Strategy Session 2015–2016 with Konica Minolta Business Solutions, U.S.A., Inc.
Years of Investment Paying off Big in IT Security and Hardware Sales Growth
BLI sat down to talk with Kevin Kern, senior vice president of marketing for Konica Minolta Business Solutions, U.S.A., Inc., to discuss the current state of its business, including its recent growth, focus on IT services and security, and active search for tomorrow’s workflows.
When asked how his company’s business is doing this year, Kevin Kern had a lot of good news to report.
“Our last fiscal year was a record year for us on every level, both here and in Japan,” he told BLI. “We had very strong growth in North America. We just finished the first half of this (fiscal) year and we’re seeing a lot of success in our core production print and midrange color in office segments. The surprise, on the upside, is that office mono/A3 has grown, which is what’s counterintuitive to what the market says it’s doing, and our mono production print business had some growth as well in a market that has been projected to decline.” Kern emphasized, “Having the right product mix, in the right segments, enabled us to leverage the market factors.”
KMBS Sees Growing Demand for IT Services
The outlook is just as bright for KMBS’ IT services business, All Covered, which is, says Kern, “showing double-digit growth. It’s really taken off for us.” Between investments in cross-training to help traditional reps understand the business and an IT services platform that ranges from SharePoint development to round-the-clock help desk support, to multiple Konica Minolta cloud-based data centers,” says Kern. “We can offer our customers an end-to-end solution, all supported by more than 600 IT engineers and architects. That changes the conversation for an average hardware rep going into a typical business.”
For example, says Kern, KMBS sees its dealer channel IT consultant services growing rapidly. “At this point, dealers understand the need to offer these products and services. The hardest thing for a dealer right now can be to figure out how to get into it, because you can’t go halfway. If you’re going to be doing help desk support, for example, you have to provide it 24/7, 365 days a week. Several of our dealers have robust IT services business, but we can help them support national accounts or projects where they need added manpower or expertise for those that do not have the capabilities. We ‘white box’ it for them so they can effectively buy time from us. They can set up their own customer relationships and do their own contracts this way. There are a variety of options we offer them, based on where they are in the process. Some use Konica Minolta, or use their pre-existing solutions products with a hybrid approach, using us to fill in areas where needed.”
He continued, “In the area of IT security, for example, one of our biggest selling solutions right now is the integrated software and HID card readers, or in the government’s case, CAC card readers, where we integrate fully with their in-house security system. In many cases, that opens doors to some security business for us on the IT services side as well.”
Another area of investment paying off for Konica Minolta is Enterprise Content Management (ECM). “We started in that area about three years ago and bought a few more companies in the past couple of years,” says Kern. “It’s growing exponentially and it’s another thing that complements the eco-system of the hardware.”
“We’re a partner with Hyland OnBase, and at the mid-tier level we’ve got Square 9, but we’ve got the engineering and consulting teams to help companies that want to re-do their accounts payable department, or their HR department, etc., in terms of content management. You can add and subtract easily because you’re not tied into capitalized hardware. That’s a complementary additive business to these other businesses, and it’s off to a good start.” (This service is billed monthly through recurring revenue-type contracts.)
“The hardest thing for a dealer right now can be to figure out how to get into it, because you can’t go halfway. If you’re going to be doing help desk support, for example, you have to provide it 24/7, 365 days a week. So, we ‘white box’ it for them so they can effectively buy time from us. They can set up their own customer relationships and do their own contracts this way.” –Kevin Kern
Kern said that on the direct sales side, “We’ve seen a pretty good crossover with the monthly revenue generated through the IT services business, both on the services side, as well as the project procurement side, which is growing significantly every month. It took awhile to get that going, but it’s really taking off now.”
“This is a mature business which required a lot of investment,” Kern told BLI. “Over five years ago we have acquired 21 companies and we’ve now got a national presence and a real scale with which we can easily leverage the round the clock help desks we have as well as our cloud data centers, etc. We got over our initial hump of scaling up the business. We do a lot of desktop support, for companies ranging from 20 to 17,000 people. Interestingly, we’re getting a lot of smaller businesses for the help desks, which the larger companies don’t want to pick up.”
New Wide Format, Production, Office and Software Products to Be Launched Soon
Despite this year’s impressive business growth, Kern said, “We’re never satisfied and don’t want to be static. We recently exhibited [production products] at GraphExpo in Chicago. As we move toward commercial and industrial print, we see big opportunities in super wide format, where we sell EFI, hybrid wide format products. We also see growth potential in terms of short to mid run label printing, packaging printing, as well as with our new KM-1 (a 29.5-inch sheet-fed UV inkjet press set for launch in Spring 2016), which has the new printing press technology.”
He said that Konica Minolta’s recently announced industrial print products will be shipping soon, and four new products will be introduced in the next quarter including production and office products, as well as additional software solutions.
Using “Business Innovation Centers (BICs)” to Help Evolve the Workplace of the Next Decade and Beyond
Kern said Konica Minolta is spending a lot of time and energy trying to see what work is going to look like in the future.
