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Analysis

Xerox steps up channel MPS business
Louella Fernandes By: Louella Fernandes, Principal Analyst, Quocirca
Published: 29th September 2011
Copyright Quocirca © 2011
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The overarching message of Xerox's recent analyst briefing was about being  "services-led, technology-driven". Xerox is certainly a company in the midst of  transformation. Its total revenue has grown from $15.2bn in 2009 to  approximately $23bn in 2011.

Services now represent about half its business, up from 25 per cent two years  ago. Already an established player in the document management/processing  outsourcing market, its acquisition of ACS last year, a BPO firm, means it is  now a leading player in the services market, with an estimated value of $500bn  that combines document outsourcing, business process outsourcing (BPO) and IT  outsourcing.

While the ACS integration promises to expand Xerox's penetration into the  enterprise, it is also actively pushing its managed print services (MPS) capabilities to the SMB and mid-market sectors. Globally, Xerox is working to  accelerate the transition of its global partner network to a services-led  model.

Xerox now has more than 2,500 partners offering some form of MPS. In addition  to its traditional channel partners, its global MPS partner network also  includes a range of managed IT services, technology and software partners,  including Cisco and Computacenter.

In an increasingly commoditised hardware market, MPS is a reseller opportunity  to increase revenue through providing customers with a contractual approach to  purchasing or leasing hardware together with service and supplies.

Central to Xerox's channel MPS initiative is Xerox Partner Print Services,  which sits between its basic equipment service packages, such as eClick and  PagePack, and its direct enterprise MPS offerings.

Xerox XPPS is a cloud-based platform hosted by Xerox and offers a range of  standardised components to support a multivendor environment, such as assessment  and optimisation, device discovery and monitoring, sales contract management,  business intelligence (BI) reporting, service management and delivery, and a  customer service portal. Its recent acquisition of NewField IT and its AssetDB technology has been key  to partner enablement providing the backbone for assessment and proposal  generation architecture for XPPS, as well as an ongoing optimisation of customer  contracts.

Xerox has built a comprehensive certification and accreditation process for  XPPS salespeople and partners to support their MPS sales efforts. Accredited  XPPS partners must be able to demonstrate successful delivery for a client's  managed print service. In Europe, Xerox has approximately 170 XPPS partners,  having grown from 90 at the end of 2010. Almost 80 per cent of these partners  are fully accredited XPPS partners. One of the key strengths of Xerox's  XPPS offering is its multivendor device support, which will appeal to multibrand  resellers and also offers opportunities for Xerox's concessionaires.

In particular, the managed IT services market represents an opportunity for  multivendor MPS platforms such as XPPS, as it enables managed service providers  (MSPs) to integrate MPS with their existing managed service platforms. Although so far printing is not typically an integrated  component of managed IT services, Quocirca believes MSPs will be the next  development in expanding the opportunity for MPS among SMB and midmarket  businesses.

Xerox has certainly set a stake in the channel MPS ground, and many of its  competitors are seeking to emulate its actions. The vendor has already  successfully remodelled its Enterprise MPS tools and technologies for the SMB  and midmarket. And, as such, Xerox is positioned well to support its partners'  transition from box-shifting to a services-led approach.

Its XPPS offering appeals to a wide range of resellers, in our view particularly those strategically focused on MPS. Xerox, of course, recognises that not all its resellers will transition to  XPPS. There will always be some that are reluctant to use a vendor-hosted  infrastructure to manage their multibrand base, which may have concerns about  where and how their customer data is hosted. It should be noted, though, that Xerox has extensive ISO 27,001 security  standardisation and proper contractual terms in place to mitigate such concerns.  In such cases, resellers may consider independent third-party management tools backed up by their own networks of service engineers.

Nevertheless, for those resellers ready to develop their MPS capabilities,  using a flexible and robust hosted platform such as XPPS is a viable approach,  for both Xerox-only and multibrand resellers. Not only does this limit the risk when investing in building a MPS platform,  it also gives resellers access to Xerox global supply chain and delivery  centres. This should appeal particularly to resellers that want to expand their MPS  delivery across regions.

For now Xerox is ahead of the game when it comes to its channel MPS  initiatives, but competitors are following fast and competition will not only  come from its traditional competitors but also from those in the managed IT  services market with which Xerox, wisely, has already engaged.

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