates in our industry for dealers to move into that space. I’ve finally seen that potential and it makes me optimistic.

A number of other exciting developments in our industry also make me bullish. From the manufacturers, I see what Konica Minolta is doing with its “Workplace of the Future,” opening up a new world of possibilities for dealers, and that makes me optimistic. Companies like Kyocera and Konica Minolta are acquiring software companies, while other OEMs such as Canon are partnering with software companies that add value to their hardware offerings, and that makes me optimistic. Ricoh is shaking things up with its distribution, relying less on its branches than it has in a long time. HP is making a monumental effort to gain traction in our industry, possibly doing it right this time. And while those efforts may negatively impact some of the established OEMs, I view that potential shock to the established system as a positive.

On the product development side, inkjet technology is picking up steam within the imaging channel. Software companies and other players in the industry are enhancing what had become a stale and commoditized MPS business model.

And finally for the dealers, we are seeing large and mid-size dealers continuing to grow organically and through acquisition, which is the best news we can report. I talk to dealers all the time, and most are still as enthusiastic as they’ve ever been when talking about their businesses and this industry.

Yes, this industry still has numerous challenges ahead, as clicks continue to decline and the focus within dealerships shift in new and different directions—exciting to some, frightening for others. But what I’m seeing is an industry—from dealers to the OEMs, to the solutions companies, to the leasing companies, and everyone else associated with the imaging industry— is that they are embracing these changes. And that makes me optimistic too.

What about you?

Scott Cullen Editor-in-Chief

HARDCOPY From the Editor’s Desk

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2017 Konica Minolta Dealer Awards Categories and WinnersMarco Receives Top Honor; POA and Imagetec Score Hat-Tricks

Konica Minolta 2017 Dealer Award category winners were announced as follows:

Award of Excellence: Marco

Top Revenue Growth (Up to $1.9M): Imagetec, LP($2-4.9M): UBEO, LLC ($5M+): DEX Imaging, Inc.

Top Percentage Revenue Growth(Up to $1.9M): Imagetec, LP($2-4.9M): Central Office Systems Corporation($5M+): Systel Business Equipment Company, Inc.

Top Managed IT RevenueAll Copy Products, LLCImpact Networking, LLC The Swenson Group

Top Solutions RevenuePacific Office Automation, Inc.PERRY proTECH, Inc.DEX Imaging

Top Production Print Units (up to $1.9M): Imagetec, LP($2-4.9M): Advanced Imaging Solu-tions, Inc.($5M+): Pacific Office Automation

Top A3 Color Units(Up to $1.9M): United Office Systems($2-4.9M): ImageNet Consulting, LLC($5M+): Pacific Office Automation

Konica Minolta Business Solu-tions U.S.A., Inc. (Konica Mi-nolta) hosted a closing bash at its 2017 FUTUREADY Dealer Meeting in Carlsbad, Califor-nia (October 3–5), that fea-tured a combination of come-dy, charity, dealer awards, and a live performance.

Lenny Clarke, the American

comedian and actor best known for his role as Uncle Teddy on the FX cable series Rescue Me (2004–2011), starring Dennis Leary, with his thick, trade-mark Boston accent, rallied the audience with Konica Mi-nolta President and CEO Rick Taylor and incited a bidding war over various raffle prizes among dealers that ultimately

pitted DEX Imaging, Documa-tion, Inc., and Pacific Office Automation, among others, against each other. These ef-forts were to raise money for the The Blue Angels Founda-tion, a 501(c)(3) public chari-ty whose mission is to support wounded veterans in a variety of ways. (For more informa-tion about the organization,

visit blueanglesfoundation.org). Konica Minolta increased contributions to the charity from $95,000 to $250,000 in approximately 30 minutes.

Following these fundraising efforts, SVP, Business Intel-ligence Services and Product Planning, Kevin Kern emceed a dealer award ceremony.

INDUSTRY ANNOUNCEMENTS, AWARDS, ACKNOWLEDGMENTS & SIGHTINGSI N K

BY CJ CANNATA

• 12 •

Living It Up at Konica Minolta’s Hotel California

Kevin Kern serves as 2017 Konica Minolta Dealer Awards emcee. Select dealers shown accepting awards flanked (left to right) by Sam Errigo, EVP, Sales and Business Development, and President and CEO Rick Taylor: 1. Steve Gau, VP, Sales, Marco; 2. Brad Knepper, President and CEO, All Copy; 3. Keith Allison, President and CEO, Systel Business Equipment, Inc.

2

1 3

I NKKonica Minolta arranged for a full set by Don Felder, for-mer Eagles lead guitarist and songwriter (1974–2001), and

his band to close out the eve-ning and event. By mid-show, the dance floor was packed as Felder ran through Eagles tunes

he co-wrote, including “Hotel California,” “Victim of Love,” and “Those Shoes,” in addition to a full array of Eagles clas-

sics, such as “Take It Easy,” “Witchy Woman,” “One of These Nights,” “Life in the Fast Lane,” and Heartache Tonight.”

• 14 •

DON FELDER BAND

DON FELDER KEVIN KERN AND DON FELDER

LENNY CLARKE JIM D’EMIDIO, CAROL CANNATA, AND GUESTS

PSIGEN makes powerful, scalable content capture and workflow solutions with a stratospheric track record.

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Toshiba America Business Solutions, Inc. (Toshiba) an-nounced on October 2 that Larry White has been named its Chief Revenue Officer (CRO), effective immediate-ly. White, a 21-year veteran of Toshiba, had previously served as its senior vice presi-dent of sales for the Americas.

In this newly created position, White will be responsible for achieving company revenue objectives, developing revenue and profit growth strategies, and driving customer value through both the company’s di-rect and indirect channels.

Ten days after announcing

White’s new role, Toshiba an-nounced the promotion of Ted LeBlanc to vice president of U.S. dealer sales. In filling this new role, reporting to White, LeBlanc will oversee Toshiba’s

U.S. dealer channel sales. LeB-lanc is an established industry executive and a 10-year Toshi-ba employee who previously served as the company’s East-ern region director of sales.

• 16 •

I NK

For the second year in a row, CRN, a brand of The Chan-nel Company, awarded me-ga-dealer Marco with its es-teemed 2017 Triple Crown Award, as the influential dealer announced on Octo-ber 2. Forty North American solution providers had the

necessary revenue, growth, and technical expertise to be recognized on three of CRN’s pre-eminent solution provider lists, earning them the Triple Crown Award this year.

CRN assembles lists and rank-ings each year to recognize solution providers that are set-ting the bar in the IT industry, including the Solution Provid-er 500, which lists the largest solution providers in North America by revenue; the Fast Growth 150, which ranks the fastest-growing solution pro-viders; and the Tech Elite 250, which recognizes solution providers that have received the highest-level certifications from leading vendors.

According to Robert Faltera, CEO, The Channel Company, it is a considerable achieve-ment for a solution provider To make any one of these lists, let alone to make it onto all three of them—as this year’s Triple Crown Award winners have done—is a substantial achievement by any entity. A company must simultaneous-ly have enough revenue to be ranked on the Solution Provid-er 500 list, record double- or triple-digit growth for rec-ognition on the Fast Growth 150, and invest heavily in top certifications to attain Tech Elite 250 status. Marco earned CRN’s Tech Elite 250, Solu-tions Provider 500, and Fast Growth 150 awards, which led

to winning this year’s Triple Crown Award.

2017’s Triple Crown Award winners will be featured in CRN’s October issue and are posted at crn.com/triplecrown.

Marco Acknowledged as CRN Triple Crown Award Winner

“This year’s CRN Triple Crown Award winners boast multiple advanced technical certifications from leading vendors, rank among the top-earning IT solution providers in North America, and are some of the fastest-growing organi-zations in the channel today

–Robert Faletra, CEO, The Channel Company

“Larry White has consistently demonstrated the ability to lead his team to profitable revenue growth in a very challenging market. In this new role, Larry will have the opportunity to leverage a more cohesive and integrated organization toward continued great success.” –Scott Maccabe, president and CEO, Toshiba

“Throughout his tenure at Toshiba, Ted LeBlanc has established him-self as an impactful sales leader who consistently exceeds expecta-tions. Ted has the perfect blend of sales experience and expertise to successfully grow our reseller channel.” –Larry White, CRO, Toshiba

LARRY WHITE TED LEBLANC

ROBERT FALTERA

Toshiba Elevates Larry White and Ted LeBlanc to New Senior Roles

899617A | Clover Imaging Group and its logo are trademarks owned by Clover Technologies Group, LLC, and may be registered in the United States and other countries.

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Pacific Office Automation’s Salem branch officially opened the doors to its new office space on Friday, Sep-tember 1, in the heart of the downtown area. The move

had been a long time com-ing and was celebrated with a grand opening event at the new location. In late 2016, the Oregon-based office solu-tions company purchased and began renovating this historic building with plans to make it a home for several businesses in the area.

Located at 260 Liberty Street NE, the building had been va-cant for ten years. After being purchased by Pacific Office Automation, it received an interior and exterior facelift in early 2017. This project in-

cluded completely gutting and remodeling the building in preparation for its new tenants. The refurbished building has a new storefront, a sprinkler sys-tem, and electrical upgrades. It also features ADA accommo-dations, an elevator, and struc-tural upgrades to meet earth-quake safety standards.

POA currently occupies part of the building, leaving the rest for other businesses to rent out spaces. The ground floor of the building was transformed into an office equipment showroom to display the latest printers,

copiers, and more from POA’s partner manufacturers, includ-ing Konica Minolta, Ricoh, and Pitney Bowes.

POA’s newly renovated Sa-lem branch is just one of its 18 locations across the West Coast. As the company con-tinues to expand its reach by offering office equipment and services to more organi-zations, the company’s teams are looking to grow. Visit POA’s website. pacificof-fice.com, to see why people choose to make a career with Pacific Office Automation.

• 18 •

I NK

HP, Inc. (HP) announced Supplies Network, a U.S. dis-tributor of print and imaging products, “HP Partner of the Year” at HP Reinvent: World Partner Forum event in Chi-cago late this sumer on Sep-tember 13. The forum brought together more than 1,400 HP partners from across the globe, along with HP’s CEO, Dion Weisler, and his entire executive channel team.

Supplies Network was recog-nized in the sub-category of U.S. Supplies Distributor of the Year.

HP evaluated the winning partners across a variety of criteria including innovation, category leadership across print, PC and supplier, dis-tributor, and re-seller catego-ries. Globally, more than 50 partners were honored.

POA Renovates and Opens Historic Building in Salem, Oregon

CJ CANNATA AND DOUG PITASSI

STEPHANIE DISMORE, VP AND GM, AMERICAS, HP, INC.; GREG WELCHANS, PRESIDENT AND CMO, SUPPLIES NETWORK;

CHRISTOPH SCHELL, PRESIDENT, AMERICAS, HP, INC.

HP Names Supplies Network “Partner of the Year” at HP Reinvent: World Partner Forum

“Supplies Network was chosen out of a select group of valued partners based on a variety of revenue and growth factors that were reviewed and ultimately determined by our channel lead-ership team. This year’s award winners are perfect examples of what happens when we focus on driving strategic growth togeth-er. Congratulations on this well-deserved award!”

– Stephanie Dismore, vice president and general manager, Amer-icas Channels, HP, Inc.

• 20 •

I NK

On September 25, Marco an-nounced it purchased Koest-ner Office Products, Inc. (KOPI), a copier/printer com-pany based in Jefferson City,

Missouri, and run by President Sherri Wilbers.

Accordingly to Marco CEO Jeff Gau, the purchase will al-

low Marco to further expand its technical expertise and ser-vices in the state of Missouri, and the industry leader looks forward to continuing KO-PI’s commitment to satisfying their copier clients and pro-viding opportunities for their valued employees.

This is the 17th acquisition the company has completed over the past three years. In addi-tion to Jefferson City, Marco now has three other locations in Missouri.

Marco has 1,100 employees

and serves more than 32,500 customers from its 46 loca-tions throughout the Midwest and nationally.

Marco Acquires KOPI in Jefferson City, Missouri

Toshiba America Business Solutions, Inc. (Toshiba) an-nounced on September 13 the

implementation of digital sig-nage for the GRAMMY Mu-seum, run by Scott Goldman,

GRAMMY Museum execu-tive director, at L.A. LIVE, an AEG-owned venue in Los Angeles. Toshiba claims that the addition of its digital tech-nology in the GRAMMY Mu-seum strengthens the compa-nies’ alliance, which extends across many high-profile AEG assets and venues throughout North America and Europe.

Toshiba’s digital signage highlights the exterior of the GRAMMY Museum while promoting the venue’s up-coming performances, exhib-its, and education initiatives. The recently installed Toshi-ba LED signage was designed to enhance the exterior of the GRAMMY Museum and in-crease museum attendance, especially foot traffic from L.A. LIVE.

GRAMMY MUSEUM

GRAMMY Museum at L.A. Live Selects Toshiba as Venue’s Digital Signage Partner

SCOTT GOLDMAN

“We have already seen a positive impact from Toshi-ba’s digital signage. Our staff has reported a steady increase in attendance for all events.”

–Scott Goldman, GRAMMY Museum executive director

“We are excited to sell our company to Marco. They are a high performing com-pany that is committed to excellence and outstanding customer service. They are also consistently recog-nized as a great place to work.”

