Konica Minolta Aims to Crush Rival MSPs With New Workplace Hub

Konica Minolta has upped the ante to play in the print space by placing a huge bet on a multi-function device that connects to their own massive MSP subsidiary and can provide copying, printing, as well as a full suite of IT services -- all from one box called the Workplace Hub.

“Imagine a multifunction product, and then embedded inside that multifunction product is a platform that can run all the services for that SMB. All their IT service. Whether its email, all their applications, everything resides within that architecture,” Sam Errigo (pictured), EVP of Sales & Channel Programs at Konica Minolta told CRN. “Its on prem ... Complete back up, complete redundancy of everything that is loaded on that platform.”

The Japanese printer maker’s ambitious goal is nothing short of eliminating rival MSPs by using its behemoth MSP subsidiary - All Covered- No. 110 on the CRN SP500- as the services backbone for Workplace Hub along with its 300 independent Konica Minolta printer providers acting as resellers.

[RELATED: The Konica Minolta Workplace Hub: 10 Things You Need To Know]

“Are we looking to replace other MSPs? The answer is 100 percent,” Sam Errigo, EVP of Sales & Channel Programs at Konica Minolta told CRN.

Workplace Hub was quietly unveiled earlier this year, but days ago at Konica Minolta’s partners conference more than 50 independent solution providers signed up to sell the device, which Errigo said bodes well for the product’s future.

“This is what the customer is demanding. They are looking at fewer suppliers fewer integrators. They’re looking for a holistic way to service and support this concept of workflow or workplace of the future,” he said. “Our job is to make sure we’re prepared. This isn’t something we thought up last year and said ‘This would be great to announce at our dealer conference.’ This has been a very methodical, well thought out strategy to get us to this point.”

That strategy began eight years ago when Konica Minolta bought All Covered, a Foster City, Calif.-based MSP that now boasts more than 1,200 employees as well as 100,000 end-users, the company said. Errigo said along the way, that deal was backed by more than 30 tuck-in acquisitions and is being expanded further with two massive build outs this year, one in Tampa and one in Phoenix – 56,000 square foot service centers to handle the projected expansion of the company’s managed print and IT business.

“Based on our investment, remember we do this at the enterprise level as well," said Errigo. "Our security, our data centers, the security, the infrastructure, the talent that we have is robust. SMB pricing and capabilities at an enterprise class level. We think this is the future. There’s nothing out like it. We’re the only company that has this.”

One critical piece acquired in the All Covered buy was Nick Pegley, a 30 year IT industry veteran who spearheaded the creation of the Workplace Hub, and is now Sr. Vice President, Solutions and Services, Konica Minolta Business Solutions,

“That deal eight years ago is really when this journey started. We really couldn’t have done what we’re doing here with Workplace Hub without having built the IT services business here in the US,” Pegley told CRN. “I think that’s why you’re seeing something kind of different. I think there’s a much stronger IT core to the business here. And really what has been a significant transformation to be more IT centric, data-centric, and focused on the customer’s needs more broadly than print and print solutions.”

Errigo and Pegley said the average business owner is fed up with IT, and the people who provide it, saying most companies simply accept what they are given.

“SMB has been settling for IT. It is what it is. They’re not overly thrilled about the service that they get from IT providers,” Errigo said. “Now we can go in and basically do everything for that SMB customer and provide enterprise level support at a price that’s affordable for SMB.”

Pegley said the Workplace Hub puts IT back into the hands of the business owner via a subscription model that most customers are already used to.

“We in the IT business. We’re all guilty. We have sort of created complexity by throwing a lot of solutions at people, a lot of vendors, that really the customer has to be the integrator in a lot of ways,” he said. “We think there’s an easier way. We call it simplified IT. Think about it differently. Just use it. And pay for the use of it. Everyone is used to that in the cloud now.”

The product is aimed at workforces between 10 and 100 workers, so small to mid-sized business. It enables those businesses to add and control all of their IT applications via a touch screen interface.

For Konica Minolta partners, Pegley said the Workplace Hub offers many advantages, whether or not the partner understands IT.

“To them it’s a reseller model. They resell it like they resell the Bizhub multi-function printers. It’s a beautiful thing,” he said. “They sell the hardware, but they keep the recurring software and services. They’re very used to that model on the multifunction printer side. Most of them go through a financing model where they get a customer who pays monthly but they get the money upfront for the hardware and then the ongoing services revenue. It’s a nice monthly recurring revenue model that makes it all work.”

Taking away the IT components, the Workplace Hub is still a multi-function device that can print, copy, scan and fax paper at 28 pages per minute, the company said in its literature. The IT side of the box is powered by HPE servers, with a Sophos XG firewall installed for security. Pegley said additional security is provided by All Covered services which offer their own 24/7 SOC, Konica Minolta’s private cloud storage, backup data and recovery. It also offers public cloud integrations with AWS, Microsoft Azure and Google.

“Really what we’re trying to put together is the next generation of IT for small and medium sized businesses,” Pegley said. “Get away from the headaches. Just get on with running your business. Simplified IT. That’s our goal.”

Pegley conceded that the "local relationship" – which will be provided by All Covered and independent Konica Minolta resellers- is critical to the Workplace Hub experience."The local relationship is critical to us," he said, noting that customers will always meet face to face with someone from Konica Minolta. "We’re always going to hear directly from them. We’re going to come sit in their office. We’re going to interview their people. We’re going to hear the owner’s challenges and the CFO’s concerns and so on. So every deal is customized for the customers’ needs and that intimacy of relationship, is just the beginning of what we hope is a long one. For execution and remote management and all the rest of it, we don’t have to be there all the time.”

At this point, Konica has no plans to enter into alliances with MSPs to either provide services or resell the Workplace Hub.“Right now, we are self-sufficient," said Pegley."We are managing the customer directly… we designed it. We’re the only people who can really manage it. It’s a sophisticated product and its new. And we’re very excited to get it to our customers."

Looking to the future, Pegley said, the Workplace Hub will be remembered as the moment IT changed for SMB customers.

“We really think we’ll look back in a few years, and think ‘Wow, about this time, 2019, 2020, is when at least for small and medium sized businesses, IT really started to change,’ ” he said. “It started to change from somethings that is complicated, that you have a lot of headaches around, that you have a lot of risks and concerns around, to something that you basically use like turning on a light switch, setting your AC to the right temperature, or getting in your car and driving.”

Of course, replacing other MSPs that have well established relationships with customers is not going to be easy. Josh Justice runs Just Tech, a Washington DC area printer-copier reseller, who posted record sales last year, even as nationally printer sales were down. The Xerox Accredited Master Elite MPS Partner also specializes in IT and recently licensed one of his own apps for sale in Germany.

“I am perplexed with Konica Minolta’s strategy,” he told CRN. “Our entire client selling process starts with an assessment and ends with the recommended solution to optimize the client’s print and IT environment. Every client is different and we do have core IT services, but these are customized based on the client. With the print solution, the recommended offering may include a mix of multifunction printers and desktop printers and not solely a 28 page per minute device. We succeed by leading with the assessment, not the solution. Interesting concept but not really applicable with many SMBs.”

A New York City area MSP said the problem with the Workplace Hub model is that it does not take into account how fast the IT market changes. “The issue is a lack of integration into new platforms that aren’t invented yet," he said.