Xerox: Outsourcing Global Information Technology Resources - PowerPoint PPT Presentation

1 / 18
About This Presentation
Title:

Xerox: Outsourcing Global Information Technology Resources

Description:

Situation Analysis: 1994. Xerox is a technology-driven leading edge company ... Situation Analysis: History. Historically ... Situation Analysis: Restructuring ... – PowerPoint PPT presentation

Number of Views:764
Avg rating:3.0/5.0
Slides: 19
Provided by: drrober4
Category:

less

Transcript and Presenter's Notes

Title: Xerox: Outsourcing Global Information Technology Resources


1
Xerox Outsourcing Global Information Technology
Resources
2
Situation Analysis 1994
  • Xerox is a technology-driven leading edge company
  • Some would say a surprising candidate for
    outsourcing
  • Global reach into 130 countries
  • Intense competitive and financial pressures
  • Has sustained heavy losses during the previous 2
    years
  • Sold off non-core businesses

3
Situation Analysis 1994
  • Totally reorganized its global divisional
    structure
  • Xerox is skilled at working with partners in many
    aspects of its operations
  • Outside benchmarking is used extensively at Xerox
  • Summary
  • Xerox is a financially stressed company going
    thru a transition

4
Situation Analysis History
  • Historically an extremely successful company
  • Based to some extent on a monopolistic position
    in the plain paper copier market
  • Invented xerography in 1950s
  • Brought first product to market in 1959 32M in
    sales (900 employees)

5
Situation Analysis History
  • 1.1B in sales 1968 (24,000 employees)
  • 1970
  • Gross margins 70-80 !
  • Phenomenal growth attracted federal lawsuits
  • Unfair monopoly

6
Situation Analysis History
  • 1975 Xerox settles with the FTC
  • Forfeits some patent protections
  • Forced to license technology
  • 1976 1982
  • Market share of US market goes from 80 to 13
    (ouch!)
  • Massive influx of competitors
  • Canon, Minolta, Ricoh, and Sharp
  • Xerox began to compete on quality and improve
    internal performance

7
Situation Analysis Restructuring
  • Nine divisions along market segments and three
    customer operations along geographic lines
  • Each Xerox division had end to end responsibility
    for a set of products and services related to a
    particular market segment
  • Divested financial and insurance operations

8
Situation Analysis IT Organization
  • Centrally managed
  • 2,100 employees, 670M budget
  • Seem as a support function rather than a
    leading-edge differentiator
  • Expense center
  • Highly dissatisfied senior users

9
Situation Analysis IT Organization
  • Massive legacy systems built to support the old
    structure as opposed to the new one
  • Maintenance of these highly inflexible systems
    consumes most of IT development resources
  • Units users are undisciplined and very
    unsympathetic to the challenges faced by IT

10
Situation Analysis IT Organization
  • New systems must be configured to include
    architectural flexibility to support future as
    yet unspecified reorganizations.
  • Xerox 2000 initiative seem as the solution
  • Involves a total rebuild of everything to a
    client/server model with global module sharing.

11
Situation Analysis IT Organization
  • IT at Xerox is perceived as under-performing and
    inefficient n a company that is under
    extraordinary stress

12
Situation Analysis Outsourcing with EDS
  • Why
  • Outsider can bring needed financial discipline
  • Outsiders are more efficient
  • Speed up consolidation
  • Provide immediate funds thru the recapture of
    170 M from asset sales
  • Xerox can get access to much broader how to
    knowledge
  • Outsiders can be more up to date on technology
  • In-house group can concentrate on IM 2000

13
The Deal
  • 3.2B over 10 years
  • Transferred 170M in assets
  • Outsourcing legacy systems, keeping IM 2000 and
    new tech in house
  • 700 workers

14
Partnership
  • Concerned that EDS make money on the arrangement
  • Concerned that employees well taken care of
  • Emphasis on cultural fit
  • In the end Xerox went with EDS which has a very
    different culture
  • Ten year contract critical to let economics
    work out
  • 70 of IT expenditure in first year and only 30
    in the second year
  • Divorce agreement

15
Process
  • Frequent meetings
  • Detailed discussions on sharing objectives
  • Intense information management briefing to ensure
    Xerox staff is on top of what is going on
  • Summaries for Xerox senior management
  • EDS set up a separate unit exclusively to
    interface with Xerox
  • Flexibility to rework pricing

16
Complexity of Global Outsourcing
  • Different HR laws
  • Flexibility to handle pricing in high inflation
    countries
  • Differences in telecom
  • Legal issues tied to asset transfers
  • IP issues

17
Final Thoughts
  • It takes a lot of time (years) to negotiate and
    effectively execute this form of partnership
  • Managing the details is key.
  • Small issues become major problems if not
    carefully managed
  • Global outsourcing contracts much more complex
    than domestic ones
  • Necessity for long-term relationship

18
Questions
  • Name three significant risks that Xerox faces in
    outsourcing the bulk of its IT systems to EDS
  • Of the three risks you listed above, pick the one
    with the greatest potential for negative impact
    and describe how Xerox can attempt to mitigate
    that risk.
Write a Comment
User Comments (0)
About PowerShow.com