Title
Managed Print Services - Approval
History
During the Fiscal Year 2014 budget process, the Village Manager’s Office, Development Services, and Public Works departments submitted requests to include funds for the replacement of the Konica Minolta 7075 copiers in their departments (total of 4 machines) with new multi-function printers (MFP) with print, copy, scan and fax functions, at a minimum. The Konica Minolta 7075 has reached its end of life and parts and toner are in limited supply. The Village has owned these machines for over 10 years. Annual maintenance on these machines is provided by Gateway Business Systems under a hybrid Managed Print Services program. Although the Village purchased these machines outright, we pay for maintenance and support on a per click basis.
Rather than including funds for the purchase of these items in the Fiscal Year 2014 budget, staff was directed to analyze the option of obtaining replacement MFPs for these three pilot departments through a full Managed Print Services program, whereby the machines are leased as opposed to purchased and the lease payment, as well as all maintenance, support and supplies are paid on a per click basis. The goal was to reduce the Village's overall cost of ownership by obtaining state of the art equipment at the lowest cost, eliminating a number of desktop printers and redirecting print jobs to the MFP, which has a lower per click cost than a desktop device, utilizing the newest technologies available and eliminating the need to budget substantial amounts every five or so years to replace these machines. At the end of the program term, the Village would have the option to renew the lease (if the original lease was a FMV lease), refresh the equipment and enter a new lease term, or buy the equipment at either fair market value or for a dollar buyout, depending on the original lease terms. A committee, with representatives from each of the departments, as well as from Finance and IT, was established to analyze our options.
Based on current relationships and vendor outreach, four vendors were invited to participate in this analysis - Exceed Group of Elmhurst, IL; Gateway Business Systems, Inc. of Munster, IN; Nextdaytoner of Orland Park, IL; and Proven Business Systems of Tinley Park, IL. The committee met with each of the vendors independently to review the print/copy/scan/fax environments in each of the pilot departments, as well as to discuss the full Managed Print Services vs. buy option analysis that we were performing. Tours of each department were offered to each vendor to help them assess the model and location of all copiers and desktop printers within each of the pilot departments. Although a formal bid/RFP was not issued, the process was competitive, providing multiple vendors the opportunity to submit proposals based on identical information provided to each vendor.
Once the vendors had an inventory of imaging devices in each department, they provided IT with data collection agent (DCA) software that was installed on the Village's network to count the number of printed images from network desktop printers for a specified time period within each department. The Village also provided each vendor with 2013 total image counts from the respective department copiers. This information would assist the vendors with determining the size and speed of the MFP that they would be proposing.
Each vendor had the opportunity to analyze the usage data collected and meet with the committee to present their initial proposal, making recommendations on how to streamline our printing needs by buying or leasing MFPs that could print, copy, scan and fax, as well as, managing our existing printers. Each vendor offered a different brand MFP, along with their own brand of management software that could help staff analyze printing behaviors in each department, determine which printer devices could be eliminated, and provide secure access to these new MFP's based on a user login.
Gateway, Proven and Nextdaytoner recommended one (1) full size machine for the Village Manager's Office, two (2) full size machines for Development Services and one (1) full size machine and two (2) smaller machines for V&E. Exceed Group proposed three (3) machines, one (1) for each department.
Vendor Multi-function printer (MFP) Software
Gateway Business Systems, Inc. 4 - Konica Minolta Bizhub C454e PaperCut
2 - Lexmark XM1145
Proven Business Systems 4 - Canon IR C5240 UniFLOW
2 - Canon IR 1025iF
Nextdaytoner 4 - HP M880z HP Flow CM
2 - HP Laserjet ProM425dn
Exceed Group 3 - Xerox 7845/PTFX Print Fleet
The communication software recommended by Gateway and Proven would run on our network and would require the purchase of in-house servers. The cost of the additional servers was not included in their proposals, but IT has estimated the cost to be an additional $7,500. The Exceed Group did not provide what platform their communication software would run on.
Communication with the printers recommended by Nextdaytoner is provided by Web Jet Admin, a free utility provided by HP. There is no server needed. It provides superior mobile/wireless device printing, and HP FLOW CM, a cloud-based document management system for staff working in the field, allowing them to utilize a laptop, IPad or IPhone to upload/download documents and photos from the field onto/from the cloud, reducing or in some cases eliminating the need to transport paper copies back and forth.
The committee toured Gateway, Proven and Nextdaytoner's facilities, participating in demonstrations of each proposed machine. Based on the features of each proposed machine, the accompanying software, as well as the cost, the committee has selected HP machines proposed by Nextdaytoner as the desired brand of MFP.
