This Month's Spectrum Summary:

(The following is an excerpt from the June 2003 issue of Spectrum. Spectrum is a proprietary monthly briefing published exclusively for the clients of I.T. Strategies, Inc. © 2003)

Xerox Seeks to Recover Glory Days With Services and
"A New Way to Work"

This month, in the wake of a series of Xerox promotional events, the I.T. Strategies' consultants gather to distill some perspectives relevant to the industry as a whole. The various events included new MFP product announcements and promotion of Xerox Global Services as key to a successful Xerox turnaround.

Xerox is realistic in working to refocus the company, but the sea of words at the various presentations was short on specifics. The main focus still seems to be on machines, which in our maturing market cannot offer the ROI necessary to support growth. Production printing is not profitable, in part because commercial printing is relatively stagnant. Xerox's traditional strength in mono office printing/copying is drying up, and so far their color business has not been profitable.

Xerox sees Global Services as the way forward. XGS is now one of Xerox's three main operating groups and currently has around 1,000 consultants supported by 14,000 "associates" accounting for around $3.6B of the corporation's $15.8B annual revenues. The current services are: personalized communication, product lifecycle, office services, document content and imaging, and intellectual asset management.

Although the program is new, they claim to have a number of large corporate clients with impressive success stories. Among the assets they list are their technology resources such as PARC and other research centers, insistence on measurable results, expertise in document-intense business processes, and their Lean Six Sigma efficiency program. They say they can work effectively in a multi-vendor output environment. Many Xerox service people are trained to support non-Xerox as well as Xerox products, and third party service contractors are also used. They are not afraid to get rid of machines. For one client they reduced the number of printers and copiers from 40,000 to 25,000. This could lead to internal competition, but is not considered a problem since the goal is to grow volume overall.

Despite the many assets Xerox brings to this business, questions remain. Strategy beyond the next four years is not clear. And it is not clear that Global Services growth can sufficiently make up for the minimal growth anticipated in production and office printers. It is felt the company has to remake itself on a deeper level, and look beyond document printing into specialty graphics and industrial markets. Here HP seems to have the edge, since they have not only the vision, but also more services experience and resources. Problems for HP, Xerox and other services providers could be market saturation and the fact that interest in honing operating efficiencies could fade if there is a general turnaround in the world economies.