Q&A: Burns Zeroes In On New Channel Opportunities

Since taking charge at Xerox, Ursula Burns has gotten to know a lot of VARs. At the company’s recent Fusion conference, she let VARs get to know her. During her keynote, Burns spoke about being raised by a single mother in New York to graduating with an engineering degree because that field paid the most at the time. After her speech, Burns talked with CRN about Xerox’s strategy with her at the helm. The following are excerpts:

What skill sets do you think VARs will need going forward to be successful with Xerox?

If you were to ask me this question 10 years ago, I would say you’d have to be a master salesperson. Understand IT infrastructure in general and then our technology, our printing, copying, multifunction technology and then how it connects to the IT infrastructure. I think you still need to do that, but that’s not enough.

/**/ /**/Today, we have to understand more and more, in the channel but also by Xerox employees, about customers’ business processes and what actually makes a company run. This is something when I was early in the company somebody said to me: You should always understand how a company makes money, how Xerox makes money and how the gap between your revenue line and your profit line is all about the cost in the company. If you can understand how your clients make money, you can understand how you can help them make more money. We call it business process understanding, but it’s also customer intimacy. That is as important today as understanding how solid ink technology works and where routers go.

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A lot of your channel partners come from a technology background as opposed to a business background. Do you think that it’s going to be a difficult thing for them to move to?

I think it’s actually going to be easier for partners vs. someone who spent their life in an engineering lab. Channel partners have some deep intimacy into a business themselves. They’re running their own place and working in relatively small enterprises where they can see a lot of different processes in the business. That gives them a deeper and broader understanding of key pain points and what kind of work has to be done. I think they have a better start point. They’re also a little more entrepreneurial than not. With this whole idea of branching into new areas and not sticking with the status quo, particularly today when technology cycles are so fast and the pressures of cost are so significant, they have to continue to figure out every single day a way to serve their customers better and better, broader and broader in order to stay relevant.

How can Xerox help them make this transition? Are you going to be making investments to help them get there?

A big piece of the work we’re doing with channel partners is not only to give them things to sell, a mobile print solution or partnering with them to sell things. It is about teaching, educating on industry-specific verticals. So if you’re doing a lot of work with the government today, there are ways to apply the technology and solutions and services that we provide around a specific vertical. But it’s also around how do you take all this stuff and knit it together into a relevant set of offerings for your clients. Only a portion of the investment is the [products] that we give. It’s the part you see the most, but another piece of the investment is how we help them become more relevant by using their value-add, their intimacy into local geographies, to partner with a set of solutions that we have. We also help them communicate that to the marketplace.

Is Xerox looking for additional or new types of channel partners that maybe you didn’t touch before?

Absolutely. Xerox started out its go-to-market strategy [direct] when we started the company, and [that] lasted for 30 years. We had Xerox people employed by us literally carrying our technology to clients. That was a self-limiting value proposition. You could only grow as fast as you can hire and train. That takes forever to do that.

We expanded to have a wholly owned channel, what we called a mono-branded channel. We didn’t own them. We had a business arrangement with them. We gave them some of our technology and our infrastructure. Both of those things were limited as well. We found out through our maturing as a company that those value-added resellers that already have a position with clients in certain IT segments didn’t generally get involved with document technology. They didn’t generally get involved with copiers and printers and multifunction devices. Until recently, that was not considered part of the IT infrastructure.

So the next step was to partner with IT-relevant resellers and add to their portfolio, and they add to our coverage a set of technologies that are becoming more relevant and are required to be part of the IT infrastructure because they have the same security risks, the same bottlenecking processes, the same need for consistency across the enterprise.

And we realized that these guys are great, but we kept the offering [to VARs] pretty narrow: desktop devices, relatively small, no solutions, no services. They sell, they’re smart, they have relationships that we don’t have, particularly in the SMB market. Why not give them more and more to sell? And I don’t mean just to push [products] but to get Xerox value-added [solutions] in front of clients. Why wouldn’t you do that?

As partners get more and more engaged with us, solutions are something they want to add. Mobile print as a solution is a key one. Our PagePack expansion. EConcierge, how you get supplies ordered in a cost-effective way. And then opening up the fleet of offerings to not be just desktops, but essentially everything that we offer up to 60 pages per minute they can offer to their clients as well.

We’re focusing on expanding [direct] with large enterprises; that’s where the biggest need is for our services. But as we go forward we will absolutely have to consider and work with partners. We have them, they’re great, they already have relationships. How do we morph the services we have so that we may be able to partner some of these services out to [VARs].

NEXT: ACS And The Channel

Where are the synergies with ACS and how will they play with the channel?

Clearly, we’re not far down that path. We have so much work to do to fill out the large enterprise offering. The BPO push and need is amplified and very intense in large enterprise. They have sites all over the world, [tens] of thousands of employees, HR infrastructure, accounting infrastructure, customer care infrastructure. This explosion in BPO is around these clients saying, ’Why am I spending all this money to do this and I have no scale? Can I actually get scale partnering with someone?’ Our focus is on that for the near future. 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.

