Xerox jumps on service provider bandwagon

Martin Vander Eyken, manager of IT projects at Schneider Electric Inc. in Toronto, still remembers the day his co-worker lost it over a peripheral.

After too many problems with a particularly fragile photocopier in constant need of repair, Vander Eyken’s colleague gave up on the annoying technology, “ranting and raving…that the service technician got to use his copier more than he did in a week. He was there every day fixing it.”

Vander Eyken, a former Xerox Corp. employee, suggested Schneider migrate to Xerox’s printers and photocopiers, convincing the company that similar calls to Xerox would not be required.

That was 14 years ago, and the Schneider-Xerox relationship proved solid. Now Schneider is taking it to the next level, inviting Xerox to take care of network peripherals – printers, photocopiers and fax machines – as a service.

Xerox provides a point man on peripherals, a technician at Schneider’s Toronto headquarters whose job is to make sure the technology runs smoothly.

Vander Eyken said the peripheral go-to guy is invaluable. “We’re not getting our expensive network support people dealing with photocopier, fax machine and laser printer calls. It’s all dealt with by Xerox.”

That Xerox wants to be known for services as well as technology indicates just how popular this concept is. Last month the company announced “Global Services Canada,” a new business unit designed to change the firm’s image. Although Xerox’s most recent attempt at a makeover failed, spokespeople posit an image based on managing IT infrastructure as well as providing it.

“In order to stay with our growth pattern, we need more than technology to sell,” said Thomas Dolan, president of Xerox Global Systems. So, taking a cue from IBM and its e-business service push circa 1995, Xerox is targeting customers not with photocopiers, but with the know-how of maintaining technology.

Bill Fournier, printer market analyst with Evans Research Corp. in Toronto, said the Xerox mindset concerning services is on the ball. After all, “what’s the point of selling a box? We have to make sure we’re selling a solution. That’s really where a lot of the revenue from high-end machines come anyway.”

Jason Bremner, senior analyst of outsourcing services with IDC Canada Ltd. in Toronto, said companies turn to third parties for cost savings and to better focus on the business at hand, instead of the technology.

“If they can’t do it with the resources in house, then they’ll look at a different model and obtain the benefits from a service.”

To wit: Schneider Electric’s IT department has only six people, including network caretakers. It serves almost 2,000 employees in Schneider’s 30 locations and Xerox is “saving the internal cost of service issues,” Vander Eyken said.

Xerox offers more than peripheral aid for stressed out IT departments. Aside from managed services, the company hosts applications, offers consulting and helps with tech implementation. These elements represent a new outlook for the former “Document Company”, according to Dolan.

“We’re changing that image,” he said. “I think if you went to our Fortune 100 clients, they’d tell you we’re much more than that,” nonetheless, he added that Xerox is known primarily as document specialists. The services division could help expand the company’s definition.

This is not the first time Xerox has tried to change its image. In 2000 the company made a play for the inkjet printer market in an attempt to win friends in the small office/home office (SOHO) crowd. The plan ultimately failed – not surprisingly, said Fournier.

“People think ‘Xerox’ and they think ‘copiers’ and ‘business products.’ It would have taken a lot of strategy to get into the consumer marketplace. They did try to do it at the SOHO level.…But that market has traditionally looked at companies that provide consumer products, like HP, Canon and Epson.

“They’re going back to their roots, which is being a corporate company. That’s really where they belong.”

Dolan said Xerox does not want to make the same mistake with services. That’s part of the reason why the company announced Xerox Global Services Canada in March, months after the group was formed. Practice makes perfect and “otherwise this becomes nothing more than theory,” he said.

However, a business catch-22 could hinder Xerox’s success as a provider, notes IDC’s Bremner. On one hand, customers prefer to buy from providers with well-formed histories. Xerox, an ancient brand, wins in this case. But customers also prefer to work with companies whose core competencies speak to particular services. Although Xerox has a history with documents, it is not known for IT management, one of the services Xerox offers.

“What happens if they say, ‘We want to start offering data centre operations’?” Bremner said. “Is a large organization going to look at Xerox as being capable of managing a data centre?”

Vander Eyken, for one, said he will “reserve judgement” on Xerox’s ability to offer other sorts of IT services, such as desktop PC management.

“But in terms of the ability of a company like Xerox…to actually do what they’re selling, I would say yes, I would feel confident. In my history with Xerox, whatever they’ve sold their product to do, it does it. I’m expecting the same with their services, but I don’t have the proof yet.”