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Market Share
15 10 5 0 1984 1993
Net Income
Information Management
1970s - CIM Established 1987 - General Services Division Established
Mission of CIM was now to . . . develop the IT strategy for Xerox and ensure that it was implemented in all the business units. $500 Million IT Budget
No coordination of money spent each year No Corporate-Wide Management of IM Investment Priorities A Peripheral Player in IT Management Narrowly Focused IM Talent Pool Senior Managers Stingy With IT Infrastructure Redundant / Overlapping Efforts No Staff Development Mechanisms
Centralizing IM
$670 Million spent on IM in 1992 Forecast to grow to $1 Billion by 2000 . . . Amounts to 3.7% of total revenues!
Problems Revealed
Aging applications portfolio Proprietary technologies from previous structure Large spending for legacy systems Autonomous culture allowed for costly duplication
IM 2000 - Strategies
Reduce / Redirect Infrastructure Management Leverage Worldwide IM Resources Business Process Driven Solutions
What is Outsourcing?
Is the strategic use of outside resources to perform activities traditionally handled by internal staff and resources. Mgmt strategy by which and organization outsources major, non-core functions to specialized, efficient services providers. Wholesale restructuring of the corporation around core competencies and outside relationships.
Strategic Grid
Outsourcing at Xerox
Outsourcing versus integration. Create win:win relationship. Share values to create a true partnership. Develop spirit of the contract for senior management to and understand. Create infrastructure to support companies strategic direction in the 90s.
Outsourcing Process
Phase I - Fact Gathering
IT Partner
Outsourcing Objectives
Outsourcing Objectives
Drive down spending on legacy system Improve quality and cost of IM services Focus companys resources on the primary mission.
Xerox Benchmarking
Outsourcing Strategies Outsourcing Processes Vendor references Human resource impact
AT&T Kodak Sun Microsystems McDonnell Douglas
Companies
Salomon Brothers General Motors Equifax First Boston
Vendor Selection
Qualifications
Global Presence Capability to manage globally Experienced in large scale outsourcing Core strengths in various frameworks Mgmt processes and strengths
Financial
Translation of productivity savings to Xerox Flexibility in meeting Xerox financial requirements Experience in engineering financial environment
Soft Criteria
Congruence with positive Xerox environment Provide benchmark for desired Xerox cultural traits
Human Resources
Treatment of Xerox employees Human resource values
Technical Solutions
Productivity Commitment Support for existing Xerox diverse environment Capability to migrate
Outsourcing Process
Phase I - Fact Gathering
Outsourcing Process
Phase I - Fact Gathering
Outsourcing Process
Phase I - Fact Gathering
Outsourcing Process
Phase I - Fact Gathering
Global Complications
Various Human Resource / Employee Laws Degree of Risk Political Instability Various Asset Transfer Laws
Contract Addendum
Clarified Terms for Desktop and LAN Support Established Formalized Response Metrics Established Managed Rate Change Eliminated Billing Inconsistencies
Recommendations
Outsource Non-Core Competency Functions Write Air-Tight Service Level Agreements for Every Strategic Business Unit & Every Platform Define Graduated Levels of Performance and Penalties Based on Customer Satisfaction Dont Compromise Service Levels with Price Negotiation