Exclusive
By Andy Slawetsky – Under the theme Futuready, Konica Minolta Business Solutions (KM) held their dealer meeting Oct. 3 – 5 in Carlsbad CA. As has become the norm with KM dealer events, this meeting was over the top, for so many reasons that I will now share with you. With 650 attendees, this was the smallest KM dealer meeting in years. KM wanted it intimate.
Konica Minolta was one of the first to discontinue the annual dealer meetings, opting for an 18-month cycle, which many competitors chose as well. Some have even gone to two years between dealer shows, the idea being that after two years, they will have tons of new products and services to put in front of dealers. During one of his presentations, President and CEO Rick Taylor told listeners that KM wants to hold more meetings – not less, as has been the trend of late. Also of note, this event was two days, rather than three, which has traditionally been the case for a show like this.
Anyone that spent time in sales knows the value of face to face time with clients and events like these are an amazing way to get quality time with dealers. The problem is, the typical dealer show can be incredibly expensive, which is why most companies have moved to 18-24 month cycles. Costs associated with transporting, unboxing, setting up and displaying hardware can be astronomical, especially when we’re talking about production equipment, like the bizhub PRO, AccurioPress and MGI product families KM sells.
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How do you throw dealer events while still keeping the cost down? You don’t bring hardware. Indeed, there was very little hardware at this show. There were only a few devices there were there to show workflow and solutions, such as KM’s Dispatcher Phoenix and others. This brings me to another item of interest; there were virtually no partner sponsors at this show, the first time this is been done in a while, if not ever.
Konica Minolta chose to highlight their own technology, rather than their partners’, who often work with all of their competitors. KM wanted to showcase the home-grown stuff. This on it’s own is impressive, but what it really meant was that KM was willing to give up considerable money that goes to pay for the cost of these events that they get from sponsors. There were only two of what I would consider “partner” companies at this show; MWA and a leasing company. And, I don’t believe they sponsored dinners or entertainment.
MWA was there because the SAP Business One platform is critical to KM. This is the ERP direction they’ve gone and they’re all in. In my opinion, being literally the only technology partner at this event adds quite a level of creditability to the MWA story. Indeed, during one part of the opening day, SVP Kay Fernandez told the crowd that marketing automation increases sales productivity by 15%. A great plug for FORZA.
The show opened on the travel day, another break from the norm, as the Keynote began at 3 PM the day we arrived, rather than the next morning. Dealers (and myself) are conditioned to 20+ years of meetings starting with a cocktail hour beginning at 7 PM on the travel day, so a few dealers didn’t make the opening session. Also, the Yankees were playing in that one game playoff VS the Twins during the meeting and we may have lost a couple of people to that. Sorry Twins fans.
The stage was a bit different than “normal,” containing four areas where the presenters stood and sat throughout the sessions. No death by PowerPoint!
Rick started things off, talking about KM’s growth and openly questioning the validity of slides (that I’ve posted) from competitors that show KM numbers are down while theirs are up. Look, I’m not a numbers guy, I publish what they show me. I know enough to understand that any of these big companies can find areas of strength where they’re better than the competition and make a great slide out of it. More than the numbers, what really tells me how the company is doing are the details. What kind of hotel is it? What’s the entertainment? What’s the food like? Are the same executives still with the company? You may think I’m being simple but, little things like these often tell more of the story than a slide with revenue or unit shipments.
In any case, according to KM, they’re doing great, with revenue up $1 billion since 2010 and unit sales up 10% in the last 6 months compared to last year. Every YOY quarter has been bigger than the one before it since 2010 and last month was the biggest single dealer sales month in their history. Also, we were in Carlsbad at a 5-star resort, drinking top shelf alcohol, listening to a former Eagle playing guitar and singing to us. You tell me how they’re really doing.
Dealers are still hugely important to KM, accounting for 51% of their unit sales (30% of revenue). KM’s real message to dealers is that you have to find something else besides print to exist in the future. He made a great point that, if you’re just selling to 85% of your MIF on renewals and you’re only getting 85% profit compared to last time…you’re going to shrink. You need to find something else that fits into your portfolio and that you can support. I couldn’t agree more. Rick said, he didn’t care if it was managed services, or 3D or ECM or security, etc., dealers just need to “pick one and go with it.”
