Ursula Burns: Why You Should Care About Xerox

Nearly two years after taking over as the CEO of Xerox, Ursula Burns is enjoying her coming-out party with the IT channel. Consider these recent events: its first big partner conference in four years, a new managed print services tool, a significantly opened-up product portfolio for VARs and an all-out alliance with Cisco.

From mobile printing to cloud services to business process outsourcing, Xerox has become a state-of-the-art technology resource that businesses rely on to run more efficiently. To think of Xerox as a copier company is to think of Apple as a Macintosh company.

Earlier this month, Burns stood in front of more than 100 investors and analysts at the New York Stock Exchange to talk about ’the new Xerox,’ a company that will increasingly rely on partners to provide more products and services to SMB customers, she said.

/**/ /**/’A lot has changed. Xerox has been working on transforming the company. We’re confident we have the right strategy, the competitive advantage and a disciplined focus on executing,’ Burns told Wall Street May 10.

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Two weeks earlier, Burns offered a more direct promise to VARs about their expanded role with the company going forward.

’We will give you more offers and work more closely with you to get in front of more customers with more value and more services. You’re clearly central to the push in document management and our MPS [managed print services] offerings will be delivered to SMBs by you,’ Burns told the audience of more than 200 VARs at Xerox’s 2011 Fusion conference in San Antonio.

Several of Burns’ statements were met with applause from the audience, who have been waiting for the CEO--and the company--to come out of a quasi-self-imposed shell with the IT channel. It turns out Xerox wasn’t hiding, it was formulating.

’They’ve done an excellent job rolling this stuff out to the partner community,’ said Tom McDonald, president of NSI, a Naugatuck, Conn., solution provider. ’They listened to the channel and they took action. Xerox is giving us an opportunity to go out and talk to new customers now. This is like a hunting license from them,’ he said.

Until recently, Xerox gave VARs a very limited portfolio of products to sell, which hampered its efforts to make inroads in the channel against Hewlett-Packard, Lexmark and others. Now Xerox has expanded its IT channel line card to include almost all A3 (11 x 17) color and monochrome devices up to 60 pages per minute. And not only can VARs sell the products, they can become authorized service providers for them. That marks the reversal of a stance Xerox took a few years ago.

’That had been taken away from us. We’ve had ongoing discussions for two years with Xerox on [A3]. We were really concerned about getting warranty service back on the big boxes. When we went away from A3, it was painful for a while. We had to provide labor at our internal costs. It was a political battle in Xerox,’ said Mike Parmet, executive vice president at Parmetech, a Havertown, Pa.-based solution provider. ’Now we can have our arms around a solution and take care of the client as opposed to relying on Xerox or a CompuCom.’

NEXT: Services a Key Driver

Services a Key Driver

Access to new products is great, but many VARs see the biggest growth opportunity with Xerox in services. Indeed, the key driver behind Xerox’s restructuring is its increased focus on services following its acquisition of Affiliated Computer Services in September 2009. That purchase doubled Xerox’s services revenue and bumped up its services mix to about 50 percent of the company’s $22 billion in sales last year.

The ACS acquisition gave Xerox a big splash into the business process outsourcing (BPO) market which, combined with its managed print services and nascent IT outsourcing (ITO) services, gives the company a well-rounded services portfolio to attract large enterprises. Xerox spent the past 18 months honing those offerings into a solutions-based model and now is developing ways to bring those services to SMB customers.

’A year from now, I won’t be talking to you about ACS, I’ll just be talking to you about BPO and ITO,’ Burns told Wall Street.

About 85 percent of Xerox’s services revenue now is recurring/annuity-based revenue, according to Xerox, a figure that many VARs would love to replicate.

’Clearly, we’re not far down that path,’ Burns said, referring to VARs partnering with ACS. ’But no, there’s no doubt there will be a set of questions and an appetite by Xerox and by partners so that we can morph some of these offerings [and] figure out how they can be applied to the customer base our partners cover.’

Gary Gillam, vice president of North American channel operations at Xerox, believes VARs could attain margins of 40 percent or more by partnering with ACS on some opportunities, which is why the company is feverishly looking to attract more MSPs now for when a formal partnership program with ACS can be rolled out.

Gillam has recently spent more time recruiting than Mike Krzyzewski and Jim Calhoun, scouring conferences such as Ingram Micro’s VentureTech Invitational and Synnex’s VARnex to garner interest in managed print and BPO partnerships among MSPs.

’I think that ACS is great opportunity for this group. I’d love to scale some solutions to this group,’ Gillam said. ’We’ve got 100 percent share with a lot of the [print] guys. It’s the managed services guys we need to go after, guys where the customer is not asking about [managed print or BPO].’

It’s Xerox’s belief that the service-heavy business models of MSPs would provide a smoother transition to add managed print and BPO services compared to a traditional print VAR. MSPs’ customers also are more likely ready candidates to buy those services, said Tom Gall, director of value channel marketing at Xerox.

