Deal Furthers Xeroxs Services Efforts
The deal with Cisco also furthers the printing giant's services efforts, which took a big leap forward in 2009 when the company bought business process outsourcer Affiliated Computer Services, or ACS. At the time of the ACS purchase, Xerox officials said the acquisition would enable it to rapidly ramp up its services capabilities. It also came relatively soon after HP bought EDS and Dell acquired Perot Systems, part of a trend of major tech companies gathering services as a way to add recurring sources of revenue and give customers help with their increasingly complex IT environments. In addition, it gives the companies a way of taking advantage of the rapidly growing cloud computing trend."It gives Xerox as a company a completely new way to look at the market," Peakcock said, noting the new capabilities in such areas as BPO (business process outsourcing) that Xerox can now leverage. "We're still proud of our heritage in the technology space, [and] we still spend a significant amount of money on R&D on [building technologies], but our company is changing." He said he senses that the rest of the industry is also embracing the change in Xerox. "The view of the outside world, we hope, is more and more of Xerox as a player in the outsourcing space," Peacock said. Xerox Chairman and CEO Ursula Burns reiterated that point during the company's shareholders meeting May 10, where she spoke about opportunities in such areas as business services and document management. "This is the new Xerox," Burns said in a statement. "Today, we provide the most diverse set of services in the industry, offer the broadest portfolio of document technology, have a growing global customer base, and continue to invest in world-class innovation that brings differentiated value to customers." Xerox is continuing to look for a greater percentage of its revenue mix to come from services, which company officials should grow 6 to 8 percent by 2012. More than 90 percent of revenue from services is annuity-based, which they said offers Xerox a long-term revenue stream.
For Xerox, the change has been good, according to Russell Peacock, president of Xerox's North American operation. In an interview with eWEEK earlier this year, Peacock said the ACS acquisition is helping Xerox in its efforts to become more of a solutions company than a technology company. Xerox right now gets about 49 percent of its revenue from services, he said.