Back in business


29 Aug 2003

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The comeback trail is littered with casualties, star-struck victims too slow to realise that their time has been and gone. There are exceptions, a tenacious few that have successfully returned and enjoyed a second bite of the cherry. Muhammad Ali springs to mind; Elvis Presley is another one. And then there’s Xerox.

The exiled king of office equipment may seem an unlikely name to be lumped in with the former world heavyweight boxing champion and the king of rock and roll, but its struggle to maintain its place in the big scheme of things has been just as epic.

At the start of 2001 it was a sprawling multinational mess that found itself steering perilously close to bankruptcy — a document management specialist that had somehow missed out on the significance of the internet and the growth of network computing. As the board considered its future, there was talk of mergers or of an outsider coming to the rescue just as Carly Fiorina had done at Hewlett-Packard (HP), someone far enough removed to sweep away the cobwebs and start again.

As it turned out, the board wisely put its trust in an internal candidate. Anne Mulcahy, a long-standing employee, took over the company as chief executive in August 2001. Not since IBM transformed its fortunes at the start of the Nineties has an IT company been so resolute in reinventing itself, first with a drastic round of redundancies and then, slowly but surely, through restructuring and new products.

Now fêted as something of an industry guru for turning a wasteful monolith into a sleek and efficient business with clear goals, Mulcahy sits at the top of a reinvigorated company with a lot more strings to its bow than the famed photocopiers.

Joe Browne was appointed as director and general manager of Xerox Ireland in October 2000, just when the company was hitting rock bottom. With a background in accountancy he remains sanguine about the ebb and flow of the company’s fortunes. “Xerox has been through three major corporate crises and the only thing I can say for certain is that there will be a fourth,” he says matter-of-factly.

The two previous scrapes happened in the Seventies. First there was an ill-advised attempt to deviate from core business and dabble in financial services. More worrying was a second crisis brought on by Japanese competition that delivered better product for less money.

The company has emerged from each crisis, bruised but alive. The most recent piece of escapology came courtesy of severe cost cutting and the decision to outsource nearly all of its manufacturing. It’s in the nature of the company that it puts its own experience into its current sales pitch. “Xerox has taken US$2m out of its own cost base so we know a little about productivity,” says Browne.

This translates to Xerox selling its larger customers the benefits of a multifunction platform. “Across all corporates and any public sector body, they are spending 3-7pc of their revenue on information and document management. Most of the time it can’t be measured because it’s so proliferated. What we’re trying to do, and so are our competitors, is to move away from a proliferation of devices, to centralise it and move it towards a multifunction platform,” he says.

Browne estimates that an organisation can save 30pc of its document management expenditure through asset rationalisation and that Xerox can deliver a productivity improvement of up to 50pc if its solutions are embedded in the business processes. A new range of product designed to achieve these productivity gains includes the 555 Document Centre, a hefty piece of hardware with a touchscreen panel that gives immediate clues that this is no ordinary scanner/copier. Documents can be distributed by email or fax but it can also integrate into a company network to play a major role in paperwork processes.

Married to the hardware is its software solutions. DocuShare 3 is a web-based management application that offers an array of features for document-intensive organisations, while FlowPort makes light work of converting paper into a paperless format as it transforms hard copy to digital for distribution and routing throughout an organisation.

Xerox now has three divisions to its business. At the high end it is a market leader in digital print but it’s the office business product — scanners, printers, copiers — that made it famous and remains the stalwart of its Irish office. The third strand of the company is the solutions and services that support the hardware. The 555 Document Centre represents the multifunction amalgamation of the hardware and the software solutions.

Browne has the job of making sure the global strategies fit seamlessly into his local business. He oversees the manufacturing operations in Dundalk as well as the technical support, financial services and governance operations for Xerox Europe.

On the ground in Ireland, the nuts and bolts of Xerox business are about selling to a local market that Browne reckons is 90pc made up of small to medium-sized enterprises (SMEs). There are occasional big wins to be had, but similar to a lot of other technology firms, the ongoing challenge is selling to small companies that don’t always fit easily within the sights of global vendors.

Xerox made the decision to go to market the indirect route. This has been useful for a company that has sometimes suffered from customer perception. Despite Xerox’s Palo Alto Research Centre giving the computing world such IT gems as Ethernet and the mouse, Xerox is best known for one thing.

“I always baulk a little at the ‘copier company’ tag,” says Browne. “I understand it, I know where it comes from but Xerox is a technology company.” By choosing the indirect route to reach its customers Browne hopes to counter some of these image problems. “In the past we would not have been associated with IT but our IT resellers do have that relationship,” he adds.

Its concessionaire partners — seven nationwide dealers that only handle Xerox — serve the SME community, while another group of resellers target the large corporates and the public sector. In the background, Xerox sales staff members are on hand for support and backup to the channel partners.

