Least Cost Printing – A Strategy

My posting about Least Cost Printing several weeks ago created some interesting comments here and on other forums. After reading some of them it seemed to me that there may be some value in providing greater definition to the topic.

The Strategy

Least Cost Printing is a simple strategy that is designed to minimize document output costs within the mixed technology environments that most of you have in your organizations: it defines the least expensive method of output for specific job types. It is the antithesis of a program to take advantage of clients but rather allows clients to leverage their technology investments at the lowest expense.

Hard Costs & Soft Costs

When designing a least cost printing strategy you need to decide what hard costs and whether or not you wish to include soft costs such as user convenience, impact on productivity and environmental issues. The most simple example is the value of the time it takes for one of your employees to walk across a room or department to retrieve a printed job.

An Example

A simple scenario based on three assumptions about your environment follows:

• Average loaded cost of a classification of employee is $40,000/yr or $0.3205 per minute


• Average monochrome cost per page of your desktop inkjet printers is $0.0830 per page


• Average monochrome cost per page of your network laser printer is $0.0180 per page

In this scenario the cost differential is $ 0.0650 per page so what is the justification for printing to the desktop inkjet versus the network laser printer? If you estimated that an employee takes a minute (on average) to pick up a print job from the network printer your strategy would be that only jobs of five (5) monochrome pages or less can be output on a desktop inkjet printer ($0.3205 /$0.065 =4.93 pages).

Building Your Strategy

You can build your own strategy with as much complexity (or simplicity) as you like. Current expenses based on technology or model specific, employees by classification, department or individual, amortization of hardware or operating costs alone and any soft cost you feel are significant. The more granular you get the higher the savings but they will be offset by higher development and management costs. My recommendation is to start simple and refine as you go!

Expense Reduction

When working with my clients on document output environment assessments and strategy development I always include this component in my recommendations. Following the simple example above if I take all inkjet monochrome pages resulting from jobs of six (6) or more pages and assume their migration to a less cost device I can project savings based on the client’s actual environment. This is a cascading calculation, inkjet to cartridge-based laser, both of them to component-based multifunction devices and finally consideration for electronic document distribution. The same is done for color and duplex printing with a typical end result of about 35% expense reduction.

If the client is considering fleet management for their printer fleet then the calculations would obviously be made on the new contracted cost per page. The point here is that a least cost printing strategy and a fleet management program are not mutually exclusive but complementary components of managed print services.

Implementation

Historically, this type of strategy has been very difficult to implement successfully: how could you get users to conform and how did you know if they did or not. As mentioned in my first post on the topic there are software tools today that are very good at implementation of a least cost printing strategy and they can deliver a return on investment of six months or less.

For purposes of this posting I have tried to keep this discussion simple; least cost printing is a simple concept but it does take a bit of work to get there. If you would like to explore a least cost printing strategy for your organization or if you just have questions please feel free to contact me.

It is my intent to discuss this in future postings if there is interest from the readers.

MPS – Are You Thinking Laterally or Vertically?

After reading a number of postings in several Linkedin user groups I recognize similarities to our national political discussion. So, I have decided to borrow an idea from Mike Huckabee and apply it to the ongoing MPS discussion; lateral and vertical thinking.

The Similarities

If you are a cable news junkie like me, you must be amused by the non-stop chatter of political talking heads who constantly position every issue as either left or right. This filters down to our elected officials who argue every point strictly within their Democratic or Republican party position. Have you noticed no one seems to care about what is good for We the People, the taxpayers. This is lateral thinking, right or left versus vertical thinking, positive results for the people or negative impact on them– get the idea?

What I see happening in the MPS discussion are different folks taking positions to the left (MPS) or the right (hardware focused sales). MPS advocates definitely consider themselves as the progressives so they earn the left position on my lateral scale.

Lateral Thinking

In many of these discussions the participants like to talk about the positioning of their offerings and usually describe them in terms of how solution oriented (leftist) they are. They talk about what title to apply to their sales professionals and programs. Much attention is paid to the CPP approach and electronic monitoring of devices. There are lots of challenges issued to the dinosaurs of the copier world (my words) and a significant number of negative references to their business practices. Has anyone but me noticed that each side considers the other’s sales professionals and dealers as pencil whipping scammers and brokers of dishonesty?

Bottom line is most of the discussion is on positioning according to the marketing strategy and processes employed: this is how we do it!

Vertical Thinking

In contrast vertical thinking is about positive or negative results for the client.

Outside of a few individuals there does not seem to be much discussion about this. I read about and see in the field many programs that employ MPS processes but do little to nothing to improve the client’s environment. Some of the ones I have seen actually increase the clients cost structure without adding very much convenience to justify it (must have been some great pencil whipping done).

