Network News Volume 39 No.1
Around the World in 3 days
@ SIA Conference in Vegas.go
Keynote Speaker Announced
by: Claudia J. Betzner
Mr. Charles R. Wright, Chief Agency and Marketing Officer for State Farm Insurance Companies will keynote the Beyond Service 2000 conference this year. Mr. Wright's company recently received a lot of negative press when a October 1999 decision was handed down by a judge with a $1.2 billion verdict against State Farm which called aftermarket parts/products inferior. Although the verdict applies to generic auto parts, it is not a far jump to affecting all aftermarket competitors with an unjustified blanket condemnation of inferiority. Since this association represents approximately 200 companies in the business of aftermarket service we Support State Farm's disagreement with this negative decision by the courts and your SIA Board of Director's has agreed to help State Farm fight this negative PR campaign and decision. Mr. Wright will title his Keynote - Got Choice? Inspired by the Got Milk PR campaign and Ron Katz's article in the last issue of the Network News.
Mr. Wright is part of the Chairman's Council at State Farm in Bloomington, Illinois. He joined them in 1963 as an agent in Minneapolis and received many promotions serving in numerous management positions from Arizona, Minnesota and finally in the Agency Executive Office in Illinois from 1981. He is originally from North Dakota and is a member of the Board of Directors for State Farm Mutual Auto Insurance Company, State Farm Life Insurance Company, State Farm Fire and Casualty and serves on many other Boards outside his company.. Contents
Conference highlights
The Conference officially begins Monday Morning, February 28 at 8:00 A.M. and runs until 5:00 P.M. on February 29. A welcome reception is scheduled for Sunday at 6:30 P.M. on February 27 at which time the winners of the infamous SIA annual Golf Tournament will be announced. Rich Heimann, Past President of SIA will chair the tournament. Cash prizes total $1000 plus donated prizes for this event. Tee Times for the golf tournament begin at 10:50 A.M. and go until 11:15 A.M. - format is scramble and it will be held at Paiute Golf Resort North of Las Vegas. Shuttle Service can be arranged through your hotel.
The conference format has changed this year to allow more time for your specific segment of the Service Industry. We begin each day with a couple of primary sessions, then breakout to three tracks, focusing on Computer Service, Medical Service and Business Products (Copier Service). The breakouts on Monday start at 10:00 A.M. and go until 4:00 P.M., at which time all groups come back together for a final session on E-Commerce, chaired by Al Andrus, Founding President of SIA and President of U. S. Computer Group with a reception following at 6:30 P.M.
On Tuesday morning we have three major sessions when all are together: 1) Industry Leaders Panel chaired by Frank D'Alessio, past Chairman of SIA and CEO of Maintech. The discussions will include key leaders in each of the three market segments of the service industry. They will discuss the changes past, present and their predictions of the future of service Beyond Service 2000.
2) Parts Panel of experts- T he next session chaired by Rich Heimann, immediate past President of SIA, will bring together Parts companies, info sources and remanufacturers to discuss the superiority of aftermarket parts.
Finally, 3) The Legal Forum will discuss how past cases across the service industry have affected ISO's and changed the landscape. The speakers will include service company owners who have gone through litigation and the lessons learned from it. This session will be chaired by Ron Katz, General Counsel for Service Industry Association and Partner of Coudert Bros.
