10 Things To Watch For From The New, Channel-Friendlier Xerox

Welcome To The New Xerox

Xerox executives said the $11 billion document technology behemoth has a renewed commitment to winning over multi-vendor channel partners following the spinoff of its $7 billion business process outsourcing (BPO) division, which closed Tuesday.

"We are relentlessly focused on multi-branded channel partners like we never have been before," said Mike Feldman, Xerox's new North America president. "We have very low market share, and we have not made a serious attempt to go after them."

Xerox is vastly underpresented in the $51 billion small and midsized business (SMB) printing market, according to new Chief Commercial Officer Kevin Warren, particularly in the $20 billion segment serviced by independent, multi-branded dealers.

"This is all greenfield for us," Jeff Jacobson, Xerox's new CEO, told investors last month. "This is $20 billion that we just, quite frankly, didn't focus on."

From signing up 500 new U.S. partners to shifting tens of thousands of direct accounts to the channel to the company's first ever channel-exclusive offering, here are 10 things to watch from the new Xerox.

10. All Marketing And R&D Funds Reinvested In Document Technology

The spinoff of Conduent will be very clean since Xerox didn't integrate many of its BPO offerings into Xerox's legacy document technology and document outsourcing capabilities, according to Feldman.

But as a standalone company, Feldman told CRN that Xerox will be able to put more time and resources into channel recruitment and activation programs since all of its marketing and research and development funds will be re-invested into this business.

Xerox partners will not find themselves competing against the newly-independent Conduent since they focus on outsourcing operations in areas such as call centers, toll processing and student loans, according to new Chief Marketing Officer (CMO) Toni Clayton-Hine. That's very different than the products and services provided by Xerox's channel, she said.

9. More Capabilities Around Reaching Line Of Business Leaders

Xerox partners can expand their business not only by boosting the number of IT assets under their control, but also by expanding their reaching into line-of-business (LOB) buyers in sales, marketing and human resources, Clayton-Hine said.

Clayton-Hine told CRN that in the past, organizations had separate people managing print and IT infrastructure. But now that printing is considered an IT asset, Clayton-Hine said that solution provider can assert more control over all internet-connected endpoint devices.

Xerox's offerings will also enable partners to tap into a recurring revenue stream they aren't seeing from other traditional hardware, software or Software-as-a-Service (SaaS) offerings, Clayton-Hine said.

"If all you're thinking about is hardware, then you're missing an opportunity," Feldman said.

8. Greater Partner Customization Of Screens And Workflows

Xerox has developed a graphical user interface that makes it possible for partners to easily change the look and feel of the screen without having to be an IT developer, according to Steve Hoover, Xerox's new chief technology officer.

More small changes to the device itself around defining and save unique workflows will also be achievable for most partners, Hoover told CRN. More detailed work with the offline graphical programming environment will be obtainable for solution providers that employ developers, Hoover said.

More complexity exists, though, around manipulating Xerox's Extensible Interface Platform (EIP) interface, which Hoover said is the application programming interface (API) for everything Xerox does within the device. Hoover said partners with experience developing client servers and web apps – or roughly 10 percent to 15 percent of the company's channel – should be capable of doing this.

7. Managed Print Services That Save Time By Automating Workflows

Xerox occupies 10 percent of the $7 billion SMB managed print services (MPS) market and has enjoyed double-digit growth in the space for at least each of the past four years, Feldman said.

"The market has been growing at 7 percent," Feldman said. "We're significantly outperforming the market, and we expect to continue to outperform the market."

Xerox's MPS offering starts with assessing and optimizing the end client's printing infrastructure and moves into securing the integrating the printing devices, Feldman said. But the company really differentiates itself by simplifying and automating processes such as tracking toner usage, detecting when it's low and automatically shipping replacement supplies without anyone having to lift a finger.

"Your customers are demanding workflow automation," Feldman said. "This is where the future is, and Xerox has made big investments in this already."

6. The Ability For Partners To Easily Build Their Own Apps

Xerox started an app gallery that supports partner-developed apps roughly a year ago, Hoover said. Since then, Hoover said channel partners have developed about 20 different apps capable of streamlining firmware updates or components of managed print services.

