Managed Print Program Launch:

Reducing Costs and Enhancing Penn’s Sustainability Posture

Managed Print Program Launch:

Reducing Costs and Enhancing Penn’s Sustainability Posture

Data Sources: BEN Financials; IDC; Gartner; Papercalculator.org; Purchase and usage reports from respectively named suppliers. Data cross-validated, where applicable.

Data Sources: BEN Financials; IDC; Gartner; Papercalculator.org; Purchase and usage reports from respectively named suppliers. Data cross-validated, where applicable.

- Printing at Penn: Current State

- Managed Print Services (MPS), defined

- Fleet Dashboard Tool & MPS Portal

- Strategy Summary

- Evaluation Process

- MPS Business Case:- School of Veterinary Medicine

- School of Dental Medicine

Brent FriedmanSourcing ManagerPurchasing Services | Business Services Divisionwww.purchasing.upenn.edu July, 2013

http://www.purchasing.upenn.edu/MPS/

What do you know that you know?

FACT: In most establishments, the true cost of office printing is unknown.

Printing at Penn: Current State

Known Annual Cash Outlays for Print Support

$7,200,000

The True Costs?

FACT: In an unmanaged print environment, the true costs of office printing are typically 2-3X the known costs.

FACT: In an unmanaged print environment, the true costs of office printing are typically 2-3X the known costs.

What do you know about printing costs?

Cost Component, Typical Employee Month Year

Printer ($250, basic B&W laser) $5 $60Paper ($4/ream) $4 $48

Toner ($110) $13 $156Energy ($3) $3 $36

$25 $300

Known costs, new printer with a 4-year

lifespan Cost Component Month Year

Printer ($250, basic B&W laser) $5 $60

Paper ($4/ream) $4 $48

Toner ($110) $13 $156

Energy ($3) $3 $36

Break/fix service, parts & maintenance $10 $120

IT Support $10 $120

Incorrect, unused, or abandoned print jobs $8 $96

Toner held in inventory $2 $24

Real estate costs $2 $24

Staff time, ordering & maintaining supplies $5 $60

Disposal costs $1 $12

$68 $816

Real costs, new printer with a 4-year lifespan

We know this example cost model to be directionally true, based on 20+ years of Managed Print Services industry benchmarks.

We know this example cost model to be directionally true, based on 20+ years of Managed Print Services industry benchmarks.

4 Year Total Cost of Ownership: $1,200

4 Year Total Cost of Ownership: $3,204

Unknown Annual Costs

• Carried ink and toner inventory; waste, end-of-life, Ben’s Attic

• Staff time spent ordering and managing supplies

• Internal time and cost for LSP support

• E-waste disposal

• Waste due to incorrect and abandoned print jobs

• Over-specified print devices

• No standardization of print fleet

• Environmental

974’

Penn’s Annual Paper Consumption

Penn consumes a stack of paper equal to……?

Annual Office Paper Consumption

3.53.5MilesMiles

60,000,000 sheets

12,000 cases

285 tons

Less than half is recycled-sheet

Penn consumes enough paper to displace 25% of Central Park….

Central Park, New York City

A Managed Print solution drives sustainable printing behaviors that reduce paper consumption.

6,500 trees

6,000,000gallons of water in

manufacturing

148 cars’ worth of annual CO2 production

Environmental Impact of Penn’s Paper Consumption

>25,000 cartridges

#1 category of spend with Office Depot (>$1.4M)

266 cartridge types

Less than half are recycled/compatible brand

>5 tons of e-waste

Annual Printer Purchases & Ink/Toner Consumption

>1,000 new devices

#1 category of non-computer hardware spend (>$350K)

8 OEM brands, 144 models

No device standardization

No significant rationalization efforts

>10 tons of electronics

Net add, several hundred printers per year

Additional Data Points

• 90+ instances of MPS on campus; wildly variable rate structures• B&W: $0.004 - $0.25• COLOR: $0.04 - $0.14

• Ratio of ~1.25-1.75 local printers for every networked print device• Ratio of ~1.50 print devices per employee

• 2,000+ staff hours to manage supplier contracts and order/maintain consumables

• $1,400,000+ spent annually on ink & toner• $400,000 savings if Penn used compatible and remanufactured toner cartridges

• $2,000,000+ in carried ink & toner inventory on campus• Costs $ thousands per year in lost opportunity costs and cash flow restrictions

• Average institutional cost per page: $0.15 - $0.25 (conservative)

Managed Print Services (MPS)

What is Managed Print Services?

