Rising print costs - who cares?

Print typically accounts for around 3% of a company's annual revenues. So what? That has been the traditional CIO response to print overheads. Colin Edwards discovers that little is changing despite IT's bigger involvement in managing huge printer fleets.
Rising print costs - who cares?
By Colin Edwards
Tue 31 Oct 2006 12:00 PM

Every day, apparently, a 40- foot container load of paper arrives at the gates of Aramco's supplies depot. It is doubtful whether that daily delivery of a mini forest represents 1% of the Saudi oil giant's revenues over the year, but other Middle East companies can expect to spend around 3% of their annual revenues on print costs.

The question now is who should be controlling such costs: the CIO, or is it best left to a facilities manager or, as it is such a significant corporate spend, the CFO?

According to many printer vendors, the CIO or IT manager is not too interested in getting involved with these revenue-eaters, despite becoming an increasing part of IT activities. “Traditional IT managers don't really get involved in cutting paper usage costs. It is not top of their agenda,” says Duncan Vass, non impact product manager at Tally Genicom. “I have never spoken to one who has been that bothered about paper.”

Paper? Maybe not, but the whole print operation is now very much IT-centric. Most enterprise printer fleets include sophisticated multifunctional devices that sit on the network; their day-to-day support represents one of the biggest drains on help-desk resources; they are starting to play a critical role in document management and content management solutions; they are even forming part of the good governance, security and compliancy picture; and their management represents a significant IT cost.

"If a CIO can re-deploy resources away from things like printer support to more important projects, then it should be important to the CIO," says Mark Ward, pre-sales printer solutions consultant at HP. But if CIOs are aware of print costs, it is in the wider context of company expenses and not specific to IT.

"CIOs probably have cost reports from every part of the domain they control. They probably know the cost per megabyte per user, the email usage, server uptime and downtime figures, but do they know anything about the printers and the costs associated with them?" he asks.

"At first pass if you talk about cost control to the CIO he may not be interested. But he is certainly looking for ways to make his department more efficient - say help desk calls, services and maintenance of the printers. As the conversation opens out they start to see an opportunity to save money and make better use of their budgets and so enable them to look after more strategic projects."

At Lexmark Middle East, François Feuillet, general manager, also doubts if print costs in general feature very high on issues concerning CIOs, but believes they should. He says the company opened its offices in Dubai, Saudi Arabia and Egypt to make sure it gets its improved print cost management message across to the region's CIOs.

"If some CIOs have the expense target under their wings then they would be interested in cutting costs, but this is exceptional. Usually it's the finance director or general services director," he says.

"However, cutting costs without improving efficiency is something a finance director might be happy about but not the CIO.

“On the other hand, being efficient but at a high cost is not going to interest the finance director. So one of the conclusions could be that the CIO should get more involved in that direction."

But overall the consensus is as Ranjit Gurkar, general manager, Brother International, Gulf, says: "On the whole, very few companies in the Middle East are making a genuine effort to cut down paper consumption. However, with increased awareness, this could change in coming years."

It is Gartner that put a print cost figure of between 1% and 3% of annual revenue and concluded that the print function has literally been 'left to its own devices'. As for CIOs disinterest in such costs, research from document services and systems management software provider Macro 4 reveals that ignorance of printing costs is widespread throughout the IT departments whose responsibility it is to manage the networked printing environment, but not, it would appear, total costs.

Oki Middle East general manager, John Ross says that CIOs at most large companies in the region would say they are interested in cutting down paper usage and controlling print costs. "However, it would be interesting to ask them what they are actually doing in practical terms.

“If we take printing costs, this tends to come out of a different budget from that which is used to purchase hardware, which results in it not really being controlled or used effectively," says Ross.

Macro 4's survey indicates that 42% of IT directors do not monitor or manage their organisation's office printing costs. Moreover, only one in four are confident they have print spending under control.

Gurkar concurs. "We are not sure if CIOs on the whole are interested in cutting down paper usage. They need to take reports such as Gartner's more seriously and take the necessary action."

Xerox, on the other hand, says that awareness is growing and most enterprises are acutely aware that there is cost involved in printing and managing related assets. "But there are differing levels of awareness in terms of what people can do to control those costs," says Dan Smith, office business manager for Xerox Middle East.

The printer vendor industry is virtually unanimous in precisely what comprises "necessary action". Essentially, various vendors told ACN, it is all about getting print output under central control and making sure that end users know what they can print, where and how.

In other words deploy management tools and get the necessary policies distributed and understood. All point out that hardware acquisition costs represent just a fraction of the total costs. Lexmark's Feuillet, for example, says that although print costs are high, "remember that in the cost of printing the cost of machine is just 5%. The 95% are supplies, electricity, space, paper, etc."