Each vendor's cost proposal separated the overall cost of Managed Print Services into two components - the monthly cost of leasing the machines, as well as a per click cost for maintenance based upon historical usage. Each vendor also provided information on the cost of purchasing the machines as opposed to leasing them. Each vendor noted that if we chose to lease, we could lease through them or obtain a lease elsewhere in order to minimize the monthly lease payment. Finance began researching several equipment leasing options. Based upon prior contact and vendor recommendation, Finance contacted Fifth Third Bank, HPFinancial Services, First American, and National Cooperative Leasing (through National Joint Powers Alliance). Staff requested quotes for 36-month and 60-month dollar buy-out and FMV type leases. At the end of an FMV lease, the Village has the option to renew the current lease, refresh the equipment and enter into a new lease, or buy the equipment at FMV. At the end of a dollar buy-out lease, the Village has the option to buy the equipment for $1.00 and continue to use it, or refresh the equipment and enter into a new lease. Most leasing companies recommend the dollar buy-out for municipalities as the estimated life of a copier is five (5) years, so either way, the residual value is minimal. Based upon our analysis, HPFinancial Services offers the lowest lease factor of approximately .01798, or an effective interest rate of 3.03%.
Attached is the Total Cost of Ownership (TCO) lease versus buy analysis for the selected HP machines. The cost of the six (6) machines if we were to purchase them directly would be $35,726. The lease option is slightly higher due to the cost of money, but allows us to purchase the machines at the end of the lease term for $1 and continue to use them if they are operating efficiently or replace our current outdated machines at the end of the lease term without a large cash outlay. If we chose neither of these options, we can simply return the machines to the vendor and lease (or purchase) new machines that allow us to take advantage of the newest technologies at the lowest cost.
The new machines, along with the technology provided by the HP Flow CM software, will enable us to change printing behaviors as documents can be made more readily available electronically when out in the field or away from your desk. Our plan is to phase out the twenty (20) desk top printers from these departments over the next two years, as printing is redirected to the new MFPs. This will further reduce the cost of maintaining and providing supplies for additional printers that are more costly to operate than the MFPs. The toner/ink for the desktop printers is more expensive per click than the Managed Print Services per click charge. On average, the three departments in this study spend approximately $9,800 per year combined on toner for these desktop printers. A portion of this will be saved each year as desktop printers are phased out; in addition, staff time spent maintaining and troubleshooting on the desktop printers will be reallocated and utilized more efficiently.
During the analysis process, staff was informed that the Konica Minolta 7022 located in the lobby of the Village Hall has also reached the end of its life and parts are difficult to obtain. Nextdaytoner recommended an HP M4555f as it is compatible with the Jamex Cashbox that the Village owns to accept payment from the public for use of the copier. The cost of this machine if we were to purchase it directly would be $2,591.
Staff recommends the selection of the HP MFPs recommended by Nextdaytoner, as well as entering into a Managed Print Services Agreement with Nextdaytoner for the maintenance and support of the seven (7) MFPs. Nextdaytoner has been in business since 1998 and located in Orland Park since 2003. They have been providing excellent service to the Village since 2007. The HP MFPs provide the greatest functionality both with the machine and the HP FLOW CM software. The Village could either purchase the machines and enter into a five (5) year Managed Print Services Agreement paying a per click fee to Nextdaytoner, or enter into a Master Lease Agreement with HPFinancial Services to finance this and possible future purchases of equipment, as well as enter into a Managed Print Services agreement with Nextdaytoner for the maintenance and support of the seven (7) MFPs, as well as any possible future purchases of like equipment.
On April 7, 2014, this item was reviewed by the Finance and Information Technology Committee and referred, without recommendation to the Board of Trustees for consideration.
I move to approve the purchase of four (4) HP M880z, one (1) HP M4555f, and two (2) HP M425dn multi-function printers from Nextdaytoner
OR
Financial Impact
Funds are available in the FY2014 budget to cover the lease payments that would be due in 2014, as well as the estimated per click amounts that would be payable in 2014 under the Managed Print Services Agreement. Funding for the purchase would exceed the amounts included in the budget; therefore, a charge against contingency funds included in the FY2014 budget would be necessary.
Recommended Action/Motion
I move to approve a 60 month dollar buyout lease agreement with HP Financing Services to lease four (4) HP M880z, one (1) HP M4555f, and two (2) HP M425dn machines from Nextdaytoner;
And
To approve entering into a Managed Print Services Agreement with Nextdaytoner for the maintenance and support of the four (4) HP M880z, one (1) HP M4555f, and two (2) HP M425dn machines, with the option to add machines to our agreement as existing copiers and printers are replaced.