Automotive Distributor Gains Efficiencies and Flexibility with Canon Managed Document Services

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1 BUYER CASE STUDY Automotive Distributor Gains Efficiencies and Flexibility with Canon Managed Document Services Holly Muscolino IDC OPINION Global Headquarters: 5 Speen Street Framingham, MA USA P F A major automobile, parts, and accessories distributor in the United States ("the Client") implemented Canon Managed Document Services to achieve efficiency gains and cost savings within the organization. Using wisdom and lessons learned from prior MPS engagements, the Client completed a successful and smooth implementation and has seen significant cost savings and service benefits emerge from the new contract. After the Client went out to bid in order to negotiate more favorable contract terms, its decision to select Canon as its managed print services (MPS) vendor involved the following key points: In 2011, economic concerns caused the Client to initiate a new competitive bidding process rather than automatically renew its existing MPS contract. Robust service, flexible terms regarding fleet size, and a tiered pricing agreement were key aspects that the organization wanted to include in the new contract. Key win factors for Canon during the vendor selection process included its dedication to providing best-in-class service and management of the Client's fleet and Canon's flexibility regarding proposed contract terms. IN THIS BUYER CASE STUDY This IDC Buyer Case Study examines how "the Client," a California-based distributor of automobiles, parts, and accessories, selected Canon's managed print services to replace its existing MPS solution. It highlights why the Client decided to reevaluate what solutions were available in the market, the company's main business requirements, the product selection phase, implementation, and lessons learned. SITUATION OVERVIEW Organization Overview The Client is a subsidiary of a Japan-based automobile manufacturer. The organization handles importation, sales, marketing, product development, parts, and customer service in North America. Filing Information: August 2013, IDC #242448, Volume: 1 BuyerPulse Analysis: Managed Print and Document Services: Buyer Case Study

2 For this Buyer Case Study, we interviewed the Client's purchasing manager, who is responsible for managing the Client's fleet of office equipment (multifunction copiers, desktop printers, fax machines, and home office printers). Challenges and Solution In 2011, the Client's existing managed print services contract for U.S. operations was scheduled to expire in early 2012, and the organization decided to return to the market and complete a competitive bidding process. With automotive sales declining in North America because of the economic downturn in the automotive industry, the Client wanted a vendor that could provide a favorable contract with flexible terms regarding payment structure and potential device reduction. At that time, the Client had a fleet of 220 desktop printers and 55 MFDs across the organization's 32 facilities in the United States, as well as 100 home-based devices for field employees. Because of the organization's distributed and relatively small fleet of devices, the Client needed to make sure that prospective vendors were committed to providing high-quality service to the organization. Table 1 provides details related to the Client's decision to purchase Canon Managed Document Services. TABLE 1 Buyer Case Study Capsule Category Vendor/offering User organization Vertical Size Purchase trigger/need Key requirements Key win factors Decision cycle time Implementation time Details Canon's Managed Document Services Automobile, parts, and accessories distributor in the United States Automotive Midsize Conclusion of existing MPS contract Addition of more efficient devices Flexible contract, commitment to high service levels, management of home-based devices Approximately five months Approximately one month Source: IDC, # IDC

3 Key Requirements: Flexibility of C ontract, Support, and Efficiency In response to a decline in automotive sales within the United States, the Client saw the new bidding cycle as an opportunity to reevaluate pricing in the MPS market and attempt to include more accommodating terms in its new contract. The Client required a vendor that could provide a tiered pricing model that would minimize the organization's financial burden during the first contract year and allow the organization room to recover from adverse economic conditions. "We went through several years of difficult economic circumstances, and we had some very strong competition in the marketplace. We needed to restructure our agreement," the purchasing manager explained. In 2008, the Client issued an RFP for MPS that resulted in a three-year contract with Océ Business Services (Océ). The Client had fully executed several prior contracts at this point and had identified a number of service areas that needed to improve. Accordingly, the organization prioritized strong support as a key criterion, and it wanted a vendor that could provide automated monitoring and onsite technicians for the organization's main facilities. The Client also needed a vendor that was willing to supply and service a fleet of approximately 100 home-based devices designed to enable productivity for employees working in the field. While preparing for the 2008 bidding process, the Client identified that it could receive significant efficiency gains and cost savings by optimizing the existing fleet and implementing a new print policy. To tap into these benefits, prospective vendors had to be able to offer strategies for fleet reorganization and device optimization. Prospective vendors also needed to be able to drive change management within the organization to successfully implement the new print policy and make alterations to the fleet without causing significant cultural pushback. Océ was awarded a three-year contract in 2008, and the Client rated Océ's performance over the contract period as excellent. Product Selection When the contract came up for renewal in 2011, Océ had begun merging with Canon. The Client was hesitant to sign a renewal because of potential changes in management, structure, and personnel that can occur in such situations. In November 2011, in coordination with the expiration of the Océ contract, the Client's purchasing department initiated a competitive bidding process and issued an RFP to five vendors: Ricoh, Toshiba, Canon (which had subsumed Océ), Lexmark, and Xerox. Applying lessons learned in 2008 and earlier, the Client once again engaged in a methodical evaluation process over the course of five months. The Client voiced its concerns to Océ and Canon and was assured that service levels and performance under the existing contract would remain intact. During initial discussions and negotiations, Canon worked hard to demonstrate its ability to tailor the MPS solution to meet the Client's technical and service requirements. After evaluating vendors' responses to the RFP, the Client invited Canon and one other vendor to perform onsite or remote assessments of the organization's print 2013 IDC #