– Sherri Wilbers, president, KOPI

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• 22 •

I NK

If it’s the beginning of fall, it must be time for Fraser Ad-vanced Information Systems’ annual customer appreciation lobster dinner. It’s a seafood bacchanal in the woods of Blandon, Pennsylvania, with a bounty of oysters and clams on the half shell, all served during the cocktail hour, followed by

trays brimming with lobsters at dinner, resulting in the ultimate customer bonding experience.

Bill Fraser and his team do an amazing job of entertain-ing and feeding up to 80-plus guests and this year’s dinner on September 28 at the Maid-encreek Hunt & Fish Club

was another winning event. The dinner was once again co-sponsored by Sharp, one of Fraser’s key business partners, with Sharp’s Senior Vice Pres-ident of Sales Laura Black-mer and Senior Vice Presi-dent Steve Oda in attendance, mixing and mingling with the guests. As we’ve seen time and

time again, the dealer commu-nity has a knack for fostering long-term relationships. It’s clear that cooking more than 450 pounds of lobster is one of the best ways we’ve seen for keeping customers satisfied.

By Scott Cullen

Claw and Order: AIS Annual Customer Appreciation Lobster Dinner

Toshiba America Business Solutions, Inc. (Toshiba) an-nounced it is now the official document solutions partner of the Anaheim Ducks team late this summer on September 12. The multiyear partnership equips the National Hockey

League team with Toshiba’s industry-recognized e-STU-DIO multifunction printers (MFPs) featuring Elevate, a new technology that enables Toshiba MFPs to provide a custom-designed user inter-face for clients.

Toshiba endeavors to improve productivity and workflow via its e-STUDIO MFPs for Anaheim Ducks’ personnel throughout the team’s Hon-da Center home, corporate offices, and nearby Anaheim Ice training facility. Toshi-ba’s e-STUDIO print fleet will be deployed across the team’s functional areas from

operations and the executive suite, to the marketing depart-ment and press box. Whether producing high quality pro-motional materials, team and player statistics, or game day food and beverage menus, Toshiba solutions will help manage the team’s entire array of document needs throughout the year.

Anaheim Ducks Name Toshiba Official Document Solutions Partner

CR

“The Anaheim Ducks are excited to partner with Toshiba America Business Solutions as the official document solutions partner of the Ducks. Toshiba continues to provide top of the line business solutions and shares the same commitment to quality as our organization. We look forward to this partnership and utilizing Toshiba’s premium products and services.”

–Bill Pedigo, chief commercial officer, Anaheim Ducks

BILL FRASER AND SCOTT CULLENLAURA BLACKMER AND SCOTT CULLEN

*Konica Minolta Business Solutions USA, Inc. surveyed its sales representatives and lease administrators, and asked them to rate their four primary leasing providers on a number of factors. CIT Bank earned top honors for: Top Overall Partner, Best in Class, Overall Performance, Best Customer Satisfaction, Best Sales Representatives, and Best Processes/Systems.

©2017 CIT Group Inc. All rights reserved. CIT Bank and the CIT Bank logo are registered trademarks of CIT Group Inc. CIT Bank, N.A. is a subsidiary of CIT Group Inc.

Konica Minolta employees selected CIT Bank as “Best in Class” with the highest Net Promoter Score among their primary financing

providers.* We humbly thank Konica Minolta for the recognition

and are proud to serve the office imaging industry through our

customer-focused approach.

Learn about our winning solutions for manufacturers and dealers atcit.com/equipment-finance

Konica Minolta Selects CIT Bank as Top Overall Partner

On July 28, 2017, Yoshinori Ya-mashita, president and CEO of Ricoh Company, Ltd., stated that

the company’s “RICOH Restart” theme for the mid-term management plan from FY2017 through FY2019 has been mov-ing along quite smoothly.

Ricoh’s Q1 FY2017 financial statement, announced that same day, showed rev-enue of 495.5 billion yen (1% increase from Q1 FY2016), operating profit of 18.9 billion yen (74.1% increase), net profit before tax of 16.8 billion yen (61.7% increase), and quarterly net prof-it of $12.2 billion yen (91.3% increase). While the revenue experienced a modest increase, profit improved significantly. This uptick indicates Ricoh’s perfor-mance is recovering well in the wake of the profit-oriented policy implemented by Mr. Yamashita. As detailed by Yamashita’s presentation, the following outlines the key highlights resulting from the restructuring related to North America. Sales and Service Structure Reform in North America

In North America, Ricoh’s direct sales operation had some MIF with low profit-ability, particularly among SMB custom-ers. As a result, Ricoh has been focusing on establishing a remote sales structure by enhancing its inside sales and increas-ing indirect sales locations (reps). Due to the switch from door-to-door sales to in-sides sales, sales expense efficiency has increased by 20% to 30% for 50% to 60%

of the MIF for SMB customers. This has had the greatest impact for customers in remote or rural areas. Further, the company is trying to improve profitability by transferring the MIF for its direct operation to some of its leading dealers that can provide enhanced service and support. The profit from selling the direct MIF to those dealers was 6.3 bil-lion yen in Q1 FY2017. For major accounts, Ricoh has hired ex-perts for each category of service and industry, and is strengthening the com-pany’s ability to make sales proposals by becoming more knowledgeable about customer workflows in those accounts. Restructuring Production Locations

Production facilities for REI (Ricoh Elec-tronics, Inc.), a production subsidiary in North America, have been divided be-tween locations in California and Georgia with the intent of optimizing the produc-tion function. The company will consoli-date the entire MFP production function by moving it to Japan from California by next spring. The completion of the tran-sition of the headquarters’ function to the Georgia factory is expected by the com-pany’s second fiscal quarter. The California factory will continue to maintain its warehouses and be respon-sible for the customization and recycling of some products, remaining as a location to receive the products manufactured in Asia. However, the overall size of the fac-tory will become much smaller.

Additional Measures for Further Re-structuring

Mr. Yamashita is not only focusing on cost restructuring, but also is keen on creating a solid profit structure through operational process transformation. To accomplish this, he revealed the company would implement the following addition-al measures to the original plan.

1. Optimization of function and opera-tions between Ricoh headquarters and regional sales headquarters;

2. Enhancement of the supply chain man-agement (SCM) function at the global level;

3. Business process transformation for headquarters and indirect divisions utilizing RPA (robotics process auto-mation) and AI (artificial intelligence); and

4. Optimum location arrangement based on the streamlined operations.

By following this restructuring strate-gy, Ricoh indeed expects to achieve a substantial reduction in costs of 100 bil-lion yen in FY2019 compared to that of FY2016, all while continuing to exam-ine how to aggressively achieve this goal ahead of schedule.

• 24 •

JAPANESE HEADLINES BY TETSUO KUBO

CR

Questions About This Story? Contact Scott Cullen

Phone: (609) 406-1424

Email: [email protected]

Ricoh’s Reset President and CEO Yoshinori Yamashita claims the company’s “Restart” theme for its mid-term management plan has been moving along quite smoothly.

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There are three ways to look at the global managed print services (MPS) landscape—around the

world in 80 leading countries, or making a simple split between established mar-kets—USA, Europe, some MEA (Mid-dle East and Arabic), some APAC (Asia Pacific), and all the DMOs (Developing Market opportunities).

Alternatively, we can explore the offer-ings of the usual suspects such as HP, Lexmark, Ricoh, and Xerox, closely fol-

lowed by Canon, Konica Minolta, and Kyocera, around the globe, as well as the findings of the market research com-panies that track these markets such as Gartner’s Magic Quadrant, Quocirca’s Landscape, IDC’s MarketScape, and Forrester’s Wave.

What do we know about MPS in the world’s 197 countries? How relevant is MPS globally? What elements of an MPS portfolio are of importance? And finally, what stages of MPS are available

where? Let’s try to answer some of those questions as we take a global tour of the MPS world.

An Essential Offering

Most anyone selling office imaging equipment, hardware, and software in the U.S. believes MPS should be an es-sential offering from almost any dealer to nearly any client. The same is true in Canada and Europe, particularly the U.K., Germany, France, and almost all

EUROPEAN HEADLINES BY PETRA DIENER

• 26 •

Managed print services represents a growing global opportunity in many regions.

Around the World with MPS

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Lexmark dealers are color superstarsLexmark wins 2017 Color Printer/MFP Line of the Year from Buyers Lab.

Lexmark International Inc. was chosen by BLI analysts as the winner

of the 2017 Color Printer/MFP Line of the Year award for its:

} Exceptional reliability, simple maintenance and high-yield supplies for minimal downtime

} Full spectrum security

} Consistently outstanding color output

} Strong value proposition across its line, offering standout performances and functionality for a low-to-competitive total cost of ownership

Lexmark devices gave a superb performance across its entire color line. From small workgroups to large enterprise environments, Lexmark’s impressive portfolio of color printers and MFPs has you covered.”

Marlene Orr

BLI DirectorOffice Equipment Product Analysis

© 2017 Lexmark. All rights reserved. Lexmark and the Lexmark logo are trademarks or registered trademarks of Lexmark International, Inc. in the United States and/or other countries. All other trademarks are the property of their respective owners.

17CH7353_TheCannataReportAd1_092917.indd 1 9/29/2017 10:08:25 AM

members of the E.U. and even beyond where MPS is expected and accepted.

There’s also a growing community in South America and Central America with Brazil and Mexico leading the pack.

Some of the northern African states are under the European MPS influence, fol-lowing its hardware and software trends. South Africa has an active community as well with offerings similar to those in the northwest African markets.

But what about the large number of countries between South Africa and let’s say, Morocco? What do we know about them? Frankly, not much. We should, however, be aware that in some societ-ies, print hasn’t had and will never have a strong position, as they simply skipped this step, from a “classic” workflow to a super modern, digital one.

But let’s continue the journey east to the MEA region. Depending on the area (Dubai and Kuwait, for example) with their digital initiatives, we see enough high-level activities, skipping even basic MPS and diving right on into an aggres-sive digital transformation of the office document process.

From Russia with Love and Beyond

What about countries like Russia, China, and India? These countries are among the most populated in the world and have some of the highest monthly print volumes.

I spoke with an IT manager at a Russian university not too long ago. He was very excited about Ricoh’s offerings and the upcoming implementation within his university. We also know printer, car-tridge, and toner production in Russia is doing well, and a recently published success story by HP, detailing how it

is providing MPS for Gazprom, a Rus-sia-based global energy company, is only the tip of the iceberg.

An Indian startup company recently re-leased a device-tracking software similar to PrintFleet and Print Audit. With an es-timated 10 billion pages per month, the Indian market is, according to Gartner, still offering plenty of growth opportu-nities for MPS.

Moving on to the country of China, some might feel like we’re hitting a big blank spot on the MPS map, as we rarely hear or read about MPS activities in this country. However, China has one of the strongest MPS markets globally and is without a doubt the most active in Asia with an annual growth rate around 15%, making it a battleground for all the key MPS players.

Almost forgotten on the MPS map is South Korea, which has a booming MPS market with a similar growth rate and speed as China, Brazil, and Mexico.

Down Under and on the Top

Let’s leave the vast Eurasian continent behind and move on down under to Aus-tralia. Here, MPS is everywhere. Aus-tralia has a great active MPS communi-ty with one of the leading independent

global thought leaders on the subject, Mitchell Filby, at the forefront. Australia is the place to be for anyone who wants to see MPS going strong and ready for the future.

Money Makes the Word Go ‘Round

Analysts predict revenue growth for MPS from $26 billion ($U.S.) in 2015 to a minimum of $70 billion ($U.S.) by 2024 worldwide. Some even expect that figure to reach $97 billion ($U.S). Global players such as HP and Xerox are investing heavily in training and cer-tification programs for their teams and partners around the world. Solutions of-ferings, both hardware and software, are becoming more sophisticated, including industry programs, far beyond financial savings, and in support of the digital transformation of traditional office im-aging processes, from document creation to capturing, to output and archiving.

But in particular, DMOs are looking for much more than savings; they want security. Printers and related processes must meet the highest demands for data, content, and network access protection.

Summing It Up

As we’ve just seen at PRINT17, print is well alive and kicking. The predicted death of the printing industry and the radical drop in paper output doesn’t even have an ETA yet, but you might want to be part of the MPS movement now to ce-ment your position as a valuable partner for your clients, enterprise, and SMB go-ing forward—no matter what continent you call home.

CR


Phone: (609) 406-1424


• 28

The predicted death of the printing industry and the radical drop in pa-

per output doesn’t even have an ETA yet, but you might want to be part of the MPS movement now.

© 2016 Wells Fargo Bank, N.A. All rights reserved. All transactions are subject to credit approval. Some restrictions may apply. Wells Fargo Equipment Finance is the trade name for certain equipment leasing and fi nance businesses of Wells Fargo Bank, N.A. and its subsidiaries. Based on current net assets of Wells Fargo Equipment Finance (including Wells Fargo Rail) compared to net assets of the largest equipment fi nance/leasing companies (excluding GE Capital) ranked in the Monitor’s 2016 special edition. WCS-3001801 (09/16)

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Delivering equipmentfi nancing solutions toNorth Americanbusinesses

• 30 •

OOne of the genuine pleasures of conducting this year’s dealer tour has been meeting with people who were in the business when I attended my first NOMDA convention in 1973 in New Orleans. At that time, dealers

were focused on selling typewriters and dictation equipment, while some were also selling office furniture and office supplies. A few had broadened their op-portunities by carrying copiers manufactured by companies such as APECO, AB Dick, SCM, Saxon, Royal, 3M, and others. This was the genesis of the indepen-dent dealer within the copier industry.

