Konica Minolta and the End of the FORZA Fantasy

Konica Minolta and the End of the FORZA Fantasy

Konica Minolta (MWAi FORZA) – is a lesson for sure. And the end of the FORZA fantasy is most definitely worthy of attention.

The industry’s actors have wasted millions of dollars and countless hours based on very little substance,

I witness newcomers attempting to become the print industry’s new ERP, the promoter of an e-commerce site that lacks the realities of e-commerce or those still attempting to reinvent the latest managed Print Services Software, not to mention all the new AI experts.

I can’t help but scream, “LEARN FROM FAILED FORZA!”

Ten years of press releases regarding the industry’s new ERP have proven useless. Now that Konica Minolta Business U.S. (KMBS) is divesting itself from this obvious disaster, where are the industry’s media and analysts? Now, they have nothing to say.

One day, the industry will awaken to the reality that marketing plans consisting of weekly press releases announcing what’s coming cannot substitute for an actual business plan based on what will be accomplished—a business plan with measurements and accountability to those measurements.

KMBS has amassed a collection of what one must believe is junk—junk in the sense of companies underperforming financially. Since KMBS bought All Covered in 2011, they have added at least 15 other companies under the All Covered umbrella.

Anyone looking should have noticed that in 2018, when KMBS added MWAi and its FORZA ERP to the All Covered portfolio, MWAi/FORZA was financially underperforming. I suggest that many of the KMBS acquisitions were also likely struggling entities.

Some have suggested over the years that the KMBS CEO at the time purchased MWAi/FORZA to bail out his friend, the CEO of MWAi/FORZA. I always found that suggestion extremely elementary. Besides giving the MWAi/FORZA CEO a job at KMBS for a couple of years, I don’t believe that when KMBS took the reins, anyone at MWAi/FORZA or any of its investors benefited at all. Again, I think it was a financial disaster.

So why would KMBS be interested in a falling company that had spent around five years attempting to replace the industry’s largest ERP e-Automate?

I believe that KMBS only purchased the assets of MWAi/FORZA, for more than likely pennies on the dollar. KMBS was interested in the SAP Business One licensing. It seems they believed All Covered could become a SAP Business One sales and service provider.

Also, it is essential to note that Greyrock Capital was the private equity money behind MWAi FORZA. I have always believed that Greyrock lost millions, and no one at MWAi or Konica ever disputed that, leading to my conclusion in the accuracy of that thinking.

KMBS seems to struggle to deliver its aspirations to the marketplace successfully. KMBS purchased All Covered in 2011, 13 years ago. By now, KMBS should be well-positioned as a nationally recognized IT services provider. It seems safe to say that KMBS is no more recognized today as a leading IT services company than in 2011.

I found it remarkable that in 2022, the current CEO of KMBS U.S. explained in an interview that All Covered would become a global IT Services provider as they intended to sell its solutions in Europe. Of course, the interviewer made zero challenges to the viability of that statement.

We can all assume All Covered is not knocking IT out of any European ballparks.

Keep in mind that purchasing awards claiming your success does not indicate any success at all. Marketing awards really should be eliminated from the services industry.

I have challenged KMBS numerous times to share all the realities regarding KMBS and All Covered. KMBS has never been shy about promoting itself as the winner of one award after the other. KMBS repeatedly says its All-Covered business is doing great. They use terms like “we are knocking it out of the park.” When I hear their leaders say that, I quickly remind them that hitting it out of the park is irrelevant when it’s a foul ball.

KMBS has no problem sharing its greatness through adjectives. However, sharing the actual numbers is something the KMBS leaders, past and present, run from. This continuous evasion compounds my thinking that All Covered is collapsing and KMBS still, after 13 years, has not figured out a viable marketplace strategy for its All Covered division and all the companies that were rolled up into it.

I have gone on record and will again, in this article, predict that KMBS will make a significant change regarding All Covered. Divesting it makes the most sense. I expect it has already divested other assets, as it did recently with MWAi/FORZA. Some of the entities KMBS bought could be eliminated without anyone knowing, unlike the massive blunder of MWAi/FORZA which impacted dealers using the product.

Recently, Konica Minolta and Fujifilm announced that they are exploring a joint venture to manufacture MFP and printer equipment—a joint venture like the one we saw Toshiba Tech and Ricoh form this year, Etria, LTD.

I see this situation more as Fujifilm buying and eliminating Konica Minolta. The industry needs consolidation, and everyone knows Konica Minolta has struggled immensely to produce profitability.

Fujifilm could easily swallow the Konica Minolta portfolio. Of course, Fujifilm will take action to clean up and eliminate the business components that prevented Konica Minolta from producing acceptable profits.

Konica Minolta must face the reality of its decisions and its inability to execute its aspirations. OEMs getting distracted by exploring services outside their core scope are proving very costly and problematic.

Over the next few years, we will all witness many changes, some of which will surprise us. However, many of the changes coming, most of us have already realized, are well past the due date.

The industry needs more transparency from all its actors. As we navigate the turbulence of disruption, our compasses must be trusted, and all trust must be verified.

The industry has a dysfunctional issue with conflict, and some will go to major lengths to avoid facing reality because facing reality always causes conflict with the status quo.

Here in the United States, a couple of essential stories are unfolding that one should pay attention to. One story involves Konica Minolta’s financial situation, and the other concerns the BDC Lender Ares Capital and its investment in the mega dealer roll-up Visual Edge IT.

What’s unfolding with these organizations is an alarm bell for the other OEMs and, of course, the other mega dealers. I will briefly discuss the Visual Edge IT scenario. This mega dealer has been the subject of my daily podcast video series, The End Of The Day With Ray! Numerous times. I will do a separate article regarding this financially non-performing mega dealer soon. Here’s a quick outline of their alarming situation.

According to Ares Capital’s 10k and 10Q, Visual Edge has been a financial disappointment for quite a while. In the third quarter of 2023, Ares Capital wrote off a loss of 49 million against a senior subordinate loan on the books for around 89 Million. Ares took a preferred position on the balance. The financial troubles were apparent for a few years. However, the financial problems were mounting when Ares put this senior subordinate loan in nonaccrual, where it sat for a year until the massive write-off.

When the industry looks back on this massive debacle regarding MWAi/FORZA or the coming results of Visual Edge IT, it must do so through clear lenses. Too often, the industry’s actors attempt to look through rose-colored glasses, which always layer the image with a false reality.

The industry needs to challenge all its current software or processes. However, the industry’s actors must avoid unsubstantiated programs based on perpetual dreams. It can become very easy to follow a dreamer, especially if there is never any accountability to the merits of the dream.

Perpetual dreamers are most comfortable when all those around them have not awakened to the fantasy of their dream.

In today’s fast-changing world, leaders must put time limits on dreams. Without setting alarm clocks, dreams linger until the dreamer and all those participating in the dream are eventually awakened by a nightmare.

As our industry embarks on its diversification journey, remember that it is usually through unrealistic optimism that one buys off the cart of the charlatan.

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