The General Session will break at noon for lunch after which each of the three groups go back to their individual Service Groups. At 4:00 P.M. all three groups will come back together for a wrap-up and discussions of the three tracks. Contents
Breakouts
For the first time Breakouts are receiving increased focus by the head of each subgroup. Each of the Chairs - Randy Parks, Computer Service, Dave Johnson, Medical Service and Lee Carr, Business Products (NISO Owner's Meeting on day one) have focused on what is important to their groups. They have held conference calls, meetings and talked with many of the industry leaders in their segments to design a program which fits the needs of the participants. All of the Board members have worked hard this year to bring you a program they take pride in. They are to be commended for their efforts.Contents
Vendor Showcase
A Vendor Showcase is being held in conjunction with the SIA conference to showcase a limited number of specific invited vendors who represent products and services of need by the participants. What is new this year is "a showcase" where each will describe the goods or services they are providing during receptions, breakfast, lunch and breaks. In addition, the grand prize, which will be given at the Grand Finale, will be drawn from cards where each participant got a stamp by each vendor present. Cards not completely filled will not be eligible to win and the participant must be present at the Grand Finale. The Grand Finale will be held on Tuesday evening at Caesar's Bacchanal four star restaurant where you are treated by wine goddesses to neck massages while feeding you grapes and wine. Contents
The Profile
By:Mac McBride
SIA is always looking for new and better ways to provide value-added services to our members. In that vein, we are proud to announce the introduction of TheProfile, which will be demonstrated at our annual meeting in Las Vegas, February 27-29, 2000! TheProfile is an employee profiling and assessment tool that will help you save money and increase productivity. We are convinced that TheProfile is the fastest, easiest to understand and most comprehensive, profiling tool available. TheProfile is a management tool designed to give you a better "picture" of new hire candidates, or for assessing your current employees. Using a series of instruments, TheProfile provides you with just the type of information needed to make better hiring and management decisions. You will learn what the characteristics of your employees are. You will learn their strengths and restraints. You can even learn about your own strengths and restraints and how to better interact with your employees. With a happier, more satisfied staff, you will find productivity on the rise. With TheProfile as one of your hiring tools, you can hire with the confidence that you are selecting the right candidate for the right job. You will know the types of characteristics that lend themselves to certain job functions and you will be able to look for those types of characteristics in a candidate. Save money by placing the right person in the right job the first time! Best of all, TheProfile is simple to use and easy to understand. TheProfile will be available over the Internet at a site being designed exclusively for SIA members and will take only a few minutes to complete. Results are delivered, within minutes, right to your e-mailbox. Look for the introduction of TheProfile at the SIA Annual Meeting. Then plan to begin using this great management tool to help you make a positive impact on your bottom line. Contents
Xerox
Monopoly
By: James Konodl
(Excerpts from a White Paper)
This writing attempts to illustrate some (but by no means, all) of
the methods Xerox employs in their efforts to monopolize high-volume
copier/printer service. There is no doubt that Xerox's diagnostic
s/w policy and fees are designed but for one thing - to inhibit the
ability of ISOs to compete. Under Xerox's s/w terms and conditions,
ISOs are greatly disadvantaged.
In the late 1980's and into the 1990's Xerox deployed policies restricting Independent Service Organizations (ISO) from obtaining parts, service documentation, machine supplies and other things in order to stop ISOs from being able to penetrate into their high-volume equipment and service base. ISOs were left with few options except to seek relief from the courts.
Anti-Trust Litigation: A class action lawsuit against Xerox resulted in Xerox settling and agreeing to make parts, documentation and software available to ISOs and end users. Xerox attempted to double charge s/w fees, then quickly reduced to half price as soon as the court was made aware of their pricing. Xerox explained that there was an error made and that the price for s/w licenses was actually half of what their documents stated.
Although the price was reduced, their new s/w policy took effect. The s/w license agreement requires that the end user (or their agent) sign the agreement and list what ISO will be servicing their equipment. The agreement must be renewed and fees paid every year. The agreement has no provisions for refunds or transfer of the license if the end user sells their equipment or reverts to a service agreement with Xerox (s/w license is not required if the equipment in on Xerox service).
S/W Strategy: Xerox realized that s/w would be their major weapon against ISOs. All new equipment that Xerox would manufacture would require s/w licenses. The cost and restrictions that the s/w agreement invokes would enable Xerox to discourage ISOs from servicing Xerox equipment and assist Xerox in identifying ISO customers to aid their marketing efforts.
One problem Xerox has created is that in order to force ISOs to pay for license fees, Xerox must force the end user and possibly a Xerox customer to pay the fees. If Xerox was to litigate against end users (some of which are their customers), Xerox may succeed in forcing them to pay, but the end users might never purchase Xerox equipment again. Most likely this is the major reason that Xerox has not enforced their s/w policy on everyone that services Xerox equipment without a license.
Xerox has changed their s/w policy and pricing, and can change them again at any time
Kodak/Danka: In efforts to gain high-volume market share, Kodak launched third-party Xerox service. After a few years Kodak sold the division to Danka. Xerox in efforts to shore up their service base, purchased 1090's in mass quantities, making it difficult and expensive for Danka and ISOs to purchase 1090's for reconditioning and sales. Xerox also re-marketed their existing equipment models by changing the model numbers and subjected these new (remanufactured) machines to s/w licenses.