As we’ve been visiting legacy dealerships such as Les Olson, Gordon Flesch, and most recently, Edwards Business Systems, we’ve been transported back to those dealerships’ beginnings all those years ago. It has been more than a learning expe-rience for us, particularly for CJ, who has had the honor of meeting some of our industry’s earliest trailblazers.

It is hard to describe, but every one of the dealers we have visited has rolled out the red carpet and warmly welcomed us into their businesses and even their homes. When we contacted Ray Fuentes of Edwards Business Machines about visiting

SOLID AS STEEL

Edwards Business Systems

grows from a typewriter sales

and servicing shop to one of

the largest independent office

technology companies in

North America.

By Frank G. Cannata

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© 2017 Sharp Electronics Corporation. All rights reserved.

2017 DEALER TOURpresented by Sharp Electronics

Collaborate Like Never BeforeWith AQUOS BOARD® interactive display systems

• Open platform for seamless integration within your existing IT infrastructure

• Smooth and fast, intuitive touch technology

• Brilliant definition and large format display

Learn More: sharpusa.com/AQUOSBOARD

© 2017 Sharp Electronics Corporation. All rights reserved.

• 32 •

EDWARDS BUSINESS SYSTEMS

1. Office entry way 2. Conference room and showroom

3. Office entry way ceiling art, as de-

signed by Jamie Musselman, wife of Edwards Business Systems’ CEO Jim Edwards

1

3

2

his Pennsylvania-based dealership, he put together an itinerary that was part busi-ness and a lot of fun. In addition, the invi-tation was for the entire Cannata family, which Carol appreciated immensely.

Edwards Business Systems is primar-ily located in the Lehigh Valley area of Eastern Pennsylvania. The company has spread out and today has 11 locations in Pennsylvania and Virginia. Edwards Busi-ness Systems has no intention of stopping there. The company was founded in 1954 in West Reading, Pennsylvania, and has grown from selling and servicing type-writers and adding machines to serving as one of the largest independent office equipment companies in North America.

Edwards Business Systems has kept a keen eye set on growth through acqui-sition. In 1993, the company acquired Virginia Copiers, now known as Virgin-ia Business Systems. Edwards Business System’s most recent acquisitions include The Tamblyn Co. in the Scranton/Wilkes Barre area and Image Tec of Roanoke, Virginia. These two purchases have ex-panded the company’s footprint to 11 dif-ferent locations. Collectively, the 11 Ed-wards Business System locations provide services and support from the SMB space to the enterprise in Eastern Pennsylvania and Central Virginia. The dealership rep-resents Konica Minolta, Xerox, and Lex-mark, encompassing A3 and A4 MFPs to production print.

PRE-MUSIKFEST COCKTAIL PARTY

4. From left to right: Jamie Musselman, Cathy Dotter and Jim Edwards

5. Jennie Fisher, GM and SVP, Office Equipment Group, GreatAmerica Commer-

cial Finance and Frank Cannata

6. From left to right: Ray Fuentes; Jim Morrissey VP, Sales, Document Technology

Partners; and Jim Edwards

7. From left to right: Jim Dotter and Frank Cannata

8. From left to right: Jamie Musselman and Barb Fuentes

• 33 •

5

4

A Memorable Visit

During the first day of our visit, we spent the better part of three hours in the Ed-wards conference room, located in the company’s City Line Road location in Bethlehem, Pennsylvania. Our host was Ray Fuentes, president of Edwards, who was joined by Jim Dotter, president of Virginia Business Systems, and Edwards’ CEO Jim Edwards, son of the company’s founder. While most of the conversation was off the record, I can say that both CJ and I learned quite a bit about what this company thinks and feels about various aspects of our industry.

Even though Jim Edwards told us, “I

don’t give advice,” he still had plenty of wisdom to share, as did Ray and Jim Dot-ter. We learned that there doesn’t seem to be any single secret to the company’s success. All the changes that have taken place in the industry and continue to take place have made it challenging for many dealerships, including Edwards Business Systems, to make definitive plans for the future. Reflecting on what we learned and saw during our visit, the company’s success is the result of having a nimble organization that is prepared to respond to market changes and adapt quickly. It’s a formula not all that unfamiliar to many other independent dealerships.

We also walked away with the impression 8

7

6

that this is a dealership that understands its strengths, its customers, which mar-kets to target effectively, and the value of hiring the right people and letting them do their jobs.

Our discussion was followed up by a tour of the facility, led by Jim Edwards, who took great delight in sharing with us that he was aware of everything that goes on in the business that bears his family name. The West Reading location is the corpo-rate center where the financial side of the business is based. The City Line Road lo-cation is the hub in Pennsylvania, while Richmond is central to the five Virginia locations. It is visible the company’s op-erations are truly a team effort, and the collaborative spirit was readily apparent throughout our visit.

After the meeting and tour, we enjoyed dinner at an elegant restaurant and con-tinued our pleasant conversation, which turned more toward family. Ray specifi-cally had invited us to visit at this time of year, as this is when MusikFest in Beth-lehem is held. The next day, we were in-vited to Jim Edwards’ home for cocktails before going to MusikFest as guests of Edwards Business Systems.

After the cocktail reception, we attended a dinner hosted by Edwards for its cus-tomers and employees, and then, we had the great pleasure of seeing Santana per-form. He put on quite a show and it was a fitting end to our visit with Edwards Busi-ness Systems.

Frankly Speaking It is challenging for me to express exact-ly how I feel about the authentic kindness and generosity extended toward my fam-ily and myself by each of the dealers we have visited as part of our CR LIVE: 2017 Dealer Tour (which will expand to include a 2018 leg). When we began MRC in Jan-uary 1979 and started publishing in 1982, I hitched my star to the independent dealer. I was determined this was one of the best distribution networks in the United States and if I was smart, I would truly come to not only know the dealers, but also fully understand their business model. It was the best decision I ever made in my life.

As we progress through our dealer tour, my main goal has been to introduce CJ to some of the people who are central to our business and who are the core foundation of our own successful business. From Lit-tle Rock, Arkansas, to Bethlehem, Penn-sylvania, our dealer tour of the U.S. con-tinues. Next up is E. Johnson in Wausau, Wisconsin, followed by a visit to an old friend, Bryan Ammons, of Standard Of-fice in Duluth, Georgia. We will continue the tour through April 2018 and conclude it with a trip to Japan and a visit with Can-on, Konica Minolta, Kyocera, Sharp, and Toshiba in May of 2018.

MUSIKFEST

9. From left to right: Carol Cannata and Jim Edwards a private dinner hosted by

Edwards Business Systems at MusikFest

10 & 11. Carlos Santana performing live MusikFest 2017

• 34 •

CR

Questions About This Story? Contact Frank G. Cannata


Phone: (860) 614-5711

9

11

10

1/19/17 SALT LAKE CITY • UT • LES OLSON COMPANY

2/21/17 MADISON • WI • GORDON FLESCH COMPANY

5/24/17 FAYETTEVILLE • NC • SYSTEL BUSINESS EQUIPMENT

6/29/17 SACRAMENTO • CA • SMILE BUSINESS PRODUCTS

7/18/17 TAMPA • FL • DEX IMAGING

8/4/17 BETHLEHEM • PA • EDWARDS BUSINESS SYSTEMS

9/7/17 WAUSAU • WI • E.O. JOHNSON BUSINESS TECHNOLOGIES

10/25/17 DULUTH • GA • STANDARD OFFICE SYSTEMS

CR Live: 2018 Dealer Tour and dates to be announced

Read about our visits in The Cannata Report and thecannatareport.com. For inquires about The Cannata Report’s CR Live: 2017 Dealer Tour, contact [email protected].

2017 DEALER TOURpresented by Sharp Electronics

Presented by

The Cannata Report Visits Top Performers Nationwide

Breakdown of Survey Respondents

Manufacturer Number of % of Mfg’s. Number of % of Mfg’s. Respondents Dealer in Respondents Dealer in 2016 Survey 2016 2017 Survey 2017

Canon 57 19% 57 20%Konica Minolta 61 21% 54 19%Kyocera 39 14% 22 8% Ricoh 55 19% 47 17%Sharp 33 11% 28 10%Toshiba 43 15% 56 20%

Over the years, we’ve discovered dealers aren’t shy about expressing their true feelings

about anything and everything related to the imaging industry. Dealers can be their OEM’s and business partner’s sharpest critics and some of those critiques make its way into our editorial coverage throughout the year.

Despite this criticism—sometimes constructive, sometimes harsh—the dealers’ general levels of satisfaction with their major equipment and technology suppliers and leasing partners never fails to surprise us. And with all the challenges dealers face— whether it’s keeping up with technology or everyday competitive pressures—there is still an overall sense of optimism among the participants in this year’s survey.

As reported in this year’s Part I, we went from a survey in 2016 that yielded a more balanced group of respondents by

manufacturer than any of our surveys to date to one this year that was somewhat less balanced. This year’s survey had 12 fewer responses than last year—277 compared to 289. That slight decline in respondents resulted in fewer dealers representing Konica Minolta, Ricoh, Sharp, and Kyocera compared to 2016. The same number of Canon dealers (57) contributed to the survey as last year, while the number of Toshiba dealers participating increased from 43 in 2016 to 56 this year. We commend Toshiba for doing such a fine job of encouraging its dealers to participate.

Although fewer dealers responded this year, the end result is the same as last year—a wealth of valuable and valid data. Once again, we are compelled to caution our readers that when the number of Kyocera dealers participating drops from 39 to 22 as it did this year, it becomes more difficult to interpret the results from such a small group of dealers about that

company’s performance. Anecdotally, based on past conversations with Kyocera dealers, we believe there’s some validity in the data we’re presenting in Part II.

Channeling a Spirited Sense of OptimismBy Scott Cullen

• 36 •

32ND ANNUAL DEALER SURVEYDealer Concerns, Partner Impressions, and Future Outlooks

Methodology Revisited

As we noted in Part I of our September issue, we conducted this year’s survey online for the fourth consecutive year for easier accessibility and to elicit more responses. This year the survey yielded 277 responses—19 fewer than last year—after we deleted duplicates, those with corrupted data, and incom-plete submissions. Historically, the numbers from the “Big Six”—Canon, Konica Minolta Business Solutions, Inc. (Konica), Kyocera Document Solutions America, Inc. (Kyocera), Ricoh America’s Corp. (Ricoh), Sharp Imaging and Infor-mation Company of America (Sharp), and Toshiba America Business Solu-tions, Inc. (Toshiba)— vary from year to year although last year’s survey was more balanced than any of our past sur-veys as far as OEM population. Howev-er, that was not the case this year with the most noticeable decline being in the number of Kyocera dealers participat-ing—only 22 as compared to 39 last year. You’ll find the universe of our 32nd Annual Dealer Survey in the chart at the bottom of this page. For the majority of this survey, we only used the respons-es from those dealers representing the “Big Six,” totaling 264. When we includ-ed the responses of the “Other” group, we have noted their inclusion, for ex-ample, when presenting their views of acquisitions, production print, areas of concern, annual dealer meetings, and awards selections.

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• 38 •

u Dealers’ top three concerns remain consistent with our past years’ surveys as 48% of the 277 dealers responding this year selected declining clicks as one of their top three concerns, followed by hiring and retention of talent (45%) and competition from manufacturer’s direct branches (42%).

u Every dealer that identified competition from direct branches as one of their top three concerns rated this one as their number one concern. Not a single dealer listed this concern in a lower position.

u Succeeding in production print does not seem to be a big concern for most respondents. Only 8.6% of total respondents identified this as a concern and all were aligned with one of the three big production print OEMs—Canon, Konica Minolta, and Ricoh.

u Dealers overall have a positive view of their A3 manufacturers, with the Big Six averaging 4.40 compared to 4.21 last year out of a possible high score of 5.0.

u Last year, 72% of respondents relied on their A3 supplier for A4 product, while this year that number has dropped to 67%. Among the other companies cited by dealers as their A4 supplier were HP, Lexmark, Muratec, OKI, and Samsung, with Lexmark and HP being the strongest of the group.

u When rating their A4 manufacturer, we saw a slight dip in the average rating from last year’s 4.20 to 4.08 this year out of a possible high score of 5.0.

u The average number of leasing partners among dealers representing the Big Six manufacturers is 2.6. That’s a sizable number given that 16% (45) of dealers with less than $5 million in revenue among our 277-dealer universe only have one leasing partner.

u Nearly 20% of dealers responding to our survey cited one of their OEMs as one of their leasing partners. (Dealers could list up to four leasing partners.) This trend was most prevalent among Canon dealers where 79% identified Canon Financial Services (CFS) as one of

their leasing partners. An additional 2% of the remaining dealer population that did not identify Canon as a primary vendor is also using CFS for financing.

u The average percentage of dealers using internal leasing has declined 2% from 10% in 2015 to 8% last year, and has declined even further, by 4.66%, to 5.33% in this year’s survey.

u Looking at how the Big Six dealer universe ranked their leasing partners, 54% were ranked as “Excellent” compared to 64% last year.

u With a 5.0-rating system, the top three leasing companies in our survey all received scores well above 4.0, averaging 4.41%.

u Dealers identified well over 40 different software and service providers as providing the best products and support to allow them to compete most effectively, resulting in our most competitive results ever. Not a single provider scored higher than 8%. This year’s top four includes ACDI, Square 9, Papercut, and FM Audit, all with percentages in the single digits.

u Of the dealers whose core business is A3, 79% are optimistic about their businesses and the industry despite their concerns about declining clicks. Only 12% said that they were pessimistic, while 9% offered no response. The most optimistic dealers in this group belong to Kyocera with 95% feeling optimistic, followed by Ricoh with 85% of its dealers feeling optimistic.

u In the A4 realm, the results were roughly similar to A3 with 80% of dealers feeling optimistic, 8% pessimistic, and 12% offering no response. Once again, Kyocera and Ricoh had the most optimistic dealers with 95% and 89%, respectively feeling optimistic.

u In the Production Print space, only 57% of dealers reported feeling optimistic, while 24% noted pessimistic and 18% did not respond to this question. The dealers that feel the most optimistic are those that market products from Canon, Konica Minolta, and Ricoh.

