The “FM” (OnSite Service) Business

The post just before this one revealed the 5 worst decisions I made in the reprographics business. While I had given some thought to writing a post about my 5 all-time best decisions, I’ve decided, at least for now, to talk a bit about the FM business, because getting involved in the FM business was, without question, one of my 5 all-time best decisions.

As I look back over the two extended careers I had in the reprographics business, I cannot find a single decision that had more of a positive impact on our businesses than getting involved in the FM business. For those of you who are in the reprographics business but who are not now, or have never been, involved in the FM business, I don’t know what you’re thinking (or smoking?), but you’re missing the boat, don’t have a clue and are leaving your flank open to attack.

Business is a war. Unfortunately, it is a war that never ends. (Or, perhaps I should say that it does not end until you retire from the business or sell your business.) To stay ahead of your enemies (your competitors are your enemies), you’ve got to win more battles than they do, and your victories have to be more significant than your defeats.

Those of you who know me personally and/or who have heard me talk about the FM business, have heard me say, “an effective FM business segment can be your best offensive weapon AND your best defensive weapon.”

Speaking in the present tense …… Our objective (well, at least it was my objective) is to grow our business to be the “market-share” leader in our particular market (or, if you are a multi-market enterprise, to grow your business to be the “market-share” leader in all of your markets.) An effective FM business segment not only helps achieve that objective, it is, IMHO, essential to achieving that objective.

100% market share is the sum-total of all of the individual “account shares” in a particular market. What I’m getting at here is that, if you manage to lock-up an account’s business, you score 100% account share. And, if you repeat that success with the majority of the accounts in your market, well, guess what you end up with? Majority market share. And, when you are in that position, then your sales should be higher than your competitors’ sales, and, if you are selling “service” and “solutions” rather than “price”, your profits will also be larger than your competitors’ profits.

An effective FM business segment can position you to grab 100% account share with customers who were not previously your customers (or with customers you were sharing with competitors). That’s the “offensive” nature of an FM business segment. Provided you know what the hell you are doing, FM’s can be a very powerful offensive weapon.

An effective FM business segment can position you to secure 100% account share with customers who were already your customers. Regardless of whether your FM strategy allows you to grab and lock up new business or allows you to lock up existing business, the “lock up” nature of the FM business is a very powerful defensive weapon.

To me, the FM business has two parts – unstaffed FM’s, which, to me, are kind of like the vending machine business – and staffed FM’s, which, to me, are kind of like “our store inside the customer’s office.” The FM business is not all that difficult to get into or operate, but it does take a lot of thought and concentrated focus. While many reprographers have the same FM-business-strategy, some reprographers’ FM strategies are different. I’m not going to get into a discussion of FM business strategy. I could, but I’m not going to.

How does one learn what the FM business is all about?

Well, the best way to learn is to learn from your friends in the industry who are not competitors. That’s one of the reasons why I am a huge proponent of reprographers being members of the IRGA. When you attend IRGA conventions, you meet reprographers from all over the U.S. (and some from Europe and Japan), and some of those you meet are, if you simply ask them, willing to share their FM experience. Don’t just take one person’s word for what the FM business is, talk to several people who’ve had experience in that business.

I mentioned in an earlier post that ARC’s PEiR Group has held at least two FM Sales Schools, open to PEiR Group member-companies. For any reprographer who is interested in getting into the FM business, attending a PG FM Sales School is a must. When I attended both of the PG FM Schools I went to, I was very surprised (or should I say “shocked”) that the number of attendees was low. Are there that many clueless reprographers out there? I guess so.

I have no idea if ReproMax or RSA have held FM schools for their member-companies. I they have, or if they plan to in the future and if you are members of those organizations, go to those schools.

The more you learn about the FM business, the better positioned your company will be to get into the FM business, or, if you are already in the FM business, to improve the FM business you’re already in. Sorry, there is no easy way to learn the FM business; it takes a lot of time and effort to learn the various parts of the FM business (concept-pitch, survey-analysis, account-deal strategy, proposal development, selling the deal, invoicing, and operations.)

