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Market Report

09.10.09

Managed Print Services Market


Size, Share and Forecast Analysis
2009 Market Report

PHOTIZO GROUP
Ed Crowley eacrowley@photizogroup.com +1 (859) 873-4518 ext. 4
Michael Huster mhuster@photizogroup.com +1 (859) 873-4518 ext. 3
Scott Hornbuckle scott_hornbuckle@photizogroup.com +1 (859) 873-4518 ext. 2
Table of Contents
License Agreement 3
Report Overview 4
Executive Summary 5
Introduction 6
Defining the Managed Print Services Market 6
Managed Print Services versus a “Click Charge” or “CPC” Contracts 8
The Customer Adoption Process for Managed Print Services 9
Market Sizing and Forecast Methodology 10
Sources 10
Market Sizing Process 11
Developing Managed Print Services Market Forecast Projections 12
The Global Managed Print Services Market 13
2008 Managed Print Services Market 13
2009-2013 Global Market Forecast 15
Growth Drivers 15
Implications 18
North American Managed Print Services Market 19
2006-2008 Managed Print Services North American Market 19
2009-2013 Forecast For The North American Market 22
Recommendations 23
European Managed Print Services Market 25
2006-2008 Managed Print Services European Market 25
European market Forecast 27
Recommendations 28
Emerging Markets – Asia and South America 30
Asia Pacific Focus 30
Recommendations 31
Report Analytical Team Bios 32
Appendix I - Photizo Group Background 34
Appendix II - Global Market Forecast Assumptions 35
Appendix III - Definitions and Resources 36
Definitions 36
Resources 36
Appendix IV - Additional Photizo Group Reports 37

List of Figures
Figure 1 - MPS Components 7
Figure 2 - MPS Customer Adoption Cycle 8
Figure 3 - North America Rev. vs. Devices 20
Figure 4 - North American Market Share 22
Figure 5 - North American MPS Opportunity 23
Figure 6 - Graph of European Price vs. Devices under contract 26
Figure 7 - European Revenues (2006-2008) 26
Figure 8 - European MPS Opportunity 28
Figure 9 - Asia Pacific Revenue Opportunity 31

List of Tables
Table 1 - Comparison of Managed Print Services and Cost Per Copy 7
Table 2 - Market Forecast Sources 10
Table 3 - North American Market 19
Tabke 4 - Table of MPS Dealer Programs 21
Table 5 - European Market Size 25
Table 6 - European Market Share 27
Table 7 - Asia Pacific Market 30
Table 8 - Latin American Market 30

PHOTIZO GROUP, LLC © 2009


Managed Print Services Market Size, Share and Forecast Analysis, 2009
License Agreement

This report is provided to Photizo Group clients. The report is licensed for use by the individual,
business unit, or corporation per the terms of use in the purchase agreement / statement of
work. External publication of this report (in part or entirety) is strictly forbidden without
written authorization by the Photizo Group. The client may copy, distribute, and post this
report for internal use only (within the constraints of their purchase agreement). Any Photizo
Group information which is to be used in advertising, press releases, or promotional materials
requires prior written approval from the Photizo Group.

Copyright 2009 Photizo Group.

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report overview
Report Overview

Included in Managed Print Services Market Watch Service, Managed Print Services
Global Advisory Service

Report 2009 Managed Print Services Market Size, Share, and Forecast Report

Target audience Vendors, Resellers, and Manufacturers who seek to understand their firm’s
position in the Managed Print Services market.

Objective Accurate reflection of current market positions and market sizing,


insightful forecast of future demand.

Intention Guidance for marketing programs, sales management, and organizational


performance measurement.

This report was developed in order to provide clients with an


insightful analysis of key Managed Print Services (MPS) market
Here’s what you should
size metrics. The report has been expanded significantly since expect from this report:
the 2008 report including the addition of:

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Understanding of the
Global coverage including the addition of South America market share positions
and the Asia Pacific regions. for the top Managed
Print Services vendors.
Addition of country level data for 13 countries.

2
Our intention is to continue to enhance the report each year. Insight into the
For the next year, the major focus will be expanding the vendor composition of the
detail. Additional analysis of the data is available (in selected market in terms of
countries) by business size and industry segment. devices under Managed
Print Services contract,
The report is accompanied by the following deliverables: the breakdown of
the market streams
Managed Print Services Data Tables detailed spreadsheets into their individual
containing the region and country data detail and selected
graphs.
components.

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Managed Print Services Forecast Presentation a PowerPoint
presentation deck presented by the Photizo Group. Outlook for future
market growth rates
and the composition of
future market revenue
streams.