Although Xerox agreed to sell parts and limit parts price increases, Xerox strategy has been to make more and more parts available only by buying an expensive assembly.
By purchasing Danka's service base, Xerox removed one of the largest ISO resources for the development and use of third-party (after-market) parts.
Post Settlement: Since the settlements with Xerox, ISOs began to realize the impact of s/w agreements with Xerox. ISOs customers that used s/w required equipment had to have s/w agreements with Xerox, giving their locations and contacts.
Xerox could also interface periodically with the ISOs customers to clarify s/w-billing problems and again attempt to market equipment, service and supplies. Xerox's s/w agreement made it possible for Xerox to always be in the wings, ready to negotiate lower pricing with the ISOs customer.
Pricing: Xerox has many equipment and service pricing plans available. ISOs have made it possible for end users to purchase equipment and service at lower prices by offering an alternative to Xerox. ISOs must offer savings to the end-users in order to be competitive. The expensive s/w license costs to ISOs make it difficult for ISOs to compete against Xerox's predatory pricing. Xerox's predatory pricing is limited to sales that ISOs are bidding on.
Xerox S/W License Policies
Annual Agreement: Xerox s/w licenses are for one year only. ISOs must offer multi-year service agreements in order to compete with Xerox. After the first year of a multi-year service contract, Xerox could change the conditions of the s/w license, by requiring the purchase of operating s/w upgrades in order to license the diagnostic s/w, s/w license price increases, Xerox refusal to re-new the license agreement, and just about anything Xerox felt like changing. By not knowing how much or what changes Xerox might make to s/w policies, multi-year service is very difficult to budget.
Non-Refundable: Diagnostic s/w licenses are non-refundable. In order for ISOs to compete against Xerox they must offer like-for-like equipment replacement guarantees
Xerox Refusal to License: Xerox has refused to license many machines to ISOs and end-users.
Equipment Sales/Service Tie-in: Xerox prefers to lease their high-volume equipment with service included in the lease payment. This service 'tie-in' makes it impossible for an ISO to service the equipment under the existing lease agreement, as Xerox will not license the diagnostic s/w.
S/W License Cost: The high price of s/w licenses is a major hurdle for ISOs to compete with Xerox. An end-user with three Docutech NP's would cost the ISO over $20,000 per year for diagnostic licenses. With 40 to 100 units being serviced the yearly cost of diagnostic licenses would be in the hundreds of thousands of dollars.
Operating S/W: If a machine with a hard drive requires reloading of the operating s/w in order to repair it, the operating s/w must be purchased separately from the annual diagnostic license. Operating s/w prices vary per machine model and must be purchased for each machine that operating s/w is needed.
Xerox Inspections: Xerox license agreements provides for Xerox to be allowed access to the equipment. Xerox has and will subject an ISO's customer to equipment inspections.
ISO Inspections: Before accepting a machine for a service agreement or at an end-user's request, ISOs need to inspect and/or evaluate a machine's condition. In order to fully evaluate the equipment the diagnostic mode must be accessed.
Pre-owned Equipment Sales: By offering pre-owned and reconditioned equipment sales, ISOs make it possible for end-users to save up to 70% savings from the price of a newly manufactured machine from Xerox.
S/W Policy Changes: Xerox can at any time (and does) change their s/w policy. Xerox s/w changes can include just about anything: higher prices, forced s/w upgrades, operating s/w fees, s/w transfer fees and s/w contract changes. Overview Unless Xerox is forced to adopt s/w policies that are fair, ISOs of Xerox equipment will become fewer and Xerox will be able to increase equipment and service pricing to end-users. Xerox has made it very clear that if ISO services are available, Xerox pricing becomes more competitive. If there is no ISO, Xerox's discounting will end.
If OEM's of other industries were to follow Xerox's lead and implement similar s/w policies, consumers of all products could discover that only the OEM could repair their equipment and products. Automobiles, computers, appliances, machinery, equipment, and just about anything would require OEM service.