MPS typically includes:• multi-function printers (MFP’s), copiers, scanners and fax machines• ink/toner supplies• preventive maintenance• parts and break/fix service• equipment up-scaling and down-scaling flexibility• guaranteed service level response times• single contract for increased buying process efficiency and buying power• usage reporting and analytics

Managed Print Services (MPS) is a service that analyzes and manages document input/output devices to:•improve efficiency and productivity•reduce electronic, paper, and plastic (ink/toner) waste•reduce the total cost of office printing•reduce support burden to IT staff•manage the printer fleet with greater visibility and control

Managed print ≠ networked printers.

MPS: How does it work?Print Assessment Optimized Print Environment

A print assessment process typically includes:

1.Physical walk-through of print environment; floor plan mapping of devices

2.Data Collection via software tools (“DCA” – Data Collection Agent)

3.Business process evaluation and key end-user interviews

4.Optimization recommendation to client, tailored to precise client requirements

Unmanaged Print Environment

Networked Print Environment

RIGHT-SIZEDBEST PRACTICE

FINANCIALLY SMARTERSUSTAINABILITY-FOCUSED

Optimized Managed Print Environment

Large Workgroup Printer

Local Standalone Printer

MPS Program Benefits

Waste reduced

Increased service levels

Better sustainability posture

Free-up staff time

Reduce costs

High toner usage on documents can be costly, especially color

(or same-day, if required)

Costs unaffected by high toner usage

12 Ways Managed Print Services Can Reduce Costs

Implementation of a robust MPS environment typically reduces print costs by 25-40%.

1. Optimization of the print fleet: right size & location for the volumes

generated

2. Implementation of duplex printing

3. Reduction of printed pages

4. Optimization consumables/toner usage

5. On-demand consumables supplies – no need to keep inventory

6. Proactive support and maintenance

7. Consolidation of parts and service expertise requirements

8. Fewer devices, fewer device types

9. Increased product reliability

10.Energy efficient print devices

11.Consolidation of supplier relationships

12.Enhanced leverage through campus-wide print volume

Fleet Dashboard Tool & MPS Portal

Dashboard Main View

Fleet View(Local or Global)

Supply Levels View(Local or Global)

Individual Device View

Service History View(Local or Global)

Penn’s MPS Portal: Single location for all MPS information

http://www.purchasing.upenn.edu/MPS/

Strategy Summary

Strategy Summary & Proposal for Improvement

TARGET:•Develop a highly flexible, scalable managed print framework that can be leveraged by anyone at Penn•Set the standard for office printing across campus.

PROPOSAL:•Constitute a cross-functional core team than can:

• identify school/center/department/building(s) with a desire to implement a Managed Print program• assess the marketplace (including incumbents) for capabilities• execute a formalized RFP, selecting a preferred supplier partner through a weighted scorecard approach• implement, measure improvements, broadly communicate success, and enroll more participants

BENEFIT:•Best pricing/value on campus•Enhance Penn’s campus sustainability posture•Impact local job market & economic inclusion efforts•Implement best-in-class business practices for office printing•Free up staff time currently spent managing/supporting print devices, supplies, and supplier relationships•Reduce cost, on-campus supplies inventory, direct & indirect waste, while improving Penn’s overall cash flow

SITUATION:•>20,000 print devices on campus; net add several hundred year-on-year. •Penn acquiring over 1,000 new print devices per year; net add “hundreds” annually•3 suppliers providing some form of Managed Print Services; inconsistent fees charged•Inconsistent buying practices for supplies; inconsistent pricing schemes among suppliers•Penn pays up to 10x more for office printing than what it could cost•Current practices are financially unsustainable, notwithstanding the environmental impact

>$7.2M(that we know )

The Approach to Building a Strategic MPS Framework

1. Identify business areas seeking an MPS solution; validate interest

2. Inform incumbent suppliers of intent to go to market

3. Gather internal requirements and volumes

4. Draft a formalized Request for Proposal (RFP) Document

5. Finalize internal sponsorship, alignment, and requirements

6. Send RFP to market (proposals received October 12)

7. Evaluate proposals, short-list suppliers

8. Conduct parallel, competitive print environment assessments with short-list

9. Evaluate finalists’ print optimization recommendations

10. Award contract; define the overall MPS framework

11. MPS Program Launch

12. Continuous Improvement, Ongoing Evaluation

Month MilestoneJanuary, 2012 ObservationsFebruary, 2012 Opportunity Confirmed; Internal business areas identified for projectMarch, 2012 Suppliers Informed of IntentApril, 2012