32ND ANNUAL DEALER SURVEYExecutive Summary (Part II of II)

Areas of Greatest Concern Exhibits 2.1–2.4 As we attempt to analyze and interpret the dealer community’s comments pertaining to what they see as areas of greatest concern, we asked dealers to share with us the top four areas of greatest concern from a selection of 10 options, including “Other.” The areas of concern we asked dealers to choose from included:

• A clear vision of where the industry is heading

• Competing against manufacturer’s branches

• Declining clicks • Hiring and retention • Keeping up with new technology in

MPS/print management • Keeping up with the growing number of

solutions on the market • Leveraging solutions • Maximizing revenue and profits • Success in production print

What we discovered, perhaps not so surprisingly, was that dealers have plenty of concerns.

Despite offering a wider selection of areas of concern to choose from compared to previous years, survey respondents remained consistent in identifying competition from direct branches, declining clicks, or hiring and retention as one of their top choices. Looking at our top three concerns, 48% of the 277 dealers responding selected declining clicks as one of their top three concerns, followed by hiring and retention (45%)

and competition from manufacturer’s direct branches (42%).

What’s interesting about competition

from direct branches is that every dealer that identified this factor as one of their top three concerns rated this as the No. 1 concern. No dealer listed this concern

0%

10%

20%

30%

40%

50%

60%

70%80%

2017*20162015

Toshiba

Canon

Sharp

Kyocera

Ricoh

Konica Minolta

Other

Exhibit 2.1: Manufacturers’ Branches as Greatest Area of Dealer Concern (2017)

• 39 •

32ND ANNUAL DEALER SURVEYResults and Analysis (Part II of II)

* In 2017, “Other” includes: Lexmark, Muratec, Samsung, and Xerox.

10%

20%

30%

40%

50%

2017*20162015

Toshiba

Canon

Sharp

Kyocera

Ricoh

Konica Minolta

Other

Exhibit 2.2: Clicks as Greatest Area of Dealer Concern (2017)


in any lower position—it was either their utmost concern or not a concern at all. To be clear: When we talk about competition from a manufacturer’s direct branches, we mean all manufacturers’ direct branches, not just a dealer’s primary manufacturer.

The overwhelming issue when competing against direct branches, as dealers have told us again and again over the years, is that the branches sell on price. Even though some manufacturers have attempted to alleviate this situation, it seems to us this will continue to be a cause of great concern for dealers. The wildcard here, however, is whether we’ll see the number of dealers that identify this as a top-three concern decline next year now that Ricoh has been divesting itself of its branches, moving its direct business to a select group of independent dealers. In conversations with dealers over the years, we’ve often heard them take Ricoh’s name in vain when lamenting about how challenging it is to compete with the company’s branches on price.

For an industry still dependent on hardware sales, it’s not surprising that declining clicks ranked as the top concern in again in 2017. Reality is starting to set in, and dealers don’t have to look much further than their own individual workspaces and workplaces to see evidence of that trend.

Hiring and retention is a concern common to businesses and organizations of all sizes and types, and the independent dealer community is no exception in identifying this as a serious concern. Don’t expect this concern to disappear from our top rankings anytime soon.

As the imaging industry has become more dependent on solutions, it’s a given that solutions remain an ongoing concern for dealers. Offering solutions can be a differentiator and open doors into vertical markets, but leveraging those solutions comes with a price—investing in the education and training necessary for effectively selling those solutions. This year’s survey included two solutions-oriented concerns among our options as

areas of greatest concern: 1) keeping up with the growing number of solutions on the market and 2) leveraging solutions. Fully 43% of all dealers participating in our survey identified at least one of those as an area of greatest concern among their four choices.

As manufacturers align themselves with more solutions partners, as well as develop their own solutions, dealerships are finding themselves in the unenviable position of making some tough decisions

as to which solutions to invest in. To alleviate concerns about the cost of training and education and hiring personnel who are knowledgeable about these solutions, some dealers are trying to limit the number of solutions they sell. For some, this is a wise move. For others, especially with the emergence of vertical market solutions and an emphasis on vertical marketing, that strategy is not an option. Solutions have become increasingly critical in a digital and mobile world, and navigating the

• 40 •

0%

10%

20%

30%

40%

50%

*OtherToshibaSharpRicohKyoceraKonica Minolta

Canon

26% 26%

19% 20%

26%

32%

40%

28%

34%

50%

42%

34%

17%

12%

201520162017

7% 6%

14%

31%

39%

11%8%

Exhibit 2.3: Recruiting as Greatest Area of Dealer Concern (2017)


0% 10% 20% 30% 40% 50%

Success inProduction Print

*Other

A Clear Vision ofWhere the Industry

is Headed

Keeping Upwith Technology

MaximizingRevenues

Keeping Upwith Solutions

Hiring & Retention

Declining Clicks

Competing with Manufacturer’sDirect Branches 43%

33%

15%

4%

2%

2%

1%

0.5%

0.3%

Exhibit 2.4: Dealer Areas of Greatest Concern – All Dealer Respondents (2017)

“ Other” concerns identified by dealers include: declining margins and hardware cost-per-image, seat-based billing (SBB) models, Epson’s presence in the market, “HP’s conquest to destroy the A3 market along with the dealer community,” and competition selling on cost rather than value.

many options and figuring out how to bundle those with one’s product offerings will be an ongoing challenge for all dealers.

Moving forward, we expect to see the OEMs continue to align themselves with solutions providers, as Epson has done recently with Nuance, in an effort to gain increased traction in the high-end A3 space, or to acquire solutions companies as Kyocera did in early August with its acquisition of DataBank. We think the latter is less likely, as solutions providers tend to cast a wide net with their OEM relationships. What we’re more likely to see is consolidation among the solutions providers with companies like Nuance and ECi expanding their menu of solutions offerings via acquisition.

Much to our chagrin, succeeding in production print does not seem to be a big concern for most respondents. The modest percentage of respondents (8.6%) that identified this as a concern was typically aligned with one of the three big production print OEMs—Canon, Konica Minolta, and Ricoh. Either they’re doing just fine in production print or they’re more concerned about other areas of their business.

It is interesting to note that the percentage of dealers concerned there isn’t a clear vision of the future stands at 30% of all survey respondents. To that, we say welcome to the world of technology, a world that is in constant transition

and one in which the vision of the future is often more murky than clear. This is an issue we hope to address next year in a special issue of The Cannata Report, especially as more OEMs extend their own visions of the future beyond traditional print technology.

Dealers also had the option of citing “Other” as a concern beyond the choices we offered them. Some of the “Other” concerns identified by dealers were declining margins and hardware cost-per-image, seat-based billing (SBB) models, Epson’s presence in the market, “HP’s conquest to destroy the A3 market along with the dealer community,” and competition selling on cost rather than value.

A3 MFP Manufacturer RatingsExhibits 2.5–2.12

We asked dealers to rate their primary A3 MFP suppliers as “Excellent,” “Very Good,” “Fair,” or “Poor.” Each year, there are always dealers that decline to give their manufacturer a rating. Historically, we have tossed out those responses when tabulating the percentages shown in the accompanying Exhibits

• 41 •

46%

4% 7%

9%

2%

PoorFairGoodVery GoodExcellent

No Response

31%

Exhibit 2.6: Dealers Rate Primary A3 Manufacturer – Konica Minolta (2017)

Rating: 4.7

44%

5%

28%

14%


7%

No Response

2%

Exhibit 2.5: Dealers Rate Primary A3 Manufacturer – Canon (2017)

Rating: 4.1

• 42 •

49%

13%

2%

30%


No Response

6%

Exhibit 2.8: Dealers Rate Primary A3 Manufacturer – Ricoh

Rating: 4.3

77%

23%


No Response

Exhibit 2.7: Dealers Rate Primary A3 Manufacturer – Kyocera

Rating: 4.7

45%

41%

5%9%


No Response

Exhibit 2.10: Dealers Rate Primary A3 Manufacturer – Toshiba

Rating: 4.4

54%

11%

14%

4%


No Response

14%

4%

Exhibit 2.9: Dealers Rate Primary A3 Manufacturer – Sharp

Rating: 4.2

2.5–2.11. On further reflection, we consider the lack of response relevant to each manufacturer’s ratings. We then awarded five points for “Excellent,” four points for “Very Good,” three points for “Good,” two points for “Fair,” and one point for “Poor.” We then divided the total by the number of dealers participating from that manufacturer.

Overall, dealers still have a positive view of their manufacturers with the Big Six averaging 4.40 compared to 4.21 last year out of a possible score of 5.0. For the sake of transparency, only

three dealers representing one of the Big Six manufacturers gave their A3 manufacturer a “Poor” rating.

While dealers like to vent about their OEMs from time to time, or maybe more often than that, when taking stock of the big picture, our survey still shows a high degree of dealer satisfaction with their manufacturers.

Exhibit 2.12 showcases the differences in ratings for each manufacturer since 2011. This trend chart illustrates how

• 43 •

3

4

5

Percentage Up

201720162015201420132012

1.2

Exhibit 2.11: Dealers Rate Their Primary A3 Manufacturer – Total (2012–2017)

3

4

5

2017201620152014201320122011

Dea

ler A

ppro

val R

atin

g

Toshiba

Canon

Sharp

Kyocera

Ricoh

Konica Minolta

Exhibit 2.12: Dealers Rate Primary A3 Manufacturer by Manufacturer (2011–2017)

dealers’ ratings have evolved over the past seven years to where they are today.

A3 MFP Manufacturer Dealer Meeting Ratings Exhibits 2.13–2.19

Prior to 2016, we evaluated each manufacturer’s dealer meeting by level of attendance, which enabled us in part to gauge the effectiveness of the meeting.

Starting last year, we asked dealers to rate their manufacturer’s meetings as “Excellent,” “Very Good,” “Good,” “Fair,” or “Poor.” At the same time, we also track the number of dealers that did not attend.

Due to the type of responses, we evaluate this data by using the number of dealers that responded rather than the total number of dealers associated with each manufacturer. When a dealer elected not to respond, it was because they did not attend or the dealer decided they could not provide a valid opinion on the event.

It’s also worth noting that not every dealer is invited to those dealer meetings, even if the dealer considers that manufacturer its primary source for A3 products. Those dealerships typically are on the smaller revenue side—with less than $5 million in revenues. As they look to reduce the costs associated with putting on these events, it’s not surprising they are focusing primarily on the dealers that are responsible for the majority of their business.

While we’ve noted in the past that scheduling these meetings at a time when it is convenient for dealers is of the utmost importance for manufacturers, we also understand that with only 52 weeks in a year, there’s always a potential conflict. In addition to the OEM meetings—and most dealers represent more than one OEM—there are also the BTA regional events, meetings of the various dealer groups, and events sponsored by software providers such as Docuware and Square 9, as well as agnostic events such as the PRINT and Graph Expo shows and IT services and MPS events. When dealer incentive trips are added in as part of those events, time is far from being on the side of most dealers. Even though we can be critical of these meetings’ content and execution, overall, we consider these events of significant importance to the dealer community. We caution dealers to consider the great value of networking with one’s peers and representatives from their OEMs, as well as taking advantage of the many educational opportunities available.

• 44 •• 44 •


17%34%

10%25%

14%

Exhibit 2.13: Dealer Rating of Manufacturer Meeting – Canon (2017)

Rating: 3.7


3%

50%

15%

32%

Exhibit 2.14: Dealer Rating of Manufacturer Meeting – Konica Minolta (2017)

Rating: 4.8

• 45 •


3%

37%55%

5%

Exhibit 2.16: Dealer Rating of Manufacturer Meeting – Ricoh (2017)

Rating: 4.5


22%

67%

11%

Exhibit 2.17: Dealer Rating of Manufacturer Meeting – Sharp (2017)

Rating: 4.4


32%54%

14%

Exhibit 2.18: Dealer Rating of Manufacturer Meeting – Toshiba (2017)

Rating: 4.4


5%

30%

25%

35%

5%

Exhibit 2.15: Dealer Rating of Manufacturer Meeting – Kyocera (2017)

Rating: 3.8

• 46 •

A4 MFP Manufacturer RatingsExhibits 2.20–2.29

As we did with the A3 manufacturers, we asked the dealers to rate their A4 manufacturers. As dealers and the OEMs are aware, not all dealers rely on their A3 manufacturers to meet their A4 needs. There is a broader mix of A4 options beyond those provided by the Big Six, even though not every Big Six OEM has made an effort to build a strong presence within the A4 space. This year’s survey reveals that more dealers that identify one of the Big Six OEMs as their primary A3 supplier are opting for a vendor outside the Big Six as their primary source for A4 products. Last year, 72% relied on their A3 supplier, compared to this year where we saw the number drop to 67%. Among the usual A4 suspects cited by dealers as their A4 supplier were HP, Lexmark, Muratec, OKI, and Samsung, with Lexmark and HP being the strongest of the group, warranting their inclusion in in Exhibits 2.26 and 2.27.