4 environment. Because of its existing awareness that the print environment needed significant alterations to achieve efficiency gains, the Client placed significant emphasis on the quality and thoroughness of the two vendors' assessments. While both vendors performed well, Canon stood out because of the strength of its assessment, high degree of flexibility in regard to the contract, and demonstrated willingness and ability to offer top-quality service to the entire U.S. fleet. The biggest win factor for Canon was its ability to offer the most flexible contract out of all the prospective vendors. Canon agreed to a tiered pricing agreement with a low initial price point that would increase over the years of the contract. The contract was based on a per-device monthly fee that includes equipment, consumables, and service. Canon also agreed to the Client's request to provide consolidated billing as part of the contract. In addition to its flexibility in regard to the terms of the contract, Canon also won the Client over by committing to maintaining the existing high service levels that the Client had enjoyed under the Océ contract. Part of this service commitment involved pledging to retain the existing team of onsite support technicians that were provided by Océ. Canon assured the Client that standard performance metrics would be met under the new management, including service acknowledgement time of one hour and response within four hours to major Client locations and eight hours for more remote facilities. Another important support concern was making sure that the Client's fleet of approximately 100 home-based devices was serviced and supplied by the vendor. Canon further demonstrated its flexibility by developing a plan to deploy new machines to field employees (as necessary) and make sure they were serviced and resupplied in a timely fashion. Implementation In May 2012, Canon commenced implementation. It took approximately one month to replace the 55 MFDs at the organization, and the new MPS solution went live in June As part of the implementation, Canon altered the existing fleet by approximately 10 15% in favor of more efficient and appropriate devices. To meet the Client's service-level expectations, Canon provided automatic monitoring of device functionality and performance for the organization's facilities and offices. For the home-based devices used by field employees and other devices that were not on the network, Canon set up an 800 number that employees can call to report technical problems and order supplies. The home-based devices are billed based on a consumables charge model. Thanks to lessons learned during deployment under the previous contract, Canon did not experience any issues or technical problems while implementing the home-based devices. To add functionality to the print environment, the Client also deployed Canon's Universal Fleet Management (UFM) print software solution. This tool provides routing capabilities that will redirect print jobs if the printer that was selected is offline or not operational. Additionally, the UFM solution has a pull printing capability built in, which allows users to securely release a particular print job from any of the organization's networked devices. 4 # IDC

5 Over the years, the Client has seen a gradual increase in color printing. To combat this increase, the Client implemented a soft print policy aimed at encouraging employees to only print final versions of documents in color. This new policy was supported by change management efforts from Canon. "We have an onsite print support person from Canon who goes around and preaches to our community about the best practices and features of the equipment, as well as urging them to use color only judiciously," the purchasing manager stated. As part of the new policy, the Client has also set defaults on devices to print documents double sided and in black and white to further reduce print-related costs. Future Plans Following a smooth implementation and the establishment of a stable print management solution, the Client has begun to look at creating automated workflows for the organization's accounts payable system. The purchasing manager explained that the organization wants to make available to users several standardized invoice templates that can be automatically processed into the accounts payable system. These standardized invoices could be fed directly into the company's ERP system and would reduce manual efforts needed to receive and process invoices. While it is still in the research and planning stage, the Client is considering using Canon's technology to help implement this process. Results While the Client was initially skeptical of the arrangement, its decision to partner with Canon has provided the Client with cost-savings benefits and service agreements that other vendors were unable or unwilling to provide. The Client enjoyed a smooth implementation and changeover process, in part due to much of the significant integration and device optimization work having been completed in the previous implementation. Skillful and persistent negotiation efforts by the Client allowed the organization to get the service levels it needed to maintain the day-to-day efficiency of the print environment under terms that were optimized to ensure the long-term health of the business. Under the new contract, the organization has witnessed significant cost savings from reduced click charges for black-and-white printing as well as reduced lease rates for its fleet of devices. While cost savings was the strongest driver behind the Client's decision to initiate a new competitive bidding process, the organization was wise to seek out a true partner rather than look exclusively for the lowest-priced solution. Following implementation, Canon delivered on its promise to maintain the existing support and service staff. "They didn't change any of the management people or the account people assigned to us and so we have been happy that there has been continuity. There has been stability, and the service level has not had any drop off even though now they wear Canon shirts instead of Océ shirts," the purchasing manager stated. In addition to maintaining an established and trustworthy support team, partnering with Canon also allowed the organization to continue its contract with the administrative services staff that Océ had provided, including mailroom staff, a receptionist, and an automobile valet IDC #

