Jeffie Davis Danny Harmon Brandon Guynes David Nguyen Kelly Vaught

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Jeffie DavisDanny HarmonBrandon GuynesDavid
NguyenKelly Vaught
Xerox Outsourcing Global Information
Technology Resources
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Xerox Company Background

• Introduced 914 model in 1959
• Sales increase from 32 million to 1.1 billion
  by 1968
• Held 95 share of the plain-paper market
• 1976 1982 share of US copier installations
  dropped from 80 to 13

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Xerox Company Background

• 1980 introduced Leadership through Quality
• Participation
• Complete company unity
• Benchmarking
• Industry comparison
• Quality management
• Improved quality of service

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Xerox Company Background

• 1989 winner of Malcolm Baldrige Quality Award
• 1989 winner of Canadian National Quality Award
• 1992 recipient of 1st annual European Quality
  Award

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Xerox Corporate Restructuring

• 1992 Xerox created 9 division
• Created to move decision making closer to the
  customer
• 3 customer operations
• 1993 began 10 workforce reduction over next 3
  fiscal periods

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Strengths
Weaknesses
Federal Lawsuits Caused Forfeit of Patents No
Overall Coordination or Management of
Information Technology Investment
Name Recognition First Mover in the Plain-Paper
Copier Market Global Oriented
Foreign Competition Canon Minalta Ricoh Sharp
Outsource Information Technology Requirements
Opportunities
Threats
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Business Model

• Manufactures
• Markets
• Services
• Finances
• Document Processing Equipment

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Information Management at Xerox

• Corporate Information Management (CIM) was
  established in the early 1970s
• CIM was
• responsible for managing their data centers and
  networks
• expected to supply the overall IT leadership to
  the company

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Centralizing Xerox IM

• It became apparent that the existing information
  systems infrastructure was inadequate in the late
  1980s
• IM was not capable to provide the information
  needed to support the companys new divisions
• Xerox was not getting what they needed from the
  money that was being poured into IM

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IM 2000 Project

• The IM 2000 reengineering project was started in
  the middle of 1993 to address the problems in IM.
  
• Legacy Systems
• Financial Challenges
• Lack of consolidated applications

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IM 2000 Project

• Strategies were recommended to develop the new IT
  infrastructure
• Reduce/Redirect
• Infrastructure management
• Leverage worldwide IM resources
• Business processdriven solutions

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The Decision

• They tried to keep it Internal
• But
• They knew they had a steady demand
• They knew they had little time
• They knew they had funding constraints
• A rapid movement toward the IM 2000 vision
  ultimately convinced Xerox to outsource

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Outsourcing Benefits

• Financial Benefits
• Experience
• Management
• Focus

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The Outsourcing Process
Aug 93
Sep 93
Oct 93
Nov 93
Dec 93
Jan 94
Feb 94
Mar 94
Leading vendors evaluated   (8-10)
Selected CSC EDS IBM-ISSC Andresen Con
Solicited CSC Andersen Consulting
(partners) EDS IBM-ISSC and AT T (partners)
Selected EDS
Literature Search
Request for Information
Firm Bids against terms and baseline
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EDS is Selected

• Vendor Qualifications
• Human Resources
• Technical Solutions
• Financial
• Soft Criteria

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The Contract

• June 1994 Xerox signed a 3.2 billion 10-year
  deal with EDS
• EDS ran mainframes, legacy systems, world-wide
  voice data in 19 countries
• 170 million and 1,900 employees moved to EDS

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Spirit of the Contract

• This is not a client/vendor relationship this
  is not a supplier relationship this is not a
  win/lose situation this is a strategic
  relationship.
• -Reed

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Spirit of Contract

• Integration only available with complete
  cooperation
• Obstacles
• fear of publication
• Contract too lengthy
• Divorce issues
• Pricing issues

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Global Complexities

• Varying Human Resource Laws
• Cost of living adjustment provision
• Effect of a force majeure event
• Varying asset transfer laws
• Local telephone companies

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Issues to be Clarified

• Structure
• IM operation processes
• Management processes
• Human Resource Management

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Lessons Learned

• A multidisciplinary team is a necessity
• Employee communication is a key success factor
• Global integration of IM is necessary for a
  global contract
• The acceptance of a global IM strategy is a
  necessity for common contract development

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Team Question 1

• What are the benefits of outsourcing?

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Team Question 2

• What benefits did Xerox gain by outsourcing?

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Team Question 3

• How difficult is global outsourcing compared to
  domestic?

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Team Question 4

• Describe how the partner process could have been
  changed to better to reconstruction of Xerox.