After Rick’s session, the people on stage shifted to couches off to the left where a panel of KM execs and special guest expert Wendy Murphy chatted about hiring and HR – one of the greatest challenges in the world of today’s copier dealer (and yesterday’s). This fit in with the People, Spaces and Technology sub theme of the event. Everything they did fit into one of those three areas.
During this part of the General Session, those on stage discussed the difficulties dealers have in making their companies desirable places to work, particularly for Millennial workers who have different priorities than, say Generation X-ers like myself who only wanted to sell copiers and make money. Konica Minolta has done many things to stand out as a great and different place to work. SVP Kay Fernandez discussed KM’s Step Forward woman’s program that she started in 2015 to help “encourage the advancement of women by helping to develop leadership skills through sharing experiences and best practices.”
Rick also discussed a summer hours vacation policy, where people were able to leave at noon as well as flexible vacation allowances, where executives can take as much vacation time as they want, as long as they get their work done. Ironically, giving executives virtually unlimited vacation time has actually reduced the number of vacation days KM execs are taking.
Another panel then shifted to ECM, where SVP Kevin Kern told us about the importance of ECM to KM’s future. He said it’s one of the fastest growing areas at KM and “for every dollar of ECM sold, we got $.19 revenue.”
They also had Perry PROTECH’s Barry Clark on stage in one panel discussion, talking about security, such as cyber security. Barry said they just got a $25 million security contract. He told attendees “portfolio diversification works.” After Barry, Dean Swenson of The Swenson Group joined another panel to discuss working with KM’s All Covered for IT services. KM can talk until they’re blue in the face about how great their programs are, but nothing tells the story better than bringing up respected, successful peers of these dealers to talk about how it worked for them and how they made money doing it. KM should continue to showcase success stories like these.
The evening closed with a discussion about The Workplace Hub (WH), the server-based “does everything” solution from KM. FINALLY we’re talking about something I can lay my hands on! The WH was initially slated for release this month, but it’s now pushed back to January. Describing what the WH is seems to be challenging, because it can literally be something different to every customer depending on how they configure and use it.
WH is a modular server than can offer dashboards, collaboration, remote monitoring of hardware and users and on and on. There’s literally no limit to what KM can do with it. Essentially, it’s an HP Enterprise Edge server with a layer of KM software on top that allows for the modular sale of different components, such as those I just mentioned. The best analogy I can think of is (feel free to steal this KM), it’s like the Nest for your office.
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If you’re not familiar with Nest, it’s awesome. It started with thermostats and they keep adding capabilities. Basically, your home’s thermostat is on your wifi, tying it into the IoT. You can now control your heat and AC from anywhere in the world, right from an App on your smartphone. But, Nest took if further. They keep adding connections to other IoT assets. You can now control your thermostat using your Amazon Echo, allowing you to turn your heat up and down just by telling Alexa to do it vocally. Nest also added security connectors, camera connectors, the ability to turn your lights on and off, open/close your garage door and so much more. This is what KM’s Workplace Hub wants to do for the office. They want to be a centralized place where customers can do everything. The Nest of the Office. It’s quite brilliant.
Will it work? Will they succeed? I don’t know. There’s a lot for them to figure out. Pricing, how it’s sold, etc. remains to be seen. Can dealers make money with this? That’s the question. It seems like a very involved (long) sales process, which would indicate that it will cost a lot. As it’s targeted towards SMB, that’s a challenge, as SMB customers don’t have a lot of extra cash sitting around for things like this. Still, it will make their lives SO much easier and efficient, assuming the dealer understands how to sell it, set it up and maintain it. While it’s not for everyone, I spoke to a couple of dealers that can’t wait for it to become available. It’s kind of funny. Older dealers are skeptical on this product, younger dealers are thrilled about it.
I love the concept. No one else is doing this and I can tell you as an SMB customer (and a Nest user), I’m sick of multiple dashboards, multiple logins, multiple subscriptions, etc. I would LOVE to have everything in one place, just like it is with my Nest App.