Hoover said doesn't expect to see millions of channel-developed apps since businesses can only use a finite number in their regular workflow, but he does expect partners to eventually contribute hundreds of thousands of apps to the gallery. This will help the channel maintain a relationship with end users that extends beyond the one-time device sale, Hoover said.

"We have made it very easy for partners to develop these apps, and we think that ability will give them a little extra value with customers to make them really sticky," Hoover said.

5. A More Robust And Less Expensive A4 Portfolio

Xerox has long been a leader in the larger, freestanding A3 printer space, with a current market share of 22 percent, Warren said. But the company today has just 6 percent market share for smaller, tabletop A4 printers, leaving them stuck in 9th place from a market share perspective, he said.

That is all changing, though, with Xerox's latest product launch, in which 16 of the 20 new offerings are A4 devices, Feldman said. The new A4 offerings are also priced more competitively for the channel, Hoover said, with the newly-released WorkCentre 6515 retailing for less than $500.

"Large companies are willing to buy A3 products from one vendor and A4 printers from another vendor," Feldman said. "But in the small and medium-sized business space, they'd rather have one vendor with a competitive offering in both."

4. Aggressive Partner Recruitment In Geographic Areas Of Need

Xerox has pinpointed the geographies where it would benefit from expanded channel distribution, identified the major channel players in those areas and invited them to a 1.5-day recruiting session where Xerox talks them through the company's strategy and offerings, Feldman said.

Jacobson told investors that he attended one of the partner recruitment meetings in New York, where 48 channel partners were brought in and 20 percent of them opted to sign up. Xerox has held the same recruitment meetings in Europe and enjoyed a similar level of success, Jacobson said.

"They [the channel] want to make sure they hitch their wagon to [vendor] partners that they know will be here," Jacobson said. "When they look at us as an industry leader, they have great confidence."

3. The First Ever Offering Available Exclusively Through The Channel

Xerox's new Healthcare MFP offering will make it possible for small doctors' offices and clinics to securely share digitized medical records with one another, Hoover said. And it will be Xerox's first-ever offering sold exclusively through channel partners.

Larger hospitals or provider networks serviced directly through Xerox aren't the target audience for the Healthcare MFP product since they typically have their own internal electronic medical record (EMR) system, Hoover said. But many small and mid-sized clinics and doctors' practices – who are primarily served through the channel – are still sharing secure documents with one another via fax, Hoover said.

"We're going to see how this works," Hoover said. "If it works very well, then we would be looking to develop more channel-specific apps. If it doesn't, then we wouldn't repeat it."

2. 500 New U.S. Channel Partners With More Than $5M In Annual Sales

Xerox will aggressively pursue larger channel partners in the United States, Warren said, with plans to bring on 300 dealers with between $5 million and $10 million in annual revenue and 200 dealers with yearly sales exceeding $10 million.

"We will ratchet up the recruitment and activation of partners that are the right fit and have the right growth investment," Warren said.

Xerox typically had more success in the past with smaller channel partners since they were getting limited attention from other manufacturers, Feldman said. But since Xerox will now have a strong portfolio of both A3 and A4 offerings, the company should be able to win over bigger, better-established channel partners with a multitude of good vendor options.

1. Tens Of Thousands Of Direct Accounts Moved To Channel Partners

Xerox plans to transfer tens of thousands of its directly-served upper mid-market and smaller enterprise accounts to channel partners, Feldman said.

Customers with 1,000 or more seats are currently classified as large enterprise accounts, Feldman said, and are therefore eligible to be serviced directly by Xerox's salespeople. Going forward, though, only accounts with 5,000 or more seats will be considered large enterprise, Feldman said.

As a result, just 2,000 accounts will be eligible for direct interface with Xerox, Feldman said, with tens of thousands of other accounts shifting over to channel partners.

Xerox also plans to change how it compensates its sales force, Feldman said, moving from a model that incentivizes direct sales to one that pays salespeople the same regardless of the route to market.