The last two years have underlined the importance of diversification for generating additional revenue and maintaining relevance with customers. Managed print services provider Apogee, which was acquired by HP in 2018, had started down this road before the pandemic struck, and has been accelerating its transition into a managed IT services provider ever since. As CEO Aurelio Maruggi told Technology Reseller, this is not an instant transformation but an ongoing journey, where the biggest challenge is often not identifying new opportunities but reining in the enthusiasm of Apogee’s sales teams and customers. Of course, many IT and telecoms resellers are undergoing a similar transition and adding managed print services to their portfolios. The good news for them is that there is still growth in the print market, if you know where to look.
Technology Reseller (TR): Like many managed print service providers Apogee is evolving into more of a managed IT services provider. When did you start this process and how advanced is it?
Aurelio Maruggi (AM): The very first thing to make clear is that this is a journey, and we embarked on it as a successful provider of managed print services to quite a large client base – we have in excess of 11,000 clients that we have been serving for almost 25 years since the first nucleus of Apogee was founded.
Two years ago, we started an accelerated journey to evolve Apogee from being just a managed print services provider to becoming a services provider with a significantly larger portfolio of services for our client base. This was driven by the realisation that a lot of the capabilities and infrastructure that we have built for managed print services could be used for the delivery of other services, combined with recognition of the major changes that have taken place because of the pandemic.
Someone said that the last two years have been like two dog years in terms of certain trends, such as accelerated digital adoption and digital transformation, accelerated investment in security and, last but not least, managing a workforce that became, for an extended period of time, completely remote and is now hybrid but still way more challenging to engage.
At the onset of the pandemic we realised that work wasn’t going to be the same and that there was an opportunity for us to continue to provide clients with what I like to describe as the single thing that Apogee delivers, peace of mind.
We realised there was an opportunity to provide peace of mind beyond print – to understand the customer’s environment; to understand the journey they are on, be it towards digital transformation or more automation; to provide a range of possible solutions that the client can rely on to drive that digital transformation; and, even more importantly, to support those solutions with hardware or software that we are able to put together, configure, deliver to the client and support throughout its lifecycle.
TR: What are some of the additional services that Apogee is now offering?
AM: We have three categories of service. One is Managed Print Services. The second category is what we call Outsourced Document Services, where we produce medium to high volume print on behalf of customers at our two production centres, one in the City and one close to Manchester, supported by our own delivery services.
In March to May 2020, to meet customer demand, we added scanning services to our Outsourced Document Services, including inbound mail. During the pandemic, a lot of clients redirected their physical mail to our production centres, where we open the envelope, check the contents and scan documents to a cloud-based repository or to an employee for processing.
We also have a hybrid mail service, which was particularly valuable during COVID and still is for hybrid workers. Hybrid mail gives every worker the equivalent of a printer driver on their desktop or laptop that enables them to send a document to one of our production centres for printing, along with the address and type of postage required. There, it is professionally printed, put in an envelope, franked and delivered to the addressee, saving a lot of time and hassle for hybrid workers who no longer have access to a franking machine.
Our document services business has been experiencing double-digit growth and we expect it to continue to grow steadily. A lot of medium to large companies in
our customer base still have internal reprographic centres where they do high volume production printing and more and more of them are keen to outsource that work and redeploy the resources and investment from their reprographic centre to IT or other parts of the organisation.
The third area is what we call Managed IT Services. This covers a very broad spectrum of technologies and services and the approach we are taking is not to boil the ocean all at once but to identify areas of IT that have closer adjacencies to the services that we already provide in managed print.
At the beginning of last year, we started providing device-specific services to our clients. In the case of desktops or laptops for example we would identify the right device for your needs; configure it or image it as it is called in the PC world; deliver it to the right location after the device has been properly tagged; provide remote monitoring and remote support throughout the device’s lifecycle; provide break-fix services if needed; and, last but not least, provide end of life disposal. We include everything from defining the right device to managing its end of life all in a single contract similar to what we do in managed print services.
This is our starting point in managed IT services, but this year and going forward we will be launching additional services in the areas of security, cloud services and eventually networking services.
TR: What are the challenges you face in expanding your IT services offering, and can you do it organically or do you think you will need to make acquisitions?
AM: Up to now we have taken the steps I’ve described organically, but I don’t exclude the possibility that as we grow our managed IT services business and expand our portfolio of services we may look at acquisitions.
Our single biggest challenge so far has been to inject into the organisation a capability that previously did not exist in a well structured and formalised way, and that is the process required to prepare for the launch of a new product or service.
Most managed print service providers have developed their capability organically and fundamentally sell one service, so they haven’t developed much understanding around the changes that need to happen within an organisation before launching a new security service, say, in terms of infrastructure or product management capability.
Two years ago, when we started on this journey, we invested in and created a product management capability, and we are continuing to invest in it because we want to make sure that whenever we launch a new service we are absolutely ready to deliver that service and support that service.
We now have a quite sizeable product management team devoted to identifying new services to launch and doing all the preparation work, identifying what we need to do in service, what we need to do in supply chain, what we need to do in marketing, what we need to do in sales so that the entire organisation is ready to launch that new service.