Fact finding, data gathering, marketplace conditioningMay, 2012June, 2012 SDM Confirmed - ~250 printersJuly, 2012 SVM Confirmed - ~330 printersAugust, 2012 ASC + 3 standalone Departments Confirmed - ~400 printersSeptember, 2012 RFP Sent to Market; Project Status to IT RoundtableOctober, 2012 RFP Due, preliminary evaluationNovember, 2012 RFP evaluation, continuedDecember, 2012 RFP evaluation complete; short-list discussionJanuary, 2013 Short-List PresentationsFebruary, 2013 Pilot Assessment KickoffMarch, 2013 Pilot Assessment PeriodApril, 2013 Pilot Assessment PeriodMay, 2013 Pilot Assessment Complete by May 31. June, 2013 Final Evaluation Team meeting. Award Decision, strategic MPS preferred supplier announcedJuly, 2013 Implementation, Initial Savings/Benefit ForecastAugust, 2013 ImplementationSeptember, 2013 ImplementationOctober, 2013 Major Project Update; Achievements Reviewed, Savings/Benefit Re-forecast

Overall Project Timeline

• Volume leverage: Best-in-class service levels and overall value for business areas that opt-in

• Unified reporting of print data against established measures

• Access to printing subject matter expertise and superior print technologies

• Highly attractive MPS account in a very competitive market

• Minimally effective implementation provides significant and irrefutable cost savings and environmental benefits

SUMMARY: Why do this, and why now?

• A robust, flexible MPS strategy:– complements Penn’s Climate Action Plan– further supports the American College and University Presidents’ Climate Commitment – saves money, drives sustainable behaviors, and is a best-practice – is increasingly in demand across Penn’s campus

• It is the right thing to do.

Evaluation Process

Scoring Methodology for RFP Responses

Method Employed:Since all suppliers fundamentally meet the basic requirements for MPS, we will score each RFP question response relative to the competition. RFP sections will be prioritized and weighted.Scoring Key:

5 – “Best answer, most desired response”4 – “fourth best”3 – “third best”2 – “second best”1 – “Least desired response”

0 – Unable to Score; Not Applicable; Completely Fails Penn Requirement

Evaluator Comments:All evaluators are encouraged to use the ‘Comments’ section with each RFP question to help support future evaluation team discussions.

Special Circumstances:If you do not possess adequate expertise or information to make an informed ranking on a particular RFP question, input “0” for all responses on that question.

This will force a “wash” on that question and not affect the overall ranking in your individual scorecard. Purchasing will account for this in the overall tabulations.

Commercial & Financial Risk Evaluation

• Commercial analysis focuses on:– ability to meet Penn’s diverse customer and delivery requirements– collection of incumbent supplier performance feedback– financial solvency to continuously grow the company and adequately fund operations– known and potential litigation risks– ability of Penn to influence the product offering and marketplace– (typically) understanding Penn’s negotiation position; ability to achieve a high value cost

structure– (typically) contract legal terms and conditions

• When reviewing a company’s financials, we analyze:– overall financial solvency of the firm– ability to support continued operations for anticipated contract term– ability to support current indebtedness and simultaneously continue internal investment

for growth– financial assets to support upswing/downswing in business during term

Other Considerations

• Scalability

• OEM agnosticism

• Holistic document management capabilities

• Ability to maintain leading edge on industry trends,

technology• Ability to implement a unified program across a single

campus with highly diverse customers

• Local economic inclusion

• Ability to benefit the most people at Penn

• Ongoing process improvement and continuous cost savings

Team Evaluation Process

Written RFP Responses

(5)

Written RFP Responses

(5)

Pilot Print Assessments

(2)

Pilot Print Assessments

(2)

On-Campus Presentations

(2-3)

On-Campus Presentations

(2-3)• Approach: Relative ranking

by weighted scorecard

• Goal: Scoring results used to short-list

Award(1)

Award(1)

• Approach: Short scorecard used by evaluation team

• Goal: Validate written RFP response content

• Goal: Validate short-list by written RFP scoring

• Approach: Identify business areas for parallel assessments

• Goal: Determine which supplier best “fits” in Penn environment

• Goal: Gain comfort with level of expertise

• Goal: Determine if MPS recommendations fit typical Penn requirements.

• Approach: Reconvene evaluation & extended team

• Review findings, assessment experiences, and review supplier recommendations

• Goal: Determine if enough data and pilot experience exists to make an informed, data-driven, defensible award decision.