Curiously, two dealers responding to our survey did not identify an A4 provider, which means either they have somehow been able to swim upstream against the current A4 trend, their customers aren’t demanding A4 devices, or they just neglected to answer this question. Considering that some dealers were reluctant to take on A4 in the past because of its notoriously low margins, we wouldn’t be surprised if these two dealers still remain resistant to taking on these products.

In rating A4 providers, there was only a modest change from last year’s 4.20 out of a possible 5.0 to 4.08 this year. Overall, dealers approve of their A4 provider performance.

9%

38%

35%


No Response

9%

9%

Exhibit 2.20: Dealer Rating of A4 Manufacturer – Canon (2017)

Rating: 4.12

0

5

10

15

20

25

30

35

40

201720162015201420132012

Toshiba

Canon

Sharp

Kyocera

Ricoh

Konica Minolta

Exhibit 2.19: Dealer Non-Attendance at Primary A3 Manufacturer Meeting

• 47 •

6%

44%


No Response

6%

28%

16%

Exhibit 2.23: Dealer Rating of A4 Manufacturer – Ricoh (2017)

Rating: 3.58

6% 40%


No Response

6%

12%18%

18%

Exhibit 2.24: Dealer Rating of A4 Manufacturer – Sharp (2017)

Rating: 4.14

2%

71%


No Response

9%

18%

Exhibit 2.22: Dealer Rating of A4 Manufacturer – Kyocera (2017)

Rating: 4.54

7%

39%

32%


No Response

7%

14%

Exhibit 2.21: Dealer Rating of A4 Manufacturer – Konica Minolta (2017)

Rating: 4.08

• 48 •

31%


No Response

9%

32%

25%

3%

Exhibit 2.28: Dealer Rating of A4 Manufacturer – Other* (2017)

Rating: 3.90* “Other” includes: OKI, Muratec, Samsung, and Xerox.

13%


No Response

13%

34%40%

Exhibit 2.27: Dealer Rating of A4 Manufacturer – HP (2017)

Rating: 3.56

4%

32%


No Response

4%

26%

11%

2%

Exhibit 2.26: Dealer Rating of A4 Manufacturer – Lexmark (2017)

Rating: 4.57

7%

52%


No Response

7%

26%

11%

Exhibit 2.25: Dealer Rating of A4 Manufacturer – Toshiba (2017)

Rating: 4.23

• 49 •

Leasing Company Ratings Exhibits 2.30–2.35

The economic downturn in 2009 created a challenging environment for the leasing companies and the dealers that rely on those companies for financing. Here, there were various causes and effects such as some leasing companies cutting back on the number of leases they were writing, others pulling out of the office technology segment altogether, and some dealers frustrated about the lack of options, taking the plunge and doing their own leasing when most other avenues were failing them.

As the economy has recovered, we are finding that now, more than ever, diversity rules in the dealer community when it comes to the number of leasing partners dealers work with, as more leasing companies have returned to the independent dealer community to focus on this still lucrative segment. Our survey finds that the average number of leasing partners among dealers representing the Big Six is 2.6. That’s a sizable number when you consider that 16% (45) of dealers among our 277-dealer universe has under $5 million in revenue and one or zero leasing partners.

As we have in past surveys, we only include those leasing companies that have been identified by 25 or more dealers as their primary leasing partner. With all this diversity among leasing partners in this year’s survey, only three leasing companies fit that criteria this year—GreatAmerica Financial Services, De Lage Landen, and U.S. Bank. Dropping off the list were Wells Fargo and EverBank, both of which we included last year. The three leasing companies we included in this year’s charts were identified as the primary leasing partners by 54% of our total universe of 277 dealers. When these numbers are adjusted for only dealers representing the Big Six, that figure drops to 52%.

A trend we haven’t tracked in past surveys but wanted to

acknowledge this year is that nearly 20% of dealers responding to our survey cited one of their OEMs as one of their leasing partners. (Dealers could list up to four leasing partners.) This trend was most prevalent among Canon dealers where 79% identified Canon Financial Services (CFS) as one of their leasing partners. An additional 2% of the remaining dealer population that did not identify Canon as a primary partner also reported using CFS for their financing. Other vendors that dealers identified as one of their four leasing partners included: Copystar, HP, Lexmark, Ricoh, and Xerox. Cumulatively, those companies represented 3% of the 277 dealers participating in the survey.

Meanwhile, we continue to see a decline in the average percentage of dealers using internal leasing. That percentage fell from 10% in 2015 to 8% in 2016, and sank even further to 5.33% in our 2017 survey. With the economic rebound of the past few years, dealers that started doing their own leasing after the 2009 economic downturn, or that many have been doing it prior to then, now have more leasing companies competing for their business and offering more attractive leasing programs and programs that extend beyond hardware so they no longer need to offer internal financing.

We also understand some of the leasing companies are now purchasing internal portfolios. The reason for this is that as interest rates rise, the overall cash value of the portfolio will diminish, making it more attractive for dealers to maximize the value by selling before rates rise. With acquisitions activity on the upswing, some dealers may then take that cash and use it for funding acquisitions.

Another reason for the decline in internal leasing could be pinned to the fact that the rates available from leasing companies and programs from the manufacturers are still low and dealers can add points to the rate and be close to, if not more profitable than, having their own portfolio without having to deal with the administrative challenges of managing a portfolio. Another driving factor for getting out of the internal leasing business is increased auditing by state governments, along with the complications of managing property taxes for various jurisdictions. Most dealers don’t have systems in place to do this in a compliant manner. We’ve also heard that it’s not unusual for the assets of a dealer’s internal leasing portfolio to be sold to help pay off the debt of a previous owner as the dealership moves into a succession plan situation.

Meanwhile, the leasing companies are thinking beyond the box and offering dealers new programs to accommodate MPS and MNS, as well as digital signage and other emerging technologies. What this indicates to us is that the leasing companies are paying close attention to what’s going on in our industry and going with the flow to accommodate those changes. Just a year ago, no leasing company had a seat-based billing (SBB) offering. Now, dealers have that option (albeit

4

5

Percentage Up

20172016201520143

Exhibit 2.29: Average Dealer Rating of A4 Manufacturer (2014–2017)

• 50 •

only one that we know of at press time), and we expect more as the SBB concept takes off in the MPS world.

As we have in done in our past surveys, we asked participating dealers to rank their leasing partners as “Excellent,” “Very Good,” “Good,” or “Poor.” Looking at how the Big Six dealer universe ranked their leasing partners, 54% were ranked as “Excellent,” compared to 64% last year. With a five-point rating system (with 5.0 being the highest rating), the top three leasing companies in our survey all received scores above 4.00, averaging 4.41.

Looking at all the dealers participating in the survey, that figure, stands at a healthy 4.50.

If we can derive anything from these responses, it is that dealers are generally satisfied with their leasing partners, even if they aren’t rating them as highly as they did a year ago. Yes, favorable interest rates are a factor, but we also believe the proactive approach the leasing companies are taking to offer dealers a wider variety of programs is another element that should not be overlooked when determining dealer satisfaction levels.

2.0

2.5

3.0

3.5

20172016201520142013

Leas

ing

Part

ners

per

Dea

ler

Toshiba

Canon

Sharp

Kyocera

Ricoh

Konica Minolta

Exhibit 2.30: Average Number of Leasing Partners per Dealer by Manufacturer (2013–2017)

0%

5%

10%

15%

20%

25%

20172016201520142013

Leas

ing

Part

ners

per

Dea

ler

Toshiba

Canon

Sharp

Kyocera

Ricoh

Konica Minolta

Exhibit 2.31: Percentage of Dealers Performing Their Own Leasing by Manufacturer (2013–2017)

• 51 •

66%

8%

25%

2015

Poor

Fair

Good

Very Good

Excellent

54%

6%

33%

7%

2017

64%

7%

29%

2016

NoResponse

0.6%

Exhibit 2.32: Dealers Ratings of Leasing Partners – Universe (2015–2017)

Rating: 4.6 Rating: 4.53 Rating: 4.41

79%

5%

16%

20172015

62%27%

8%

81%

2%

17%

2016

Poor

Fair

Good

Very Good

Excellent

NoResponse

3%

Exhibit 2.33: Dealers Ratings of Leasing Partners – GreatAmerica Financial Services (2015–2017)


69%

7%

24%

20172015

45%

3%

40%

7%

72%

7%

21%

2016

Poor

Fair

Good

Very Good

Excellent

NoResponse

5%

Exhibit 2.34: Dealers Ratings of Leasing Partners – U.S. Bank (2015–2017)


Software and Services Providers Ratings Exhibit 2.36

This is the fourth consecutive year that we have asked dealers to identify the companies—excluding the hardware manufacturers and leasing companies—that provide them with the products and support that allow them to compete most effectively. Software and services is a highly competitive category

because there are so many players. When looking at this area, support is critical, particularly as solutions and services have become a key component and a key differentiator of many hardware sales.

In this year’s survey, dealers identified well over 40 different software and service providers as providing the best products and support to allow them to compete most effectively, resulting in our most competitive results ever. These results further validate the concerns dealers expressed earlier in our survey regarding navigating the many solutions on the market and leveraging solutions. This year, not a single

• 52 •

53%

13%

34%

2015

45%

5%

50%

2016

49%

6%

36%

2017

Poor

Fair

Good

Very Good

Excellent

NoResponse

9%

Exhibit 2.35: Dealers Ratings of Leasing Partners – De Lage Landen (2015–2016)


0%

5%

10%

15%

20%

25%

2017201620152014

PAPE

RCU

T

PAPE

RCU

T

PAPE

RCU

T

SQU

ARE

9

SQU

ARE

9

SQU

ARE

9

SQU

ARE

9

LMI

LMI

LMI

FM A

UD

IT

DM

ACD

I

ACD

I

DM

FM A

UD

ITACDI

FMAudit

LMI

Square 9

PaperCut

Exhibit 2.36: Top Four Software and Service Providers 2014–2017 (Bar Chart)

• 53 •

0% 20% 40% 60% 80% 100%

No Reponse

Pessimistic

Optimistic

Toshiba

Sharp

Ricoh

Kyocera

KonicaMinolta

Canon 75% 16% 9%

9%

18%

13%

5%

13%

85%

74%

95%

71%

80%

13%

11%

11%

2%

Exhibit 2.37: A3 MFP Dealer Sentiment (2017)

*Results based on 264 dealers representing the Big Six Manufacturers whose core business is A3 MFPs

provider scored higher than 8% penetration among our dealer respondents. This year’s top four providers include: ACDI, Square 9, Papercut, and FM Audit, all with percentages in the single digits. We don’t believe those low percentages illustrate a complete picture, however, as they reflect the many choices dealers have, including solutions from their own manufacturers.

Perhaps the biggest change in this year’s survey compared to the last two is the evolution of results for LMI Solutions. During the first three years, we rated software and services providers, LMI Solutions was consistently in the top three, but this year, the company failed to come close to cracking the top five. When one considers that the fifth spot in this survey category was the choice of only 2% of the dealers in our survey, that is a significant drop off from the 8% to 17% level LMI Solutions received from 2014 to 2016. We attribute this to some issues occurring within LMI that are impacting its operations, which came from off-the-record conversations with dealers and other industry experts.

We continue to see ACDI and Square 9 perform well in our survey, even though both companies failed to achieve double-digit recognition from dealers in our survey. Considering last year, ACDI was identified by 23% of dealers, putting it securely into the top five for the first time, but the company’s penetration dropped to 8% in 2017, but still maintained the top spot in our survey. Square 9, a consistent performer since we’ve been tracking software and service providers, finished a close second at 7%, a decline from 18% in 2016. Again, we believe the wide range of options in this category accounts for the smaller percentages across the board in this year’s survey.

Dealer Sentiment Exhibits 2.37–2.39

This year, we expanded our efforts to gauge the degree of dealer optimism by looking at A3, A4, and production print.

Not every dealer offered an opinion and again, we believe that no responses should be included in our percentage calculations. We invite you to scroll through and review the charts to gauge dealers’ sentiments across these three segments by manufacturer to get a better sense of how optimistic these dealers are about their businesses.

Of the dealers whose core business is A3, 79% are still optimistic despite their concerns about declining clicks. Only 12% said that they were pessimistic, while 9% offered no response. The most optimistic dealers in this group belong to Kyocera with 95% feeling optimistic, followed surprisingly by Ricoh with 85% of its dealers feeling optimistic. We say surprisingly given Ricoh’s decision earlier this year to transfer much of its SMB MIF from its direct branches to select dealers, which left quite a few of those dealers that did not receive that MIF unhappy when the initiative was first announced.

In the A4 realm, the results were roughly similar to A3 with 80% of dealers feeling optimistic, 8% pessimistic, and 12% offering no response. Here, Kyocera and Ricoh had the most optimistic dealers with 95% and 89%, respectively, feeling optimistic. The two manufacturers that scored the lowest in this group were Sharp at 68% and Konica Minolta at 70%.

