Are you turning over every stone to find hidden savings? Procter & Gamble is, and it found millions of dollars, all hidden under thousands of printers and copiers. The consumer products company realised the savings after it hired a contractor to manage its global array of printing devices and the paper and ink cartridges they consume.
Using a managed print services (MPS) provider, as P&G did, is a way to consolidate, centralise and outsource management of your company's printing and copying functions. In return for paying a monthly fee to an MPS provider, you can cut printing and copying costs by 25% or more by leveraging economies of scale and rethinking how many printers you actually need.
Companies have been keen on the idea of copier/printer consolidation since multifunction peripherals were introduced. But MPS vendors such as Xerox, HP and others have taken efficiency to the next level. Not only can they streamline printing and copying operations to help customers save money, but they also claim that they can maximise worker productivity by monitoring what employees are printing, and where and when they're doing it, and then suggesting workflow and process improvements.
With 135,000 employees in 80 countries, P&G prints and copies millions of documents annually. In early 2008, those documents came from 45,000 individual devices, copiers, printers, scanners and fax machines, that were shared by just four employees each, on average.
Offices were free to buy their own devices and supplies, a practice that "was absolutely not efficient," says Caroline Basyn, P&G's director of global business services. She proposed outsourcing printing at all 200 P&G sites to an MPS provider. "I want to manage this whole print fleet as if it was one printer," she says.
Basyn chose Xerox Office Services in September 2008, and P&G is on track to slim its printing and copying fleet from 45,000 devices to fewer than 10,000. Now there are an average of 15 employees using each device. With 65 sites outsourced so far, P&G has reduced printing costs by 27%, paper costs by 30% and energy costs by 40%, according to Xerox figures.
Though Basyn originally chose to go the MPS route to improve efficiencies and help digitise the company, the cost savings can't be ignored. Document printing and processing costs are typically equivalent to 3% to 5% of a company's revenue, according to Gartner. For P&G, that would put such costs as high as $3.8 billion in 2008.
The office environment and its myriad printing, copying, scanning and fax devices has become the new frontier for cost cutting. "Unlike a lot of areas of infrastructure, like data centres, desktops and call centers, we pretty much beat up those in terms of cost savings for years, the office environment with these types of devices has been pretty unmanaged," says Craig LeClair, an analyst at Forrester. That's especially true now that many companies are doing away with office managers, who used to monitor such spending, he says. But he is bullish on MPS as the solution to escalating printing costs.
A true MPS provider offers much more than just a maintenance and ink-and-toner-replacement contract. "This is a contract with a third party that almost plays an advisory role to you," says IDC analyst Angèle Boyd. They provide continuous monitoring of your environment and know where the output is going, how much is being used by different departments and what type of output is being produced.
In the current economy, though, cost savings are the No 1 reason why companies choose MPS, and most are saving 25% to 29% annually on their printing costs, Boyd says.
"There's a proliferation of print device models, consumables end up becoming obsolete in closets, and the number of devices per employee is way too luxurious in most current environments," LeClair adds. "When you can ratchet up the use of these devices from three employees using one device to 10-to-1, you can take a lot of costs out of the environment."
Like P&G, Rent-A-Center was looking to improve printing efficiencies with managed print services, but the cost savings were an added benefit.
The company has 3,100 stores, and the ability to print rental contracts and receipts is essential. "If we can't print, we can't rent," says Jai P. Chanani, director of technical services. He chose High Touch to manage 3,400 HP printers, with the goal of improving uptime. One year into the project, printing equipment downtime has been all but eliminated.
"We still have the same number of printers, but they're better managed," Chanani says. High Touch monitors the performance of all printers from its office using HP's JetAdmin tool. Replacement cartridges are sent to Rent-A-Center stores before they're needed, and High Touch dispatches a service partner in the area when monitoring shows that a device needs maintenance. If a printer can't be repaired, or if the monitoring tool catches three or four service calls on the same printer within 90 days, High Touch replaces the printer with a current model at no additional cost.
"The key that drove us was to enable our stores to print anytime, but the cost savings was a nice benefit for us," Chanani adds. The project is on track to save Rent-A-Center over $1 million a year, one third of its annual printing budget, in cartridge expenses alone.
Industry watchers say MPS can help companies of all sizes save money, improve uptime and gain efficiencies, if an MPS program is implemented properly.
A prospective service provider or independent firm will assess the printers and paper flows of the entire organisation to look for economies of scale and then make recommendations to improve efficiency. Ideally, the service provider will have benchmarking data to compare the printing costs at your company with those of others in the same industry.
It's important to find a provider that can scale with you, especially if you're a large enterprise with a national or global footprint. "The highest costs savings are going to come the more you extend this throughout your corporation," Boyd says.
P&G was able to expand its MPS project to the Far East through Xerox's Fuji-Xerox operation in Asia. Still, there are a few locales in the developing world, such as parts of Eastern Europe and Africa, where Xerox is not present. "That makes it a bit more challenging," Basyn says.
LeClair advises companies to pay for an assessment from an enterprise class MPS provider rather than accepting a free evaluation from a vendor. "When you pay them [for an assessment], you maintain your independence" to seek bids from other vendors, he says.
Find a provider with a broad range of hardware products, from desktop devices to high end office systems. The MPS contractor should also be able to offer maintenance on brands outside of its portfolio, either directly or through a partner, Boyd says.
Many MPS providers not only manage devices, but also offer advice on workflow and process improvements. For example, they could help you eliminate paper from the invoicing or expense reporting processes by suggesting that you scan documents instead of copying them, LeClair says. That way, he notes, "you improve cycle time, get rid of file cabinets and save employees time."
Make sure that the optimised environment doesn't sacrifice productivity in the name of cost savings, Boyd says. It's possible to eliminate so many printers that employees have trouble getting their work done. Toward that end, you could ask for two proposals: one that maximises cost savings, and one that balances employee productivity and cost savings, she says. "Ask the provider how, through SLAs, contract components and rollout of the program, they are going to ensure that the productivity of employees is enhanced, not just maintained," she adds.
Breaking old habits
When a provider shows up and tells employees they'll have to relinquish their personal printing devices, expect a lot of resistance, MPS veterans say. Many providers offer change management experts and tools to help customers with the transition.
At P&G, people in some business units feared that the equipment reduction would hurt their productivity, Basyn says. "Interestingly, as soon as we did the implementation, those same leaders would say the opposite. They don't have to take care of any of the supplies, and the [equipment] is much more reliable. We have uptime of 99.2%."
P&G sold MPS to its employees with a combination of hard and soft arguments promoting a centralised operation. "We know the culture is different by person, some people go with the soft arguments, others with hard arguments," Basyn says. P&G first promoted the overhaul as a "green" sustainability project and then sold it as a cost saving project. The company also capitalised on the competitive nature of its business units by publicising how each division was utilising MPS and how units compared to one another.
Ideally, the MPS provider will also recommend policies that will help ensure that employees don't revert to old habits.
"If you don't have policies and enforce them," Boyd says, "department managers or employees will go out and buy personal devices, and before you know it, you're back to the old state of affairs."
Both P&G and Rent-A-Center consider their MPS providers to be strategic partners.
"The way we measure success with a partner is that once you're in discussion, the word contract never comes to the table," Basyn says. And with Xerox, he adds, there was no quibbling over the project's minutiae: "We're very much on the same page."