CRN Exclusive: New Xerox CEO Jeff Jacobson On The Managed Print Services Goldmine, Why A4 Is So Important To The Channel, And The Pursuit Of Larger Partners

The New Sheriff in Town

Xerox will aggressively grow its business with multivendor channel partners thanks to a more affordable offering of smaller, tabletop A4 printers and an industry-leading managed print services portfolio, according to Jeff Jacobson, the Norwalk, Conn.-based company's new CEO.

Jacobson discussed exclusively with CRN what's prompting partners not working with Xerox today to reconsider, why the company is interested in attracting larger solution providers, and his experience attending a partner recruitment meeting in New York.

Jacobson started as CEO Sunday after the completion of the split of Xerox's $7 billion business process outsourcing division – which was renamed Conduent – from its $11 billion document technology business. Jacobson had been president of Xerox's technology business since July 2014 and started with the company in February 2012.

Read on to learn what Jacobson sees as Xerox's competitive differentiators, where the company plans to invest, and how he believes his performance should be measured.

Why is now the right time for Xerox to focus on multibranded channel partners?

For us, it's a greenfield opportunity. It's a $20 billion market. We have everything we need to be successful. We have a new product portfolio coming out that we're going to unroll. It's the largest introduction in the history of Xerox. We have an A3 portfolio, A4 portfolio, managed print services, all the things that channel partners need. Every share point that we can gain is worth about $200 million, and it's a great growth opportunity for us.

Is the channel push more informed by the new products or the timing of the separation?

A little of both because it [the separation] gives us the investment stream that we need. The productivity and cost transformation that we're driving will enable us to invest. We needed the lower total cost of ownership for A4 products or else it would have been more difficult. These resellers have always wanted our A3 products because it was the leading product in the industry, but they needed an A4 too because they needed to go to their customers with an A4 and an A3. And now that we have a product where we can give them all the functionality and more they need at a cost point where they can then sell it onto their customers, that's what enabled it at this time.

What's prompting partners not working with Xerox today to reconsider?

They looked at their current manufacturers, and in this industry of consolidation, they want to make sure that they have people who will be here for the long haul. And they have great confidence with Xerox in that. They also know from a services standpoint – managed print services – they want to partner with someone because they know from their business they can't just be the box. They want to make sure that they're well-positioned from a services standpoint because that's where the industry's moving. And we are No.1 in that.

You said you attended a partner recruitment meeting in New York in November. How did that go?

It showed a commitment on our part. We had a number of our senior leaders there. … Partners were impressed that I, as the future CEO of the company, would come in and spend 60 to 90 minutes on a presentation and Q&A. And I had dinner with them that night. And I think they saw the commitment that we were certainly applying to our efforts in this area. They said in the past that they hadn't seen that. They believe.

What are the competitive differentiators you'll be pitching channel partners on?

When I look at what channel partners need to succeed – they need reliable products, they need service. Our A3 and A4 products that we're bringing out will be as good, if not better, than any in the market. What they're going to need are tools for managed print services. If they need financing or leasing, we have that ability as well to help. So we just have a vast array of tools, and then a desire to work together with them.

What are the key areas where channel partners should expect investment from Xerox?

I think it's in our training, it's in our demand generation, it's in our product portfolio. All of the above. But we expect equal investment on both ends. … We both have to invest in our businesses. But one of the things we do with our mono-branded channels is that we train our own employees on sales techniques. There's no reason we can't do that for our partners as well.

Why is Xerox looking to focus on larger channel partners? What will that require from Xerox?

I think it's the same regardless of the size. The reason why you want to focus on the bigger ones is you get a faster return on the investment. If these are people that have businesses that are $10 million as opposed to a $2 million business, they'll have access to larger customers. And that's what we're very much interested in. … I think it's the same principles [to satisfy a $10 million partner and a $2 million partner].

What new technologies is Xerox investing in that will make a difference to the SMB market?

It's our 29 new products and it's all the tools … in the managed print services space.

What do you feel are your differentiators in managed print services?

We're fortunate. We're the No. 1 company in managed print services. If you were to take the No. 2 and No. 3 manufacturers, they'd just about equal our share. A lot of our share today is in the large enterprise. So we're going to take those same principles and apply them to the SMB market.