Funny FM story #1 – in 1997, my company, employing our FM strategy, managed to grab 100% account share in two different “major” accounts in one of our market areas. One of those accounts was already our customer (we were handling most of that customer’s outsourced reprographics work (but not all); that particular customer had, for many years, been (and still was) operating a significant “staffed” in-house print room. We convinced that customer to allow us to implement a staffed FM program. Overnight, (at the moment we implemented our staffed FM program) the competitor who was selling paper/toner/developer/service and leasing equipment to that customer was, as they say, “out the door.” The other account we took away from that same competitor (likewise, scoring 100% account share) was not our customer before we implemented a staffed FM. So, for us that deal was 100% new business. And, it turned into a multi-market FM deal. Prior to the implementation of our FM deal, our competitor was selling paper/toner/developer/service and leasing equipment to that customer. Like in the other case, our competitor lost its business overnight. In May 2008, several months after I retired, I ran into one of the partners who owned the competitor that we took those accounts away from. Very, very nice guy. He was aware that I’d retired from NGI. I asked him “how’s business?” He said that “of the many years we’ve been in business, we had our worst-ever December, not to mention a bad year overall.” And, then he said and asked me, “you took two of our largest accounts away from us in 2007, we thought our relationships with those accounts were solid and, as you know, we had our type of “FM” deals in place; how did you manage to take those accounts away from us?” I apologized for taking those accounts away from him, explained to him that we did not do that with “low pricing”, but I did not get into the details of how our FM strategy was different (and more pervasive) than his company’s FM strategy. FM strategies, reprographer to reprographer, can be very, very different.

Funny FM story #2 – in late 1983 at my first company, we got into the FM business at the request of a prospect! In other words, we had not done any planning, had not given it much thought, even though we were aware that reprographer-friends in NYC were doing FM’s. What happened? Well, a NYC-based Architecture firm had recently opened a branch office in Washington, DC. They called us to ask if we could provide reprographics equipment for their DC office, we told them that we did not sell equipment and that we would be more than happy to do their reprographics work at our production center, but the guy who called said, “I don’t think you understand what I’m asking you for. I don’t want to buy (or lease) any equipment. I want you to do that and place it at our office, and, oh by the way, I want you to provide all of the reprographics supplies we’ll need, and I want you to put one of your reprographics operators over at our office to operate the equipment you provide to us.” Okay, we finally “got it”, commenced our first FM program, and never looked back from there.

Funny FM story #3 – In 1986 and 1987, not long after we purchased a company in Boston, we sold and implemented 4 staffed FM deals. One of those FM deals was sold to a company we already counted as a customer. But, three of those FM deals were sold to a competitor’s customers. The competitor we grabbed those customers from was Charrette. For those of you who are too young to know this, Charrette was the largest reprographer in the Boston market at that time (and probably still is), Charrette later became Charrette ProGraphics (when the Charrette “supplies” business was split off into a separate division), and, later on, Charrette ProGraphics became Service Point U.S. When we sold those four staffed FM deals in the Boston market, Charrette was not in the FM business. (In other words, they had left their “flank” open to attack.) I know that our FM deals took Charrette by surprise. Many years have gone by since then, and, today, Service Point (who some older folks like me still refer to as Charrette) operates a very significant FM business, one of the large FM businesses in the U.S. I’d like to think that our entry into the FM business in Boston gave Charrette “food for thought” and eventually forced Charrette to begin its own FM business. Charrette went on to develop one of the most successful FM business segments in the U.S. reprographer community. (The SP parent company, HQ’d in Spain, says that SP, world-wide, has over 800 FM deals in operation.) A few years ago, I learned how they managed to become so successful in the FM business in the U.S. For about 12 years, SP’s FM business was led and managed by Mark DiPasquale, one of the brightest talents in the reprographics industry. Significant contributions were also made by Jane Simmons, another “bright (scary-smart) star” in the FM business in the U.S. reprographer community. Mark and Jane are certainly a “power duo.” (Neither Mark nor Jane are now with Service Point, having gone on to greener pastures.)

