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Xerox CEO John Visentin On HP, Industry Consolidation And How Often He Speaks With Carl Icahn
‘It‘ll always take two players to want to consolidate, and we’ve always been very vocal that this industry is too large and that we should start seeing some consolidation, which we haven’t yet,’ says Xerox CEO John Visentin.
John Visentin believes Xerox Holdings is the industry’s best-kept secret. As a prominent print and IT services player in the market that took a hit during the pandemic when workforces went remote, the Norwalk, Conn.-based IT giant is expanding its market share with new offerings in the artificial intelligence and robotic process automation spaces.
“I don’t think we ever want to apologize for who we are at Xerox,” said CEO Visentin. “We will start with disrupting the industry and getting the proof points. It’s incredible on the innovation side.”
During the company’s Investor Day event Wednesday in New York City, the first in-person event the company has held since before the pandemic, the company showcased offerings that use forward-thinking AI and RPA technologies that are outside the print and IT services scope.
“ESG [environmental, social and governance] is ingrained in our culture,” Visentin said. “One thing I’m very proud of is that we are focused on mirroring the markets we serve. Diversity is in every one of our discussions, and that’s what gives us the extra strength. That’s what gives us the force to move ahead as we focus on sustainability. It’s not just for the environment or for society; it makes us a better company.”
The highlighted offerings showcased at the event were FITTLE, CareAR and PARC. FITTLE, which was previously Xerox Financial Services, is a global financing offering that enables the sale of equipment and services. CareAR is a virtual and AI-driven visual support platform that providess real-time offerings and content on demand. PARC drives commercial applications for research efforts that focus on digital manufacturing, Internet of Things and clean technology. One such research effort under PARC is Eloque, which uses fiber-optics sensing on bridges to collect data.
CRN spoke with Visentin to discuss driving new offerings and expansion as the pandemic continues, his M&A strategy and how Xerox will grow its partnerships.
You said during the Q&A portion of the Investor Day presentation that Xerox is the best-kept secret. Why do you say that?
Xerox is the best-kept secret but our belief is we can talk about it, we can tell you all about this great stuff. Three years ago we talked about it. We did an Analyst Day and we said, ‘Hey, we’re going to invest in monetizing innovation. We’re going to invest in these areas.’ Now we’re three years later and we’re saying, ‘We have proof points.’ As we stand up these businesses, they will be more and more recognized. Some will only recognize CareAR or they may only recognize FITTLE or they may only recognize Eloque and not even know the rest of Xerox, and that’s fine. That’s why we say it’s the best-kept secret, but it’s up to us to get proof points to grow these businesses and then move forward. It’s still under Xerox Holdings. I’m very proud of our print business, but we’re doing a lot more.
Some partners said they lost salespeople because of the pandemic. How can Xerox and partners work together to recruit, train and on-board sales professionals going forward?
We always go with the philosophy of recruiting, whether it’s with our partners or for us, that people have a choice in today’s marketplace. So why come to Xerox? What’s exciting about coming to Xerox? The conversations we have with our own recruiting team, and conversations we have with employees, is what’s of importance to them. What we’re doing in ESG and what we’re doing with our carbon footprint, even our investments in areas like clean tech, have nothing to do with print but has to do with reducing carbon footprint and helping the world. That helps us recruit and that helps us with recruitment of young employees coming on board. We put a lot on that.
We’re working with organizations because we want to continue to improve our diversity. [With] our women in the workforce, I think we’re one of the leaders. Just look at my management team. In the myriad of markets we serve, it’s really important to us that we continue to do that. We work with outside firms and say, ‘How do we recruit from your group of diverse employees that are out there’… or kids coming out of school for different roles. We’ve been doing a lot of that as well.
You’ve recently acquired a few solution providers. What are the rules of engagement for partners that compete against your own solution providers and why should partners team with Xerox if you're competing against them?
We have rules of engagement that are no different than any other industry or any other partner. If you’re the first to be there as a client and you’re servicing the client, then it’s your account. Will there be some in-fighting once in a while? That’s what Joanne [Joanne Collins Smee, chief commercial officer, SMB and channels] solves. It gets to Joanne’s level and she solves it. But overall, it’s pretty straightforward. It’s pretty clear on who gets there. The market’s open. The way we look at it is don’t fight over the x percent that we own or that you own. There’s another 70 percent out there that we could all go get together.
Channel growth is key. Contention, will there be some? Absolutely. Honestly, in the three and a half years I’ve been here I didn’t get many at my level to say, ‘Hey, this is wrong.’
Do you believe you have a competitive edge over HP?