I think a recent posting by Jim Fitzpatrick summed it up quite well. To paraphrase; “if the client has not seen an account manager or been presented with suggestions for improvement based on reports since the implementation this is not MPS!”

Where is Your Thinking

So the question I ask is where is your thinking and MPS program? Is it simply a sales strategy as discussed by Tom Callinan a while back, or is it an actual program that manages the client’s environment beyond delivery of fix/repair services, supplies and usage reporting?

I would suggest if it is the former you are going to see some pretty strong competitive challenges as other vendors and industry participants educate your clients about what MPS could be. If this is the case, there are a number of resources for you to use to create greater value in your programs and service offerings. Start with taking a quick look at the Managed Print Services Roadmap contained in my Linkedin profile.

My Linkedin Profile

If your thinking is truly vertical, congratulations and good luck with your business; you should be able to realize some nice growth over the next few years!

“Least Cost Printing” – is it the holy grail of the Managed Print Services effort?

Over the years the convergence of technologies changed not only the way we deliver documents but the cost structure of doing so. As printer technologies evolved workflows shifted from print-once-copy-many to printing to the most convenient device. Commensurate to this was an increase in costs as page volumes moved to relatively expensive toner and ink cartridge-based engines.

So began the idea of least cost printing: as copiers transitioned to digital multifunction devices much of the effort focused on replacing printers and print-once-copy-many workflows with the MFD and concentrating print volumes to a workgroup device.

The Digital Promise

Many organizations invested in new component-based digital MFD technologies on the promise of reduced costs and even improved workflow. More often than not, this digital promise was not realized due to the inability to train their users to adopt these new workflows. The capabilities of the digital MFD remained underutilized in most enterprises as users continued to print to the desktop and workgroup toner and ink cartridge-based printers.

Fleet Management

As the marketplace realized the folly of the idea that the digital MFD would eliminate printers some began to focus on reducing the cost structure of the printer itself. The concept of fleet management began to grow and come to age enabled by improvements in the quality of remanufactured and compatible supplies.

So here we are today with half the marketplace proselytizing the benefits of fleet management while the other half continues to promote digital multifunction devices as the answer to cost containment. Meanwhile, most clients still have one foot in investments in digital MFDs and the other in fleets of printers, both toner and ink cartridge-based. For these, fleet management can without doubt reduce the expenses associated with operating printers but still not to the level of maintaining the multifunction devices.

Least Cost Printing

Simple in concept, least cost printing is one step in the evolution from fleet management to print management. It acknowledges the realities of the marketplace and can deliver dramatic results by shifting pages from higher cost-per-page devices to those with lower operating costs. Organizations can reduce office printing costs by as much as 35% with an effective least cost printing strategy.

A least cost printing strategy takes into account the actual cost-per –page of individual technologies within document output environments combined with the impact on user convenience and efficiency and drives pages to the most cost-efficient device or document delivery method for a particular job. A well designed least cost printing strategy should address issues such as color, duplex printing and electronic document distribution.

Enabling Technologies

While the concept of least cost printing has been promoted by the copier industry for a number of years to cost-justify digital multifunction devices there was not an enabling technology to train and manage users to overcome their resistance to change.

Today, there are low-impact and cost-effective enablers for least cost printing. I have used several and for the most part they are easy to install and maintain and provide an attractive return on investment.

These tools are applicable for small user groups to large enterprises who wish to leverage their technology investments and realize the digital promise. They will receive additional benefits from office printing solutions that include process controls provided by a least cost printing implementation;

• Reduced page output costs
• Improved employee productivity
• Increased utilization of technology investments
• Ability to manage office printing environments

It is my opinion that least cost printing should be part of every well-designed strategy for managing a document output environment.

Page Cost Calculator Update & User Tips

I wanted to thank all of the folks who have provided constructive feedback - it is satisfying to know this tool is saving time for you!

This post provides an update and a couple of user tips:

• The calculator should now work for all Hewlett Packard and Lexmark laser printers and color laser printers - next will be the laser-based multifunction devices
• The default page coverage (9%) is applied universally across all consumables - for a more accurate cost model you may want to reset the maintenance kits, fuser kits and transfer kits to the manufacturer standard five percent (5%). We will update the algorithm in the future to take this into account.
  
• Some of you have asked about access to other supply items - if you click on the file folder icon to the left of a supply item a window will open with alternatives such as high-yield toner cartridges. You can select an alternative from this list and the tool with automatically recaculate the cost model.
• You do have the ability to adjust the supply item cost, yield and assumed coverage model to customize the cost model to accomodate compatible supplies or specific client pricing and usage.