PHOTIZO GROUP, LLC © 2009


Managed Print Services Market Size, Share and Forecast Analysis, 2009
Introduction

Defining the Managed Print Services Market


Perhaps the most important step in any forecast or market sizing for the Managed Print Services market

introduction
is to define what this market is. Due to the youth of this market, and its rapid evolutionary pace, the term
Managed Print Services has had many connotations ranging from a basic ‘click charge’ to the outsourcing
of hardcopy fleets and the document workflow / market strategy. As the basis of this report, the Photizo
Group uses the following definition:

Managed Print Services (MPS) is the outsourcing of the hardcopy fleet, document
workflow, and document production strategy for the distributed production of hardcopy
documents. This can include many different functions ranging from simple device repair to
sophisticated workflow analysis and document workflow optimization. Most importantly,
for our definition, it must include more than a simple ‘click charge’ arrangement for
financing equipment. It must include the proactive management of the customer’s fleet
over an extended period of time.

While theoretically a Managed Print Services engagement could consist of as few as ‘one’ user, practically,
we limit our definition to businesses with at least two or more employees working in an office / business
location. The Photizo Group recognizes that there are multiple definitions of MPS, and that this is
a segment of a larger managed services market. However, for the purposes of this report, the above
definition is used.

In addition, while the Photizo Group recognizes some overlap between the Managed Print Services and
the Facilities Management market, we view these markets as unique markets with significantly different
deliverables, customer objectives, and decision makers. This topic is further explored in the Photizo
Group’s Market Watch Client Report: Managed Print Services vs. Facilities Management, which is being
released in September of 2009.

Most importantly, the Managed Print Services market represents a paradigm shift from the traditional
hardware and supplies centric business model for the imaging industry. Managed Print Services requires a
shift to a fundamentally new approach, the professional services business model. This model is exemplified
by the multi-vendor environment which is managed by a professional, outside third party who is able to
bring to the customer a vendor agnostic view of the best solutions for their business needs.

An example of a firm which has made this transition in another, related technology sector is IBM.
During the last 15 years, IBM has shifted from services representing less than 30% of revenues to services
representing over 60% of revenues (and the majority of profits). In addition, the firm has shifted from
a culture of selling ‘IBM only’ technology, to a culture of understanding the customer’s needs and then
delivering the right solution (regardless of the vendor) for the customer’s needs. IBM Global Services
epitomizes this change.

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Managed Print Service engagements can be relatively complex and encompass a broad array of activities.
Based upon the Photizo Group’s Managed Print Services Decision Maker Tracking Study™1 , Managed
Print Services engagements typically include providing at least three of the following four services and
introduction

equipment areas:

1 Hardcopy equipment such as printers, copiers, faxes, or Multifunction Printers (MFPs);


2 Supplies and consumable items such as toner or ink;
3 Services and support including break-fix, installation, and maintenance; and,
4 Infrastructure software such device monitoring or meter reading devices and management activities
such as device deployment recommendations.

The number of specific Repair &


Maintenance
deliverables within a Service Business Process
Assesments
Level Agreement (SLA) for
a Managed Print Services Installation Physical Services
Capabilities
Document
Workflow
Optimization
engagement can be mind-
Enhancement

numbing. The Photizo Group On-Site Staffing

study tracks over 20 distinct Workflow Analysis

services and offerings, which Performance


Reviews

are commonly provided as part User Deployment


Criteria
Contract
of a Managed Print Services Negotiation &
Management

engagement. The Figure 1 MPS Engagement


Management Managed Print Fleet Management
Fleet Deployment
Planning Recommendations
provides a visual depiction of Supplies Vendor
Selection
Services
these services. Utilization
Assessment

Hardcopy Device
It is important to understand Vendor Selection

that Managed Print Service Reporting

engagements have very MPS Vendor


Selection
Help Desk

Fleet Optimization
different objectives and goals Planning &
Implmentation Redeployment

depending upon their level


Program
User Support Communication

of Managed Print Services Device Monitoring


adoption and experience. The Training

Photizo Group’s Managed


Print Services Decision Maker FIGURE 1 - MPS COMPONENTS
Tracking Study™ has shown
that the organization’s level of experience with Managed Print Services is one of the key predictors
to their needs, expectations and requirements.

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Photizo Group 2008 Managed Print Services Decision Maker Tracking Study™ In this ongoing tracking
study at least 300 decision makers in North America, and 300 decision makers in Western Europe are surveyed
annually regarding their Managed Print Services engagements, vendor selection, and vendor satisfaction. This
study is in its second year and comprises the largest database of Managed Print Services decision makers
available.

