Xerox Global Services: The product is service

Xerox still makes copy machines, sells toner and fixes broken office equipment. But its fastest growing segment does not market a physical product. Xerox Global Services (XGS) takes over printing, tracking and storing documents for clients, using proprietary software, digital repositories and re-engineered workflows. Tom Dolan, president of XGS' global account operations, gave executives attending the 18th Annual Compete Through Service Symposium an overview of how to save money by modernizing their document functions. The symposium is sponsored by the Center for Services Leadership at the W. P. Carey School of Business.

What do you think of when someone says the word "Xerox?" If it's the "Saturday Night Live" skit featuring a slang-slinging coworker who talks about "makin' copieeees," then you've missed the substance of this iconic company. It's a $15.7 billion technology corporation that also manages document services for more than 6,000 organizations in 60 countries. The Stamford, Connecticut-based Xerox still makes copy machines, sells toner and fixes broken office equipment.

But its fastest growing segment does not market a physical product. Xerox Global Services (XGS) takes over printing, tracking and storing documents for clients, using proprietary software, digital repositories and re-engineered workflows. "Just about every business — whether a mortgage processing company or a car rental agency — has documents as its connecting point," explains Tom Dolan, president of XGS' global account operations.

"Key documents might be anything from rental agreements to production checklists, insurance policies, maintenance logs and compliance records. Managing them can be enormously complex, and leads naturally to software and digitization." Dolan gave executives attending the 18th Annual Compete Through Service Symposium an overview of how to save money by modernizing their document functions. The symposium is sponsored by the Center for Services Leadership at the W. P. Carey School of Business.

The XGS typical client overhaul starts with an assessment: what documents do sales staffers use? Does each salesperson have his or her own printer, or do blank forms come from a supply closet? Where does each type of document go — to the warehouse, to maintenance dispatch, to accounts payable, to the compliance officer or to storage? Also, what is storage, anyway — a dusty storage unit, employee file cabinets or separate databases scattered across the globe? Does the client want to personalize standard documents for particular customers?

"Very often, the goal includes eliminating sequential document processing, replacing it with parallel processing, which may mean outsourcing. It may mean taking them out of the paper world and converting to automated document processing. It almost always means an end to individual printers on employees' desks in favor of a central printer, perhaps down the hall," Dolan continued.

Often, an XGS team can come into a large Fortune 500 company that operates 10,000 output devices — copiers, scanners, printers, faxes — and figure out an efficient way to do the same work with fewer machines, say, half, or 5,000 output devices. This means mapping equipment locations, interviewing employees, tracing document workflows and once a new system is designed, determining ongoing document volume.

A help desk is added, or streamlined, or outsourced entirely to XGS, and software that monitors equipment performance and sends preemptive maintenance and break-down alerts is usually installed. "The client saves money, time and space," he notes. At least 80 percent of new XGS clients have existing lease agreements for output devices made by competitors when the company is hired for document servicing. So XGS takes over equipment maintenance but doesn't break the leases.

Instead, once the leases expire, XGS replaces that equipment with Xerox machines, unless the client insists on keeping a particular brand name. "In that case, we agree to continue managing the competitor's equipment. For example, we manage over one million Hewlett-Packard contracts — but we always use Xerox supplies like toner in them," he says with a laugh.

XGS appears to be targeting six primary markets: financial services, healthcare, high tech, manufacturing, retail products and, of course, the ever-lucrative public sector — entities including schools and government agencies such as city, county, state and federal agencies. Client case studies listed on the company's Web site are impressive.

For example, at the Brooklyn Public Library in New York, XGS overhauled document functions, installed self-serve kiosks and hooked up a smart-card system patrons use to reserve computer time, check out books and pay for copies and overdue fines. Print costs dropped and the organization regained 135,000 hours of librarians' time. Since documentation is key to proving government compliance, it makes sense that highly-regulated industries such as airlines have very specific rules regarding processing information.

For instance, at Continental Airlines — like other carriers — mechanics, inspectors and supervisors must read and sign new "maintenance advisories" within 20 days of their being published by the Federal Aviation Administration. But tracking and documenting compliance on each of Continental's 3,500 mechanical staffers for every single advisory was an overwhelming job. Then there was the problem of where to physically keep the sign-off sheet so it was accessible but secure at each its 30-plus maintenance field stations.

XGS automated the whole process so that staffers learn of the new advisories via email, then read them online. Compliance documents are kept in a central depository, accessible anytime, anywhere. In 2003 another client, Hormel Food Corp. of Austin, Minnesota, faced a crisis in its accounts payable department. Revenues were climbing, and thanks to several acquisitions, the company had a growth spurt. The bad news was that A/P staffers were buried in paper.

The XGS team replaced Hormel's paper-based system with software and a digital repository, or database, strengthened its process for capturing vital data and made invoices and vouchers available to vetted users at the click of a mouse. The new A/P system saves Hormel $31,000 a year. And since the new system helps the company track its compliance with government health standards, it also potentially saved millions of dollars in legal costs.

A fourth client, Owen Corning of Toledo, Ohio, had trouble getting sales literature into the hands of its marketing staffers in a timely manner. So frustrated staffers would order more sales literature, and wind up with way too much, creating waste. XGS put document "advisors" at company sites and took over printing on an outsourcing basis. Another solution was changing equipment and software to allow for much smaller, on-demand quantities of sales literature.

The new process included software that added the ability to customize documents for a specific client or situation. Results: document operating costs dropped 50 percent in 2004; the need for warehouse space decreased; collateral inventory needs fell 90 percent and $1.5 million in redundant printing was eliminated. Dolan says XGS teams can sometimes manage the client's physical makeover during a single weekend.

"We start switching things out on Friday night and are up and running Monday morning. But most companies want to phase in the new system, usually starting at one location, then moving to another site," he adds. XGS document specialists can work at the client site on an ongoing basis, at an off-site outsourcing center or even run a dedicated document-processing plant for particularly large clients.

The cost of supplies and maintenance is built into the per-copy cost, which varies according to the document-servicing complexity as well as on the number of black-and-white or color documents printed. Dolan created the current document servicing line in 2001. Before that, he said, global services "ran mail rooms, loaded toner and paper, etc. We reoriented our offerings beginning in 2002, and that's when we started looking into this 'smarter document' approach."

XGS profits now compose 24 percent of Xerox Corp. revenues. "Basically, we create subsections like Amazon.com. We study our client, then tailor the service proposal to their needs — and it always gains their attention," he adds. "We're at $4 billion now, and want to reach $5 billion by 2009 or 2010. Xerox is no longer a product and technology company alone; we believe XGS will represent at least half of our revenue in the future."

Bottom Line:

• XGS products and services earned 208 awards worldwide in 2006. Awards included acknowledgement for innovation, knowledge management, ethics and leadership.
• The company manages more than 8,000 active U.S. patents for things like digital imaging, printing systems, materials and services technology.
• XGS employs 15,000 service professionals, working from more than 160 countries.