PrintIT Reseller meets Stuart Sykes, Managing Director of Sharp Business Systems UK
Stuart Sykes is in confident mood when PrintIT Reseller catches up with him at Sharp’s offices in Stockley Park near Heathrow. And why wouldn’t he be? A massive injection of cash by new investor Foxconn has enabled him to dustdown initiatives shelved when Sharp was on its uppers and build on what he describes as a ‘great’ six months. There will be a reckoning at some point – Sharp is targeted to double in size over the next fve years – and the road ahead is scattered with more obstacles and hidden dangers than a Super Mario kart track. But right now, the Yorkshireman’s focus is firmly on Sharp’s potential – and that of its resellers.
Since April 2016, when Sykes was appointed Managing Director for the whole of Sharp Business Systems UK – he was previously in charge of the company’s direct business – he has been at great pains to reassure dealers that they have nothing to fear from his appointment and that the dealer channel is central to Sharp’s growth plans.
In doing so, Sykes makes much of his 20 years at Ricoh dealer Eurocopy, a £20 million business later renamed IoT, which Sharp acquired in 2011.
“I can remember being on the dealer side – I have sat across the table from manufacturers for many years, thinking ‘You don’t get it; you don’t understand what it’s like to run a sales business, buying from manufacturers and having to add value and make a profit’. That’s the feeling that dealers have about manufacturers,” he said.
“One of the positive messages I have been able to put across to dealers as I have met them over the last six months is ‘I understand exactly what you are trying to do; I understand exactly what your pressures are; and I understand that what a manufacturer does can affect you greatly’. So please be assured that I will take the decisions with dealers in mind, because, at the end of the day, we want you to be stronger.”
Sales at Sharp are currently split 50:50 between the direct and indirect sides of the business. If the company is to double in size and maintain this ratio, which is what Sykes wants, both channels will have to grow significantly.
Direct and indirect
In the past, Sharp has used acquisitions to strengthen and extend the reach of its direct business. Its take-over of IoT in 2011 gave Sharp Direct national coverage for the first time and, more recently, its acquisitions of Copyfax and CopyIT have boosted its presence in the North West and East Anglia.
The company’s financial difficulties put this programme on ice, but post-Foxconn, Sykes expects it to be revived. “It’s definitely part of the European strategy, and if we fnd the right prospect in the UK we will look at it. That doesn’t necessarily mean a traditional MFP dealer; it could be a system integrator or IT services company. What we don’t want to do is end up with an imbalance between the direct and dealer sides of our business. We want to grow the dealer side as well,” he said.
Sharp currently has about 120 active dealers across the UK and it is keen to increase that number in the future. In tandem with a dealer recruitment strategy, Sharp has various initiatives to help dealers grow organically.
Sykes says that one of his priorities has been to change the company ethos so that everyone on the direct side of the business is conscious of the bigger picture and understands how the success and prosperity of Sharp and its dealers are intertwined. He points out that with less than 10% market share there’s a lot of business to go after and no need for Sharp Direct to tread on the toes of channel partners.
“As a manufacturer we want our dealers to thrive. If our direct team takes business away from one of them, it’s so easy for them to switch to someone else, because you don’t want to be in competition with your own manufacturer. We have put mechanisms in place and fostered a thought process amongst direct sales people to stop them trampling on a dealer with cheaper pricing. And it’s worked really, really well,” he said.
“When they go after new business, our sales people have a discovery phase when they fnd out who the incumbent is. If it’s a Sharp dealer, with a Sharp product, we don’t want to upset that relationship – it’s already a Sharp sale. But if it’s a Ricoh account, or Samsung or Toshiba, then fine.”
That ethos underpins everything Sharp will do going forward, including a growth strategy consisting of four main strands – service improvements, changing the perception of Sharp, the Foxconn effect and listening to dealers.
In recent years, Sharp has had to cut its coat to suit its cloth – plans have been put on ice, economies made and corners cut – sometimes with unwelcome consequences. In the last year, even before the Foxconn cash injection, Sharp had started to put things right.
“Because of our financial difficulties in the past, we were under-resourced in certain areas, which made it difficult for us to really make an impact in the marketplace,” Sykes explained. “Under the previous regime, for cost-cutting reasons, the whole back office was outsourced. The service customers were getting wasn’t good enough and it started impacting the business. So, when we were able to, we took the decision to terminate the contract and ‘in-source’, to bring the back office in-house. This has been a complete success with our dealers. Everyone is delighted.”
Delegates at Sharp’s bi-annual dealer forum offered other suggestions for where improvements could be made. “One of the areas dealers said they wanted us to improve was technical support. Another was training. So we put our hands in our pockets and put extra resources into those functions. Again, that has worked really well,” said Sykes.
Sharp has strengthened its training team with three full-time appointments; completely overhauled its technical support capability so that the direct sales support team can now take calls from dealers’ engineers; and, perhaps most importantly, doubled the size of the product planning and marketing department. This is enabling Sharp to implement a long-term growth strategy, rather than simply fire-fight, whilst also making sure that dealers have all the co-branded marketing assets they need to win business.
2 Changing perceptions
About 90% of Sharp’s turnover still comes purely from MFP sales, despite the long-standing availability of printer solutions and, more recently, related technologies like large format displays, videoconferencing and collaboration solutions and cloud services.
This indicates that dealers and customers have been slow to embrace the possibilities for integrated, connected technologies encapsulated in the ’Inspiring ideas from Technology’ tagline launched last year. On a more positive note, it also reveals the great scope that exists for Sharp and its dealers to increase sales of these products.
The challenges facing Sykes are, first, how to change the way Sharp is perceived so that customers see it (and its dealers) as technology partners rather than simply MFP providers; and, secondly, how to package solutions so that they are easier for the channel to market and implement.