Should resellers be thinking about that now and actually preparing their businesses for those prospective opportunities, and what should they be doing?

The way they set themselves up is by focusing on the solutions offerings. BPO is about that. Mobile print is about taking a set of technologies and work processes. MPS is about a work process. The way that resellers can get ready for a broader services bent is to take advantage of the services and solutions that are available to them today. It won’t take them a long time, but there will be some time to get some of these simple solutions out.

EConcierge is the first example. Managed print services has been around for a long time, but partners around the world and industries around the world have only been kind of doing it a little bit. Now the need is unbelievably intense. A normal tech cycle, anything you do, whether it’s IT infrastructure or MFP devices or routers, is one that drives price down by innovation.

If you think about the first BlackBerry, it cost $1,000 and the second one that came out cost $900. The cycle time between them, with increased functionality and decreased cost, is shortening.

If you’re an IT reseller and all you do is sell hardware, the pressure on you every day is intense for new ways to make more revenue. We know for sure [end users] are saying how you can generate more revenue is to help me pull this stuff together, to help me understand my work processes and how technology and solutions can make that more efficient. The highest-level BPO is that. The simplest BPO entries are to do BPO around the expertise you have, around technology resources. I don’t think they have to do much more than that to start practicing and engaging in a broader set of discussions with their clients.

So VARs have to learn to walk before they can run when it comes to BPO and managed print services?

Yes. By the way, we’re not ready to have them run today. The solutions we have are definitely not packaged for someone to just walk up the street and set up a call center for someone. If we’re going to get to the point where we actually do engage partners, we have to make sure we make these things ready. Right now the market for that is not as high in demand as the market for it in the high enterprise.

How do you see the migration from Web-based tools to app-based tools?

An amazing nuance in that question is very important. I’m going to move not from Web-based to app-based but from Web- and ground-based to app- and cloud-based. Basically what happened in the past is you had to have your own stuff -- your own server, your own infrastructure, your own software people, your own security, your own everything.

Large enterprises tend to grab on to new technology first, but they don’t actually morph it faster than smaller enterprises, which don’t have all this infrastructure to carry the burden of inefficiency.

So what’s happening in the application of technology today, in hardware and software, is things are moving to app-based [models]. You package it in a way that you can use it. All the stuff you had to have before gets peeled off and used in a descaled, central way for you. Also, you can buy in chunks that you can afford and understand. The world has changed amazingly, with the simple words of ’app-based’ and ’cloud.’ I mean, we say something about cloud in every speech. Cloud this, cloud that. And if you don’t, people think that you’re not hip.

The way to think about cloud is you used to have to have everything. If you wanted to cook a meal, you needed your own kitchen. With the cloud, you go to a restaurant and buy only the things you need on a plate already plated for you. And the cloud allows you to virtualize a lot of the infrastructure that you have. You don’t have to be an expert and it is relatively simple. It allows you access and a place to park resources you have in a shared environment. So you don’t have to have your own servers, your own farms of computer technology. You can literally do it in a public cloud, which has some limitations, but you can also do it in a private cloud. Applications, which is the putting together of all this stuff, is basically solutions and business processes, and cloud allows you to move significantly faster and to be more efficient. You don’t create as much waste.

The normal utilization of a multifunction printing device is about 15 percent. So you buy this thing that works 60 pages a minute and because you don’t work 24 hours a day, and because you work and are not printing, you buy this technology and whole hours of the day your infrastructure is not used and you’re paying for this thing to sit. With applications in the cloud all you to do is access and share across this amazing environment. And it doesn’t require you to have to understand solutions.

So how does that tie into what you’re doing in document management?

How it connects to document management is directly. One of the things I said earlier is if you look at the normal utilization of a piece of technology in your office, a scanning device, a printing device, first of all you have too many of the damn things. Everybody has one at their desk. So instead of having a workgroup-shared device that probably has a utilization of 25 percent, you have 500 single-function things that have a utilization of 5 percent each. The whole idea about document management in its most basic offering is to just look at the client’s work environment. Understand the work that this client does at the most basic level. Manage the topology of document devices, connected through software and management processes. How do you keep it up? How do you make sure the paper’s in? How do you make sure the toner is in? Managing that to take the number of document devices and consolidate it down to the most efficient configuration you can have, that’s what managed print services is all about.

The next higher level or increasingly complex level is to say you also have a set of workers that are mobile. And they need to have access to documents. Your mobile workers change and you have to scale and deliver communications for a specific client. How do you put in place, you, Mr. Reseller selling to the paint store down the street, something he can generate on the fly, on the road? A set of collaterals that he can leave behind when he doesn’t even know for sure who he will run into?

Having a mobile print solution is not just having an iPhone and printing one page. I want to have access to applications that Xerox and its partners can work to set up that are industry-specific. If you’re going to a small hospital we can help you develop a set of collaterals in short time with a client’s name on it. You can have that without all of the infrastructure, the collateral database by yourself. Think about that all the way up to the most complex processes where you have to package together a set of IT infrastructures which the value-added resellers can provide to a client today and expand that to document technology where you literally become the office-in-a-box for a small business.