• 54 •

0% 20% 40% 60% 80% 100%

No Reponse

Pessimistic

Optimistic

Toshiba

Sharp

Ricoh

Kyocera

KonicaMinolta

Canon 79% 5%

5%

5%

15%

13%70% 17%

95%

90% 6%

68%

82%

14%

7% 11%

1%

Exhibit 2.38: A4 MFP Dealer Sentiment (2017)

0% 20% 40% 60% 80% 100%

Toshiba

Sharp

Ricoh

Kyocera

KonicaMinolta

CanonNo Reponse

Pessimistic

Optimistic

75% 9% 75%

65%

36% 41%

20% 15%

23%

66% 23% 11%

25% 43% 32%

50% 29% 21%

Exhibit 2.39: Dealer Sentiment – Production Print (2017)

The story is quite different when we look at the production print space. Here, only 57% of dealers are optimistic, 24% pessimistic, and 18% did not respond to this question. We surmise these numbers reflect the number of dealers seriously participating in production print at this time. It’s only fitting then the dealers that feel the most optimistic are those that market products from the three biggest players in that space—Canon, Konica Minolta, and Ricoh.

The majority of dealers responding across A3, A4, production print are mainly an optimistic lot, and we view that as a positive indicator for our industry and its future.

End of Part II.CR


Phone: (609) 406-1424


• 55 •

Konica Minolta strongly presses dealers to expand their revenue streams beyond the core MFP business at 2017’s FUTUREADY Dealer Meeting. By CJ Cannata

THAT ONE THING

The predominant message of Kon-ica Minolta Business Solutions U.S.A.’s (Konica Minolta) 2017

FUTUREADY Dealer Meeting, October 2–4, in Carlsbad, California, was decid-edly simple, decisively relevant, and on point. “Just pick one thing,” Rick Taylor, president and CEO of Konica Minol-ta, emphasized. He was referring to the

many options dealers have in terms of embracing available technologies and of-ferings that can complement and augment their core MFP businesses to aptly posi-tion their dealerships for the future and sustain and increase their relevancy.

As I have come to expect and look for-ward to, Konica Minolta once again tried

something new in its approach to and in execution of this meeting. The manufac-turer began by seeking to create a more targeted and focused group, in part by deciding not to include vendors or spon-sors outside its key leasing companies. The goal was to facilitate increased deal-er engagement with Konica Minolta and among the dealers themselves.

• 56 •

Talent

The meeting officially kicked off on Mon-day, October 2, with the opening riff to Tom Petty’s “Runnin’ Down a Dream” from the artist’s 1989 solo LP “Full Moon Fever,” his largest selling record to date (until his recent passing). To commem-orate the universally beloved American icon that had passed away that morning, Konica Minolta President and CEO Rick Taylor walked out onto the stage alone and briefly acknowledged the loss of Petty.

For the afternoon general session, the semi-circle seating arrangement around the stage set a more intimate tone than usual for a meeting this size. The stage itself concurrently featured different sets and the session favored a more informal panel or discussion-oriented approach. Key players shifting between roles during the session included: Rick Tay-

lor; Executive Vice President of Sales and Business Development Sam Errigo; Senior Vice President of Business Intel-ligence Services and Product Planning Kevin Kern; Senior Vice President of Marketing Kay Du Fernandez; and All Covered President Todd Crouteau. Each addressed each other, the audience, and special guests.

Among others, special guests during the general sesson included dealer influenc-ers Larry Sudbay, president and CEO of SymQuest Group, Inc., headquartered in Burlington, Vermont (now a subsidiary of Konica Minolta); Barry Clark, CEO of PERRY proTECH, headquartered in Lima, Ohio; and Dean Swenson, presi-dent of The Swenson Group, headquar-tered in Livermore, California.

Sudbay, Clark, and Swenson had a com-mon message for the dealers in the au-

dience. Transitioning from a hardware orientation to a managed services en-vironment is not an easy task. Yet, by working with All Covered, each of them said the challenges became less arduous. Hearing that common message from three widely respected individuals from the dealer community was an excellent way to convey this very important point. The need to develop a new revenue stream that provides recurring revenue to replace the erosion in printer click counts is of paramount importance. Featuring panels such as this one drove home a singular message for Konica Minolta: to ensure that the dealers understood Konica Minolta’s All Covered is a viable option as they look to overcome challenges in finding sustainable new revenue streams.

Sudbay focused on IT services, empha-sizing the importance and point-of-differ-

GENERAL SESSION: 1. Rick Taylor; 2. On screen: Larry Sudbay; (below from left to right) Todd Croteau, Kay Du Fernandez, Kevin Kern, Larry Sudbay, Rick Taylor, and Sam Errigo; 3. On screen: Barry Clark; (below from left to right) Rick Taylor, Kay Du Fernandez, Todd Croteau, Barry Clark, Sam Errigo, and Kevin Kern.

1

2 3

• 57 •

ence in having an on-premise call center with employees that speak fluent English. While some analysts mistook that remark as racist, we didn’t believe it was the case and knowing Sudbay, it certainly was not what he intended.

Most people in the industry who know me are well aware of my overt support of diversity in the workplace. However, I do believe Sudbay’s point is directly aligned with my thinking when it comes to business and pragmatism. If you are serving an English-speaking client base, it should be a priority for your employ-ees to have a fluent command of the En-glish language in order to provide the best service.

For example, I am dependent on the taxi and car service Über, as many in metro-politan areas are. When I first started us-ing Über, all the drivers seemed to speak

English fluently, even though they came from many different parts of the world—this is New York City, after all. Lately, however, I’ve witnessed more and more Über drivers who don’t have even a basic command of the English language. For me, this is a deal-breaker. Drivers have to be able to understand me in order to get me to my destination.

Just like Über needs to cater to its diverse clients, dealers also need to be cognizant of their customers’ needs. The better a customer is able to communicate with a vendor or help desk, the more efficient and productive transactions or exchanges between the two will be.

Clark focused on security and shared, in part, one of my favorite stories pertaining to entrepreneurial ingenuity. While I’m not at liberty to publish the full story, I will tell you he employs a cyber-crime

unit that was initially funded by a local police force.

Swenson’s participation served to advo-cate his fellow dealers’ use of All Covered, as the Konica Minolta dealer channel’s le-veraging of All Covered was a consistent call to action during the meeting.

While I have attended several manufac-turer dealer meetings featuring their respective dealer councils, or those with one or two dealers speaking in short order to a specific innovation or best practice, I have rarely attended an event where three or more renown dealers and entrepreneurial trailblazers were collectively included so integral-ly for approximately a third of an en-tire general session, as was the case at this Konica Minolta meeting. Featuring Sudbay, Clark, and Swenson was an in-herent win for Konica Minolta, given

GENERAL SESSION 4. (From left to right) Rick Taylor and Kevin Kern; 5. Counter clockwise: Todd Croteau (from behind), Rick Taylor, Kevin Kern, Dean Swenson, and Kay Du Fernandez; 6. On screen: Kristen Reed, Workplace Knowledge Consultant, Herman Miller; (below from left to right) Rick Taylor, Kay Du Fernandez, Todd Croteau, Kristen Reed, Sam Errigo, and Kevin Kern.

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they spoke to the positive relations the company enjoys with a many of their dealers. These three were certainly a highlight of the meeting.

Konica Minolta also featured several non-industry speakers, including Wendy Murphy, managing director for RSR Part-ners, and Kristin Bradford, strategic ac-count manager at Herman Miller.

Murphy participated in a discussion re-garding talent acquisition and retention with a focus on the integration of millen-nials into an organization. She stressed that one cannot define any one generation or group in absolutes, as they are com-prised of individuals. She encouraged dealers to ascertain the common denom-inators and leverage those in the deci-sion-making process.

For example, common denominators

among millennials include their tenden-cy to favor team-oriented approaches; recommend what they might consider to be the best idea, regardless of where it came from; seek opportunities that allow them to substantially contrib-ute and take ownership; and prioritize maintaining awareness of what’s going on around them in their communities and beyond.

These four traits in particular, if acknowl-edged effectively, can only serve to help increase a company’s overall efficiency, innovation, and output.

My only critique of this portion of the ses-sion was that Murphy’s tone at times was somewhat condescending, in my opinion. Additionally, I think adding a panel of highly accomplished millennials to the discussion would have more effectively resonated with the audience.

Production Design

Only one piece of hardware, Konica Mi-nolta’s Workplace Hub, was featured on set, and the entire production succinctly emphasized the company’s “Workplace of the Future,” inclusive of employers, employees, and technologies.

Taylor and his executive team also dis-cussed the many factors that should go into a dealer’s decision of how to evolve their companies, including resources, lo-cation, talent and interests. Then, he un-derscored that it doesn’t necessarily mat-ter what new direction a dealer takes, only that they chart a course and commit to it. Taylor went on to emphasize that dealers that do not evolve will lose their relevan-cy, a noteworthy point.

The Konica Minolta team substantiated the overall message beyond that. The fea-

PRESS CONFERENCE: 7. (From left to right) Kay Du Fernandez, Kevin Kern, Rick Taylor, Sam Errigo, and Todd Croteau. DEALER SHOTS: 8. (From left to right) CJ Cannata, Loren Davis, president, Davis Business Machines, and Frank Cannata; 9. (From left to right) Barry Simon, president, Datamax; and CJ Cannata

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tured executives highlighted key areas of Konica Minolta’s investment in technol-ogy and education for dealers, including production and industrial print, managed IT services, security, content manage-ment, and artificial intelligence, among many others.

Taylor also pressed that the goal of the meeting was to incite and empower im-mediate action, meaning his intent was to ensure dealers would depart with a high level of excitement and immediate actionable intelligence. Konica Minolta substantiated this message with an ag-gressive seminar schedule with thought-ful breadth and depth. If attendance is any sign of success, Taylor and Co. scored an A+, as all seminars were packed.

Lastly, Taylor spoke to Konica Minolta’s intention to have more, similarly intimate meetings with less people, but more of-

ten. This, as Taylor stated, is directly in alignment with the speed in which tech-nology continues to evolve.

Synopsis

This was a strong meeting in terms of format and content. Was it perfect? No. However, any time a company tries some-thing new, it is going to experience some bumps. I did have the sense Konica Mi-nolta was trying to pack too much into too short of a timeframe. The meeting started on a Monday afternoon at 3:00pm PT and ended at approximately 11:00pm PT on Wednesday after the closing festivities. There were several sessions I would have attended, however, time did not allow for it. Even a networking event felt rushed. While I do believe the new, more intimate format worked well, transitions between topics could have been smoother to link the topics covered more cohesively.

That said, I consider the meeting a sub-stantial win for Konica Minolta. The company’s ongoing originality when it comes to producing dealer meetings are on the right track. By far, this manufactur-er has placed more emphasis on comple-mentary opportunities for dealers aligned with the workplace of the future than any other manufacturer.

Konica Minolta embraces change as op-portunity and consistently dares to be dif-ferent. Taylor and team embrace calculat-ed risk and innovation in their approach the market, two essential ingredients for success. This authentic entrepreneurial spirit will only continue to set them apart from their competitors.

10-12. TECHNOLOGY SHOWCASE

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Questions About This Story? Contact Frank G. Cannata


Phone: (860) 614-5711

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Earlier this year, Cleveland-based MT Business Technologies sold to Global Imaging Systems. This

deal was a shocker in that MT was one of Ricoh’s biggest dealers with revenues of some $75 million a year. The industry is accustomed to small- and mid-sized deal-ers selling, but when a dealership of the magnitude of MT Business Technologies is acquired, it gives one pause. If a dealership of this size can be acquired, what does this mean for the rest of the industry? At the same time, other acquisitions are changing the dealer dynamic as dealerships expand from focusing on a local market to becom-ing more regional in scope

Hold, fold, or sell?

Centric Business Systems in Owings Mills, Maryland, is on pace to exceed

$56 million in revenue this year without an acquisition. The plan is to continue to grow organically and via acquisition. Centric has made four acquisitions over the past several years, contributing to its geographic expansion throughout the mid-Atlantic region.

Even as Centric is evaluating potential new acquisitions, the company is fielding calls from entities interested in acquiring the dealership.

“We have absolutely no interest in selling and remain focused on our key strategies of organic growth and acquisition,” re-plied Rick Bastinelli, Centric’s president, when asked if he’d ever consider selling. “I love what I do and see myself doing this for several [more] years.”

He views the current acquisitions activity as an indication of the current state of af-fairs within the imaging industry.

“A lot of smaller dealers are realizing that with the direction the industry is going, it may be in their best interest to maximize their opportunity and take advantage of

Should I Stay or Should I Grow? Acquisitions are reshaping the independent dealer landscape and challenging the established norms of the acquisitions game. By Scott Cullen

Editor’s note: This is the second of a two-part series on acquisitions in our industry.

“We have absolutely no interest in selling and remain focused on our key strategies

of organic growth and acquisition,” said

Bastinelli.

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higher valuations either by selling their company or partnering with a larger or-ganization so they have the size and scale to bring a [wider] range of solutions re-quired to be successful today to the mar-ketplace,” he said.

Another factor driving acquisitions is a mature industry populated by dealer principals who may be at a stage in their career where they are looking to sell and move on to the next phase of their lives. Bastinelli has no plan to enter that next phase anytime soon, although he has pre-pared his dealership for it. Centric has a succession plan in place to ensure its fu-ture, as well as a Board of Directors and senior management team that will man-age the company should anything happen to Bastinelli.