PHOTIZO GROUP, LLC © 2009


Managed Print Services Market Size, Share and Forecast Analysis, 2009
Managed Print Services Versus a “Click Charge” or “CPC” Contracts
There is a healthy debate within the industry regarding whether Managed Print Services is just another

introduction
form of click charge or Cost per Copy (CPC) contract. While one could argue that there are similarities
between the two in that they are both outside of the traditional ‘purchase’ model, they are also not a true
Managed Print Services contract. Essentially, a CPC is a ‘static’ contract which amortizes the cost of
supplies, the device, and service over a fixed per page charge for a fixed number of devices for a specific
period of time. In essence, it is a method of financing the fleet. While many Managed Print Services
contracts contain a fixed ‘per page charge’, they go far beyond this ‘financing method’ to managing the fleet
and activities on an on-going basis. This is a fundamental difference between CPC and Managed Print
Services. The following table highlights the differences between a traditional “Purchase” arrangement, a
CPC agreement, and a Managed Print Services agreement.

Clearly, Managed Print Services is significantly more complex than a simple cost per copy charge. As
mentioned earlier, delivering this set of complex services requires significant changes to the vendor’s
capabilities and business model.

MANAGED PRINT 
  PURCHASE  COST PER COPY  SERVICES 
Equipment  Vendor or Leasing  Vendor or Leasing 
Customer 
Ownership  Company  Company  
Recommend 
Vendor’s Role In  Limited – Primarily  Primarily Suggesting 
Deployment, On‐
Making Deployment  Suggesting  Models, Setting Usage 
going Deployment 
Recommendations  Equipment Models  Levels 
Management 
Equipment, Supplies, 
Service, Maintenance, 
Fleet management 
Equipment, Supplies,  
Items Included In  Equipment and  and Strategy, 
and Periodic 
The Agreement  (potentially) Service  Document Workflow 
Maintenance 
Tools and Consulting, 
Call Center, Other 
Services 
Technology 
Financial Resources 
Key Vendor  Technology 
Technology   Consulting 
Competencies  Financial Resources 
Project Management 
Sys. Integration 
Technology Fit with  Technology Fit with  Ability of Vendor to 
Key Vendor 
Customer  Customer  Provide a Complete 
Selection Criteria 
Requirements  Requirements  Outsourcing Solution  
  1 - Comparison of Managed Print Services and Cost Per Copy
Table

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The Customer Adoption Process for Managed Print Services
Managed Print Service engagements go through three basic stages of adoption. In the first stage the
introduction

customer is attempting to gain Control of the widely disbursed fleet and to centralize decision-making. In
the second stage, the customer Optimizes the fleet in order to reduce cost and ensure assets are being fully
utilized while maximizing end user satisfaction. In the third stage, the organization is attempting to use
advanced Managed Print Services to Enhance business process efficiencies through document workflow
optimization and document management or records retention services.

Currently, 76% of all engagements are in one of the first two stages of Managed Print Services adoption.
Depending upon the size of the organization, it may take up to three years to gain control of and optimize
the fleet. Only 24% of firms are at the third stage of Managed Print Services adoption. This reflects
both the relative immaturity of the market (in terms of customer adoption) and also may be indicative of
the difficulty for vendors in providing the advanced services associated with the third stage of Managed
Print Services. Figure 2 depicts the typical adoption curve, which organizations utilizing Managed Print
Services go through.

Understanding the customer’s stage in the Managed Print Services adoption cycle is key to crafting the

FIGURE 2 - MPS CUSTOMER ADOPTION CYCLE

PHOTIZO GROUP, LLC © 2009


Managed Print Services Market Size, Share and Forecast Analysis, 2009
appropriate sales, service delivery, and marketing message. Again, the Photizo Group’s research has
shown that customer expectations vary significantly based upon their stage in the life cycle. So, a ‘broad
based’ message is likely to miss the target and not elicit the response you expect. In addition, the customer

introduction
expectations, in terms of consultative services and industry expertise, expand significantly in the third
stage of MPS. In order to effectively meet customer needs, vendors must significantly upgrade their
capabilities including processes, consultative skills, and analytical processes.

The Photizo Group’s white paper: “Reach Your Managed Print Service Targets2” addresses how this
model can be a very key tool in qualifying potential Managed Print Services customers and in managing
the Managed Print Services sales process.

Market Sizing and Forecast Methdology


Sources
As with any emerging market or technology area, it is challenging to identify the true size of the market and
competitors positions for the Managed Print Services market. In order to tackle this challenge, the Photizo
Group has utilized numerous studies and interviews in addition to a thorough analysis of secondary data
and company reports. The firm used the following sources to support this analysis:

Sources Used For This Report  Methodology  Source 


North American Managed Print  300 interviews in North America, and 
Services Decision Maker Tracking  300 interviews in Western Europe in  Photizo Group 
Study (Photizo Group)  2008 
Managed Print Services Insights 
Interviews  In depth interviews via phone or ‘face 
Selected One on One interviews of  to face’.  Approximately 40 interviews  Photizo Group 
Managed Print Services decision  in 2008/2009 
makers. 
In‐depth one‐on‐one interviews, on‐ Photizo Group Hybrid Dealer Self 
Dealer Channel Interviews 
line dealer assessment forms, dealer  Assessment Tool 
Dealer Online Surveys 
on‐line surveys.  150 dealers  Photizo Group Interviews 
Vendor Web Sites, Industry Data 
In‐depth review of secondary data 
sources, Business and Trade 
including financial reports, publically 
publications, Managed Print Services 
Analysis of secondary data sources   available presentations, quotes from 
Vendor Public releases, Managed 
executives, and interviews with 
Print Services vendor financial 
industry executives 
releases 
Individual discussions with key OEM 
and infrastructure providers such as 
Vendor Interviews  Photizo Group 
software providers, and financing 
companies.  
  2 - Market Forecast Sources
Table

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Reach your Managed Print Services Targets, © 2008, Photizo Group

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The Photizo Group’s framework for analyzing the market beings with sizing the current and historical
market followed by analyzing future growth rate trends and direct versus channel marketing dynamics in
order to derive a future forecast. Finally, vendors are provided with an opportunity provide feedback on
their shipment numbers. Each of the steps is described in more detail below.
introduction

Market Sizing Process

The first step was to size the existing market.

1 An estimate of the total Managed Print Services market revenue was derived utilizing secondary data
including financial statements, company presentations, data from the Managed Print Services Decision
Maker Tracking Study™, Photizo Group Managed Print Services Dealer Survey and Managed Print
Services Quick Audit survey, and other research reports. The Photizo Group utilized a ‘grounds up’
approach by defining the historical revenue for each vendor.

In order to avoid double counting revenue between the channel and hardware vendors, revenue was
credited to the channel in one of two ways:

In the case where resellers created their own Managed Print Services program, the reseller was
given 100% of the revenue credit. The level of reseller-created programs was derived using the
Photizo Group surveys of resellers and dealers, both web based and one-on-one surveys.

In the case where the reseller is reselling a program from a manufacturer, the reseller is credited
with 20% of the revenue (the ‘mark-up’) and the manufacturer is credited with 80% of the
revenue.

2 Autilizing
separate, independent estimate of total Managed Print Services market revenue was also derived
the Photizo Group’s estimate of devices under Managed Print Services contract, and average
per contract revenue. Sources for this data include Managed Print Services infrastructure software
vendors (i.e. device tracking software), surveys of Managed Print Services decision makers, Managed
Print Services contracts and pricing data, and other secondary data sources.

3 The two revenue numbers are compared to determine if there is any significant ‘gap’. This process is
reiterated several times as specific data points are validated.

4 Vendors were given an opportunity to validate the historical, or actual, Managed Print Services revenues
for their firm. Firms representing approximately 80% of the total market responded to this request with
vary levels of specificity. Some firms provided a simple global revenue number while others provide
geography level detail.

Once the market sizing for 2006 and 2007 was established, the next step was to develop a detailed market
forecast.

PHOTIZO GROUP, LLC © 2009


Managed Print Services Market Size, Share and Forecast Analysis, 2009
Developing Managed Print Services Market Forecast Projections

The forecast was developed using the following inputs:

introduction
1 Our first assessment is to evaluate data from the Photizo Group Managed Print Services Decision
Maker tracking study, which provides a metric for the number of Managed Print Services engagements,
which are new versus existing engagements. This ratio of new to existing engagements provides us with
the ‘upward bound’ for growth rate projects. This number was 50% new engagements in 2008, with the
number increasing to 60% in 2009 (first half data), indicating an expanded growth rate.

2 This data is then combined with data from dealer interviews, the growth rate of software licenses for
the software used in managing Managed Print Services engagements, and region and country level
econometric data to create a forecasted total market growth rate.

3 Next, and independent of step 2, we create an independent forecast for each vendor’s projected growth
based upon their current market position, historical growth rates, and Managed Print Services marketing
investment.

4 The results of step 2 and step 3 are compared and then revised until the forecasting team is in agreement
that the forecast represents a reasonable estimate for the future.

While a forecast, by its very definition, is an estimate and no forecast will be 100% accurate, we believe
this forecast process provides the type of analytical rigor required to provide clients with a high level of
confidence in these market projections.

Comments and questions regarding the forecast process should be directed to Ed Crowley at the Photizo
Group at (859) 873-4518 or eacrowley@photizogroup.com or Scott Hornbuckle (the lead Market Analyst
for this project) at scott_hornbuckle@photizogroup.com.

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PHOTIZO GROUP
(859) 873-4518 info@photizogroup.com www.managed-print-services.com
209 N. Main St., Suite H Versailles, KY 40383

Copyright 2009, Photizo Group, Versailles, KY