Canon Business Services (CBS) is the latest offering from Canon India. With the launch of this new service, Canon’s Office Imaging Solution Division (OIS) expands its offering, becoming a provider of digital document management services and print room services. CBS addresses current needs of India-based organizations by enabling them to outsource information intensive processes, communications and administrative functions. CBS will help companies streamline their printing infrastructure and enhance their processes. In the first year of its operations, Canon Business Services is expected to generate Rs. 10 crore revenue and aims to take this number to Rs. 100 crore in the next five years as it builds a strong ecosystem of delivery as well as partners.
Dr. Alok Bharadwaj, Executive Vice President, Canon India, spoke to Tuhina Anand of Paul Writer on CBS and plans ahead.
Can you elaborate on Cannon’s CBS launch?
Cannon’s B2B business called the Office Imaging Solutions division has traditionally been in the business of hardware. In the last 15 years, since we are in India, this business began to grow on services as the bigger growth engine than just a hardware. It’s reached a level where almost 30 % of our revenue was coming from the services that are offered on the hardware which are sold in the office. Because of the high component of service cultivation, we began to look at newer areas of growth opportunity and as our positioning in the offices has been document management, we began to notice that there are many other areas of printing happening in larger enterprises which are not being captured. These expenses majorly fall under marketing. For instance the marketing material, the collaterals and posters printing plus in the admin area there is letterhead and business card printing. There is actually a lot of printing work that happens in all organizations which does not get captured properly. When we analyzed this and discussed with CMO’s, we found that most of their printing work was simply outsourced to printing companies. We then tried to look at advantages such as the cost and flexibility that we could offer.
Most of the printing job is outsourced but marketers can also identify that this process leads to logistics nightmare of storing and transporting the printed materials. We also noticed that security was being compromised as documents are printed by outsiders. Companies don’t realize that it is the simplest and the easiest way for information to leak. We observed how the rest of the world tackled this issue and thus the genesis of our offering Print Room services as part of our outsource services.
Is it a further consolidation or diversification of your offering?
This is the extension of our current hardware business. We’ve gone from providing hardware and hardware services to providing outsourced services and management services. We launched what we called ‘Managed Documentation Services’ about three years ago and now we’ve created Rs 100 crore business in that domain. Canon’s own hardware is being used but the proposition is to manage document services of the clients. ‘Canon Business Services’ is different from ‘Managed Document Services’. I wouldn’t call diversification; it is an extension to the services that we have traditionally never offered in India. One of the new domains of “ Canon Business Services’ (CBS) is digitization services, where we propose to large enterprises that their hard copy documents can be digitized and Canon offers this service onsite and offsite. We’ve already got business prospects on this service and now, after three months of this operation we decided that as a part of CBS, we would launch what is called “Print Room Services”. Essentially, this means that we will consolidate all the printing requirements through this offering and later on we will take on to manage their supplies. If they have printers and offset printers, we will manage that too. Some of the printing will happen on Canon machine in circumstances where clients will save more money whereas some of the printing which are expensive on Canon machines will be printed by outsourcing to offset printers. Pain points including what to print, where and how much and all other such issues will be taken by us.
How are you going to pitch this idea to the prospective clients?
This is essentially being pitched to CMOs. Canon is also one of the consumer marketing companies and every year I compare how and what we are spending and I noticed that close to 3% of our total spends in marketing is basically spent on simple printing and another 3 % goes into outdoor printing, event printing or the exhibition printing.
Print Room service addresses the flexibility issue as depending on the sales, season and other factors one can customize the marketing collaterals. Also, the need for bulk printing can be avoided because as and when the company requirement arises, we can print and ship given 24 hour’s notice. With this proposition, we would begin to talk to CMOs.
Typically for bigger organizations, they would be routing these through an agency and the agency would probably have their own partners for their printing requirements, how big a challenge is it for you to tackle the agencies?