“If I get hit by the ice cream truck on Monday morning, this company is going to be able to operate and operate very ef-fectively,” said Bastinelli.

Loffler Industries in Bloomington, Minnesota is a buyer not a seller, hav-ing acquired 18 companies in the last 10 years, but that hasn’t stopped this heavyweight dealership from receiving inquiries from prospective buyers. The dealership is currently in the middle of a three-year plan to acquire six compa-nies with three acquisitions complete and another three expected to close within the next 18 months.

Loffler’s acquisitions strategy is to focus on Loffler’s core business areas—MFPs, MPS, managed IT services, and VOIP.

“In a perfect world, if we can get them with the same brand, that’s a huge ad-vantage because we already stock certain manufacturers products and parts,” said CEO Jim Loffler.

The biggest acquisitions Loffler has made to date were two dealerships companies in the $15 million-revenue range. Like other larger dealerships, Loffler Indus-tries has become more regional, expand-ing its circle around the Twin Cities while

also exploring opportunities in other ma-jor markets rather than expanding into rural areas.

While Loffler Industries did not begin as a family business, it’s taken on that tone as Loffler’s son, James Jr., and daughter, Danielle, both work for the company. James Jr. joined the company in 2006 after working outside the industry for a couple of years after graduating college. He now sits on Loffler’s senior leadership team and runs Loffler’s IT/MS business. The plan is for him to take over the com-pany when his father steps down. Danielle works on the real estate side of Loffler In-dustries. “I’m a lucky man in that I get to work with both of my kids and prepare to hand the reins over to them when it’s time to go into the sunset,” stated Loffler. “It’s nice for the customers to know that, for the employees to know that, and for me to know that we’re not looking to sell off to an investment bank or venture capital company or major corporation.”

Doing Better Business (DBB), based in Altoona, Pennsylvania, is a family-owned business that began in Hagerstown, Mary-land, in 1973. DBB continues to expand its geographic range through acquisition and now has locations in Maryland and Pennsylvania.

Deb Dellaposta, DBB’s president and daughter of the dealership’s founder, has been involved in three acquisitions and expects to be involved in a few more. While Dellaposta doesn’t see DBB buy-ing any $20-plus million dealerships any-time soon, she acknowledges the pickings

are getting slimmer on the lower revenue end of the market.

“As all the little dealers are quickly being gobbled up, there’s not much out there,” she commented.

Dellaposta constantly gets calls from companies looking to buy the family business. Asked if she has a pat answer when responding to those calls, she says she does, but DBB always hears what somebody has to say.

“You’d be crazy not to take a meeting with somebody,” she said.

Her usual answer for those looking to acquire her company is that it would be an incredible long shot because of where she and her partners are based on their ages, family situations, and their own specific objectives.

Coordinated Business Systems in Burns-ville, Minnesota, a mid-sized 35-year-old dealership in the $18-$20 million-reve-nue range continues to grow through ac-quisition. It’s surrounded by a few larger dealerships that likely view Coordinated as a prime acquisition target.

Owner and president Jim Oricchio said he receives about three inquiries a month from companies looking to buy. He re-cently told a large competitor that ap-proached him, “I was thinking about buy-ing you.”

Oricchio has no intention of selling. Not now, not ever. “We’ve got a good, solid succession plan in place and I’m having too much fun,” he said.

He loves the chase and the competi-tiveness. He also enjoys working with young people—his daughter Kristie is director of marketing and son Jay man-ages two branches. Neither is interest-ed in taking over the dealership should Oricchio ever step down. The current plan is for senior management team to run the business.

“I’m a lucky man in that I get to work with both of my kids and prepare to hand the reins over to them when it’s time...,”

Loffler said.

Raising the Bidding Bar

As we’ve been seeing of late, private eq-uity firms are investing in office technolo-gy dealerships and we can expect them to impact the size and shape of the indepen-dent dealer channel going forward. Last year, FlexPrint LLC, a dealership special-izing in MPS and based in Phoenix, Ar-izona, was acquired by Oval Partners, a San Francisco-based private-equity firm. Since then, FlexPrint has been using that private-equity money to fund more ac-quisitions and is now a $100-plus million dealership with a significant footprint in Arizona and the Chicago area.

FlexPrint’s acquisitions model, fueled by Oval Partners’ capital, is unique compared to other acquirers. When Fl-exPrint acquires, it leaves the company intact and the seller can then invest up to 30% of net proceeds into FlexPrint stock. To date, every acquisition the company has made has done this. This means that a dealership that was once worth $30 million is now worth much more as part of a larger organization—and that dealer that sold to FlexPrint still owns a portion of it.

Fewer Opportunities?

As the independent dealer channel con-tracts, the number of dealers that are suitable acquisition targets seems to be contracting. Even though mid-sized deal-ers are still acquiring dealerships and IT companies with revenues in the $1 mil-lion to $15 million range, it now seems as if the bigger entities are now focusing on larger targets. But even those are few and far between. Just because an MT Business Technologies is acquired, doesn’t mean the other big dealers are looking to sell as we’ve just heard.

Copiers Northwest in Seattle, Washing-ton, has expanded across Washington into Oregon and even parts of Idaho, growing into a $50-plus million dealership. There is no intention to sell at this time. “We’re still growing, making money, and having fun,” said John Hines, chief finan-cial officer, who has been with the dealer-

ship for more than two decades.

Instead, Copiers Northwest is buying, or at least searching for suitable businesses.

Its most recent acquisitions have been smaller dealerships, including a $2 mil-lion dealership in Oregon the copier di-vision assets of a small copier and furni-ture dealership.

Other than those, Copiers Northwest isn’t seeing much in its price range whose cul-ture is a good match. Hines acknowledges that acquiring MIF is a valid reason for buying a dealership whose culture isn’t a good fit, but the best reason is existing maintenance contracts.

“That’s the real gold,” he said.

Asked if he can overlook the disparity in cultures if the MIF and maintenance contracts are enticing, he said, “Sure, but you’re not going to buy a crappy busi-ness. It’s got to be a good business, other-wise you’re just throwing money away.”

At present, the MT Technologies’ acqui-sition seems an anomaly mostly as there are still only a handful of entities with the resources to make acquisitions of that size, and there doesn’t seem many dealers of that size looking to sell. Even so, that kind of a deal is obvious too rich for a Copiers Northwest, but Hines wouldn’t rule out mid-sized dealers in the $15-plus million range.

“It would have to be a sweet deal because it would distract us a bit,” said Hines. “That would be a big bite, but we’d cer-tainly look.” Mike Pietrunti, senior vice president of acquisitions, corporate services, and marketing at Global Imaging Systems,

told us there’s not as many worthwhile dealerships in the $20-plus million range available as some may think out there in the market.

When asked about that comment, Tom Callinan, the new president of FlexPrint, alluded to the number of dealers with $30-plus million in revenues.

“Are there a lot of $30-plus million deal-ers out there, maybe 100,” he estimated. “Probably 90% of those are good targets for acquisition because they grew their companies to $30 million, which indi-cates they have good management in place along with talent.”

Below $15 million in revenue, particular-ly in a major metropolitan area, Callinan said it begins to get a little sketchy when a dealer in a market the size of Chicago, for example, is only doing $10 to $11 million for “X” number of years.

“It makes you wonder if they have the right talent,” he said.

The Changing Landscape

The dealer landscape is indeed changing, and changing rapidly, and Callinan offers his prediction of what it may look like in five years.

He expects to see at least five dealers doing $250 million in revenue a year, including three with revenues in that range now—POA, Marco, and DEX. He further predicts that FlexPrint will be among that group.

“And you’re probably going to have 25 to 30 $100-plus million dealers and ob-viously a lot fewer dealers overall,” con-cluded Callinan.

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Phone: (609) 406-1424


“We’re still growing, making money, and

having fun,” said Hines.

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When you hear the term “virtual reality,” the odds are good your first thought isn’t about print. It’s proba-bly not even your second or third thought. But virtual

reality (VR) and augmented reality (AR) is where many brands are starting to turn when it comes to marketing their services and products. And that means print needs to follow.

Before we look at the ramifications for print, let me get one dis-claimer out of the way: I absolutely am a “tech geek.” I love playing with all the latest and greatest gadgets, I follow tech industry news, and I am a sucker for an unboxing video. I am admittedly not what you would call unbiased when it comes to loving technology. On the flip side, I love print. I love holding it in my hands, I love getting it in the mail, I love feeling it when I come across interesting substrates, and I have a habit of trying to touch almost every printed item I can. So it is safe to say that the idea of merging print with technology is one that has me beyond excited.

And I’m not the only one.

It is truly exciting to see how brands—and by extension print-ers—are finding new and innovative ways to merge the print and digital worlds. I went down the rabbit hole and found some truly amazing examples to share with you that seamlessly blend the printed piece with a wide range of VR and AR technologies to create experiences that get people talking. The future of mar-keting is in this kind of creative warping of reality, and print-ers—and their partners—that can not only think outside of the box, but also redefine the very walls of the box itself will be the biggest winners tomorrow.

Each of these examples includes a YouTube link so you can truly appreciate how the mediums were all used. I encourage you to go view all of them, and use them as starting points for your own

ideas for new ways to use technology to drive print. You will also find the videos posted on thecannatareport.com.

Garage Magazine. This is an interesting application that used traditional magazine covers as the base printed piece. There was nothing special about the print—no specific inks, no codes, no fancy techniques. Just a printed magazine cover.

However, when users held that cover, and the spreads inside, up to SnapChat, something amazing happened. Using the AR tech-nology SnapChat already has embedded in it for facial recogni-

IMAGING REALITY CHECK Virtual and augmented reality are impacting the world of print. By Toni McQuilken

Editor’s note: Please visit thecannatareport.com for a series of five “Imaging Reality Check” posts, each anchored by, and featuring one of, five videos that illustrate the examples featured in this story.

Garage magazine leverages SnapChat to enhance content.

TAM Airlines’ “On Board” magazine delivers personalized content.

Abraxas Ab creates ad triggered by a smartphone flashlight.

https://www.youtube.com/watch?v=4_Sy_oxmgIs&list=PLBKkLeA0MNstaYn1aNButco6sTSZ9XRjP&index=5

tion and mapping, users found their magazines coming to life with special filters they could only access that way. Users who downloaded the magazine’s branded Garage app were treated to even more of an experience with the ability to see interactive content for both the main cover stories, as well as for one of the advertisers, Burberry. Without the printed magazine, this cam-paign wouldn’t have been possible, since it relied on every user of the experience starting with the exact same printed image.

TAM Airlines. AR doesn’t have to mean using fancy apps, or even providing a digital component in the final piece itself. In this piece, the airline found that less than 11% of passengers remembered anything about the company’s Onboard Magazine, and only 3% of the time in flight was spent reading it. So they took a novel approach.

TAM connected with their passengers on digital platforms and various social networks before their flight. They then used vari-able data technology to print a unique magazine they renamed OWNboard Magazine for the issue, with every passenger re-ceiving a version that was tailored to their own life and interests. The results? The average time reading the publication increased by 1,200%, and 100% of the passengers—that’s every single person on board—took their copy home with them, along with the targeted ads and promotions that went with it. This is a great example of how variable data doesn’t have to just mean what you can get from a purchased list, and AR doesn’t have to mean

what you can do with a smartphone app. There are infinitely more ways to blend these two worlds, as this campaign shows.

Abraxas Ab. This is another notable example of “hacking” the print process and using digital technologies to bring it to life. Abraxas Ab, an “adult beverage” manufacturer, worked with printers to create a stunning marketing campaign. They ran a magazine ad that, at first glance, just looked like an all-black sheet. But when users put their smartphone’s flashlight behind the page, they discovered a hidden message: an entire advertise-ment was hidden behind the black. It is a truly creative way to get readers engaged with both the magazine and the brand, and got people talking, which, after all, is the whole purpose of a good marketing campaign.

Pizza Hut. This is a pretty neat application. Pizza Hut, using printed electronics, created a “playable pizza box.” Users could connect their computer or phone via Bluetooth to the box, which then became a full-fledged DJ mix station. They could adjust the volume of their music, the pitch, the speed, even “scratch” the sound. It was a limited-edition campaign that seamlessly blend-ed their packaging with the digital world of music, creating a piece that customers wouldn’t want to just throw away.

McDonald’s. In this campaign, McDonald’s is taking advantage of the “cardboard” trend when it comes to VR glasses, and has actually transformed its iconic Happy Meal box into a working VR headset. Users could simply insert their phone into the box once it was re-folded after the meal was taken out, and suddenly, they have access to the entire realm of VR content that is rap-idly expanding. It is a way to use printed, physical packaging to connect their customers to the virtual realm, and in doing so, create a stronger relationship with them. This is a great illustra-tion that blending print and digital doesn’t even have to be about the brand itself creating the content—it can simply be the brand finding ways to connect their customers to the exciting content in exciting new ways.

These are just five of the truly fascinating examples of ways brands have merged the print and digital realities. For printers, this opens up an entirely new avenue for creativity. Those shops that are going to the brand managers and print buyers with inno-vative ideas for ways to merge realities, rather than waiting for someone to come to them with the ideas already in place, will be the shops that don’t just earn the business today, but that form lasting partnerships that will continue to benefit both sides for many years to come. And the dealers who see and understand this shifting reality will be best positioned to support those print-ers in whatever way they need—even if they themselves don’t yet know what it is they’ll need to succeed.

