Xerox President Aims for Dominance

When Russell Peacock surveys his new domain as chief of Xerox North America, he sees a brand that has high recognition and appeal in the market, but only 40 percent coverage of IT decision makers and 18 percent market share.

His goal: Drive that coverage to 50 percent of decision makers and 20 percent market share ownership by 2013. And what’s going to get him there are services and channel partners. The end goal is making Xerox’s market position as dominant as its brand recognition.

In an interview with Channel Insider, Peacock waxed about the enormous opportunity Xerox has in services that range from business process automation to managed print services for small businesses. “We’re proud of the fact that we can offer a solution to all customers in all segments. It can be one printer for an SMB customer to a multibillion-dollar custom deal,” he said.

Indeed, this isn’t our father’s Xerox. In February, Xerox closed its $6.4 billion acquisition of Affiliated Computer Services—an outsourcing and integration firm that competed directly with the likes of HP Services (EDS) and IBM Global Services. While Xerox plans to operate ACS as a wholly separate entity, the inclusion of the new company’s revenues catapulted Xerox’s top line from $15.2 billion to $22.7 billion.

But the Xerox-ACS deal isn’t Xerox’s first foray into services. It’s long operated its Xerox Services division, which provided professional consulting and integration work for large enterprises. And in 2007, it bought Global Imaging Systems, a leading reseller of document management technologies, which continues to expand its SMB and small enterprise document management and print services businesses. And Xerox is stepping up efforts to expand its managed print services through its existing Page Pack 3.0 program.

It’s that arsenal of firepower that’s got Peacock fired up. The document management market, which includes printers, is roughly $120 billion with a mere $20 billion going toward print managed services. The business process outsourcing market, which ACS and Xerox Services plays, is worth upward of $500 billion globally. The potential rewards for upward shift in either of these segments are huge.

The new weapon in Peacock’s arsenal is Xerox Print Services, a program that’s under way in Europe and going through the beta testing in the United States. XPS is a middle ground for managed print services, designed specifically for small enterprises. Where Xerox Global Services has large robust MPS offerings and Page Pack is designed for SMBs serviced by the channel, XPS—he says—is right-sized for small enterprises that want the benefits of managed print without the features demanded by their larger counterparts.

In total, Peacock expects to grow Xerox’s managed print services by 50 percent in 2010, and partners—VARs and MSPs—play heavily in that growth strategy. Partners investing in managed print services—either through XPS or Page Pack—will find competitive advantages with existing and new customers.

“It’s getting harder to differentiate based on hardware alone and services is the wrapper that does that,” Peacock says.

Xerox’s 12,000 authorized resellers and partners are critical to the success of Xerox’s vision and Peacock’s goals. But Peacock doesn’t shy away from the fact that success only comes with investment, and he says the rewards will go to partners that make the necessary investments in Xerox and its offerings.

“If someone is already carrying our brand, we don’t want to say carry on as usual. We need to listen to the partner and customers, and figure out where the market is going. From there, we should reward the partners for making the investments with us,” Peacock says.

The cautionary note from this interview comes from Peacock’s reflection on Xerox’s market coverage plan and what it’s willing to do to expand share. Xerox’s acquisition of Global Imaging Systems and the eight subsequent acquisitions made by GIS since 2007 show that Xerox is willing to buy into geographic regions where it has weak coverage and penetration. He cites the example of Global Imaging’s 2009 acquisition of Comdoc, a large Ricoh reseller, to gain access to 14,000 customers in four key states—Ohio, Pennsylvania, New York and West Virginia.

While being bought out may come as good news for some VARs, it also shows Xerox’s willingness to take some deals and markets direct to gain the best and highest penetration and market share. Peacock says it’s not adversarial to the channel, but rather contingent upon local market dynamics. His underlying goal is making Xerox—and its extended ecosystem of subsidiaries and channel partners—fiscally healthy and growing.

“I’m excited about the opportunities,” Peacock says. “We’re in a unique position. We have a crisis of opportunity, and if we do it right, we can return Xerox to market dominance.”

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