Can Xerox step up its game?
Xerox seeks to extend its lead in the managed print services (MPS) market and enhance its credentials in workflow automation.
The past year has seen some major changes in the print industry, as vendors face the ongoing challenge of remaining relevant and profitable in a mature market. Commoditisation and flat to declining print volumes are conspiring to push traditional print hardware vendors to broaden their product and services footprint. Such trends have driven Xerox to make yet another attempt at transformation.
Xerox separation reflects changing market
Xerox’s acquisition of Affiliated Computer Services (ACS) in 2010 failed to deliver the expected growth as markets evolved and shifted. The merged company’s revenue declined every year (except the first year following the acquisition). Following a strategic review in 2015, Xerox announced plans to separate into two independent companies – one comprising its Document Technology and Document Outsourcing businesses, which include traditional hardware and managed print services (MPS), and the other its Business Process Outsourcing (BPO) businesses (largely comprising ACS). Its Document Technology business reported approximately $11 billion revenue in 2015, and the BPO business produced approximately $7 billion. As such Xerox is back to the drawing board – effectively returning to its pre-ACS acquisition status. In conjunction with the move Xerox announced a strategic transformation that is estimated to save $2.4 billion over the next few years, $600 million which is incremental to business as usual savings.
Xerox joins HP in simplifying its business model and driving agility through separating the low-growth printer business from the higher growth services business. In both cases the separation is being rationalised as enabling greater agility and flexibility through a simplified organisational structure. Xerox claims that given the different client base and sales cycles, each company is more valuable as a separate entity and will create more shareholder value.
New offerings to drive growth in MPS and workflow automation
In the mature enterprise MPS market competitors are challenging the traditional MPS model with offerings to support broader digital transformation.
Xerox reported around 3% growth for its MPS business in 2015, with much of the growth coming from its channel-led MPS initiatives. Xerox is consistently rated as one of the strongest vendors in relation to brand perception in Quocirca’s review of the MPS market1 and is also building its credentials in the workflow automation space.
Indeed, workflow automation that simplifies and automates business processes are becoming key enablers for differentiation. According to Quocirca’s recent MPS and Digital Transformation study2, half of respondents are using MPS vendors to support workflow automation.
MPS has been proven to be a significant enabler for digital transformation with almost 75% of those using MPS reporting they are effective at paper and digital workflow integration, compared to 56% of those not using MPS.
Xerox is forging ahead with the expansion of its workflow automation portfolio with industry specific offerings for retail banking, manufacturing and higher education. These offer capabilities such as client on boarding, loan processing, student admissions and so on.
Xerox’s workflow automation platforms include its DocuShare enterprise content management (ECM) platform and its ConnectKey Technology. Additionally, the Xerox MFP Workflow App customisation service enables workflows to be tightly integrated into Xerox MFP hardware, for example capturing documents and routing directly to the appropriate workflow directly from a MFP. These solutions are based on a combination of partner and Xerox technology.
Xerox has also enhanced its MPS securilty offerings via its Xerox Secure Print Manager suite. This comprises both Xerox proprietary and partner components from YSoft SafeQ and Nuance Equitrac Office. Capabilities include authentication, pull printing, job tracking, accounting, print controls and user analytics.
Quocirca’s research shows that enterprises continue to face challenges in securing their print infrastructure and are looking to MPS providers for guidance in implementing an integrated approach across often diverse printer fleets. A modular approach such as that offered by Xerox will appeal to those wanting to deploy a layered approach to print security that can adapt as business needs change.
Xerox continues to demonstrate commitment to enhancing its solutions and services to address the broader digital transformation requirements of larger organisations. With an often high dependence on inefficient and complex paper-based processes, these organisations present Xerox an ideal opportunity for workflow automation.
Quocirca’s research reveals that industry expertise is a key criteria in provider selection pointing to the need not only for vertical solutions but also industry-aligned resources with deep process expertise. Whether Xerox can leverage the industry expertise from the newly separated services company or will build out industry expertise within the new document technology business will be key to it competing with more established competitors in this space.
Despite weak growth, Xerox retains a strong reputation in the MPS market. It is still building out its workflow management portfolio and faces strong competition in the business process automation market – from both traditional print vendors and BPO players.
Quocirca believes Xerox is well positioned to maintain its lead in the MPS market, but the market is in a state of flux with acquisitions and company splits.
When it comes to the broader needs of digital transformation, organisations adopting new technologies will turn to outsourced providers to deal with integration challenges. Xerox will need to articulate a strong proposition and demonstrate a proven track record as the market grows.
1 Quocirca Report: Managed Print Services Landscape, 2015
2 Quocirca Report: Digital transformation: Bridging the paper and digital gap