Printing by proxy

The realisation, in the early part of this decade, that the arrival of the Internet age was not going to trigger any significant reduction in the scale of end-user printing – indeed the opposite – prompted many large organisations to look for ways to dramatically reduce their printing overheads.

For some that meant the handing over of all or part of the print management challenge to a third party, with options ranging from the leasing of the ‘printer fleet’ and contracting out of maintenance, through to the outsourcing of the complete print function – from the provision and maintenance of the equipment itself through to the supply of cartridges, paper, helpdesk services and management reporting.

These early implementations of managed print services have been refined over the past few years as customers and their suppliers have come to better understand which aspects of the model work well, where the biggest cost savings can be made, which charging mechanisms and service level metrics are most appropriate and where further inefficiency can be wrung from the management of the office printing infrastructure.

But while organisations such as Dutch banking group ING (see box) and HM Revenue & Customs have eliminated millions from their annual printing and imaging budgets, the vast majority of companies still handle the management of printing in-house.

George Pawlyszyn, a client executive and expert in output managed services at EDS, estimates that only one in 10 large companies has gone down the outsourcing route. Organisations such as the UK’s Department of Work and Pensions, which is about to embark on a £400 million, seven-year deal with Xerox and EDS to cut its printing costs, are now much better placed to draw from the experiences of the early adopters.

And, by all accounts of the general state of print management, there is a lot to learn.

Paper chase

Above all, the biggest problem that most organisations face is a lack of understanding of the problem. Prior to the kind of audit that usually precedes any managed print contract, few senior IT executives at mid-sized and large companies have any idea of the number of printers in use across their organisation and the cost of the overall print bill, let alone how active they are in terms of attached users and the quantity of ‘supplies’ they get through, their age and the maintenance they demand.

Given that, by some estimates, printing and imaging consume up to 3% of some company’s annual revenues, that is a worrying blind spot. Indeed, Hewlett-Packard estimates that users in the US alone will print 1.3 trillion pages this year, up from 1 trillion in 2002.

Much of that printing is unstewarded. “Historically, very little management has been associated with the print function,” observes David Wilson, head of managed services at Oki Printing Solutions.

Hence, the value proposition of managed print services is a simple one, says Pawlyszyn: “Taking control of print costs, by understanding what you are spending, consolidating the print estate and channelling as much of the print through leveragable shared devices.”

There are some key metrics that companies want to shoot for when trying to both reduce costs and provide a better end-user service.

The headline number that has emerged over the past few years is, not surprisingly, the overall saving. While two or three years back several printer makers and IT services companies were quoting potential cost reductions in the region of 30%, implementation experience has caused some scaling back of their promises.

“We’ve found that 30% represents the extreme,” says Oki’s Wilson. “If you get into a deal that aims to cut out 30% of the print costs, then you may disrupt the whole service in trying to get that low.” He suggests that 12% to 15% is a more realistic – and sustainable – level. Slightly more optimistic, EDS’ Pawlyszyn sees a base line saving of 20% for those who adopt managed print services across the board.

Those cost-cutting targets can be achieved largely through three factors: the standardisation of equipment; the rationalisation and centralisation of device usage; and the use of multi-function devices that provide print, copier and scanning capabilities. In terms of raw numbers alone, there is plenty of evidence suggesting such moves can cut the printers estate by between a third and a half.

The standardisation and simplification of equipment, says Oki’s Wilson, is the vital first step. By installing printers and multi-function devices from a single manufacturer and limiting the types of printers applied in different parts of the organisation, organisations can make a huge dent in their print budgets. When the service provider is a printer company, the costs savings can be even greater.

Moreover, equipment standardisation helps with another problem. Almost every organisation today employs a host of different printers and copier models scattered around the offices, invariably sourced from multiple vendors. The result is that organisations find they have to maintain large storerooms full of ink and toner cartridges. By standardising and outsourcing, that problem simply goes away.

Another benefit is perhaps less transparent. One of the initial acts of managed print service providers is often to replace old equipment with new – that immediately lowers on-going repair costs. When the cost of each “intervention” runs at £100 to £225 per machine, that can be a significant saving.

“One of the biggest savings can be had by refreshing machines that are outside of warranty,” says Wilson.

Getting rid of old kit has another benefit. “Between 15% and 30% of all calls to IT helpdesks related to printer or copier problems,” says Wilson.

That was true at higher education establishment, New College Durham which recently outsourced print services to printer maker Kyocera and its services partners XMA and Alto Digital. It says the main savings have come from the freeing up of IT team resources to deal with other tasks.

Running parallel with standardisation is consolidation – increasing the ratio of users per printer. The accepted goal that most organisations and suppliers shoot for is seven to 10 users per office printer.

The UK wealth management business of financial services giant HSBC has pushed that even higher. In the context of a move to a new London HQ, it shifted from a ratio of printers to users of 1:4 to 1:15. In combination with other improvements, that is expected to lead to an estimated saving of £890,000 over five years.

Such consolidation does not always go down well with users who have grown accustomed to having dedicated units within their work environment, but by analysing usage, managers can identify the optimum location for each printer/copier and “so avoid impacting the productivity of staff,” says Pawlyszyn.

As that suggests, the production of good management information is key.

Understanding demand was a major attraction of managed print services for New College Durham. The college operates around 130 printers, collectively generating many millions of pages a year. “One of the key benefits is the transparency of printing costs,” says Alan Race, ICT manager. “Where there used to be a bit of a black hole we now know exactly what our monthly costs are.”