“Manufacturers are famous for saying ‘here’s a new product, now go and sell it’. But today, it’s very difficult to give someone a new piece of technology and a price list and say ‘go sell it’ because there is a lot of work that needs doing in the background. The template we have followed with our visual solutions, which we are going to replicate with IT Services, is to launch to the direct team first, take it to the marketplace, find the sweet spot, identify difficulties, learn from our mistakes and find partners who can help us with supplementary or complementary products and services that help us add value to the customer,” explained Sykes.
“After nine months of selling visual solutions through the direct business, we were in a position to go to our dealers and not just hand them a screen that hangs on the wall but give them an ‘oven-ready’ package and show how we have done it, where we sold the solutions, what partners we have found to help us and also the things we have done wrong. And we can involve people from our direct side to talk to dealers about what they did. That relationship and collaboration is quite unique.”
Backing up this approach is Sharp’s new Integrated Technology Partner Programme (ITTP), introduced in April to identify dealers that are ready to go beyond MFPs and print solutions and embrace Sharp’s expanding range of visual, collaboration and cloud solutions. From an initial cohort of six, the number of ITTP dealers has now expanded to 18. Sharp is now taking its services capability to the next level with the roll-out of IT services that enable SMEs to outsource essential functions, such as help desk, backup, disaster recovery and hardware break-fx. These services are currently being fine-tuned and proved by the Sharp direct sales arm before being packaged up and offered to the channel.
Much of these developments are made possible by the financial shot in the arm Foxconn delivered in the summer. Sykes describes Foxconn as ‘the biggest business you’ve never heard of’, pointing out that it is the third largest IT company by revenue (according to Forbes) and that in some way it touches 40% of all consumer products worldwide. This, he says, gives Sharp real strength in depth.
It is easy to see why Sharp might be excited about the relationship. But what is the attraction for Foxconn? When the manufacturing giant announced its investment in Sharp, there was some speculation about the future of the company’s Document Solutions business. At a time of consolidation in the printer industry, notably the acquisitions of Lexmark by Apex Technology and Samsung’s printer business by HP, some have wondered whether Sharp’s printer business will be next?
Sykes is quick to allay such concerns, explaining that Sharp gives Foxconn a new and important route to market.
“Sharp gives Foxconn added market potential. With Foxconn’s support, we want Document Solutions to sell more; both companies share the same ambitions for Sharp to grow aggressively in the next three to five years. That’s very exciting,” he said.
“One of the concepts we can now look at is ‘the smart office’, what we call ‘connected technologies’. We want to be the one-stop customers go to when they want to kit out an offce or school. Sharp could do the network cabling and infrastructure; the IT equipment – servers and laptops; the MFPs and displays; the furniture of the future, which will have technology built in; and even the telephony. Because Foxconn is helping us put that wider portfolio in place, all the pieces will integrate and talk to each other. That idea of the smart office is something we want to pursue.”
Sykes adds that, short-term, Sharp is already benefiting from the relationship. “Foxconn has invested a lot of money in some new A4 products, which has always been one of the weaker parts of Sharp’s offering. That’s underway now and we will see new products coming to us within the next 12 months. We also have a new Visual Solutions range that we will be launching at ISE next February. This will broaden our reach with different functionalities, different price points and some products that are slightly different to anything else on the market. That’s a real benefit – being able to fll the gaps in our offering.”
4 Listening to our dealers
The final strand in Sharp’s growth strategy is to listen closely to dealers to see what Sharp can do to help them prosper, exploit emerging opportunities and find new annuity streams.
To this end, Sharp is setting up half a dozen steering groups addressing specific technologies and market areas, including SMEs, enterprise, visual solutions, EPOS, IT services and education.
“Steering groups will be made up of key stakeholders from all areas of our business – direct teams, indirect teams, product marketing teams etc.. We are saying ‘come and join us – let’s look at all this potential, at the marketplace and you tell us how we can help you’. We want dealers to be involved in these steering teams, so we can decide what’s most important and how we can get there in two, three or five years,” Sykes explained.
One of the main tasks of the steering groups will be to establish how integrated Sharp solutions can be packaged and delivered to channel partners in a way that makes it easy for sales people to sell and implement them within Sharp’s broader connected technologies concept.
In the meantime, Sharp, like all manufacturers, must deal with the day-to-day challenges presented by an increasingly uncertain economic and political outlook. In negotiating difficulties like Brexit and the weak pound, Sykes says he aims always to put the interests of dealers first.
“The pound was in a really good position 18 months ago. Since then,there has been a drop of about 15- 18%. Because we buy everything from Europe, our costs have gone up by 15-18%. That can obviously do nothing but hurt. We have talked to our dealers and on November 1 put through price increases of about 5%. We take the long-term view that we don’t want to damage our dealers who might fnd it hard to pass price increases on to the market. The idea is that when the pound eventually improves we still have a strong channel and dealers who remain in a good position. We don’t want to make knee-jerk decisions that damage our dealers,” he said.
And, of course, where there is disruption, there is also opportunity. By strengthening its channel engagement, Sharp is likely to be an increasingly attractive option for dealers affected by market consolidation.
“Some major dealers in the UK dual source HP and Samsung. They do this for lots of reasons, but mainly to have a stronger product line and to play manufacturers off against each other. The fact that those two product lines have come together as one business could make dealers look for another supplier so that they are not beholden to one manufacturer and have more options and choices. We think this is an opportunity for us to talk to dealers and get them to consider Sharp,” explained Sykes.
Even in Sharp’s darkest hours, Sharp’s global Document Solutions Business was one of the company’s bright spots. Now, with the backing of Foxconn and freed from the financial constraints of recent years, it has the opportunity to live up to its potential.