Published on May 21st, 2014 | by Louella Fernandes0
Software: A golden opportunity for printer manufacturers?
By Louella Fernandes • on May 21st, 2014 • in Articles • 17,237 views • No Comments
As printer manufacturers re-invent themselves as service providers, are they missing out on the opportunity to expand higher margin software sales?
Hardware commoditisation and shrinking margins means that many printer manufacturers are turning to software and services to capture longer-term revenue opportunities. While managed print services (MPS) has boosted service revenue for most manufacturers, the future may lie in a shift to higher-margin software business models that can create greater value and relevance for their hardware business.
Can printer manufacturers follow the path of IBM, a great example of a hardware-centric vendor that has successfully built out a very strong portfolio of software services to enhance its overall business?
The multifunction peripheral (MFP) lies at the heart of this opportunity. MFPs have evolved to become sophisticated, intelligent, smart devices that print, copy, scan and fax. Networked connectivity and a growing ecosystem of embedded apps for mobile printing, security and document workflow is making them an ever more critical part of the IT infrastructure.
MFPs are becoming more deeply embedded in business processes, becoming a key enabler for integrating paper and digital workflows. Advancements in technology means that next-generation smart MFPs have an extensive software ecosystem. Most MFPs now support an embedded software platform where customised workflow applications can be designed. Documents can be captured and routed directly to enterprise content management (ECM), customer relationship management or enterprise resource planning (ERP) systems.
Examples of this include Canon’s MEAP platform for its imageWARE MFPs, Xerox’s ConnectKey MFPs, Lexmark’s MFPs which are integrated with Perceptive ECM software, and HP’s Flow MFPs that leverage the Autonomy platform. More vendors are extending their MPS offerings beyond the device toward helping organisations drive business process efficiencies around paper-intensive processes.
With software becoming a key point of differentiation in an increasingly competitive market could vendors be doing more to monetise their software?
The growing focus on expanding the application ecosystem for their MFP devices means that printer manufacturers are now becoming software publishers. Yet they have limited experience of monetising and licensing software across a vast array of devices enabled with different software.
A simplified approach to licensing and entitlement management is needed that can help manufacturers to control and monetise value-added software features. With feature-based licensing and entitlement management, printer manufacturers can develop and maintain a single, feature rich embedded application which is installed on all devices. The functionality of the device is then controlled through licensing. This enables vendors to ship the same product with different functionality to different customers at varying price points and upgrade customers remotely with lower support and fulfilment costs. Manufacturers can then create connected MFPs that unlock new revenue streams, protect intellectual property and potentially implement configure-to-order manufacturing.
While some manufacturers may choose a proprietary approach to licensing and entitlement management, perhaps a more effective approach is to use best of breed technology from companies such as Flexera Software and SafeNet. These in particular focus on software licensing management for hardware manufacturers.
Flexera for instance has a product, FlexNet Producer Suite, targeted at intelligent device manufacturers, offering license enforcement and revenue protection, software and hardware activation and software and firmware updates. FlexNet Producer Suite also provides manufacturers with real-time data about their customers, such as how often software is used and which features are most popular. Flexera is already used by a range of hardware vendors in the telecoms, medical, automotive and mobile industries.
Meanwhile, as more enterprises start utilising a broader range of MFP related document workflow software, there will also be a greater need for broader Software License Optimisation (SLO) within these enterprises. Quocirca believes that there is also an opportunity for manufacturers to work with SLO vendors in this space.
As hardware value is increasingly driven by value-added software, printer manufacturers will need to up their software game as they look to drive more revenue opportunities from software and services models.
The ability to manage software entitlements, flexibly license products and monitor user compliance across the growing MFP software ecosystem will be key to maximising revenue and profitability in a brave new software-centric world.
A broader mix of software will help printer manufacturers bring in steady and recurring revenues and further boost their transition from a hardware to solutions and services strategy.