Copier and printer giant Xerox Corp. is working hard to evolve with the rolling economy through technology, products and people—and in that order. Two years ago the Stamford, Conn., company placed a big bet on color copying and printing and attacked the market with a handful of super fast products. And the move is paying off. In its first quarter of 2003, ended March 31, Xerox reported a 16 percent growth in color products for the same period last year. Then in November of 2001, the company announced an overhaul of its services business, deciding that key to driving its technologies and products through businesses would be embracing the customer through customizable services. eWeek Executive Editor/News Michael Zimmerman caught up with the person behind the strategies, Xerox Chairman Anne Mulcahy at a recent product and services launch in New York to get her take on the increasing role of services to the company and the industry.
eWEEK: Todays announcements were focused on the office customer, but I think when most people think of Xeroxs customer base, they already think “office.” What was unique about todays office announcements?
MULCAHY: Our heritage has been in the office, but I think today we really talked about broadening the way we serve the office. I think we kind of narrowed our scope over the years in terms of big customers and highly functional kinds of devices. And todays announcement was about really serving the office, like everybodys office, not just big customers offices. And I think that is a change. Its all about broadening the scope of what we bring to the market so that we can participate in more customer decisions…Its not a one size fits all, its very customized both from the range of technologies; the fact that a lot of it is component oriented so its upgradeable. The whole approach of being able to listen to what a customer needs and be able to respond in a very customizable way is a real advantage in serving the office as well.
eWEEK: It sounds like Xerox is interested in vertical templates. Are you getting aggressive about the vertical segments?
MULCAHY: …I think the answer is, Yes, in the sense that were trying to both customize ourselves as well as work with partners that provide total solutions to industry segments that we think are particularly document intensive. And we can benefit from those vertical approaches.
eWEEK: And what new things are in the pipeline?
MULCAHY: The capability of technology, in terms of adding intelligence is really exciting. The whole embedded services piece of this, that says, OK, today maybe it can solve problems, order supplies, automate meter reads. In the future it can be user identification, it can be automated distribution lists—all sorts of things that make it almost seamless to get complex document work done at a device. That intelligence is there to be had within the device, and I think we just keep thinking about layering new and better services into that architecture.
eWEEK: As far as services, youve talked about expanding services down the road. What kinds of services are we talking about? More security?
MULCAHY: Well, certainly, security is very hot…theres also a lot of consulting services that are really helping make document processes in the office more productive. We talked about Office Document Assessments, but theres all sorts of solutions both onsite and offsite that can be delivered for customers that dont necessarily want to have paper documents. They might want to host applications offsite where Xerox can manage the content and really do the client communications. And were doing more and more of that in terms of imaging services. The nature and breadth of the overall services portfolio is really broadening and should be an area of good growth for us in the future.
eWEEK: As far as your stated goal of getting services revenue to account for half the companys revenues, how far away are you from reaching that?
MULCAHY: Were still a ways away. Id say when we look at what we deliver through services or in stand alone consulting services were still at about 30 percent mark. So weve got a ways to go to get to the 50 percent mark. And I dont know that thats a fixed goal. It may be more, it may be less. But I think we know that we have the capability to grow services at a faster rate than we have to grow technologies.
eWEEK: Where was it a year ago?
MULCAHY: It was probably 27 percent. But I think part of it is that the economy has hit the services sector fairly hard. So I think the last year and a half has been a real issue particularly with consulting services contracts. I think that will come back when the economy comes back a bit as well. So its definitely slowed down in the last year and a half.
eWEEK: How do you see the role of services within Xerox, when alls said and done about products?
MULCAHY: I do think it is the lead for our customer engagement. We need to be engaging with our customers on the basis of solving problems that should be some combination of the expertise we deliver with our people. The technology and the actual services we can provide to support the solution—thats when were at our best in solving customer problems. I think it is the approach we should be leading with. You know, technology is a part of that solution, but its just not what you lead with.