While vendors generally did not finger toner and inkjet supplies as a significant contributor to costs, Oki's Ross says that Gartner's 3% estimates could well be doubled in the Middle East, as "the penetration of toner based and network connected products in the US and Europe is far higher than here in the Middle East. Therefore the costs of printing will be greater here." He also warns that the cost of inkjet cartridges for a personal inkjet printer outputting a few hundred pages a month could quickly exceed the printer's original purchase price.

"As a bold statement, ban inkjets!" he says.

Genicom also has a solution to ensure low-cost printing: use line printers wherever possible.

"Impact printers still offer the lowest Total Cost of Ownership in terms of consumables and 'life' items,” says Andy Voller at Tally Genicom, which has its line printers deployed at many banks in the UAE, Kuwait and Bahrain. “Page printers are designed for low volume office printing, where 2 cents per page is typical.With impact you only pay for the information which is printed: typically 0.2 cents per page for matrix and 0.05 cents for line. That's savings of 75% and 95% compared to laser,” he says.

Getting printer fleets networked is seen as a key enabler to reducing total print costs. If output devices are put on the network, they become network manageable. "Then you can do interesting things in terms of cost savings such as predictive supply reports. If you know when the toner cartridge is about to run out, this can form the basis of a Just-in-Time supplies ordering system," says HP's Ward. Doing so keeps the user productive, minimises the stock holding supplies and therefore reduces the cost of floor space and asset management. Ross agrees, saying that Oki advocates the use of network printers wherever possible. "We encourage companies both large and small to network their printers and to use the tools we supply to understand usage and put controls into effect."

But it is not just IT departments and management that need to understand printer usage. The end users themselves need to be made more aware of what, where and how they should be using printers. To get into that position companies need to draw up printing policies or at least communicate the proper use of printers to the end user.

"Sometimes you get a situation where the user is doing the wrong thing with the printers," says Ward.

"I ask customers if they have ever published an acceptable usage policy for printers. Have you told them what they can or cannot print, or how you would like them to print?

"It's not always a question of IT strategy or IT deployment and products or technology. It's about people and management of people. That's as important as anything else," he adds.

As a company, HP is seeing more and more organisations begin to realise that controlling print costs is not just a technological issue. It is also about management and policies and perhaps using technology to help enforce those policies.

Xerox is seeing similar trends with regards to the need for print policies in the region. Smith says such policies are becoming critical as printer prices become commoditised and their distribution through the enterprise gets out of control. "It is very sensible to have some sort of policy as the cost of printers has come down to where the capital acquisition almost falls into local budgetary approval," he says.

What are policies to managers, might appear to be policing to end users, which is why companies need to make sure they communicate the need and benefits of policies to end users and also make sure that costcutting policies are not implemented at the expense of productivity.

"Within any change your change agent needs to be driven down from a high level," says Smith. "You should tell people why you are doing it. The resistance will be less. Don't force someone who is currently printing to a device 10 metres away from their desk to now walk up three floors to get their output." So you need to balance productivity with usage.

When it comes to communicating policies, Lexmark has gone to the extent of partnering with Renault, its major account in Europe, to draw up a printing policies handbook. It details how to use printers better to effect cost savings. "It explains these per function, per job, per location - the authorised printing policies, what were the devices, and how to use the devices cost effectively. It went to that extent," says Feuillet. "I think there is a need in the major companies for such an approach."

Kyocera has also been working with the auto industry in helping BMW lower its printing costs by 30% through the adoption of centralised management. As an initial step the car manufacturer ordered uniform multi-functional machines - 1,400 in all - to ensure standardisation throughout the group and simpler management. It used to have 17,000 printers and copiers representing more than 100 different models. Ongoing cost savings across the board are being realised and while purchasing policies have been tightened, it is not at the expense of flexibility.

"Controlling and saving output costs should not sacrifice end-user benefits such as ease-of-use and convenience. They should create a win-win situation," says Magi Nagao, product manager, Kyocera. While acknowledging that decentralised printing delivers some major benefits to the end user in terms of fast and convenient personal output, she says the disadvantages are borne by the whole office.

"Decentralised printing to this extreme means that the office has a huge amount of hardware to not only fit into the office space, but also to manage and administrate. The system invariably means that there are too many assets to be controlled and the printing system is allowing the business's documents management to go unmonitored.

"The solution is for users to be aware of the print costs throughout the department or company; replace the devices being used by lower running-cost printers; and wherever it is viable, use team or workgroup printing - the efficient side of decentralised printing," she says.

But at the end of the day it is the device management tools that come bundled with most network printers that will enable tight control to be kept on total print costs.

HP claims that the use of its different bundled tools at some Middle East customers have helped save between 10 and 40% of total output costs around the printed page. Its tools can enable the administrator, for example, to enforce policies such as user quotas, who can use colour and which applications they can use for colour.

