Xerox Outsourcing Global Information Technology Resources

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Xerox Outsourcing Global Information Technology
Resources

• Presented By
• Ken Grulich
• Tracy Handler
• Randy Patalon
• Nebojsa Stevanovich

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Agenda

• Characters
• History
• Whats at Stake
• Analysis
• Reasons for Outsourcing
• Recommendations
• Outcomes

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The Characters

• Xerox Outsourcing Team
• Jagdish Dalal
• Richard Bailey
• Charles Gilliam
• Core EDS Outsourcing Team
• Mike Reed
• Will Clark
• John Funk

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The Characters

• Xerox Who Started the Commotion
• Management
• Patricia Barron Director CIM
• Patricia Wallington VP CIM
• Consultants determined
• No Coordination of
• Not staffed to perform CIO functions
• Narrowly focused IT talent pool
• Management viewed IT as expense to be avoided
• Lacked effective staff development mechanisms

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History

• 1959 Xerox Introduced Model 914 Copier
• 1970 Xerox Held 95 of Plain Paper Copier Market
  with Gross Margins of 70 80
• 1975 Settlement with FTC, Forfeit Patent
  Protection and License Competitors
• 1980 Began Benchmarking, Employee Involvement
  Initiatives and Leadership Thorough Quality
• 1992 Reorganization Along Market Segment Lines
• 1993 Started IM 2000 Project to Address
  Deficiencies in IM Structure
• 1994 Firms Bid Signed 3.2 Billion, 10 Year Deal
  with EDS

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Whats at Stake

• Driver
• Legacy Information Systems Infrastructure Unable
  to Meet the Needs of New Divisions
• Decision
• Patricia Wallington Introduces IM 2000 Project in
  1993
• This project would develop a new IT
  infrastructure to provide the new business
  divisions with necessary information

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Whats at Stake

• Issues with IM Project 2000
• Xerox Senior Management did not value IT as a
  core aspect of the business lack of funding
• Legacy IT infrastructure eating up all of the
  time and budget of Xerox IM department
• Environment - Increased market competitiveness
  required the new IT system ASAP

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Competitive Forces Before

• High Barriers to Entry
• No Substitutes Were Strong Enough to Pose a
  Threat
• Customers Had Few Alternative Sources, Therefore
  Had No Bargaining Power
• Vendors Were Locked-In
• Low Competitive Intensity

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Competitive Forces After

• Barriers to Entry Were Removed
• Substitute Products Increased
• Bargaining Power of Customers Increased Due to
  Larger Selection
• Vendors Had More Markets and Were Not Locked-In
• Competitive Intensity High

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Essential Tensions
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IT Concerns

• System Proliferation
• Focus On Current Problems
• Lack of Standards
• Users Demands on Time
• Duplication of Resources

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Users Concerns

• Lack of Flexibility
• Out of Date Equipment
• High Maintenance Costs
• Lack of Innovation
• Equipment Needs Dominate
• IT Spending Out of Control

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IM 2000 Directives

• Reduce/ Redirect
• Infrastructure Management
• Leverage Worldwide IM Resources
• Business Process-Driven Solutions

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Outsourcing

• Outsourcing Driverswhy outsource?
• Outsourcing Timerswhen to outsource?
• Outsourcing Recipeswhat to outsource?
• Outsourcing Agendashow to outsource?
• Outsourcing Management

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Outsourcing

• Outsourcing Driverswhy outsource?
• Too many internal obstacles
• Little time and money to address issues
• Outside agent could introduce welcome discipline
• Rapid movement toward IM 2000 vision

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Outsourcing

• Outsourcing Timerswhen to outsource?
• Now !
• Little Time and Money
• Negotiations to begin after selection

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Outsourcing

• Outsourcing Recipeswhat to outsource?
• Data Center Operations
• Print Operations
• Network Operations
• Voice and Data
• Legacy Applications Maintenance and Enhancements
• Production and Enhancement Support
• Infrastructure Support
• Helpdesk, Hardware, Software

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Outsourcing

• Outsourcing Agendashow to outsource?
• Strategic relationship
• Collaboration with vested interest
• Accomplish IM 2000 vision together
• Price Benchmarking (40 elements benchmarked
  worldwide)
• Divorce Issues (termination of relationship)

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Outsourcing

• Outsourcing Management
• EDS created business unit dedicated to XEROX
• Focus on Collaboration
• Culture
• Strategy
• Structure
• People
• Process

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Global Outsourcing

• Complexity
• Different HR Laws
• Labor etc
• Force Majeure
• Acts of God, War, labor disputes
• Asset Transfer Laws
• Real estate
• Local Phone Companies
• State-of-the-art telecommunications

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Who to Outsource to?

• Potential Candidates
• EDS
• CSC
• EDS
• IBM ISSC
• Anderson
• Con

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What Should They Do ????

• Should Xerox Outsource ?
• If They Do Outsource How Should They Structure
  It?
• Should They Rebuild There Own Infrastructure?
• If They Stay Internal What Should They Do to Make
  It Work?

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Recommendations

• Xerox Should Outsource, Heres Why
• Management Internally Is Not Strong Enough To
  Support Transformation
• System Was Mature and Capable of Being Handed Off
• Legacy System Was Not Highly Competitive
• IT Department Was Average, However Management Was
  Below Average

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Outsource Selection

• Why EDS
• Global presence EDS believed to have superior
  global presence
• EDS - more willing to tailor their human
  resources to XEROX culture
• Most competitive BID

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Predictions

• Xerox Culture Will Be Forced Upon EDS

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What Went Wrong

• Xerox stopped honoring bills from EDS
• EDS sued XEROX over contract scope
• Billing system in disarray

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Where are they now

• Suit dropped and contract extended to 2009
• Broader service provided to Xerox by EDS
• Relationship is once again strong

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Questions