Essentially the advantages of our service need to be communicated. If larger marketing companies outsource all their marketing expenses to an agency (remember that different kind of CMOs exist in India, CMOs who are big negotiators who split their marketing spends into marketing components and cut through the layer and negotiate the best deal), so for buying media, they may not go through a main line agency but may go through a media agency. Similarly, for their printing requirement, they may not go through a mainline agency, it may outsource it to large printing company. To this CMO, this proposition will appeal the most. To CMOs who consolidate all their requirements and outsource their marketing spends to mainline agencies, we will have to give this proposition to mainline agencies.
This is one of our priorities among the initial focus points. We will focus on MNCs where this practice can be aligned as per their global practice where they already use such services. Another priority would be to look at those CMOs and companies to come to us where all the spends are being routed through one agency. In this whole process we will initially focus on engagement with CMOs followed by the engagement with the agency.
How are you addressing the location issue? Do you work through partners or how does it work?
Our eco-system will comprise creating central print room which will have digital printing either located in the company’s office or offsite. Some of the large companies are actually offering space to us and asking us- “Can you bring your machines into our office and just do it here?”
Can you elaborate on the process of setting up a Print Room?
The entire proposition is such that the work will be outsourced to Canon. Only the space is theirs, Canon will bring their own machine, set up and run the operations. This proposition is valid to companies that are spending more than Rs 10 crore plus for their printing. Canon would then set up a room and would propose to take care of all their printing requirements.
The other option that we operate is to not create a print room in the client’s office but to take the print room offsite . We have our own space and our own partners who will help set up a print offsite. Some companies are willing to do that because they don’t have any security issues.
An important part of our ecosystem include the partners who are in the business of different kinds of printing like free printing, offset printing, vinyl printing and these are partners who will be doing that segment of work that we cannot do in our own central print room because of our own knowledge and understanding of this business. We are expected to get a better-cost advantage for our CMOs because it is not their core competency to understand the right rate or the right quality, so this is the second part of the ecosystem.
Plus, all companies in India and around the world are so structured that every CXO has their individual approaches. There is so much work that the HR is involved in, which is not connected to what the CMO is doing. Similarly, there is so much of work that the CFO is involved in, which is also not connected to what the CMO is doing in terms of their supplier and vendors etc. So the last part of the ecosystem is essentially for the organization. For instance, business card printing is done by the admin department, they may not realize but may be paying double the amount than it would actually cost them if it was routed through a central print room.We are looking at initially focusing in the top four cities in India. We have the ability to extend it to 10 cities and even to next 30 cities.
So is there any thing in it for SMEs?
For this SMEs, this advantage will begin to look greater when the spends actually touch three crore and above. However, for them, the proposition of providing digital printing through our partners is a more suitable, cost effective deal.
Please elaborate on your marketing plans that you have for the Print Room?
This is a new service that is being launched. We are planning to do our first proof of concept with one large bank based in Mumbai. We are going to establish the ‘Central Print Room” in their premise. This will be the proof of concept. Initially we will have a one-on-one approach and meet CMOs. Only in the year 2015, we will scale up as part of our plan and begin to spend money on marketing communication of this concept.
What do you think are the challenges that marketers are facing today?
Challenges that all marketers are facing today is of rapidly shifting consumer behavior and how would a marketer be ahead of the curve or at least in sync with consumers’ thinking and behavior. Today, we deal with a very different consumer than what they were even two years ago. Falling demographic or falling age of our customers is creating an even bigger challenge therefore marketers will have to be agile, continue to be very close to consumer insights so that their manner of marketing communication is efficient and continuously kept active.
The second big challenge that marketers are facing is high degree of heterogeneity in consumer segment. As marketers, we learnt the art of segmentation and broadly we categorize customers as stereotypes. Therefore, we accordingly plan our marketing spends, marketing communication, creatives and our consumer engagement program based on those categories. Although things have changed and consumers are becoming very individual, therefore one on one marketing or customized marketing is becoming a challenge.
The third challenge is the area of “Delightful Customer Engagement Program”. What buttons do CMOs put their finger on for customer engagement to be the most desirable, differentiated and delightful. Customer engagement that we have seen in the last decade are all meaningless now. People are talking about digital , Facebook or their own portals etc, that’s all changing. There are newer ways and we have to discover even more interesting ways of customer engagement to make our brands more desirable, differentiated and experience being lot more delightful. Only then can we have competitive advantage.