He told BLI, “Obviously, mobile devices and smart phones have really changed how people interact with both their work and their personal life. The lines are more blurred between when you’re working and when you’re not. There isn’t as clear a definition as there used to be. And as you have the cloud, mobility and the ability to view your documents everywhere you go, the security requirements for that are obvious…but that’s the present. What’s the future of office space going to look like? How do we develop what people need to have the proper tool set to be as efficient as they can be in the next-generation integration of business workflow?”
He said that Konica Minolta currently has five “Business Innovation Centers” (BICs) throughout the world, one of which is located in Foster City, CA. “These are not R&D centers,” he explained. “They’re actually more like venture capital groups. Their job is to investigate startup companies and new ideas, and bring those new ideas to the table in terms of how we can use them to solve simple problems. Whether the problem is that you have the complexity of managing a million network PCs, with security and keeping apps up to date, etc., or something as simple as walking into a conference room and trying to get your Mac to work on a TV that isn’t set up for it, these are all annoyances. How can we make a more seamless work experience for people?”
He used a conference room scheduling tool called Robin (showcased at the last Konica Minolta dealer meeting and currently being tested at BLI) as an example. Based on an exchange server such as Microsoft Exchange, it not only enables people to book conference rooms, but it knows who has actually entered the room, so it knows when everybody has entered the meeting. This is helpful, he explained, because, “People will book conference rooms for three hours at a time, although they’re in short supply, and if you walk out no one knows they’re available again. With Robin, if the meeting ends and everyone leaves, if you don’t enter ‘End Meeting’ on the iPad and walk out the door, within five or 10 minutes of no activity, it releases the room back into inventory, so to speak, to help companies manage their conference room space much more efficiently. In addition, it knows who you are, and what sort of device you may have, and in the future it helps us configure that room to be convenient to what technology you’ll be using to present with.” This all works via an app on each worker’s mobile device.
“It’s not all about work or productivity, because workers are already very productive,” Kern said. “It’s about how can we make work processes more efficient. We have four or five technologies we’re looking at right now that can help organizations better manage their fixed assets such equipment in the building, for example.”
Konica Minolta has also recognized the significance of the Internet of Things integrates “all sorts of devices that connect to each service.” For example, at the last dealer meeting, the company demonstrated the Savioke robot (an automated service robot designed for hotels to deliver items to guests).
According to Kern, “We have two test sites where the robots will be delivering room service, with Konica Minolta providing service and the infrastructure support. Knightscope is another company [Konica Minolta is involved with] producing security robots that patrol campuses. They take audio, visual and sensory information and transmit them to a central system that utilizes big data analytics to determine the need to dispatch to a security officer. Both of these technologies work with our service delivery model, our IT services model, and our dealers’ business model, to add these intrinsically valuable functions that we can support in a customer environment.”
“It’s not all about work or productivity, because workers are already very productive. It’s about how can we make work processes more efficient.” –Kevin Kern
He emphasized, “Infrastructure security is not just for machines, but it’s part of what our IT services can do. Our industry has the best respond-in-two-to-four-hour service delivery model of any industry. These types of devices are going to need services and support, and they’re not much different than what we do today.”
He said those are just two examples of new areas the company is eyeing including, “investing in some and studying others to bring more ideas to the table to facilitate what the future of business can look like.” He said all five Business Innovation Centers work closely with each other, and with Konica Minolta, toward that goal.
Keeping Communication Open with Dealers
Kern said that every service and product available to its direct channel is also available for independent dealers. “Our direct channel doesn’t get special treatment. Everyone is given the same opportunities so we can all be a healthy community of partners.”
“We’re pretty selective [about dealers]”, says Kern. “In the past five years we’ve trimmed down to about 318 bigger dealers. And we don’t have a very hierarchical organization, so there aren’t a lot of layers between us and the dealers. One of our priorities is getting together with our dealers and customers as often as possible, where we can all generate new ideas. And we share everything we do with all our dealers.” He told BLI that Konica Minolta maintains direct contact with its dealers and service providers via both its Dealer Advisory Council and Dealer Service Advisory Council. “None of them are shy about picking up the phone and calling us directly to voice their opinions,” he added with a chuckle.
He also says the company is making face time a priority for its dealers in numerous ways. For example, he noted that in October, “We were a presenting sponsor of the American Airlines Celebrity Golf Classics on the West Coast with 30 of our dealers. It’s a charity event benefitting Susan G. Komen, but it was also a good chance to get together face to face. Laying out a strategy for where we’re going, and consistently communicating that, is a critical part of our future success.”
Whether inside the company itself or as a Konica Minolta dealer, Kern said it’s a very exciting time to be at the company. “We’re enthusiastic. We get up every day asking, what can we do better for our customers and for our 8,083 employees in the U.S. We keep looking for new ways of doing things and new opportunities for our dealers and for our customers.”