Pay as you print

The fact is that most organisations have little idea of the aggregate volume of printing undertaken by their end users. Often the only metric they have to go on is the amount of paper consumed, and few companies even measure that.

“Understanding (and reducing) the cost per page is certainly the compelling point here,” says Neil Sawyer, enterprise marketing manager at Hewlett-Packard in the UK.

The costings models for most managed print services contracts are based on per-page charging – a charge that typically covers everything from the equipment and its refresh over the life of the contract, the paper, cartridges, maintenance and helpdesk support, plus the delivery of key management information.

That involves metering each and every device, with suppliers typically providing monthly or quarterly invoices. However, suppliers also set a minimum print commitment: a figure of 20,000 to 40,000 pages a month per printer is not atypical.

Those per page prices work out at a small fraction of a cent for mono pages (less than 0.1¢) and 6¢ to 10¢ per colour page.

But the prize is not just about making cheaper printing. Most service providers now try to create ‘output islands’: areas that contain print, copier, scanning and fax capabilities. By combining such capabilities in a multi-function device, costs again are eliminated – especially when copying is combined with printing.

One of the issues that often needs to be resolved when moving to such a multi-function environment relates to ownership, says Pawlyszyn. “In most organisations copiers come under facilities management, while printers come out of the IT budget.”

“Typically, the function goes to the CIO, but one of the biggest challenges of setting up such deals is the internal politics,” he says.

But cost elimination isn’t everything. Companies are also keen to outsource print management because it gives them a much greater degree of control. Establishing a managed service creates an audit trail and   can form the basis for the implementation of security policy. An HR manager printing an employee’s salary details, for example, may be restricted to a single printer or have the output held in the printer’s memory until they input a security code at the device.

“If you only set out to attain a cost saving, then you might find yourself in difficulty after a year,” says Wilson. You might want to ensure that your supplier is committed to bringing in technical advances, and not just the most basic devices, he says.  As such, contracts need to be long enough to ensure they can be amortised over several years, but not so long that they tie the organisation in and make switching supplier difficult. Wilson recomm-ends three to five years.

HM Revenue & Customs decided it needed to take a longer view with its 10-year  ‘Aspire’ IT and support services contract with Capgemini. Until recently, Aspire’s print environment was a free-for-all.  Around 700 printers of different makes and models were handled independently, with each department ordering its own supplies and maintenance. There was neither visibility nor control, says Eddie Ginja, Capgemini (Aspire) information and development service manager: “There was no central accountability. The numbers were all over the place, and nobody could reconcile anything.”

Under the managed service contract with HP, the 700 existing systems were replaced by 300 new HP machines and their management and maintenance centralised, with automated supplies replenishment. In terms of overall business benefits, Ginja talks of reduced expenditure on print hardware, supplies, helpdesk support, installation/upgrades and maintenance. But most of all, staff productivity has been improved simply by the constant availability of print devices, he says.

Such examples underscore the multiple factors that come into play when trying to maximise the benefit of print outsourcing. As Pawlyszyn stresses, that requires deep knowledge gained from experience. “As in any outsourcing contract, the trick is to sweat the assets,” he says.

Print Management in practice: ING Group

“How many printers do we have?” When Rob Erbrink, a vice president at Dutch banking giant ING, was asked that question back in 2001, the best he could do was guess: “In our Amsterdam headquarters, about 200”, was his gut-feeling. A subsequent audit proved the true number was closer to 640, underscoring the fact that print costs were a blind spot for the bank – just as they are at most other companies.

Also typical of many large organisations, ING had printers from seven or eight suppliers, with machines up to 8 years old. “We had no idea which printers were running in which department; some were part of a network, others were simply attached to a single PC. Our maintenance costs were enormous.”

Moreover, separate departments ordered their own supplies (ink and toner cartridges and paper), resulting in overflowing stockrooms and a constant deluge of invoices.

Realising it needed to get a handle on the situation, ING decided to make it someone else’s problem. It signed a three year managed print services deal with Hewlett-Packard. Under its PrintAdvantage programme, HP replaced all the bank’s printers in Amsterdam with new machines, and rationalised their use. It created ‘printer islands’ in each department, with a core printer, fax machine and scanner. “Within a year, the 640 printers were 350,” says Erbrink.   And although that rebounded to 420, the savings for ING over three years were substantial: e3.7 million.

But there was scope for further streamlining. “The trouble was that every time we needed a new printer I’d get another lease and invoice. That was a lot of paperwork.”

ING decided to switch to a ‘Pay Per Use’ print outsourcing contract, a deal that now runs until 2009 and makes HP completely responsible for the printing environment of around 3,000 people. As well as being charged only for the pages it prints (although HP sets a minimum payment per printer of 40,000 pages per month), ING also has guarantees of service levels on troubleshooting, maintenance and supplies replacement.

“For us a key saving is in the cost of handling invoices and calls to different call centres – we now have one place to contact and we invoice HP only four times a year,” says Erbrink. “When a printer goes down there is a four hour repair time or we automatically get a replacement. Cartridges can be available within 10 minutes.”

As at other large companies, one of ING’s main issues has been the task of monitoring usage. That now comes through HP’s Remote Monitoring service, which provides reports on the availability, supplies level and usage of every printer.

All the effort to cut the number of printers and optimise their use, however, does not mean the number of pages printed has gone down. ING users are actually printing more: “It’s gone from 40 million prints a year to 70 million,” says Erbrink, “and is still growing.” Nonetheless, “we’ve worked out we can save another e2.9 million in the next three years.”

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