Xerox has historically been more of a direct sales company. What's your pledge to the channel going forward?

Our pledge is that we're committed to this. As a company, we have significant investments that we're making that we could be making elsewhere. So what it says is that we're very committed to this. We'll be in it for the long haul. And we'll be a partner they can trust.

What types of partners are your recruitment efforts focused on?

A mix of the two [traditional print agents and IT service providers]. But in the case of the $20 billion [small and midsize printing market serviced by independent, multibranded dealers], it's more on the print side, but we certainly do partner with a lot of IT VARs. Direct marketing resellers is an example of another area we're looking at.

How do you plan to go about recruiting all of those new dealer partners?

So, in every part of our operation regardless of the geography, we have what we call channel business managers. And the channel business managers are the ones that cultivate the leads, they bring on the new channel partners, they sign them up, we certify them, we take them through training. And then we work with them. It's not as if we just sign them up and say 'run on your own.' We have to work with them through the sales process.

Why is Xerox focusing more on its multibrand channel rather than its mono-brand channel?

Our mono-branded channels are every bit as important as they've always been to us, and we're going to continue to invest with them. They're extremely important. It's no different than our direct sales force. Even though we're the clear market leader, we're the clear market leader with shares in the 20-plus percent range, which means that there's almost 80 percent of the industry that we're not doing business with. So you bring on new feet on the street, you bring on what I call industrial diversity. These are businesses that you've not done business with before who might have relationships with other clients that you haven't done business with before. And that's the rationale for it.

How easy or difficult is it to sell Xerox to print agents currently working with a competitor?

It's a big commitment on their part. They have existing manufacturers. They realize that once they make a commitment to go with us, it sends somewhat of a signal to their existing manufacturers. They'll want to do that in a very prudent and thoughtful way, which I appreciate and respect. And I agree that they should do that. And the good news is that, when they do make a decision, that means that they're ready to come and they're ready to invest, just as we're ready to invest with them.

Do you face competitors that are strong in both A3 and A4?

I think it's pretty much the same throughout every competitor. … We're the largest in A3. If you take some of our competitors, they might be a little bigger in A4. In A4, we're No. 6. In A3, we're No. 1. … We're the market leader in A3, so by definition, they [our competitors] can't be.

How does it feel to now be the CEO of an $11 billion company?

I never think about it in those terms, to be honest with you. I have my head down – it's all about 'how do we drive this company to win? How do we provide the greatest return to our shareholders? How do we provide then greatest technology and value proposition to our customers? And how do we drive a company so that our employees are inspired and love to come to work every day?'

What metrics should we look at to measure your performance as CEO?

Financial metrics are usually the outcome of all the good things that you do. So if we're doing great things, our share price will be where we want it to be and where our investors want it to be. Our shareholders will be receiving return on their capital to the extent that is appropriate. We'll be making acquisitions. We'll get this business and the revenue trajectory turned to where we believe it can be, and we'll be driving our profits and significantly improving the profitability of this business year after year after year. And if we can do that, that will be winning.

What should channel partners expect from you as you move into the top slot?

When you do business with channel partners, the most important thing is transparency, especially in the multibrand channel because one day you're going to be working with them as your partner, and the next day you're going to be working against each other. That's part of the definition of multibrand channels. You can't take those things personally, but we both have to be transparent, understand where we're going to work together and where we're not. That's part of business.

What structural changes are taking place as a result of the separation?

From a channel standpoint, not significant changes. We had lines of business before the separation, and we had what was called the channel partners organization. And while in Europe, as an example, we'll go to more of a geographic model, for the most part, the people in the channel partners organization that were in Europe will be doing the same thing that they were doing before the separation. And in the United States, I think the only difference will be we'll have one person – Mike Feldman, who's going to be our president of North America – that will oversee the entire geography. He'll be dealing with all channels – meaning our graphic communications, our large enterprise and our reseller channel.

What's the relationship between Conduent and Xerox going to be like now?

We'll be separate, publicly held companies. … There won't directly [be partnering between the two organizations]. We're going to be separate companies.

What are the first channel-related actions you plan to take now that the separation has closed?

Same things we discussed. Really good products that we consider to be the best in the industry. Managed print services. And a true partnership to work with them every single day.