Ricoh U.S. Chief Pledges Greater Channel Investment

Ricoh's top U.S. executive has a message for industry observers who think the company has turned its back on the channel: indirect sales are more important to the printing and imaging vendor than ever, even as it touts a direct services workforce that numbers 30,000 worldwide.

"It's extremely important," said Jeffrey Hickling, president and CEO, Ricoh U.S., in an interview with CRN Thursday. "Even though we have a strong Ricoh-owned operation, the dealer channel is incredibly important to Ricoh and to me personally because in what we'd call the midmarket and the commercial accounts, a direct coverage model alone can be prohibitively expensive."

Added Hickling: "While a much larger share of our revenue comes from direct, we increased our investment in dealer support 50 percent in 2010."

Hickling acknowledged criticism that Ricoh has, in the past few years, been de-emphasizing indirect channel sales.

Most of its critics point to 2008 as the year that emphasis shifted, as it was the year in which Ricoh not only acquired Ikon Office Solutions, a major services firm and mainstay of CRN's VAR 500 list, but also blew up its channel organization, But Ricoh is still wholly committed to indirect channel sales, Hickling said, and if Ricoh's direct business grows between 5 and 10 percent in 2011, he expects its indirect business to grow apace.

Hickling sat down with CRN Senior Editor Chad Berndtson at Ricoh's global press and analyst event in New York to discuss the channel and other pressing issues. Excerpts of the rest of the conversation follow.

Looking at this idea at moving beyond managed print services and leading to MDS, managed document services, can you articulate what you see as the main difference between a lot of the managed print services offerings and MDS? Is it the BPO element?

In my view, managed print services has literally been about looking at a print coming off one device and deciding whether that should be on a desktop printer, a multifunctional printer, a networked device, and in and of itself, that's important. But fundamentally, we're as concerned about non-paper images as we are about the output from a printer. In the future, it's about helping [customers] manage electronic information. Our heritage is the multifunctional printer, but we're much more about managing document workflow, which goes beyond was MPS was, in my view.

Next: Ricoh's Vendor-Agnostic Device Management

When you go into a customer and offer these types of services, you say you are vendor-agnostic: you'll manage for the customer even if their hardware isn't yours. Can you talk a little about why that's important, and is that open-ended? Do you let them hang on to their Xerox printers, et cetera, forever?

It's a balance. I was with a customer yesterday who had an RFP with much of our competition and one [vendor] in particular who said, 'We want you to go in and replace all of your devices with our devices.' And the customer said, 'That's not what our RFP asked. It asked you to manage the output.'

Some customers have cash assets. They didn't lease the assets, they own the assets and they're not due for a technology refresh. So being able to manage those devices is equally important to managing the information on our own devices. It's really an emphasis on our approach. Of course we want to sell Ricoh devices, but it's much more important to start with looking at all the information being processed and then optimizing the costs for that for the customer, than it is replacing the devices on day one.

It's not just about Ricoh printers, it's about leveraging the customer installed base in any place information is moving, and providing continuous improvement and continuous cost reductions over time.

But the ultimate goal being to get Ricoh hardware in there as well? Are you saying there's no set deadline or parameters for when that has to be?

I'll tell you right now there are some customers who would say, 'I'm not moving away from my printer provider. I'm not going to change. But if you can leave those in, you can manage other assets for us.' We can live with that. Over time, we'd show the customer that our devices have more functionality in some cases and that can help you, maybe you put in half the fleet as ours. But it's not integral to the value proposition. At the end of the day, if I'm not selling any devices, I'm probably not doing my job, but it is not what we're stressing in the customer engagement.

Why is that so important to Ricoh? Because that's a real departure from what some of your competitors push.

We do understand that it is a departure. The customer I was with yesterday, half their assets are cash. They say it's a cheaper value proposition for them than leasing those assets. If they bought their desktop printer 8 months ago but know they have to manage their print fleet more holistically, they're throwing money away by having Ricoh come in and say, 'You need a Ricoh printer.' You can't make the value proposition work and do the best thing for the customer if your fundamental premise is a technology refresh. That's our view.

Next: The Importance of Ricoh's Ikon Acquisition

You came from the Ikon side, with the acquisition. How has integrating Ikon expanded what Ricoh can offer? What was the importance, three years later, of that acquisition?

I was on the acquired side, not the acquiring side, but as Ricoh looked at the opportunity with Ikon, I think fundamentally it began with Ikon's share of devices in the market. Ikon was in auction and I think Ricoh concluded that if they lost Ikon to their competition, they'd have lost opportunity. The managed services business of Ikon was probably an unknown asset then, and I'm not even sure we saw in 2008 where the managed document market was headed.

There's the footprint for Ikon -- Ikon alone has 1,700 sites -- that combined with the technology Ricoh brings for capturing information and devices made for a very powerful value proposition for providing equipment and services for our customers. It's very hard for Ricoh to be making this foray into managed document services without the Ikon footprint.

So really, IKON was a key piece of that managed services vision. Part of why I ask is we've seen vendors in this market buying up services companies and integrators. Xerox-ACS is the most obvious example, and Konica Minolta just bought an MSP. Will Ricoh continue to acquire?

If we had anything in mind, I wouldn't comment on it anyway, but that being said, Ricoh Company Ltd. is committed to this space and it's fundamental to our strategy to move to a services company. In the sense that there there are services that can better provided through acquisition than organic development, we will assess those opportunities as they present themselves.

It's much more for us about our ability to make sure our competency is there for what our customers need than whether we acquire that or develop it. It's a way of saying, if the right opportunity came along, I'm sure our CEO would evaluate it, but fundamentally, we have a lot of pieces already to play in this game, and our main focus is leveraging our existing capabilities.