EBM’s Mark Bailey was asked his Print Predictions for 2023.
“2023 is going to be a very interesting year for the MPS industry. Geopolitical issues which are affecting every country are whittling down into everyday business. We see this in our own industry, along with macroeconomic conditions created from the unstable government policies affecting market conditions. Hopefully, when this comment is published, we can see some certainty restored to make navigating 2023 that little bit easier. Until then our industry is going to see several issues on the reseller side which will affect customers. I have chosen just a few core thoughts to focus on.
The first is machines-in-field (MIF) ‘equity release
“The first is machines-in-field (MIF) ‘equity release’. Throughout 2020/21 MPS resellers struggled to obtain hardware and could not rely on service revenue whilst people were working from
home. Companies who were indebted either through pre-pandemic acquisitions or poor balance sheets instructed sales teams to ‘re-lease’ their existing MIF, with no cost to the existing hardware
and very little finance settlements involved. This strategy injected a quick cash boost back into their business.
Along with these new agreements sales teams often lowered the cost per page, hence lowering future service revenue. “This sales strategy has now handed the burden to service teams. Service
teams must maintain devices which naturally are more expensive due to the costs associated with an aged/legacy MIF (i.e. more breakdowns and higher running costs) whilst trying to keep cost per page the sales teams have now signed up the customer to. Sales teams have effectively used the service team’s contract service revenue they would typically receive over five years
to finance their short-term cash grab or ‘MIF equity release’. With rising costs everywhere from manufacturers, logistics, consumables, and general inflation, service teams will start to become hard pressed to achieve a profitable return on this MIF.
Acquisition-led companies seek to keep their investment partners happy…
For businesses who chose this option, the consequential effect will now start to rear its head in 2023. “As service margins tighten, the second thought is that the ever-running acquisition treadmill will continue as acquisition-led companies seek to keep their investment partners happy with more acquisitions providing more MIF to upsell. As there are less and less resellers
in the market, desperation will grow which will lead to more risky purchases.
Not every purchase will work out to be the right one, causing more damage to the acquirer than financially worthwhile. This will force these types of businesses to turn to organic growth and take an interest in previous customer bases they have purchased. With many of their customers either already re-leased or poorly treated and being ignored they will seek to move away to more ethical
resellers. More than ever, ethical business is important to people. The resellers who have stayed true to their ethics will be on the winning side of growth. “My last thought is that turbulent
times will always offer opportunities and growth for dynamic businesses. We are seeing continuing trends in customers seeking one service provider for multiple managed services. An efficient workplace where digitalisation is maximised to get the most out of every asset whilst being cybersecure is critical. Our business is positioned to offer that suite of products to handle this. Staying true to our style, we’re super excited to welcome 2023 as another year of company growth and development for our teams.”