NEXT: On The Competition

You mentioned in your keynote that you hate when one of your competitors does something better than you. Where are some holes or gaps that others do better than you?

Everybody has something that they do better than us. One of the reasons for saying that in this [conference] is that we are closing one of the places where we’ve been weak before. One thing that competitors did better than we did in the past is they took advantage of channel partners in the broadest sense that they could. We have been slower to open up our great set of offerings, software, services and technology to our channel partners. We’ve been kind of schizophrenic about it, nervous about it. We’ve been, ’We’ll only give you this, not that.’ We’ve been afraid of conflict.

What some of our competitors did before we did, primarily because they didn’t have an option, [was work with partners]. That started out as a disadvantage for them and they used it to an advantage over time. What we’re doing now and one of the reasons why Fusion is so important is we are trying to figure out a [way to know] what you do have and can you prove you are capable? There are hurdles you have to go through and if you can prove you are capable we’ll partner with you and make Xerox available to you. That’s something that our competitors did a little bit better than us, but we learned really fast.

To that point, one of the things we’ve seen is some of your competitors putting intense pressure to sell a single vendor solution across the board. What are your thoughts about that?

The positive side of where in the past our competitors were better is that now we are catching up. You have to compete on your merits. We’re in a democracy. Choice is a good thing. Choice keeps you on top of your game. Earning the right to be chosen, we are not afraid of at all. Using your clout in the way that it creates disadvantages is not a good thing. Over time, that comes back to catch you. If that’s the path you’re on, you’re headed in the wrong direction. It may work in the short term, but I don’t think it will work in the long term.

HP has had a tumultuous year. Has Xerox benefited from that and how?

The way we approach the market is to assume that every single one of our competitors is phenomenal. And that if they have a tumultuous time, it’’s only a temporary setback. I look at HP and say they are a very good company, very large, global. We assume that if they lose sight for even a second, they will get back in the next. Our assumption is that HP is great. Our premise is that we’re better. We try to work every single day to assure customers that they see we are better and potential customers hear that we are better, and how we are better with a broader set of technologies.

For our clients, we have knitted together a global offering that for large clients particularly makes a huge difference. If you are any big client that we do business with, you don’t want us just to do business in San Antonio. But it’s, can you get us to Alaska or Bahrain or Egypt? Can you get around the world and do it with a consistent look and feel, with a consistent set of technologies and services? HP can’t do that because they don’t own the service offering. They contract around the world. It’s not consistent. That’s allowed us to differentiate ourselves around the world.

[We also] have extended into a space HP is not interested in, the BPO space. But it is a place where customers are crying for help. This expansion of Xerox and ACS into not just document management or document outsourcing is the place that we definitely lead.

You’ve stated you are looking for the best set of partners that you can. Does that mean even if you’re not looking for Xerox-exclusive partners that you’re looking for quality vs. quantity and if I’m a Xerox VAR I’m going to have to make some investments and make sure I’m keeping up?

If people want Xerox-exclusive, that’s not a problem for us at all. But the biggest thing is not exclusivity, but whether or not you are matching your desire to do business in this marketplace with us with an investment. Not only of money, but of time to learn to become good to continue to move up the ladder to match your desire and expertise building.

In some cases when vendors want VARs to make investments, some VARs get left behind, which creates feelings of animosity. I want to make sure that if your message is that they need to step up ...

They have to step up. I don’t think that’s a negative thing. We don’t walk into a partnership and say I think you’re going to fail. We believe with reasonable effort and reasonable competency you can make a go of it. We do screening to make sure we’re not signing up with Joe Schmo. With that there’s an assumption that together we will do better than either of us could do alone.

In addition to being the first female African-American CEO of a company the size of Xerox, what do you want your legacy to be?

The first is that I continued the tradition of solidifying and growing a great company. Using all the assets we have to the highest level possible. We have a history of innovation that we should be able to apply in more spaces than document technology. We have a brand name that means something, that means something good. It means we’re innovators, global, ethical. It means that people respect it and like it. The legacy I would want for me is that she extended to more people in need around the world, more customers who need the value we have around the world. She extended.

The second is my family. The one thing I know on most nights when I go to bed is that my kids and husband are well. They’re older now and are figuring out their way. Now it’s whether they’re contributing people in the world. It’s the whole push around making sure my kids, nieces, the whole circle that makes up my family, have a proper perspective and be contributors to the world and not about taking away from the world. And it’s not about money or position or the number of people working for you. It’s about adding value, solving problems, making it a better place. This is not altruistic. It’s just basic living, which I think we’ve kind of forgotten about. Yes, you can share. Yes, you can hold the door open.

The third is to give access to more people some of the opportunities that I’ve had that have made my life fundamentally different. People ask what was the secret. The secret was we went to school. My mother actually said we have to work hard and finish school. These were not choices.