Following the announcement of Kyocera’s acquisition of Annodata, PrintIT Reseller spoke to Andrew Harman about what the acquisition means for the company he co-founded. For more coverage, including comments from Kyocera, please turn to page 40.
PITR: How did Annodata end up being bought by Kyocera?
Harman: We went out to the market about 12 months ago and at the end of the day we looked at the strategic benefits of being with Kyocera. They were looking at how we had developed and enhanced our proposition with IT services, which is the way the market is going. Cloud hosting, mobile telephony and a wider client offering beyond our traditional MFP/printer proposition have given us us a strategic advantage. Kyocera considered us not only because we are a business they can put into a direct proposition, but also because they can utilise the services we have been selling to our clients over the last two years.
PITR: Are you going to be run completely separately?
Harman: We are going to be independent and we are keeping the name Annodata. The exciting news, which was one of the reasons for doing this deal with Kyocera, is that they want us to keep all our staff. In fact, we are currently in the process of taking on an additional eight people this month (December) and another 10 or 12 next month (January), so there’s quite a big expansion in place.
PITR: What are you taking on the new recruits for?
Harman: One thing is to support the recent Crown Commercial Services framework that Kyocera has won a place on (see page 41) and the framework we are on in conjunction with them (see overleaf). Another is to support some of the resellers in Kyocera’s dealer channel. We will be able to offer additional services to Kyocera dealers that they currently don’t have, like the cloud offering and IP services. Kyocera will be able to offer that out to their clients, along with nationwide service.
PITR: So the idea is for dealers to sell IT services delivered by you?
Harman: Effectively, Kyocera’s strategy is to go to their partner channel and explain how the introduction of Annodata will give them the ability to offer digital services, saying ‘Now you will be able to provide digital services to your clients, which you couldn’t do before’ – the majority of resellers are very localised and don’t have that national service capability. Secondly, it gives Kyocera an easy route to market that they can take to their clients. Rather than investing in infrastructure themselves, dealers can utilise the services that Kyocera have acquired to offer cloud hosting, IT services, mobile print. So it gives Kyocera a proposition that they can promote and offer out to the dealer community. The third point is that Kyocera has been awarded the main Government contract and has an obligation to support that, so we are beefing up our operation to support the potential roll-out of that.
PITR: Kyocera make a big thing about being 100% channel, but clearly lines become blurred when they buy a dealer that continues to operate as an independent organisation. It gets confusing…
Harman: We’ll be putting down some firm ground rules both to help the dealer community support their clients and to protect our clients. We are not going to be going after the dealer principal clients. There’s enough opportunity to target the likes of Xerox – there’s 90% of the market that we can all go after and grab. It’s a great opportunity for all of us.
PITR: At the moment you also sell Canon and Ricoh. Is that mainly on the production side and how will that be affected?
Harman: The Kyocera proposition at the lower level has always been, and will continue to be, a very good ft for the market going forward. The market for production devices is smaller and includes Xerox, Konica Minolta, Ricoh and Canon. We need to make a decision on what is going to be the best ft for us going forward.
PITR: Currently, what is the breakdown of your business between office print and IT services & telecoms?
Harman: IT services and telecoms/mobile, where we partner with HP, Microsoft, O2 and Mitel, plus the hosting services business make up 15-20% of ongoing sales and revenues and this is growing. Five years ago, the list price of a 50 copies per minute machine was a lot higher than it is today and the cost per copy was a lot higher. Annuities and overall revenues are being driven down, so just to stand still you have to sell 30% more today than five years ago. Strategically, we made the decision to look at new annuities and new services because unless you embrace additional services you are going to be left behind. Kyocera have that in their strategy too; they get that.
PITR: The acquisition of Keltec in 2014 gave you expertise in IT services, but a lot of other dealers have been slow to move into that part of the market. Why do you think that is?
Harman: Because it’s not cheap – it’s an expensive investment to go into that market and there isn’t a short-term return. And many dealers want to follow and not lead. Sometimes, they will be guided by certain manufacturers who can’t decide themselves what direction to go in. Then you’ve got the big IT resellers coming into the market, so the whole market is getting consolidated.
I think we will see an acceleration in the next 12 months. We are doing a lot more cloud hosting deals; that’s becoming very common in our proposition to the client. IT directors are looking to work with a partner that can not only support them in the short-term, but help them with their journey going forward and take the pressure off their day to day work.
PITR: Is Kyocera’s own cloud infrastructure, with Telehouse for example, something that you can exploit?
Harman: One of Annodata’s big strengths is our flexibility. We are nimble and we understand the requirements of SME clients. The idea of big data centre, big global accounts works for some clients, but small clients need Annodata because we are a lot more flexible, a lot more agile and the client sweet spot we are selling into absolutely fts the proposition we have been developing for the last two years. Kyocera see it as stage one – let’s really embrace it and roll it out to our customers and our dealer partners in the UK and take it across Europe afterwards.
PITR: Will you be staying with the company for the foreseeable future?
Harman: One of the things that’s important for Kyocera and for me is that the legacy of Annodata doesn’t just continue but moves forward. The management team is staying in place and is quite excited by that. As regards me personally, I am contracted to Kyocera for the foreseeable future to make sure that this works for both parties.
Managed services provider (MSP) Annodata, recently acquired by Kyocera, has achieved a position on the Crescent Purchasing Consortium (CPC) framework for Multifunctional Devices & Associated Print Services
The CPC aims to drive best value purchasing arrangements for the education sector and broader elements of the Public Sector, by providing members with specialist advice on best spending practices and by producing EU-tendered purchasing frameworks covering a wide variety of products and services.
To achieve a place on the CPC framework, suppliers are evaluated on a range of criteria, including their ability to execute, pricing, support services and service portfolio. Annodata was ranked highest of all suppliers on Lot 1 (Multifunctional / Reprographic Devices and Associated Print Services and Supplies) and also secured a position on Lot 3 (Managed Print and Document Services).