It’s not just HP. We have 13 different competitors out there all with partnership networks. If we’re focused on partnership, the way we look at it is how do we underwrite with these partners to make their lives easier and offer a full solution? It’s not just, ‘Hey, I’m going to sell you my A4 or my A5.’ I‘m going to say, ‘How do I wrap it around my FITTLE services?’ That’s key to them. Right now for them to go get leasing business with other partners, it’s not as easy as it sounds. So how do we tie that into them? How do we give them digital services offerings that they can sell on our behalf? Or IT services, and how do they do it on our behalf? We try to wrap solutions. We put ourselves in their shoes. Having our own SMB go-to-market team is actually an advantage versus a disadvantage because we know how clients buy. We know how our salespeople want to sell and how they always want more in their toolkit. If we could offer the same to the channel, it makes their lives easier and they have more revenue streams to go after.
Is there still any interest in an HP merger?
Right now it’s dead. But we believe that it’s an industry that should consolidate. It’ll always take two players to want to consolidate and we’ve always been very vocal that this industry is too large and that we should start seeing some consolidation, which we haven’t yet.
Do you foresee that happening, more consolidation in the print services business?
I think it should happen. Whether it happens or not it will always take two parties to have a discussion to see if that makes sense or not for both parties. I’m not seeing much of that yet.
What influence does Carl Icahn still have on Xerox?
One of our roles is shareholder value and we have to continue to offer shareholder value to our shareholders. Carl Icahn is one of our largest [shareholders], but there are others that are large too. When we focus on our strategy, it’s really not only for clients and for our employees but it’s also for shareholder value.
How often do you talk to Carl Icahn?
What is your channel strategy going for? What is your vision for the channel?
Expanding it. The more offerings we have that are competitive and the more offerings we have that are exciting for the channel partnership, and using other solutions that can also wrap around IT services, we’ll continue to expand. The more channel partners we can get, the better it is.
In an earnings call early in the pandemic you said you believe that everyone will return to work, but it looks like remote work or a hybrid model is here to stay. How is Xerox going to pivot to stabilize the disruptive print market in a remote work/hybrid world?
Our feeling is not if, it’s when. We can predict that there will there be a hybrid type of model where three days a week you’re in the office, two days a week you’re at home. We’ve seen the statistics. When that happens, the majority of the printing is done in those three days [in the office]. It’s more cost-efficient, it’s more secure and it’s just a lot faster than printing at home. It’s not so much as are workers going to be coming back five days a week versus three days a week. What we’re looking at is how do we give them offerings we have that say you can print anywhere, anytime, anyhow. Those are offerings that we have in place and they’re cloud-based offerings that we’re focused on.
We can control what we can control. No one expected COVID to be two years. We delivered positive free cash flow. We invested $200 million per year in our innovation and we’re going to continue to do that. Our thought process right now is that roughly 80 percent will be back in the workforce in three years.
How are you handing supply chain shortages?
We’re handling it like everybody else. We’re not expecting it to come back, best case, before the second half of this year. We did say first quarter but it pretty much looks like fourth quarter. We have shortages and our pipeline keeps going up. We have our pipeline that’s over $300 million now, sold backlog, that we just can’t ship because we don’t have it. We’re looking at other parts, other suppliers and what we can do to help in terms of getting supplies.
Do you think Xerox can continue to thrive as a stand-alone company?
Xerox is not only going to be Xerox printing services. It’s all of these other offerings that we have under Holdings. We have a good balance sheet and we’re going to make smart M&A decisions.
What is your M&A strategy?
It‘s really, really simple. Does it fit into our business? We have a whole list when we look at M&As and how do we integrate them. You’re not just buying a company for revenue, you’re buying a culture. Does that culture fit with yours? How do you integrate that culture? What type of employees are there? Part of our reviews of companies is to understand the culture that we’re buying.
What technology trends are you currently seeing, and where do you see them going?
It won’t be static. One thing we’re always asking the teams is what’s behind door number two and what’s the next generation. Even if you think of what we did with CareAR or Eloque with existing technologies, even though the TAM is great, we’re disrupting. With Eloque, one thing we’re doing with bridges is putting our fiber optics on it. We don’t need to drill holes. We don’t need to shut the bridge down. You’re not doing any construction on these bridges, and you can get all the statistics and all the data. With CareAR, we’re putting it all together. It’s not just, ‘I’ve got the Google glasses. I got this piece. I went on YouTube and I looked up how do I fix my fridge. I’ve got to go through 35 minutes of it before I might find something that I think makes sense.’ This is back to simplifying it.