’Customers get it. Adding one more thing to the monthly bill is not that big a deal. If I’m selling you data security services, are you going to trust me with your printers? Probably,’ Gall said. ’The folks on the MSP side view it as low technology. The reality is there’s money there to be made. It’s not a new technology to get the CFO to buy into. They’re already spending money on print. You’re just getting them to buy in a different way.’

NEXT: Managed Print Services

Managed Print Services

More immediately, VARs can participate in managed print services through PagePack, which offers end users a single contract that covers pages printed, maintenance, services and consumables. But PagePack is designed for VARs that already have a significant print business and have customers ready to participate in a full managed print services model. That’s not all customers and certainly not all VARs.

If Xerox is going to be successful in this space, it’s going to need help from MSPs like Ted Warner, president of Connecting Point of Greeley, Greeley, Colo. Warner has built a successful managed services practice but hasn’t ventured into managed print. All he needs is a little push, a move Xerox seems poised to make.

’There’s no doubt that managed print is an important part of managing an entire client network. We have a very robust full suite of managed services that we offer our clients. But there’s been a hole as far as managing the print is concerned,’ Warner said.

Warner was one of the VARs Xerox invited to Fusion, one intrigued by managed print but unsure how to incorporate it. Connecting Point long ago lost the printer portion of the IT infrastructure when Warner transitioned the company from a hardware focus to services, he said.

’I have long been a believer that managed print is a little different sales motion than traditional managed services business -- like looking at various network pieces and developing help desk for a client,’ he said. ’I’ve felt that I would need to hire a new salesperson to do it. I don’t want to burden our traditional account managers to sell managed print. It seemed to me just so much more to do and it might be too much. Because in my opinion, it’s a little separate discipline and a little lower margin, though still appealing compared to a hardware-type sale.’

Warner’s opinion was confirmed after talking to several MSPs and print VARs at Fusion: Managed print is a different animal that requires different skills. But Xerox has heard that argument, executives said, and is ready to arm partners with a new weapon to overcome those challenges -- the eConcierge program.

EConcierge tracks an end user’s printing fleet needs and lets the customer order supplies through a preferred VAR’s e-commerce portal, an initiative designed to dramatically increase the VAR’s after-market supplies revenue.

Warner estimated 75 percent of his customers have HP printers, but eConcierge would allow him to still service those customers with supplies. And, he said, he might be able to rip and replace legacy HP fleets with Xerox because eConcierge gives customers a free service contract for Xerox printers.

’When it’s time to renew and they can buy HP or Xerox and basically get services for free from Xerox, what’s the client going to do? They’re going to go with Xerox,’ Warner said. ’It’s a soft entrance into managed print, an opportunity to get back into the printer business without a lot of brain damage. I think we will create revenue. I think we will see our sales for printers and supplies go up. Then [customers] may say we’re ready to go into a full managed print solution.’

EConcierge should let VARs add revenue that’s about 10 times the cost of the printer they sold for little investment and effort, said Deb Koehler, Xerox’s director of North American reseller sales, Business Platform.

The big enticement for customers, Koehler said, is the free services contract as long as they keep buying supplies through eConcierge. That feature could save end users hundreds of dollars in service contracts for each device, she said. Koehler estimated that a VAR managing supplies for 500 printers under eConcierge can expect to make an additional $250,000 in supplies sales each year.

Terry Williams, owner of Advanced Technical Support, a Morrisville, N.C., solution provider that piloted eConcierge, said he was able to win supplies business from customers he’d never been able to get sales from before. And he sold six new printers because he had more visibility into existing fleets.

’You can see what their behaviors are, how old are their machines, for a potential future managed print contract,’ Williams said. ’It’s stickiness. It gives you a compelling reason to get in front of a client. That’s what we’re looking for: to stay in front of the client. If you do that and be very proactive and consistent, you can have tremendous success.’

Buddy Carpenito, owner of Technology Solutions of America, a Winter Garden, Fla., solution provider that also piloted eConcierge, said his customers are so happy with it that no one has even asked how much he’s charging for toner cartridges.’They’re just buying it,’ he said. ’For most customers it’s a super convenience. Xerox gave us a franchise. They set us up in a business for virtually no cost. I’m very excited.’

The VARs’ reaction was good news for Burns, a self-admitted street-savvy New Yorker who ’doesn’t have time for bureaucracy or double-talk.’ During her keynote, Burns told VARs she and Xerox have no excuses for not being the best channel partner they can be.

’I looked up the definition of what a partnership is. It had all these unbelievably boring words that are obvious, but one sentence really stuck out with me,’ she said. ’It said, ’two or more parties conducting business for mutual benefit.’ If we both keep that in mind, I think we’ll be amazingly successful as we go forward.’