It is very easy to go on a website and advertise a lot of services. But it is another thing to have an entire organisation that is ready to deliver that service in a consistent, knowledgeable and reliable way.
TR: Is your HP connection helpful in this regard?
AM: Definitely. HP provides a lot of technology and support to a very large number of channel partners, and we are one of those channel partners. Even if we are part of the HP group, we are a channel partner and every channel partner can access the broad portfolio that HP has at its disposal.
Where HP has helped and continues to help Apogee specifically is in providing support for investment. At Apogee we are in the best of both worlds because we continue to operate with the agility and the speed of an independent channel partner and, on the other hand, we have the capability to grow and invest and discuss our requirements with a company that understands technology, that understands the opportunities that exist in the marketplace. Two years ago, when we suggested to the boards that govern Apogee that we invest to enable us to offer managed IT services it was a very quick and easy discussion.
Probably the biggest change that has happened since our acquisition by HP is that we’re not afraid of investing as long as we know that the investment will bring a return. Our timescale has extended significantly versus the timescale that this company was operating to before 2018.
TR: What strengths do you think your background in print, gives you in addressing the IT services market?
AM: First and foremost, our company has only two assets, customers and employees. So the first strength is our client base. We have in excess of 11,000 clients that we serve every single day with managed print. That is the biggest strength we have, the relationships with those clients and the trust we can build in understanding their customer environment, understanding their journey and helping them through their transformation.
The second asset is the people associated with the infrastructure that
we have put in place. Every single day we manage in excess of 150,000 devices distributed across the UK, Ireland and Germany, where we have a small presence, so we have a very well distributed workforce that is able to reach out to any client in a matter of hours. They provide what a client requires, in the past on their printing device and in the future on any IT device. It could be their desktop, their laptop, their conferencing solution, their servers and so on. That is a significant asset.
Our network, backed up by support from our call centre to our distribution centre, which configures and moves literally thousands of products every quarter, means that we are able to deliver a solution to a client, wherever that client is and however many offices they have. And in the hybrid world the number of offices is growing in a more than exponential way because the client can say ‘I want 1,000 PCs and I want 100 delivered to my office and the remaining 900 to be delivered to employees’ home addresses’.
TR: How have the last two years been for your core managed print business?
AM: It has without any doubt been severely affected by everything that is happening in the offices around us. In the darkest days of COVID, overall print volumes of our installed base were 50% to 60% lower than pre-Covid levels. Even now, we are experiencing anywhere between a 25% and 30% reduction in the pre-Covid print volume.
There is still less attendance in offices. On Mondays and Fridays in particular volumes have dropped significantly because with hybrid working more employees are choosing Tuesday,
Wednesday and Thursday as days to spend in the office, with Mondays and Fridays devoted to flexible or remote working. In addition, digital transformation and more automation has transformed certain processes from a reliance on printed paper to become more digital.
Longer term we expect there to be a 15% to 20% reduction on pre-Covid print volumes. That is not a massive reduction, but it is a material reduction.
TR: It is still relatively early days for your IT services businesses to take up some of this slack. How much of your revenue is still generated by print?
AM: North of 90%. Over time we expect managed IT services to represent the primary driver of growth for us, but we are not expecting managed print services to decline, but rather to be flat. There will be some decline in the print volume and the print fleets of existing accounts, but this will be offset by areas of growth for us, primarily in the public sector. Apogee historically has been underrepresented in central and local government but over the last two years we have secured positions on virtually every large public sector framework, giving us an opportunity to grow with public sector entities in a significant way.
And there are still growth opportunities in the enterprise space. In the majority
of these cases, the customer is going to a tender and every time there is a tender process we have an opportunity to present ourselves and to present the new capabilities that we have built within Apogee.
In the SME space, what we call commercial, most growth will come through acquisition. We did an acquisition early last year and we may still look to get a few acquisitions down the road in order to add to our SMB client base. Organic growth is mostly coming from mid-to-large corporations and public sector, where our primary competition is vendor direct not other resellers.
TR: As you have said yourself, Apogee is on a journey. Are your confident of the future and of reaching your destination?
AM: It is a very bad moment for a company when it decides it has reached its destination. I’m a strong believer that you should keep transforming and we are definitely transforming our business. This is going to be a multi-year journey.
As to whether I am positive and confident about the future, absolutely I am. The kind of transformation that we are seeing in workplaces is a great opportunity, almost a once in a lifetime opportunity. Where there is transformation, there are problems and risks and minds that aren’t at peace. We want to be a trusted partner to our clients so that however big or small the problem they face, we understand it, come up with the right solution and then stand behind that solution.
That is our commitment to our clients. Sometimes that means we have to say ‘No, we are not ready for that service’. Those are the hardest moments I have had in the past few months because, of course, clients get excited, our sales team gets excited. They want to have everything now, but we need to be rigorous in the process that we follow because we don’t want to mislead our customers by offering services that we are not ready to deliver.
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