Major activities for RFP evaluation:

1.Written RFP responses 2.Supplier presentations 3.Pilot assessment evaluation

Award Decision

Ended May 31

June 17, 2013

MPS Rationale

School of Dental MedicineMaria Mejia, IT Director

School of Veterinary MedicineSmith Ragsdale, IT Director

Business Case for MPS:

TOP FIVE REASONS FOR MPS:1. We have no idea how many printers the school uses and how much it costs us

2. Save money, especially following print assessment and right-sizing activities

3. Make better use of existing assets

4. Increase customer service levels for all printer-related issues

5. Allows Dental IT to “get out of the printer business”

BONUS: Practice what we preach – we are an electronic practice!

Client Profile:•632 Students & Residents/Post-Docs, 285 Faculty (including full-time and adjunct), 283 Staff

•213 print output devices

•Complexities:• Remote faculty practice locations: On-campus, Bryn Mawr, 34th & Market Street (University

City)• Patient confidentiality concerns; HIPAA• Student privacy; FERPA

2nd Floor SchattnerMost Severe Case: A Printer Per PersonUnmanaged

environment

Nearly a Printer Per Room: 4th Floor Levy

Unmanaged environmen

t

Success in Similar Environment: 5th Floor Levy

Fully managed environment

Side by Side: 3rd Floor Evans

Fully managed environment

Unmanaged environmen

t

TOP FIVE REASONS FOR MPS:1.We have no idea how many printers the school uses and how much it costs us.

2.Allows Vet IT to “get out of the printer business”

3.Save money, especially following print assessment and right-sizing activities

4.Increase customer service levels for all printer-related issues

5.Seems like a really good idea

Client Profile:•425 Students, 235 Faculty, 600 Staff

•Number of print output devices: NO IDEA

•Complexities:• Remote campuses: New Bolton Center and Working Dog Center• Vet hospitals: Preponderance of stand alone printers• Student printing

Business Case for MPS:

Ryan Veterinary Hospital3rd Floor(Asset DB tool used to map printers & cost)

RyanVeterinaryHospital

First Floor

MPS Project Evaluation Team: Eric Bowden Annenberg School for CommunicationsLena Buford Annenberg School for CommunicationsKim Byrd Graduate School of NursingBrent Friedman Purchasing ServicesMaria Mejia School of Dental MedicineJohn Mulhern, III ISC Technology Support ServicesSmith Ragsdale School of Veterinary MedicineJames Tarver, PhD SAS/ChemistryOmar Telan ISC Technology Support ServicesSusan Tracey University Lab Animal Resources

Special thanks to our extended team and others that contributed to the project:

Ray Aull Purchasing ServicesPar Bowler Business ServicesClare Din SAS ComputingDan Garofalo Facilities and Real Estate ServicesTom Gudmundsen Business ServicesChris Hanson Facilities and Real Estate ServicesVira Homick Purchasing ServicesSusan Kennedy Business ServicesJustin Klein Keane SAS ComputingAndrea Kreiner Facilities and Real Estate ServicesMark Mills Purchasing ServicesMelissa Muth ISC Information SecurityKristin Nelson ISC Technology Support ServicesWarren Petrofsky SAS ComputingColleen Reardon Purchasing Services

About Penn Purchasing

Penn Purchasing Services:Our Role

Strategic sourcing is an institutional procurement process that continuously improves and re-evaluates the purchasing activities of an organization. Sourcing is considered one component of supply chain management.

Key Responsibilities:•Draft, negotiate, execute supplier contracts•Assess and mitigate risk•Maximize value for Penn’s supplier investments•Transaction review & approval•Develop entrepreneurial sourcing strategies

• (RFI, RFQ, RFP, Reverse Auctions, Negotiation Planning)

Mission Statement:To leverage our institutional knowledge, procurement expertise, and technology in order to provide solutions to our customers and optimal financial return-on-investment to the University.

Traditional Role“Purchasing”

Penn Purchasing Services:Strategic Sourcing

Modern Role“Strategic Sourcing”

Marketplace Analysis

Penn Purchasing Services:Uncovered Value

Where Strategic Sourcing Delivers

Added Value

Penn Purchasing Services:Sustainability Initiatives

Writing Instrument Recycling

Point-of-useIn-line WaterFilter/Coolers

Office Depot Tote Delivery Program

Toner Cartridge Recycling

Shift to 10-30% PCR Paper

Penn Purchasing Services:Economic Inclusion & Supplier Diversity

Penn seeks to encourage local business growth, empower diversity and women business owners, provide women and minorities with greater access to the skilled and higher-paying trades, and create jobs.

• Over $90M invested annually with local, small businesses• Recognized as a leader in higher education supplier diversity &

economic inclusion