The digital age has transformed a lot of industries but perhaps none more so than those most dependent on paper. Newspapers are now Web sites, mail is now email and you don’t open a book you turn on your Kindle. Photocopiers, and the multi-billion dollar industry that sells that services them, have been something of a hold out. Xerox, Canon, Minolta and Kyocera and the hundreds of businesses their machines support are copying and collating as much paper as ever. But recent developments in digital document management software have some in copier sales and service seeing change on the horizon and pondering how they might have to change with it.
In just the past few years document management software has reached beyond the filing cabinet and into the office, redefining the industry into what’s now called enterprise content management. This is software that doesn’t just store documents but also handles many, often complex, office functions that revolve around them. At the same time-in the past four years-demand for copy paper has dropped by 3.3 million tons while a recent study predicts a further 23 per cent reduction in the next decade. This leaves folks in the copier sales and service business thinking what should be the unthinkable: Their bread and butter may still depend on copiers using plenty of papery, but the future may well lie in selling software that enables their customers to use a lot less.
“Xeroxing hasn’t been replaced by Laserficheing quite yet,” says Laserfiche ECM software reseller Chris Clarke of Progressive Business Machines, a family–owned copier sales and service business that opened in St. Louis in 1985. “But to stay successful in this business you have to help your customers manage their documents, not just copy them, and to do that you have to get involved in ECM.”
Part of the immediate challenge for copier sales and service businesses is managing an ever expanding number of documents arising from an ever expanding demand for documentation. Insurance companies, hospitals, banks and governments are all generating more paperwork than ever before, according to Clark and other Laserfiche resellers spoken with. Digitizing these burgeoning document loads and then electronically organizing them into a user-friendly virtual filing system is an intimidating task. At the same time literally mountains of existing paper files are forcing even the most technologically minded IT director to make room for paper in their digital document ambitions.“We’re seeing a lot of uptick and acceptance of document imaging at this point, but we’re not seeing any concomitant drop in the printer business,” says Dave Bishop, owner of Bishop Copier which has been doing business in Omaha, Neb., since it started selling typewriters in 1953. “We have seen the copier business stay very strong, even though the content management software business is definitely picking up.”
This is certainly good news for Bishop, Clark, and roughly 40 other copier sales and service businesses that have expanded into selling Laserfiche, a pioneer of document management technology which embraced the VAR channel since its founding in 1987. But getting customers to start storing records in computers instead of filing cabinets involves much more work than convincing them to invest in a faster copier which uses less toner. Customers can have vastly different record keeping needs and finding a way to meet those needs takes commitment from the customer and the salesman.
“ECM is a different type of sale. It is one of those things you need to really focus on if you want to succeed,” Clark says. “It is not something that can just be brought on to your business plan and then you hope your sales force embraces it. You really have to educate yourself on its use and be educated enough to sit down and have a conversation with a potential customer who may already know a great deal about the technology.”
The preparation involved prompted Clark to ask his boss for nearly a year free from his copier sales duties to study up on ECM. Even then, he says, the ECM sales cycle is radically different from the out-of-the-box process of selling a customer a new copier. Fortunately, most copier makers have taken the first step into ECM for those selling their machines. Copiers increasingly no longer make analog photocopies of documents. Instead, they digitally scan documents before printing allowing the digital information to be stored temporarily or indefinitely. This not only dramatically increases the speed of copiers, it also allows for the addition of other software features like optical character recognition which can convert document images into text files.
“The additional software that comes with copiers these days gives us an opportunity to ease customers into the whole concept of ECM,” says Scott Fraser ECM vertical sales director for Ricoh Canada. “You can still sell the copying and printing angle, but when you have a machine with that little bit of extra software, the customer can see what it can do on their own time. Then you pick that up with the customer in the next sales cycle and start to show them what more can be done with ECM.”
It is the rapidly expanding abilities of ECM technology that has copier sales and service people like Fraser thinking the copier may finally be going the way of the newspaper, and more sooner than later. ECM programmers are increasingly building workflows into their software which can route documents through computer networks to insure they land on the required terminals in the required sequence before being stored in a digital repository. Working documents in human resources, accounts payable and receivable, permitting, compliance, and healthcare offices can be securely routed and delivered electronically before an unlimited string of eyes without copier, toner, paper, inboxes, and outboxes.
“People thought of imaging as just storage and retrieval but to me the most powerful piece of imaging is building electronic workflow around a document after it comes into office,” says Bishop. “There is a ton more cost savings in that side of this industry than in the archival side.”
The prospect of such savings in the middle of a recession is probably one of the more attractive arguments for copier-based businesses to invest more time in ECM sales, Bishop and the others say. But there are many other, equally compelling reasons.
Increased transparency is driving government at all levels to embrace ECM. The healthcare industry received $78 billion in Stimulus funding to hasten adoption of Electronic Medical Records. Federal legislation like Sarbanes Oxley is compelling more electronic record use in banking and financial services. All suggest a busy future for anyone selling ECM. By contrast growth in the copier sales and service business appears limited, forcing some hard choices on long-standing copier sales and business owners if they want to see their businesses continue to grow.
“These days anyone who buys a copier pretty much already has one,” Bishop said. “So the only business strategy left is to outsell your competitors. However, in ECM you literally have to change the way your customer does business. Unless they are already committed to the sale, you have to convince the customer that the benefits of ECM outweigh the investment involved in making the change.”
The way to do that is gradually, says Peter Castelli, of A&A Office Systems a copier sales and service company in Middletown, Conn. Copier sales and service businesses have a ready-made market for ECM sales in their current customer bases, Castelli said. So A&A’s copier sales force is told to keep its eyes open for ECM sales opportunities. If a customer is placing a heavier load on their machine, it’s an opportune time to propose purchasing a lower capacity machine with some rudimentary document management software included, Castelli said.
“Every copier business has a ready-made wealth of ECM sales leads that will never dry up and we take advantage of that,” Castelli said. “When sales reps go to a customer for fact-finding or service and they think there is an opportunity for an ECM sale, they are charged with introducing those customers to me.”
Copiers are still king for most businesses selling and servicing them but the opportunity to expand lies with ECM, Castelli and the others say. Clarks says ECM comprises roughly 15 per cent of Progressive’s business, while Castelli says that figure is closer 10 per cent for A&A, and Bishop says it is more like five per cent for his business. Bishop says ECM has been slower than expected in taking business from copiers and he doesn’t see the paperless office happening in his life time. Fraser, Clark and Castelli see more upside in the ECM than in the copier side of the business and are ever after their bosses to commit more resource to it.
Workflow is one big reason why. With the expansion of document management systems across an entire enterprise, multiple departments often with multiple databases have to be integrated to work together in one system. New sales opportunity also exists with customers dealing with mountains of existing paperwork that needs to be scanned into those integrated databases. As a result the service needs of ECM customers reaches far beyond what copiers customers have historically required and service is one part of their business clearly being bolstered and not threatened by the digital age.
“If I sell a copier there’s going to be, perhaps, seven per cent revenue on the sale,” Fraser said. “If I sell an ECM software system, it’s not going to be much more. But there is so much more service involved and we’re a service-driven business. I think the next five years is a critical time frame and in 10 years ours is going to be a whole new industry. Traditional copier vendors really have to get their act together now if they want to take advantage of it.”