Xerox's legal counsel, Peter Bleakley, has stated Xerox's position regarding diagnostic s/w. "Our position from the beginning of the negotiations was that we can do whatever we darn well please with respect to diagnostic software, and if you think we are violating the anti-trust laws, then you can sue us." Contents
Service Industry Association Welcomes New Members
| ACES, Inc. (MSG) Frank Rubino, C.O.O (978) 762 8777 Medical Laboratory Solutions, Inc. (MSG) Randall Reagan,
Owner & Pres. SATS Technology Support Services (CSG) Larry Gashi,
President Sentinel Technologies ServiceTrends (MSG) Wareforce, Inc., formerly Kennsco, Inc. (CSG) Kenneth
Searl, President
|
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President's Letter
OPEN LETTER TO EQUIPMENT SERVICE INDUSTRY MOVERS AND SHAKERS!!!!!!!
Please share this letter with your BOSS! Tell him/her that almost all the other bosses of the real movers and shakers in this business are meeting in Las Vegas for the Annual Service Industry Association Conference at the end of February.There has never been a more important time to gather as the ONLY trade association concerned with protecting and enhancing a level playing field through choice for our customers. There has never been a time when OEM's were ever more determined to see ISO's lose competitive ground. Here's what participants to the Annual Conference will take home with them--
1. A thorough understanding of the litigious environment and how it is being shaped by unfair OEM practices and ISOs that are fighting the fight for all of us. Featured keynoter will be Chuck Wright who will share with us the status of the alarming case against State Farm relative to aftermarket parts. Not familiar with this case? Neither was your SIA Board of Directors until December. Here's one quote from the U.S. District judge's findings--"generic parts are inferior to OEM parts" !!!! State Farm is appealing this verdict but this case is very chilling. Also featured will be a panel of company CEO/owners who are fighting the OEMs head-on on multiple fronts. Some are winning, some aren't, all are paying an exacting price financially and personally and their story will be most compelling. Registered attendees only for this closed-door session. Come find out what you need to know to support their efforts so that your company isn't facing similar problems in the near future.
2. Multiple break, meal, social function times and vendor showcase to network with the other major shapers within our industry-- here is where alliances start, follow-up meetings scheduled, SIA initiatives for this year determined, new Board and committee members identified, etc. etc. Have to wait another year for another opportunity like this.
3. Full report and accounting of the SIA business affairs-- budget, performance/accomplishments, strategic initiatives, etc. along with our annual survey onsite of what attendees feel are most pressing matters for the Board's focus during 2000.
4. A program content, which has been masterfully, constructed by each sub-group chair(Medical, Computer,and Bsn Products) to focus on issues specific to the hearts, minds, and wallets of each sub-group! In Medical that means sessions on working with in-house orgs, FDA initiatives, service/remanufacturer alliances. In Computer it means warranty service,outsourcing strategies, professional services, OEM alliances, buyers and sellers forum. In Bsn Products its parts, predatory pricing, training, tech support, diagnostics. Overarching this content will also be take-home info/sessions on E-commerce enablement of your business, Industry Leaders Panel- the big picture, parts, and digital world crossover for Computer and Bsn Products subgroups.
5. Immediate improvement in your company's hiring process through understanding the newest benefit available to all SIA members-- Employee Assessment Profiling. This new benefit is offered to SIA members by Mac McBride, one of our own members, and represents a first product endorsement of its kind by your Board. How to select the right employee for the right job first is a compelling opportunity for most of us! I have personally witnessed the immediate effect on an organization from use of this kind of tool/philosophy and commend it to your review enthusiastically.
If all this isn't enough, then consider the Sunday world class golf
scramble and the Tuesday closing finale/feast with roman goddesses,
grapes, and grand prize drawing sponsored by our vendors of a roundtrip
to Europe for 2. Need to be present to win (and we need you present
to grow!) If all this still doesn't convince your BOSS, then have
him/her send you instead! You and I both know who gets the work done
anyway:) I look forward to beginning or renewing my friendship with
each of you in Las Vegas!! If I or the SIA Board may serve you or
your business in any way please contact me at 606-491-6279. To Register
just go to our website at www.servicenetwork.org
and check out all the new info on SIA while you are there. Respectfully
Submitted
Mark Streety, SIA President