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Xerox Corp.'s pending breakup appears poised to have a mostly positive impact on managed print service providers and other document specialists.
The 110-year-old company, based in Norwalk, Conn., late last month announced plans to split into independent document technology and business process outsourcing (BPO) businesses. That process is expected to conclude by the end of 2016. In the meantime, Xerox contends the split will result in greater operational focus for each company. On the document technology side, where numerous partners sell Xerox printers, supplies and related services, that focus will provide a tighter alignment between the vendor and the channel, according to industry executives.
Joshua Justice, president of Southern Solutions LLC, an authorized Xerox sales agency based in Waldorf, Md., said his company provides office products, managed print service offerings and Xerox apps. The Xerox document technology company will share his company's market emphasis.
"The focus will be on the same things that I do," Justice noted. "I think that is very positive."
He said most Xerox partners he's spoken with also view the Xerox split favorably.
Jim Hillmann, practice director for managed print services at Pomeroy, an IT infrastructure services provider based in Hebron, Ky., said he is not expecting a lot of change in the Xerox document business, despite the upcoming split and new channel leadership. Based on what he's heard from the company, he said he anticipates the business will operate much as it did before.
Joshua Justicepresident, Southern Solutions LLC
"It does appear if you are a traditional managed print firm, or a traditional repair firm or copier dealer, this [split] is generally viewed as positive," he said. "It does provide a greater focus to the relationship with Xerox, and, in some cases, if they had little interaction with the services or BPO side of Xerox, it may not affect them a whole lot."
On the other hand, partners whose business spanned both sides of Xerox may see more of a shift. Herbert suggested partners who sought to provide more of an end-to-end type of offering, incorporating both managed print service and BPO, for example, would end up with different working relationships as a result of the split.
Herbert, however, suggested that the channel is much larger on the document side of Xerox, compared with the BPO component's partner roster.
"I never really dealt with the other side of the business," Justice noted, referring to Xerox's BPO operation.
When Xerox disclosed its breakup plan, it said the resulting document technology company would possess the profitability and free cash flow generation to bankroll "selective investments in attractive growth areas."
One thrust the new document technology company may continue to fund is its current foray in the small and medium-sized business market. Xerox last July launched a set of managed print services to extend its reach among SMBs, where it aims to drive more of its document technology sales through channel partners. At the time, Xerox said the channel would account for nearly two-thirds of its technology revenue by late 2016 or early 2017.
"Xerox can be expected to further drive its channel strategy to gain broader mind share in the [SMB] market -- and effective channel engagement will be key to pushing this forward, given the highly competitive space," said Louella Fernandes, associate director for print services and solutions at Quocirca, a market research and analysis company based in the United Kingdom.
"There has been a lot of growth in SMB," Justice added.
In particular, he said Xerox's A4 printers will open more doors in the SMB space, noting that products' more powerful controllers lend themselves to workflow and app offerings.
Hillmann, meanwhile, suggested that Xerox may also continue its previous direction of having partners take over on-site service delivery for its multifunction devices, such as its A3 and A4 products. He said that's been a fairly consistent message from Xerox over the past couple of years and suspects the company's end game is to have fewer Xerox-badged employees servicing machines in the field.
Hillmann said partners with limited geographic coverage -- within a single metropolitan area, for instance -- can dispatch technicians to provide services. But the local service approach doesn't fit Pomeroy's business model, he said, noting that his company would need to work on equipment across multiple states.
"We can sell, manage the customer, do the invoices and run the help desk, but we need Xerox to turn the screwdriver," he said.
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