Success of dealer channel key aspect of Konica Minolta growth

Konica Minolta recently gave an update on the progress of the business in North America, including the role that the dealer channel will play in the strategy.

Sam Errigo, President and CEO of Konica Business Solutions U.S.A

Konica Business Solutions U.S.A. recently held a media and analyst day where they gave an update on the progress of the business, where the company is heading in terms of its roadmap, and the role that the dealer channel will play in the strategy.

Sam Errigo, who took over as President and CEO of Konica Business Solutions U.S.A. almost a year ago, began the call by providing a business update.

“I thought I would lay out the strategic priorities which we are putting in place, starting with our first one, which is our growth strategy,” he said. “It is a dual transformation strategy to do two things. One is to grow our core business. In parallel we also have to continue to transform, moving quicker into the managed IT sector of the business. Our document management area and software solutions and video services make up some of these new areas for growth and long-term profitability.”

Driving innovation is critical, and involves capturing IoT data for new products and services discovery.

“It means using data in a much more intelligent fashion both overall and through our dealer channel,” Errigo said. “Better use of data and technologies will help them manage costs.”

Konica Minolta’s strategy for increasing shareholder value emphasizes how they enter and order through cash management.

“Over the coming years, we need to convert 15% of our staff to robotics for mundane processes, so that we can use the people to create much higher value roles,” Errigo noted.

“We are also changing our corporate culture as an organization, going outside the guidelines of who we would have hired traditionally,” he added.

eCommerce is a key aspect of improving customer experience going forward.

“Some people are skeptical about what we are doing in our eCommerce platform, but I’m most excited about this.” Errigo said. “This is an area we are investing in for the benefit of both our direct channel and our dealer channel.”

Konica Minolta’s financials in North America have greatly improved because of success in dealing with inventory issues.

“In FY 22, Q2, our global revenue was up 31%,” Errigo said. “Freeing up product in Q2 helped us tremendously. We alleviated a lot of back order issues. We are still not out of the woods there yet, but we are moving in the right direction. We had a much better performance than Q1, primarily because of inventory. With Digital Workplace, our order backlog has been reduced, although we are running about 80% of volume level compared to FY 19 because of return to work issues. Many large corporations are not at 100% capacity, and that is likely to be another 1 or 2 years. Still, while Q1 was difficult just based on availability, now production is much more stable and predictable.”

Overall, while market share in Q1 decline dropped based on availability. It went from 13.7% in Q1 to 16.2% in Q3.

“We see opportunities to pick up share in both dealer and direct channels,” Errigo said.

Michael Mathé, Chief Of Operations and Sales Enablement, North America, at Konica Minolta Business Solutions U.S.A., then provided an operations update.

“We looked at our operations to see how we could improve our Go-to-Market strategy, and how we engage with our customers,” Mathé said.  “We started to discuss internally how we could execute a borderless strategy in North America. We looked at IT services, and decided to leave that business borderless with our All Covered and IT Weapons companies. We looked at our direct to see how we could we transform it to serve customers better, and be more attentive to customer buying patterns, keeping the structure consistent with All Covered and the professional services organization.”

Previously Konica Minolta had a four-region structure in the US, which Mathé acknowledged was very segmented.

“We transformed it into a two-region structure which would help us with dedicated sales leadership,” he said. “We put a big focus on internal sales with an emphasis on digital sales and eCommerce, as well as a fully integrated SMB model. Our IT services business was also a bit scattered, which made it hard to give expertise at the right time, so we moved into an operations success model to respond more quickly.”

Dino Pagliarello, Senior Vice President, Product Management and Planning, then gave a product review and update which indicated that major enhancements to the portfolio are on the way.

“We are continuing to invest in our core business in our plan to take share,
he said. “We have significant product coming in April of next year, which affects our entire i-Series product line, both in software and in some hardware changes to the product.” New security functionality includes cloud solution compability with SSO, and setup time and labor costs will both be reduced.

“We think this will be a great midlife kicker for these products,” Pagliarello stressed.

He also drew attention to the importance of an expanded partnership with Google.

“We are creating an analytical dashboard to deeply understand the capabilities of products that are in the field already,” Pagliarello said. “We are excited about the  prospect of working with Google to increase opportunities for our partners.”

Pagliarello said to look for new specialty and wide format products as well. A new AccurioLabel 4000 product, which provides double the productivity of  their current label products, and which has a new fifth colour station to create more appropriate labels, will launch in April. A new wide format business product. The Accurio 250, a 2.5 wide metre hybrid device, addresses what the company sees as another major opportunity. It is also due in April. Further out is a flatbed device. There will also be an update to the monochrome product line in September 2023.

Laura Blackmer, President of Channel Sales, then provided a dealer update.

“Last April, we introduced our new Rev’d Up Dealer program to reward dealers to take the journey with us into new business opportunities, as well as engage in growth,” she said. “So far, it has been a great success. Many dealers moved up, and these did not tend to be our largest. They were ones who moved into things like production, print and digital transformation. We are now getting ready to bolt All Covered programs on top of it.

“Rev’d Up can be done with a self-service delivery model,” Blackmer added. “It is very scalable. We had a version of this before but it is now super-simple for dealers to engage.”

The other new program, the Konica Minolta MSP Partner Program, is aimed at a different audience.

“It is a more integrated program, which is not for the masses but for select dealers building their business around this,” Blackmer said. “We do co-marketing and co-selling to help them build their business, and we want commitment in terms of revenue and resources. This can’t be a side business, unlike the Rev’d Up, which can be.”

About 49% of all Konica Minolta dealers are now engaged in digital transformation work, which is up 16%,” Blackmer indicated. During the first half of the fiscal year (April-September) dealer total revenue was up with digital transformation revenues up 71%, MRR revenue up 25%, and managed IT services up 82%

“UCaaS was also up 28%,” Blackmer said. “This is basically phone systems, but is a  steady business for us that dealers bolt onto their own business model.”