Ricoh Canada buys western Canadian VAR Graycon to accelerate managed IT services business

Ricoh, which is building up its services business to offset a decline in print volumes, sees Graycon as providing new capabilities for them in the west. The company also suggested they would be interested in a similar acquisition in the east.

Eric Fletcher Ricoh 300

Eric Fletcher, Ricoh Canada’s vice president of marketing

Ricoh Canada has acquired one of their VARs, Graycon Group, a Calgary-based solution provider with additional offices in Edmonton, Red Deer, Saskatoon, Kamloops, Kelowna, and Vancouver. Graycon will continue to operate under its present name, and be run by its existing management team. The deal is expected to close in the next 30 days. Terms were not disclosed.

So why is a document management company acquiring a consulting firm specializing in IT infrastructure, cloud and networking systems?

“As print volumes decline, Ricoh has been transforming the business aggressively over the last three years,” said Eric Fletcher, Ricoh Canada’s vice president of marketing. That has involved building up its services business, which has three main components.

“The first arm is managed document services, including both hardware and software,” Fletcher said. “We are a systems integrator for Laserfiche. Managed document service is a growing part of our business, and has about 500 customers today.” The second arm is based around outsourcing of some of those workflows, and includes things like outsourcing mailrooms, and check processing.

The third element, and the one relevant to the Graycon transaction, is managed IT services.

“We have been in this area for about a year and a half, and it includes building some cloud backup and recovery services, and providing eDiscovery services in the legal vertical,” Fletcher said. “This business has been built up internally across North America, and with the Graycon acquisition, we have significantly accelerated it.”

Graycon brings both a strong presence in the west and a focused expertise.

“They are a good fit for the size of customer we want to go after, which is SMB,” Fletcher indicated. “They manage IT infrastructure on behalf of their clients. We sell a lot of software packages, and are a systems integrator, so this gives us an ability to manage that down to the software stack. We can sell software as a service on top of that. They bring a lot of new capabilities for our customers.”

Fletcher also stressed that Graycon is a strong, well-known brand in western Canada, a brand that Ricoh will keep in the marketplace.

“They have a strong management team, have been in the industry for 26 years, and have a good platform and processes to continue to grow that business,” he said. “It’s also a good culture fit. They have a strong focus on customer experience. So do we. Our Net Promoter score is 64, which is approaching world class. Our customers get a great experience, and we are looking to build on that with Graycon.”

Graycon has no presence east of Saskatoon, which begs the question whether Ricoh is looking to acquire a similar type of solution provider in the east who would fill the same role.

“If we found an organization in the right market that would accelerate our business plan we would be open to those discussions,” Fletcher said. “We believe this will be a big part of the market for us going forward. Conversations to accelerate our business plan would definitely be entertained.”

The VAR channel is a relatively new, but growing, part of Ricoh’s business in Canada.

“We have three channels today,” Fletcher said. “We sell direct, and we sell through a traditional dealer channel. We have been building our VAR channel for the last couple years. They sell in conjunction with our direct force, but services would be done by Ricoh.”

Ricoh currently has “north of 10” VAR partners in Canada.

“We have one fewer now, since Graycon was one of our VARs,” Fletcher quipped. “However, as we expand our portfolio, we continue to look at the right channels to market, and are expanding our distribution capability.” They are currently using Tech Data, and Fletcher indicated they are in discussions with others.

“We will be bringing out more things that our VAR channel can sell, including projectors with collaboration software, interactive whiteboards, conferencing solutions and backup and recovery solutions,” Fletcher noted.

As to whether any of Graycon’s capabilities are something that will eventually be able to be monetized by Ricoh’s other VAR partners, Fletcher was cryptic.

“That would be a work under progress,” he said.