There are three flavors of WH. There’s a copier-based unit, with the brains in the bottom where a paper tray might sit, there’s a rack server and a standalone server. Personally, I don’t see the copier-based unit doing all that well as you really have to find a customer that wants to set up networking, collaboration and more all at the same time they’re upgrading their device. It would be perfect for a new office that needs to buy everything at once, but that’s not generally the case. I get the feeling they needed to tell Japan this idea would sell more copiers to get the program off the ground, so they built it into one. Maybe I’m wrong, it wouldn’t be the first time.
After the sessions, we headed to an outdoor area for a nice evening of food, cocktails and networking. A great first day.
The next morning kicked off the breakout sessions, aimed to show dealers not what, but how. One of the complaints I hear, and I heard it early on at this conference, is that OEM executives get up on stage and pitch these great visions, but there’s very little substance on how to put them in place and get them off the ground. These sessions were designed to do exactly that. I had dealers tell me just that about this event. They loved how KM was providing a game plan on how to do all this.
When I was in the product fair, I witnessed it with my own eyes, as a dealer watched a demo of bizhub Marketplace, the online store where customers and dealers can access Apps to customize their copiers/MFPs. The dealer stopped him in the middle of the presentation and told the KM employee, “look, I’ve watched demos on this for years, I’ve never done it…how do I do this? What steps do I take.” I left after about five minutes of listening to this guy explaining to the dealer everything he needed to know and do in order to get this strategy off the ground. THAT’S what dealers NEED. I guarantee you that dealer went home with a better understanding on how to integrate a bizhub Marketplace strategy with his customers.
The product showcase was a much smaller floor than we’ve ever seen from KM. In fact, it was held in two fairly small rooms next to each other. KM had very few stations here, focusing on just those they wanted to promote during this show, instead of the atypical “everything but the kitchen sink.” They did have one digital press, a small 3D machine, a Dispatcher Phoenix solution, facial recognition security technology, a Workplace Hub demo and a few other things, such as ALICE, KM’s automated receptionist. You can check them all out in my video walk through below.
After a few sessions, we had our press conference, which is one of my favorite parts of a KM event. Rick and his crew sit on stage and candidly take question after question from the crowd and you can ask just about anything. During this conference, we covered a variety of topics. At one point, we talked about the talent KM has brought on board over the last few years, with Rick telling us “we are stealing some of the best minds from our competitors for production and in other areas. We’re the cool kid spot to be.” Indeed, I had lunch with several former Xerox production executives, met ex-Ricoh and ex-Canon sales people…he has a point.
I asked Rick why they really bought Muratec. He told us that Muratec already sells relabeled KM gear and they have a great label printing program in place. They also have great people. KM gets another channel with over 600 dealers in this acquisition (KM has about 350 dealers in the US). That’s 600+ locations all over the US, giving KM a potentially stronger presence across the board. Muratec always positioned themselves as the dealer’s second brand (or third or fourth). “We’re here if you need us,” seemed to be their mantra. KM sees this as an opportunity. With KM support and a much larger portfolio, KM believes they can become the number one brand with many of those 600 locations. They’ll increase their placements and revenue opportunities without having to open or sign up a single new dealer or location. This could become a huge channel for them.
After the press meeting, I spent some time with Andreas Krebs of All Covered. KM acquired All Covered in 2011 as the managed services arm for their branches and eventually, their dealers. While many in the industry were skeptical, this program has taken off. I remember when I initially spoke to dealers about this, many said they had their own MSP offering and didn’t need All Covered. Now, most of those dealers are using All Covered in one capacity or another. All Covered provides a litany of products and services dealers can offer. It’s not all or nothing and What’s Happenin’ is dealers are picking and choosing the services they need.
For example, I spoke to a dealer that had been creating their own Cloud offering. They scrapped it and went with the All Covered offering as it’s built, it’s turn-key and it puts Konica Minolta in the liability chair, rather than the dealer. Win win baby. Another dealer, Barry Clark, was one of those dealers that told me years ago they didn’t need All Covered, they had their own. Perry PROTECH is a leader in managed services in the dealer world and has a very impressive and successful program. During this event, he was up on stage talking about All Covered. Perry doesn’t need everything they offer, but some components make sense. When Perry chooses to work with All Covered, you know All Covered is legit.
All Covered is doing very well in the field, with 2/3 of IT wins coming from net new business. Even in down months, IT is crushing it, according to Todd Croteau, president of All Covered.