Please continue to provide constructive feedback and share this tool with your fellow sales professionals and other potential users. I will keep you informed of updates on this blog site.

Please provide your feedback directly to me at pagecost@buscomgroup.com.

Once again, here is the temporary link to the tool.

Page Cost Calculator

Cost per Page Calculator - Update

I am surprised by the number of individuals who have registered to use this tool. I know some of you are just looking but hope most of you have found some value in it.

I wanted to update those of you who are using it on some additions and fixes:

• The decimal place has been fixed to represent dollars; for example 0.0440
• Color cost per page is now totalled accurately, sorry about that one, the individual components were correct
  
• I think we have all of the Lexmark monochrome laser printers added now in addition to the Hewlett Packard laser printers and color laser printers
• Some of you have requested a more "intelligent" search function which we will be able to add by moving the tool to a more sophisticated platform when we see its usage increasing

If you find this tool useful please share it with your team members and continue to provide us with your valuable, constructive feedback.

Please provide your feedback directly to me at pagecost@buscomgroup.com.

Once again, here is the temporary link to the tool.

Page Cost Calculator

Cost per Page Calculator - Great Response

There has been a great deal of interest in this tool including quite a few questions directed to me.

Due to this high level of activity I am going to expand on its access and usage:

• To access this tool you need to follow the link below, go to the Sign Up page and fill in the required data completely but ignore the credit card information, it is not necessary
  
• I have intentionally kept the registration process manual at this point so you will not have immediate access, we will inform you by e-mail. Due to the overwhelming response we are running a bit behind here at the outset
  
• I am still editing the data base to enable the automated price calculations so not all devices are ready to go but all of the HP LaserJets and Color LaserJets should be
  
• All supply prices are for OEM supplies and obtained from the manufacturers web store or in a few cases from an alternate web store such as CDW
  
• Cartridge yields have been obtained from manufacturer web sites
  
• The default page coverage assumption is 9% per color channel
  
• You have the ability to customize all three of these fields to accomodate your personal needs, cartridge cost, cartridge page yield and coverage assumption
  
• You can also select an alternate toner/ink cartridge by clicking on the file folder icon to the left of the cartridge description. This is especially important when you are customizing the report for the cartridge types your client is actually using. In the case of Lexmark printers there may be as many as eight toner cartridges available for a monochrome laser printer
  

Now that we have this tool up and running we hope you use it and provide us with your valuable, constructive feedback. There are several folks who have been testing it and it does appear to work well for those devices currently supported.

Please provide your feedback directly to me at pagecost@buscomgroup.com.

Once again, here is the temporary link to the tool; I will eventually be moving it to a permanent URL.

Page Cost Calculator

Cost per Page Calculator

I cannot tell you how many times I heard loud groans emanating from an analyst or sales professional within the copier, printer or fleet management market space as they struggled to research and calculate cost models for cartridge based printers to use in assessments and competitive proposals.

I too had experienced the same frustration and early on began to develop a database of printer models with compatible supplies, manufacturer yields and pricing so I did not keep starting from scratch. Over the years it grew from a simple spreadsheet, to a rather unwieldy spreadsheet and then into a database.

Now before some of you jump in here and tell me how your process is better than calculating cost models let me tell you that discussion is for another day! Some of us less sophisticated folks out here still need to know what supplies go with which devices, what are their page yields and yes even estimated cost models.

A few weeks ago I posted a query in a couple of Linkedin groups about cost per page tools available on the web to simplify the life of analysts and sales professionals – I was surprised to find no one could identify one?

This led me to approach much smarter friends and solicit their expertise to turn my personal database into a web application so I could share it with hard working analysts and sales professionals.

To automate this tool has been slightly more involved than I expected; I have to manually edit each device to enable functionality but am well on the way of doing so. I decided to begin with Hewlett Packard laser technology since it represents some seventy percent plus of the existing installed base.

For those of you who would like to take this for a test drive it is now available for you to do so. I just completed a test where I created cost models for about four hundred different Hewlett Packard laser printers in less than an hour. I think it is safe to say that is significantly quicker than doing the research manually?

I encourage you to register for free access to this tool but in return I request that you provide me with feedback so I can continue to punish my friends with requests for any bug fixes and improved functionality. In the meantime I will continue to bring more device models online, let me know if you would like Lexmark laser printers next or Hewlett Packard inkjets.

If you do choose to use this tool there is a Help menu at the top right of the Search page that explains its functionality. Now if you are prone to complaining, just remember this is just getting off the desktop and will continue to improve based on constructive feedback.

Here is the temporary link to the tool; I will eventually be moving it to a permanent URL.

Page Cost Calculator