- $40 million push to e-enable printers halted - Sales force reorganization - Serving the printer, while competing for the buyers 9/25/01 (Based on numerous sources, public SEC documents and industry consultants following Ikon.) At the end of May, WhatTheyThink.com reported a serious effort planned by Ikon to take the e-print and publishing industry by storm. Insiders told us they would pour some $40 million this year into marketing and selling their ASP solution called Digital Express. Not only would this solution target buyers and corporate accounts, but Digital Express would help printers get an e-commerce and workflow solution at half the cost of competitive offerings. At the time, the Digital Express platform was to go right up against printCafe, Noosh and others in the e-procurement print segment. Sources within Ikon said they were prepared to “do whatever it takes to win in this space." The product for printers was in beta and included tracking and reporting mechanisms, like shipping verification, proof of delivery and order history. It reduced inventory storage and file management costs by archiving documents and images not in use and converted application files to industry standard PDF or HTML without imposing proprietary formats. This breaking news, on May 29th, came after many had placed Ikon’s Digital Express in the “ceased trading” area with many others. Barbara Pellow, the company’s marketing chief and most vocal advocate of Digital Express, indicated at the OnDemand Show in New York that adoption rates were moving in favor of e-procurement providers. She indicated that Ikon had the solution for buyers - and printers. Digital Express would help printers maintain control of the customer and make the print buyer’s job much easier. On June 12th, WhatTheyThink.com reported that Barbara Pellow would leave Ikon for a well-placed position at RIT. Steven Eck, Ikon’s head of Media Relations said she left on great terms and it was not related to internal issues or strategic differences with management. We learned Ikon was still evaluating adoption rates from printers and print buyers before proceeding with the planned launch. Taking It All In: A Different but Smarter IKON Things have changed. Digital Express is still alive and well, but a new focus will take place. What once appeared to be a definite direction to target printers has shifted. Internal data and consultants hired by Ikon have determined that adoption rates are simply too slow on the print vendor side. The Digital Express sales force has been restructured with no selling to commercial printers, quick printers or creative agencies. The exclusive focus: corporations, on-site facility managements and in-plant print shops. Cary Sherburne, Ikon’s head of marketing explains. “Our focus for Digital Express has shifted more toward the corporate market. We have had tremendous success in that space, and the content owners clearly understand the value of an offering like this. We have had less success in educating print service providers; we feel that market will be slower to adopt this type of solution, particularly in light of last year's near-hysteria, and the subsequent demise of many of the players in the dot com space.” Sources say these decisions were of utmost importance for Ikon, treated with “kids gloves.” Said one source, “Missing out on an e-workflow boom from print vendors is not what Ikon wishes to do. For now, we have a market willing to use Digital Express and our resources will go toward that market.” Sherburne says Ikon will continue to monitor the readiness of the print vendor market segment and make future decisions accordingly. Smart? We could not find a source within Ikon that disagreed with this sudden change. Sources involved in selling Digital Express echoed the same sentiments that selling cycles and implementation have been much better with corporate accounts and inplants. Outsiders who have examined the Digital Express technology say it comprises all the tools to compete with any offering on the market. Case and point: In July, Marriott International’s 2,400 business units signed a five year contract with Ikon utilizing many communication solutions from the company including Digital Express. Through Digital Express, employees worldwide order documents from a customized electronic catalog for printing on demand through IKON's off-site centers. Employees at Marriott’s Washington D.C. headquarters store, manage, revise and collaborate on documents online. Sales Force Shuffle It is unclear how the sales force for Digital Express will be effected in the long term. For now, Digital Express reps have moved into Ikon North America and sell to the markets mentioned above. Rob Onorato is now VP of Sales for Business Document Services and Digital Express. Other personnel moves indicate a quick deployment of the technology into Ikon’s off-site and on-site facilities. Regarding the staff changes, Sherburne would only say that appropriate announcements will come at the end of Ikon’s fiscal year. “Our fiscal year starts in October, and we have refined our sales coverage strategy, as we do going into each fiscal year. Once all of that has been announced, we would be happy to share (that information.)” Serving the printer, competing for the buyers: Several printers speaking to WhatTheyThink.com maintain their paranoia over companies selling to buyers and also selling to print vendors. One printer in Atlanta said he is always skeptical, “When Xerox launched their Docutech, we were forced to consider the technology because it was far superior at the time. It was difficult to watch as they sold more and more Docutechs to our customers and prospects. Looking back, we managed and thrived. It taught us that we have to watch the technology, not the supplier. The technology is predictable, suppliers like Xerox and Ikon are not.” Sources within Ikon say that most of their facilities use local printers to produce offset jobs not suited for their digital equipment. One Ikon account executive said he works hard to earn business from printers. “We are not bound by a certain brand of solution - many printers appreciate that. The trust in any relationship is earned over time and this is the case for printers in my area.” Other Ikon sources said their primary competitors are not printers, but rather companies like Xerox, Danka, Pitney Bowes and similar firms. It is unclear what percentage of Ikon’s revenue is derived from print vendors, but Ikon says the segment is essential to their success. Says Sherburne, “Print service providers are obviously a key target market for Ikon from an equipment sales perspective. We have a multitude of flexible, scalable configurations that allow an ease-of-entry path into the digital print market for print service providers of almost any size, utilizing T/R Systems MicroPress or EFI Velocity Suite as a common print controller for multivendor configurations, including black & white and color.” Observers say Ikon’s strength is “total solution selling” to the non-print vendor market. Indeed, the company has many arrows to fire depending on the customer’s need. According to Ikon’s recent financial - sales of hardware, copiers and low end printers continue to decline as a result of economic conditions and overall pricing pressures from competition. Placing and managing internal print centers for corporations has seen double digit growth. The company says it is moving out of low margin products. Technology solutions like Digital Express will smooth the transition.