New MPS trend allows procurement to bank up to 40%

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Billy Bell.jpgMany companies have achieved savings of 20% - 40% through implementing a managed print service (MPS). Consequently, the concept is growing in popularity on a global scale and locally in many procurement departments.

Billy Bell, of Managed Print Services at DataCentrix, defines the relationship at a high level and some of the aspects that need to be considered, in this month’s SmartProcurement.

"Simply put, MPS is an outsourced relationship where the multitude of operational responsibilities are transferred to a single technology and service provider who would charge the services back to the customer as a cost per copy," Bell tells SmartProcurement.

"Combinations of what is included in the cost-per-copy (click) charge are possible, however, the concept needs full commitment from the organisation for the ultimate benefits to be fully realised."

Event Alert! On 23 August Datacentrix will explore the intricacies of the Managed Print Services relationship in a breakfast presentation. For more information contact Victor Tjiya on Vtjiya@datacentrix.co.za

A MPS should include all costs in the click charge, including:

  • Capital
  • Toners
  • Availability diagnostics
  • Break-fix and maintenance
  • On-site support
  • Paper
  • Volume analysis and control
  • Automated toner and paper replenishment
  • Monthly decision empowerment and reporting

All of the associated direct and indirect costs are wrapped up into a pay-for-successful-prints-only contract that successfully converts all fixed costs to a variable cost element and transfers the ownership and related contingent liabilities of the hardware rentals to Datacentrix.

Benefits of the MPS relationship to Procurement and the organisation

"The benefits of this relationship are significant enough for the majority of organisations to take the potential seriously and review their current environment against the strategic high level objectives of this service. Direct cost reductions for clientele have amounted to between 20 and 40% after the introduction of new equipment and the value added services."

Considering that organisations invest in this commodity as an essential communication instrument for internal and external stakeholders and to allow employees to achieve their individual key performance indicators (KPI). Addressing user productivity is logically the first objective whilst simultaneously reducing unnecessary costs.

In the current business environment lowering unnecessary costs is high on any CPO’s agenda, however, many companies who use this as their primary focus merely transform the direct savings into user productivity losses that are harder to define and control. Therefore, to improve efficiencies without blowing the budget the design of the print hardware environment strives to balance the cost of user productivity with the cost of the facilities:

  • Improved user productivity with the production of documents
  • Reduced and appropriate costs structures
  • Increased strategic control
  • Reduced Risks and leverage of industry expertise
  • Supporting a Green Environment

What are the Risks?

Since the company has placed all their “eggs in one basket” the biggest risk is that the single service provider will fail the required service levels and place the first objective (improved user productivity) in jeopardy.

Datacentrix suggests a “balanced scorecard” approach to mitigate the services risk, offering leverage to their customers to penalise non-achievement of service levels and cancel contracts if not corrected.

Most of the risks of the MPS proposition stem from a lack of conceptual alignment within the organisation and the service provider. There needs to be an understanding to ensure that the service provider lives up to the promise and the key performance indicators can be defined and managed.

 

Event Alert! On 23 August Datacentrix will explore the intricacies of the Managed Print Services relationship in a breakfast presentation. For more information contact Victor Tjiya on Vtjiya@datacentrix.co.za

 

 

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