Should HP Purchase IKON's PS Division? - Delicious!!

"At the beginning of the month we sell solutions (Documentum, Captaris, RightFax, Objectif Lune, etc.) by the end of the month, we sell copiers (Ricoh, Canon, K-I-Coe-Sera)" - famous IKON sales-dude.

Recent press:

"...In a conference call, Espe noted that IKON planned to work with vendors, adjust its go-to-market strategy and take steps to improve sales profitability. To that end, IKON is expected to reduce costs and expenses by $25 million in this fiscal year. Espe noted that the company does remain committed to a stock repurchase plan it embarked on in November 2007.

The bright spot in the report was in managed and professional services, which reported revenue growth of seven percent, to $206 million from $192 million in the same period last year.

Within that realm, on-site managed services, which comprises some two-thirds of IKON's managed and professional services revenue, grew 10 percent. The company noted that was largely due to the expansion of existing contracts and new sites. Professional services grew nine percent, owing much of that increase to strong European business. However, off-site managed services decreased three percent..."

The PS Division is doing better at IKON - as equipment sales stall, flatten and degrade.

How many monkeys does it take to...

How many people does it take to process, configure and deliver a copier? Would you believe 20-30, if all is well with the order and nothing is out of the ordinary? Of course these 20 or so people are just involved with the "pushing of paper" - add to this the technicians who stage equipment, the drivers who deliver and the techs and Professional Service Consultants who connect the unit to the clients' network.

Now, to make things really interesting, lets shift some of the higher end tasks like network connectivity, scan connectivity and set up, and user set-up LDAP or Exchange, onto the technicians plate - technicians who are the very best at fixing mechanical breakdowns and failures; twisting wrenches and banging hammers. -- Train Wreck

Honestly, selling the copier is the easiest aspect of sales at IKON.(at first)

I am not making any of this up, this stuff can't be made up, I have seen it with my own eyes.

"OH, how the Mighty have Fallen"

Get this - A year ago IKN's stock was at 14.00 today it is at 7.14! Can you say, "DANKA"?!!

So now IKN is in the middle of a huge stock buyback, "reaching out to vendors" and looking to reduce more costs - while doubling or tripling the layers of management between the "trenches" and the "Towers" - classic!

Core Competencies

When the going gets tough, get back to basics, back to the roots, back to what worked and what got you to over 2 billion in revenues - copiers. Sell Copiers. Period. No EDM, no Documentum, no Captaris, strictly copiers. The Core. Reduce the number of people it takes to process an order and deliver a product. Get comfortable residing in a cell, on CPM's Vendor Analysis Spreadsheet. Get use to disappointment.

And in order to re-focus, get rid of the influences that can take you away from your focus - Professional Services.

What would HP get in the end?

1. A global network of established relationships built around solutions.

2. An instant increase in "brainshare" in the Analysis and application space of Managed Print Services.

3. Payback. See this previous post.

Off the IKON site:

"IKON's Value Proposition

At IKON, partnering with our customers to uncover needs, costs, current processes and future expectations is a critical part of developing a strategy that will be successful for years to come.

What sets IKON apart from the competition is our unique ability to provide the most knowledgeable people and integrate them with innovative technology, document expertise and best practices to create a framework for success. From this base of experience, we deliver a sustainable competitive advantage to your operation by eliminating inefficiencies and improving your administrative and document management processes."

I don't care how low their stock is, the above Value Prop is very impressive - not one mention of copiers, not one. Now, just replace "IKON" with "Hewlett-Packard"(or SIGMAnet - MPS... who?). It works, don't it?

Ok, I have both Hurd and Espe's email; I volunteer to broker the deal. For a small fee.

Introductions might go like this:

"Mark, meet Matt. Matt, this is Mark. Now, we're just three guys talkin here - no worries, ok? Yousse, guys work somin out, bada bing, bada boom - we got a big deal, we toast, we dance, we sing, we all go home happy, capice? Talk amongst yourselves - fogeda bout it.