6 The Client's insistence on finding a vendor that would provide service to the homebased devices in addition to the main fleet has helped unify the organization's disparate print environment and has decreased effort and frustration among IT staff and field employees. Having a single vendor responsible for servicing and supplying devices has translated into higher service levels and a more cost-effective way to ensure that field employees have access to printing at home. The ability to have all print activities managed by a single vendor has also simplified internal management efforts by the Client. Day-to-day management of the print environment is now handled by one Client point person who has a single point of contact for resolving any issues that should arise from the deployment. By removing the need for IT involvement, the organization has created a more streamlined model for managing its print environment, which has led to considerable time savings within the organization. Lessons Learned As a long-term user of MPS, the Client has experienced certain benefits because of its ability to leverage the lessons it learned from previous MPS engagements to continually optimize the way print is managed at the organization. Experience with past vendor selection cycles led the organization to set aside a significant block of time to evaluate vendors and ensure its needs were met. "The competitive bidding process is laborious and time consuming. It requires a lot of energy and attention if you are doing it right," the purchasing manager explained. This approach of drawing on past experiences also helped the Client prevent delays and technical issues when deploying the home-based fleet of devices by making sure they had the right connectors and that the proper infrastructure was in place to support the new machines. Over the course of multiple engagements, the Client has also worked to centralize decision making and optimize the selection and purchasing process. ESSENTIAL GUIDANCE The Client's recent implementation of MPS from Canon serves as a demonstration of the immense economic and technical benefits that can be derived from a thorough vendor evaluation process and an aggressive approach to contract negotiation. By initiating the vendor evaluation process well before the actual termination of its existing contract, the Client created a strategic window of time to ensure that it could find a vendor that not only could meet its technical and service requirements but also was willing to offer flexible and accommodating contract terms. "When we did the first go-round [in 2008], I think we gave ourselves 90 days and even then we were scrambling. This last time we only invited five competitors and gave ourselves five months to do it. That timing was better because it gave us sufficient time to negotiate, analyze, and evaluate the proposals without feeling rushed," the purchasing manager explained. Prospective buyers with a similar need to get maximum utility out of their contract should heed the purchasing manager's advice to "start as early as possible." 6 # IDC

7 The Client's continued alteration and optimization of the way MPS is handled at the organization has resulted in a centralized management model that requires minimal internal effort to make sure service levels remain high. As a long-term MPS user, the Client has based these strategic changes on the need to respond to internal challenges and issues it experienced in prior MPS engagements. Prospective buyers entering into their first or second purchasing cycles should look to similar examples of more seasoned MPS users to help anticipate potential roadblocks and make sure they get the most value out of their initial implementation. Customer references can be a powerful vehicle for buyers to not only validate the story a vendor is offering but also gain insight into maximizing the benefits of a prospective MPS solution. Approaching contract negotiations with tact, determination, and reasonable expectations allowed the Client to gain several business-critical concessions while maintaining the high service levels it enjoyed under its former contract. In addition to the financial contract terms the Client secured, the Client's instance that Canon manage the entire fleet of devices at the organization, including the distributed fleet of home-based devices, helped truly outsource and optimize print management. Prospective buyers should seek to replicate the Client's efforts to begin vendor evaluation early and to bring energy and well-defined requirements to the negotiating table. LEARN MORE Related Research IDC MarketScape: Worldwide Managed Print and Document Services 2013 Hardcopy Vendor Analysis (IDC #242217, July 2013) IDC Maturity Model: Print and Document Management (IDC #241441, June 2013) Worldwide and U.S. Managed Print Services and Basic Print Services Forecast (IDC #240851, May 2013) BuyerPulse Vendor Snapshot: Kyocera Document Solutions on Managed Print and Document Services (IDC #lcus , March 2013) IDC's Worldwide Outsourced Document Services Taxonomy, 2013 (IDC #239978, March 2013) Worldwide and U.S. Managed Print Services and Basic Print Services Forecast Update and Analysis (IDC #238570, December 2012) Worldwide and U.S. Outsourced Document Services Forecast (IDC #234570, May 2012) 2013 IDC #

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