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Phone: (609) 406-1424


Pizza Hut leverages Bluetooth for the first and only “playable pizza box.”

McDonald’s die-cut Happy Meal box + smartphone = VR glasses

https://www.youtube.com/watch?v=ZhbIQNtL8JE&index=16&list=PLBKkLeA0MNstaYn1aNButco6sTSZ9XRjP

https://www.youtube.com/watch?v=7H7RkIzNCJs&list=PLBKkLeA0MNstaYn1aNButco6sTSZ9XRjP&index=28

https://www.youtube.com/watch?v=bnYg752URcE&list=PLBKkLeA0MNstaYn1aNButco6sTSZ9XRjP&index=30

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L ittle did Hunter Woolfolk know when he was sweeping floors at age 12 in his father’s dealership, Alter-

native Business Systems in Santa Fe, New Mexico, that one day he would be running his own dealership at age 30. Like it or not, and that was not his orig-inal plan, that’s what he’s doing serving as co-president with his brother Preston since May 2017 in the company started by his grandfather and office technology industry legend, Lou Scantland in 1990 as a retirement project.

“I spent every summer from then on in New Mexico and San Antonio, doing deliveries, logistics, sweeping floors, cleaning up cardboard, organizing ware-houses,” remembered Hunter about those years working for his father and grandfather. “Mom tried to be sweeter to me and let me have a fun summer, but Dad said, ‘No, it builds character.’”

That summer routine continued into col-lege when Hunter started working as a sales intern for Documation, knocking on doors and cold-calling.

“I enjoyed it, but I was pretty adamant I didn’t want to make a career out of knocking on doors all day, every day,” lamented Hunter.

Knocking on all those doors opened new doors for Hunter as he scaled the cor-porate ladder from sales intern, to sales manager, to his current position. But it was those early days that taught him the

work ethic necessary to succeed in the imaging industry.

“When I was working at Documation in high school they put me in an outdoor warehouse in Texas—a covered parking lot surrounded by metal, eight hours a day sweeping 30,000 feet of rough con-crete. Dad would make me wear suit pants and a dress shirt even though all the other guys wore polos. Now, they’re the logistics crew and they respect me.”

Although it was a challenge to shift into a supervisory role with people he’s known since he was young, Hunter maintains that his early experiences in the business prepared him for his current position, even though he had no plans of remaining in the family business.

“I thought my brother and I would start our own dealership, go a different route, leave the family [business], and do our own thing,” he recalled. “Now I’m ex-tremely thankful of all those years pick-ing up trash in the parking lot. Taking pride in the little things is how I earned [my co-worker’s] respect.”

Working as a low-level sales rep taught Hunter more than just how to sell. In-deed, many of the skills Hunter draws on today were forged while cold-calling and chasing leads.

“I learned mind management and how to succeed in tough times,” said Hunter. “In our industry, it’s very hard to start

TALENT SCOUT An intimate understanding of the millennial mindset helps Young Influencer Hunter Woolfolk identify young sales talent for his dealership and dispel some clichés about his generation.

By Kate Gragg

WHEN WE FIND THE RIGHT MILLENNIALS, THEY HAVE VERY LITTLE COMPETITION, SO THEY FIND HUGE SUCCESS,”SAID HUNTER.

YOUNG INFLUENCER Hunter WoolfolkPRESENTED BY ACDI

with no base. I had a very low salary and was told to knock on doors. It taught me to control my mind and be mentally and emotionally tough.”

A Millennial Advocate

There’s a common misconception that millennials don’t have a strong work ethic, aren’t motivated, and aren’t pre-pared for success. As a millennial him-self, Hunter disagrees, having learned a few things about the younger generation through his recruiting efforts. Many of the millennials Documation has hired are re-cruited straight out of school.

“I look for highly aggressive people who want to control their own destiny,” Hunter explained. “They don’t like having to rely on other people and want to be a strong independent producer.”

To find the right talent involves a long process of interviewing and getting to know the candidate. Hunter believes he has an advantage connecting with this generation because it’s his generation.

“[Millennials] didn’t grow up with as many trials and the work ethic of previous

generations,” he said. “When we grew up, everybody got a star for trying hard. We were too concerned with not hurting mil-lennials’ feelings.”

Working as a sales rep in imaging is nei-ther easy, nor is it for everyone.

“Our job hurts feelings,” stated Hunter. “People don’t want you calling. They don’t want you knocking on their door. It’s very hard on your emotions. The sales world isn’t fair, people aren’t always po-lite, and you don’t always win.”

Despite his successes hiring millenni-als, Hunter acknowledged that recruiting young workers isn’t easy. It’s more about learning how to identify the young people who are prepared to do the job, which can be as much about soft skills and self-man-agement as it is about education and ex-perience.

“When we find the right millennials, they have very little competition, so they find huge success,” he emphasized.

Hunter disagrees with the most common complaint about his generation, that mil-lennials have no work ethic. What he sees is not a lack of motivation, but a genera-tion motivated by different things.“The way our industry motivates people is by getting them to chase money,” he said. “But millennials believe that mon-ey’s not all that matters. The way you mo-tivate people who aren’t money-motivat-ed is by giving them purpose.”

Documation does that by being philan-thropic, investing in community charities and non-profits.

“Our sales reps have a sense of purpose because they’re a part of that, not just writing checks, but volunteering as well,” explained Hunter. “We preach a lot about value and purpose, how much they’re able to give back, and they respond to that.”

Hunter often finds himself sharing tips for hiring millennials with more seasoned C-level executives who asking him how to hire them and make them successful.

Connecting with His Team

Although the challenges of a career in sales hasn’t changed, Hunter has found that he’s had to adapt his management style to bet-ter connect with his young hires, who he has found to be more collaborative and team-oriented, as well as more comfort-able working with their peers, even though they can be fiercely independent as well.

“When I was coming up, sales reps were all very much lone wolves,” said Hunt-er. “There was little career development, team bonding, or teaching. It was just, ‘Here’s your territory, go figure it out.’ That had been very successful, but we choose to do it a different way.”

This isn’t to say that Hunter’s sales team can’t be as cutthroat as the old guard when they want to be.

“We keep that competitive spirit alive,” he said. “We’re continually rewarding our top producers, and they’re ultra-competi-tive human beings.”

Ultimately, Hunter leads a team that’s unit-ed by a common goal to better their own lives and their community, and that’s what he believes will keep them and Documa-tion going strong in the future. While mil-lennials won’t always be the youngest gen-eration in the workforce, Hunter believes their attitudes will shape the industry go-ing forward and change it for the better.

“The neat thing about hiring all these mil-lennials is that they continually raise the bar on self-improvement,” he said. “They improve themselves without pressure from management, and perpetually beat the ex-pectations we have for them. If the future’s in their hands, it’ll be a good future.”

Hunter Woolfolk ought to know after spending the past 20 years raising his own self-improvement bar to the benefit of his family business.

• 66 •

CR


Phone: (609) 406-1424


I LOOK FOR HIGHLY AGGRESSIVE PEOPLE WHO WANT TO CONTROL THEIR OWN DESTINY. THEY DON’T LIKE HAVING TO RELY ON OTHER PEOPLE AND WANT TO BE A STRONG INDEPENDENT PRODUCER,” SAID HUNTER.”

WE SIMPLYHELP DEALERS SELL MORE.

Business DevelopmentSales and MarketingLicensing ProcessingProject Management

Technical and Sales TrainingSoftware IntegrationProfessional ServicesSoftware & Hardware Support

If you need all of our services, or just a few – ACDI is here for you.

Maybe you need our business development team or solutions specialists to train your staff. Or, industry analytics and product collateral from our marketing department. We understand that every dealer’s needs are different. After 23 years of serving the dealer channel, we’ve found that working together simply works better.

acd-inc.com | 800.990.2234

• 68 •

Throughout the rest of the year, we’ll be sharing highlights from past is-sues of The Cannata Report, focus-

ing on the stories, people, and events we were covering during different periods in our history.

October Highlights

November 1982 – NOMDA Regional Shows were still very important during this time, and we covered WOMDA (Western Office Machine Dealers Asso-ciation) and EROMDA (Eastern Office Machine Dealers Association). WOMDA took place in Phoenix. Canon highlighted its PC (Personal Copier)-10 and PC-20, Sharp featured its 825 Copier, and Toshi-ba showcased the 4511. Other manufac-turers, including Mita, Minolta, Panaso-nic, and Savin, which had just announced a new agreement with Ricoh for its LTT series (liquid ppc), were also at the show. The show was poorly attended and it was the beginning of the decline of the region-al shows.

EROMDA, on the other hand, was well attended and took place in Philadelphia in November. Frank Cannata gave a seminar with the title “Changing Methods of Copi-er Distribution.” The main focus of the show was word processing and comput-ers. The Cannata Report was impressed by a demonstration of the Systel System that converted any electronic typewriter into a word processor. Minolta’s E-300 RE (reduction-enlargement) was the hot box at the show.

October 1987 – Our lead story focused on telecommunications, and we reported that many of the dealers in our annual sur-vey indicated they had taken on telecom-munication devices—telephone systems,

as opposed to facsimile machines. We strongly advocated dealers should enter this market, emphasizing that if they were already selling facsimile, then telephone systems were the next logical step. October 1992 – We attended our first Graph Expo in New York City and have not missed a Graph Expo show since then. This show exposed us to short-run color. One of the products on display, Ricoh’s 8780, appeared to be a good fit for a small commercial printer or quick print shop, underscoring how QuickPrint was one of the few sizable markets for color copiers. Two big announcements at this show were that the Philadelphia Inquirer and New York Times had ac-quired color presses. Four-color presses capable of producing quality color prints were among the hardware on display with presses from Shinohara, Man Ro-land, Hashimoto, and Sakurai producing full-color prints and posters.

Also in October, Mita opened its head-quarters in Fairfield, New Jersey. We inter-viewed Bob Magrino Sr., Mita’s vice pres-ident; Mario Lenci, vice president of sales; Yoji Shikama, vice president of marketing; Toni Levi, national product support man-ager; and Seiji Morodomi, national sales administrator. We learned that Mita was preparing to introduce its first digital color copier in the second half of 1993.

October 1997 – The 12th Annual Sey-bold Conference kicked off on September 29 at San Francisco’s Moscone Conven-tion Center. There were 300 exhibitors showing their wares to 40,000 print and web/internet publishing professionals. Microsoft’s Bill Gates and Apple Com-puter’s Steve Jobs delivered separate keynote addresses. It was the first major appearance for each executive, follow-ing the August announcement of a $150 million Microsoft investment in Apple. Gates revealed Microsoft would continue to shift its focus to the Windows NT oper-ating system and away from the successor to its widely used Windows 95 software. There was much speculation that Jobs was on his way out at Apple. QMS claimed to

break a color barrier with its Magicolor CX and EX models. This network color printer (8-ppm color and 16-ppm mono-chrome) was priced at $3,449—very competitive for the period with a low-cost per page. At 5% coverage, the cost was reputed to be cents.

October 2002 – We combined a trip to Japan with Graph Expo. We visited Canon, Konica, Minolta, and Muratec. At Canon, we met with Ikuo Soma, chief executive officer of Canon’s Office Imaging Products Operations. Soma reported Canon USA was responsible for 40% of Canon Inc.’s worldwide office imaging business. In ad-dition, we were shown the new iRC3200, a 32-ppm color MFP with a projected SRP (in the U.S.) of $16,000. At Konica, we met with Hirofumi Sakaguchi, president of Konica’s Office Document Company. He shared the company’s vision of focusing on production print. Konica had captured 10% of the Japanese production print mar-ket with the 8050 (85-ppm monochrome) and the company was well into developing a 100-ppm device.

As we prepares to launch our Novem-ber Production Print Issue featuring the latest trends from PRINT17 and expert insights, we continue to hit the road hard. In November we will visit with RISO and New England Copy Specialists in Boston, and then attend ACDI’s Solutions Summit and Sharp’s National Dealer Meeting, both of which will take place in Phoenix. Beyond that, The Cannata Report officially extends CR LIVE into 2018. We will once again visit 10 dealer-ships—as many dealerships as we have issues to provide coverage on each visit—beginning with Pacific Of-fice Automation in January. See you on the road!

UP NEXT By CJ Cannata

FROM THE VAULT

Celebrating 35 Years

Highlights:1982–2002

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AMUSEMENT PARK

APPROVED CHANGES TEAM LEADER: ART DIRECTOR: COPYWRITER: PROOFREADER: ACCOUNT EXEC:

PRODUCTION NOTES:

September Issue, Due 9/12

HI-RES: FPO:

READER: 2CLIENT: TOSHIBAJOB#: TOSH1012NAME: TOSH1012_ELEVATE_CANNATAREPORT_SEPT PUBS:

SPECS: BLEED: 8.75”W X 11.25”H TRIM: 8.5”W X 11”H LIVE: NA GUTTER:

ART DIRECTOR:COPYWRITER: PRODUCTION: JULIE ESLERACCOUNT EXEC: JOHANNA CORGUSSTUDIO: BRIAN OLIVAS

✔

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For 25 years, our independence, integrity and drive to exceed our customers’ expectations have fueled GreatAmerica.

Thank you for rating GreatAmerica the #1 fi nance company again this year; we are honored and look forward to the next 25 years.

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