Funny FM story #4 – in October 1988, shortly after I retired from my first company, I was invited to go out to Los Angeles to meet with J.C. Smith, who was then the owner of Ford Graphics. The purpose of my trip: I had sent a letter to J.C. Smith to introduce myself as the recently retired CEO of Rowley-Scher Reprographics, and, in that letter, I explained to J.C. that my company had been very successful in developing an FM business segment, and that I was prepared to serve as a consultant to help certain select reprographers better understand and get into that business. After that letter, we spoke on the phone, and we agreed that I would come out to L.A. to discuss the FM business. As most of you are aware, ARC did not exist at that time. But, as most of you are also aware, Ford Graphics was the first “ARC” operation. So, I got out to L.A. and managed to find Ford Graphics’ office, which, as I recall, was in a building in Pasadena upstairs from one of Ford Graphic’s stores. We talked for about 3 or 4 hours. J.C. concluded that the FM business was not of interest to Ford Graphics, explaining to me ….. (and, although I’ve put “quote marks” around the following, there is no way I can recall verbatim exactly what J.C. said, but I think this sums it up pretty well) ….. “well, we have quite a number of large A/E accounts, and, if I get into the FM business all that’s going to mean is that I’ll have to purchase reprographics equipment for their offices and take people from my stores to operate that equipment; doing both of those things will drive up my cost of doing business, and, considering the fact that I already have their business and a good market share here in L.A., it doesn’t sound to me like getting into the FM business would be a smart decision for me to make.” I left that meeting a bit mystified as to how he came to that conclusion. But, oh well, what’s that old saying, “different strokes for different folks?” The other thing I would like to mention about my visit that day to Ford Graphics is that during the meeting, J.C. called his fairly new CFO into the meeting to introduce me to him. That was the first time I met Mohan. I don’t think that Mohan was in the room for very long, but anyone who had been there would have quickly realized, as I did, that Mohan was a very, very smart young man. It is my understanding, from reading ARC’s history that appears on www.answer.com, that Mohan, not long after I visited in October 1988, purchased Ford Graphics from J.C. Smith. We ALL know what happened after that! Anyway, now I’m going to move the clock forward to around May or June of 1995. That was around the time I decided I needed to get back to work (by then, having been retired from the reprographics business and industry for several years), and, after sending out resumes to a few reprographers I’d met over the years, Mohan introduced me (via phone call) to Suri. At that time, Suri was running Ford Graphics San Fran, and I flew up to San Fran to “interview” with Suri ….. for a “sales” position. Most of the interview consisted of me responding to Suri’s questions about how I took my former company public, but we also talked for a while about the “FM” business. Around 1990 (I may be off by a year), Ford Graphics San Fran was operating one staffed FM program, but this particular FM program was not sold by Ford Graphics, but, rather, was “inherited” by Ford when Ford purchased “Graphic Reproductions” from a guy by the name of Walt Walker.) In the words, even though Ford entered the FM business by buying Graphic Reproductions, Ford, several years later, had not expanded its FM business. Well, that would not have been easy to do in the San Fran market even if Ford had gotten serious about the FM business, because Paul Koze, back then, was the CEO of Blueprint Service Co. (BPS) and, for those of you who know (knew) Paul, one of the very scary-smart people to ever be in the reprographics business, you would know why I said that Ford would not have had an easy time growing its FM business in San Fran, even if it had wanted to, which, back then, did not appear to be a core growth strategy for Ford. (To digress for just a minute; I did not get the “sales” job; Suri, as I recall, tactfully said that I was “overqualified.” No hard feelings, I think he made the right decision.) Okay, let’s now roll the clock forward to the first week of December, 1996. Several months prior to that, I had made the decision to leave the “large-format color” enterprise I had joined in July/August 1995. I had decided, in the summer of 1996, that I wanted to get back into the full-blown “reprographics” industry; that being in the “large-format color business “only”, was not where I wanted to me. Sometime during the first week of December 1996, Suri flew down to have lunch with me in West L.A. It was kind of like another interview. And, given my experience with and the result from my previous interview with Suri in 1995, I was not anticipating a different result. Anyway, at our lunch that day Suri said something along these lines, “we are going to make 1997 the year of the FM at ARC.” In other words, ARC was planning to get seriously involved in the FM business. Well, Suri is the type of person you can take very seriously. Today, some 12 years later, ARC has over 5,000 FM deals in place. The only comment I can make about all that is that, while some get the point sooner than others, if you want your company to be a serious player in the reprographics business and industry, you will eventually have to understand that being in the FM business is essential, and “get to it.”

Back in my formative years in the reprographics business (1970-1980), I had “no clue” about the FM business. Had I attended IRGA conventions during those years, I probably would have heard of the FM business. At least one reprographics company in NYC had been operating FM’s for years. But, because I did not attend the IRGA conventions during those years, I was not aware of what the FM business was all about. As I said, some “get the point” sooner than others. And, some never get the point.