The product fair is my only real knock on this event. Because they brought considerably less “things” to show and almost no hardware, they probably felt they could get away with a small space. The show area looked great, but once everyone came to see it, the crowd made it very difficult to really get a good look at things and to have conversations with the presenters, unless you waited until near the end when the crowd finally thinned out. Also, it was incredibly loud in there and nearly impossible to hear anything during these presentations, especially when I was part of the bigger press group. This was not the issue when they had a massive floor a couple years ago in LA that held full size 3D machines, multiple digital presses and even a race car. I get the downsizing and in general think it’s a great concept, but I hope they figure out a way to mute the background noise and improve the flow on their floor. It looked great, but it was challenging to walk through.
That evening was the final event, where we had another lovely outside dinner before the big night of entertainment by former Eagle Don Felder (and Kevin Kern). Before the event, there was a full on press to sell the rest of the raffle tickets for the charity KM was supporting as part of this event, the Blue Angels Foundation and their Wounded Warriors program. This is the first time I ever remember an OEM tying a charity to a dealer meeting and what they did was incredible.
The foundation builds campuses with housing for veterans and soldiers coming back from active duty with life altering injuries received during their service. They build cabanas where the soldiers live while they rehab and try to find some level of normalcy and cope with mainstreaming back into society. It’s incredible work they’re doing.
KM was the title sponsor for their golf tournament and Rick used the conference as a jumping off point for the event that began the day after the dealer meetings, coincidentally also at the hotel in Carlsbad where half the dealers were staying. During the KM meeting, they auctioned off a car, which was then given back and re-acutioned, as well as other items.
The highlight of the night (and the event) was when KM offered a series of tickets to some of the upcoming MLB games. I can’t remember if it was playoffs or World Series or what, but it was several games. Doug Pitassi of POA opened the bidding and promptly shut everyone else out with a bid of $15,000. Are you sh*tting me??? Well, that was quick. How awesome.
But, what? Hang on, Rick pulled out his phone just as Doug seemed to win and called Dan Doyle, Jr. of Dex Imaging (he couldn’t attend) to let him know what Doug had just bid and Dan countered with $20k. Doug went to $25. Dan to $30. And on and on until Doug got to $70,000. The room was going wild. At that point, Rick handed the phone to Doug, who chatted with Dan and they came to an agreement. They BOTH agreed to donate $70,000 EACH. I’m not sure if they split the prize or gave it back or what. KM raised $140,000 in 5 minutes for these veterans. Doug and Dan, you are AMAZING!
Rick had mentioned during the opening session when he spoke of this charity and KM’s sponsorship that he hoped to raise $500,000 during the dealer meeting and the tournament. I’m told by some dealers that stayed to golf that he raised $1.2 million. I’m blown away. Seriously, when has any dealer meeting EVER done anything like this? Never.
There’s a lot to like about what KM is doing. Adding diversified offerings is critical to long term success. A lot of their competitors are going the other direction, spinning off parts of their companies that aren’t related to print. I think KM has the right idea as they evolve from a hardware company to a solutions company, as long as they are careful to choose products and services that fit into the dealer’s portfolio.
But what I really love about KM is what they do for charity. Not just the Wounded Warriors, but MANY charities. KM personally donated tens of thousands to The Jillian Fund, the charity I ride for each year with the Patriots Pack. They donate thousands to the Cannata Dinner charities every year. They have donated on their own to cancer charities and community charities and on and on. Many OEMs I work with donate regularly, but none at the level of Konica Minolta and certainly none have ever tied a dealer meeting to a fundraising event like this. I applaud KM for what they do in this respect. They are just freaking awesome.
In all, this was a very interesting event. Another great venue and as promised, very different than the “norm.” Very little hardware. The focus was on the future. KM is preparing their dealers for their next “big thing” and they’re providing the tools they need to stay competitive and lead. At the end of the day, Konica Minolta used this event to raise over $1.2 million dollars for our wounded heroes. Nothing I say beyond that matters. They are a model for us all and as good a corporate citizen as there is. Their show was for the most part outstanding, their people are amazing and I applaud them for what they did in Carlsbad.
I greatly appreciate being invited to this conference and my hat goes off to them.
~Andy Slawetsky