“Our target is to double our share in three years. Outrageous maybe, but our concessionaires are all on target to achieve this,” says Browne.

With his sights set on local growth you could be forgiven for thinking that Browne has enough on his plate without worrying about the plight of Ireland Inc. Not so. The outspoken director frequently pops up on the IT circuit, sharing his strong opinions about government strategy and the part information and communications technology has to play in the national economy.

One thing he makes very clear is the Xerox commitment to Ireland. “Our operations here are rock solid and stable. You never say never but there is nothing on the horizon and no more redundancies,” he says.

The company may not be going anywhere, but further investment is not likely either. The IDA and Forfás strategy for moving Ireland up the value chain may have successfully enticed Intel into making a research and development (R&D) investment in the country, but Browne is not convinced.

“To their credit, there is a lot of energy coming out of the Government and the IDA about how Ireland can stay up the value chain and there’s been a lot of hard thinking,” he notes. “However, I maintain that the fundamentals must be right. For a multinational it’s becoming very costly to do business here; for an indigenous company it’s even harder.”

He continues: “When you start talking about value chains an ordinary corporate guy will say ‘what is it, can you just define it?’ At the end of the day, if you’ve got a corporation looking at where to locate its R&D, it’s going to look at the basics. These include cost competitiveness, social infrastructure, employment regulation, legislation and social partnership. If those things are really solid, you know you’re at the starting line. Then you can start to play up the knowledge economy and the partnership with the universities. But we’re not at the starting line; we’ve slipped a long way back in the past two years in basic cost competitiveness and as place where it’s easy to do business.”

He sums up: “Corporates will make decisions based on operational criteria, on the ground issues such as cost, skills, value and knowledge. They won’t make those decisions based on fiscal incentives. They’ll make them based on a grass roots environment.”

What started out as a mild-mannered rant gradually grows more specific as he focuses on the core problem, the culture of government. “I see energy and commitment but I don’t see actuals. There are too many people not doing enough. There’s a lot of bureaucracy, a lot of people talking but it has slipped across too many departments. What it needs is a very clear focus,” he says.

He won’t name names but he will point to a general malaise and a mountain of red tape that’s slowing down things. “They’re not failing, they’re just not succeeding at the pace that they need to. It’s dangerous. Let’s not throw away the incredible hard work and smart thinking that has been in Ireland for the past five to seven years, because you can lose it real fast. There’s a little bit of apathy and old-school thinking. It just needs to be addressed quickly,” he continues.

Despite his scathing criticisms, Browne remains upbeat about the future, harking back to former strategies that helped transform the Irish economy. “The way the IDA went out 10-15 years ago and brought the call centre sector to Ireland was incredibly perceptive. It showed great foresight and is a wonderful example of what happens when you apply yourself single-mindedly to an initiative,” he notes.

Judging by announcements at the end of last month, certain quarters of the Government share Browne’s concern that right now there is a vision deficit. The Minister for Enterprise, Trade and Employment, Mary Harney TD, set up an Enterprise Strategy Group under the chairmanship of former Lucent vice-president Eoin O’Driscoll. The new body promises to map out a plan and provide some clear leadership for the next decade. Around the same time, Forfás released its annual report that provides the clearest indicators yet as to how an ‘innovation economy’ can be achieved.

These initiatives are what Browne has wanted so see. “We need to have the vision to see the next 10 years because that’s when it will hit. The problem is very serious,” he warns, “but every business problem is a wonderful opportunity. The intent is there, the brainpower is here, we just need to get on and do it.”

Browne’s frustration with the public sector extends to his day job. When selling his hardware and solutions to the public sector he frequently hits the same brick walls, erected by a culture that is reluctant to change and often lacking in vision. The irony, according to Browne, is that such organisations would benefit more than most from what Xerox has to offer.

“The public sector is a great example of where you need a strategy for document management because every single department, be it local government, central government, health or education, buys and procures individually. The theory is that everyone’s buying best. In fact, if you put them all together and developed a strategy there would be productivity savings of tens of millions,” he explains.

Browne is not the first vendor to take a look across disparate public sector fiefdoms and make a case for centralisation. “It scares some people because it’s a harmonisation of strategy,” he says. “But the spending of a budget is not strategic to a department, to health or education, say. What is strategic is how they manage their agendas. The spending of the budget to support the infrastructure should be centrally managed. Give it to the experts, harmonise it, drive the productivity and spend the savings on something else.

“What is required is a policy approach to document management,” he argues. “Harney understands this but once you drill down, it’s lost in the quagmire. I see tenders come out in the Irish market where they’ve taken a document from five years ago, dusted it off and put it out. That’s the kind of thinking that’s gone into it. It will change. It has to.”

By Ian Campbell