Reports show what policies are working and help drive strategy in the right direction.

"A large number of these solutions come in the box - it's an HP value add. So when we talk about how to set up and manage a print environment within an organisation it's not another sales pitch from us where we're looking for an extra chunk of revenue," says Ward. Such tools include, for example, controlling colour output by application so that document types such as MS Outlook emails might always be printed in monochrome, whereas PowerPoint files are always in colour.

There are also third party solutions such as FollowMe, which Vodafone Egypt deployed to provide higher levels of security to confidential documents while reducing print consumables usage.

The solution is also being used to obviate the risk of documents being sent unknowingly to faulty queues and getting into the hands of the wrong person.

Solutions supplier Ringdale provided Vodafone with 27 FollowMe controllers servicing 1,000 users. FollowMe's secure printing and accounting features brought back data confidentiality and enabled printer roaming capabilities by utilising users' existing door access proximity cards.

Xerox is also engaged with a number of different software partners with solutions as basic as controlling the number of prints for specific users and counting the number of prints per user for charge-back purposes to high level solutions that redirect print at given times of the day to more cost effective devices, and profile the type of printing that people are doing and moving that around the organisation. This can be at the user or document level and really help to control costs.

"The savings are dependent on the business. For example an ad agency would need full colour printing and that would need to be very accurate because that is their business. So the need to control costs is not a major issue there. But in a general enterprise, a simple measure such as mandating duplex printing can automatically reduce paper costs by 50%," says Smith.

Lexmark, like many other major vendors, also offers a programme whereby it helps its customers reduce costs. Despite being in the market to sell printers, its first avenue of attack, says Feuillet is to look at ways of avoiding the printed page. "The non-printed page is the one that costs the least. So we look at how we can help customers manage the document flow."

From such consultative services, it is a short step to offering outsourced print management services buoyed by the argument that if CIOs and CFOs cannot get their act together to tackle print costs effectively, then leave it to someone who can so that they can get on with managing the core business.

Lexmark, now that it has established a direct regional presence, is gearing up to provide such managed services and is prepared to put its money where its mouth is by committing to delivering the cost reductions it projects. It analyses a customer's print environment and comes up with a cost savings figure typically between 10 and 30%.

"We commit on that," says Feuillet. "We go through a phase of analysis, a phase of recommendation and then a phase of cost reduction projections and if that is accepted then we go into a service approach. We take over the printing or management of the printing services at the customer. This can be controlled and audited to ensure we meet the commitment."

And there are certainly cost advantages to be realised as the National Commercial Bank (NCB) of Saudi Arabia has discovered by using Xerox's outsource print services. In a well documented case study the bank has contracted Xerox to take care of its printing and associated maintenance as well as handling all its document management operations.

Hosam Al-Yousof, support services division head, NCB, calculates that the move has resulted in savings of several million riyals in capital expenditure. "We are not in the document business, we are in the finance business.With 10 million riyals I can give a lot of loans to a lot of people to accumulate more money.With 20 million riyals I can immediately open two new branches and add them to my network," he says.

At Oki, Ross adds that while there is room for outsourcing today and in the future, it will probably develop around a different route.

"Outsourcing of print jobs will reduce as organisations understand that they can bring it in house. By using utilities and software, they can do it themselves for a very low cost," he says.

Nagao at Kyocera does not see companies benefiting much from outsourcing. While obviating capital investment, outsourcing is expensive and is also inflexible and unable to accommodate on-demand printing for urgent jobs.

The last word goes to Gurka at Brother: "The reduction of printing costs should be on their (CIOs') Top Ten list of things to do!" he says.

“We take over the printing or management of the printing services at the customer. This can be controlled and audited to ensure we meet the commitment.”
“On the whole, very few companies in the Middle East are making a genuine effort to cut down paper consumption. However, with increased awareness, this could change.”
“CIOs probably know the cost per megabyte per user, email usage, server uptime, but do they know anything about the printers and the costs associated with them?”

“Although print costs are high, remember that in the cost of printing, the cost of machine is just 5%. The 95% are supplies, electricity, space, paper etc.”


Xerox scientists have developed a font so small that you need a magnifying glass to read the words. The new MicroText Specialty Imaging Font, just 1/100th of an inch high, is designed to help make valuable documents with personal information such as birth certificates, personal identification papers, and cheques even harder to forge.


To alleviate the frustration of printing from the Web, Lexmark has developed the Lexmark Web Toolbar to enable printing in 23 different languages including Arabic. The toolbar makes it quick and easy for users to print what they need from the Web with a few simple clicks. The facility, which helps to avoid wasting supplies and time, can be downloaded free of charge from toolbar.lexmark.com.

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