Customer Engagement. Jim Firestone President, Xerox North America

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1 Customer Engagement Jim Firestone President, Xerox North America

2 Looking Through the Eyes of Our Customers Large Enterprises Graphic Communications Small / Medium Businesses Central Reproduction Departments

3 Customer Relationships are Key to Delivering Growth $102B Eligible Offset $17B Services $17B Production $8B Office $60B Graphic Communications $24B Large Enterprises $40B Small / Medium Businesses $38B Source: Xerox Internal Analysis 2003

4 The Large Enterprise Opportunity Large Enterprises Global and national accounts Public and private sector Major vertical markets Financial Healthcare Manufacturing Others

5 Large Enterprise Evolution of Requirements Business Partner Re-engineer workflow/ business process Maximum return Process effectiveness Value Add / ROI Optimize output infrastructure and affordable color Manage documents/ records by fully exploiting technology Workflow efficiency Utilization of scanning function Enterprise document spend Affordable color Output infrastructure cost Deliver industry leading output devices Hardware cost and feature/function Vendor Past Future

6 Meeting the Needs of the Large Enterprises $40B Eligible Offset $1B Smarter document management to improve enterprise ROI. Services $16B Production $3B Office $20B Unrivaled technology platforms and Smart document expertise Unmatched, integrated hardware, software and services Broadest digital portfolio with modular and open architecture Leading document solutions Integrated account management Xerox Lean Six Sigma 80% - Facilities management of $1 million+ Large Enterprises 30% - Professional services billings of $100k+ Source: Xerox Internal Analysis

7 Large Enterprise Single integrated account management team Xerox Channels Partners Customers Integrated Account Management Direct: Sales TeleWeb Indirect: Agents Concessionaires EDS Microsoft Accenture Others CFO / CIO Business process owners Purchasing maximizes share of wallet

8 Large Enterprise Customer Success Honeywell Optimize Output Infrastructure Apply ODA / Six Sigma tools to reduce assets Standardize on Xerox print platform Install global fleet of networked MFD s Web Based Document Management DocuShare as document management tool Repository for Contract Life Cycle management process Honeywell Aerospace (NA): Turnkey project to manage entire tech pub production and distribution process Electronic repository for print on demand Reduce warehouse and inventory cost Annual multi-million dollar savings

9 The Graphic Communications Opportunity Graphic Communications Commercial printers Quick print services Service bureaus Corporate central reproduction departments (CRDs) Central Reproduction Departments

10 Major Trends Driving Digital Printing Run Lengths are Getting Shorter! Turnaround Times are Getting Tighter! Over 40% of printers cite shorter run lengths. Source: NAPL 55% of printers cite turnaround pressure. Source: NAPL Variable Content is Growing! Enabled 28% price premium. Source: InfoTrends / CAP Ventures - June 04 Color Pages are Growing! Industry production color pages growing 35% Source: Internal Xerox Data The NAPL State of the Industry Report, National Association for Printing Leadership, Paramus, N.J.

11 Graphic Communications Evolution of Requirements Value Add / ROI Incidental shortrun digital printing Mainstream print-on-demand Business Development Partner Full personal communication and fulfillment capability Electronic workflows, linking complex jobs from start to finish Profit per job Database management, workflow, business development Overall running cost Equipment entry price and running cost Past Future

12 Meeting the Needs of Graphic Communications $24B Creating new business growth and improving ROI. Industry leading digital print and workflow platforms Eligible Offset $15B Production $3B Office $6B Graphic Communications Unmatched, integrated hardware, software and services Industry leading digital portfolio FreeFlow Business development programs Digital print expertise Awareness with commercial printers up 16 pts from 27% in 2003 to 43% in 2004 Source: Xerox Internal Analysis

13 Graphic Communications Most experienced digital sales force and business development support Xerox Channels Partners Customers Direct: Sales Tigers Specialists Creo Ennovation European premier partners Commercial printers Quick print services Service bureaus Corporate CRDs to drive market expansion

14 Graphic Communications PIXI* Award Winners Short Run Digital Color The Dance Company Promotion Hume Imaging Toronto, Canada Digital Books, Manuals, Magazines Through The Eyes of the Eagle Through The Eyes of the Eagle Copy General Corporation Sterling, Virginia Variable Data / 1:1 Marketing Communications Sandy Alexander Promotion TBC Color Imaging Teterboro, New Jersey *Printing Innovations With Xerox Imaging Showcasing customers who excel in the New Business of Printing

15 The Small / Medium Business Opportunity Small / Medium Businesses Less than 500 employees Law firms Real estate Churches Local business

16 Small / Medium Business Evolution of Requirements Paper to digital conversion Workflow efficiency Value Add / ROI Speed MFDs / Printers Media flexibility Color Network support Software functionality Business process outsourcing Records management Expanded functionality Output infrastructure Cost competitive equipment Simple Advanced

17 Meeting the Needs of Small / Medium Businesses $38B Affordable products that enhance productivity Services $1B Production / Eligible Offset $3B Strong Xerox brand synonymous with reliability Broad range of printers / MFD s at competitive price points Superior color, solid ink and controller technologies Expanding network of channels Office $34B Strong Xerox Install growth Q YTD Segment 1 (11-20) ppm: +46% Small / Medium Businesses Color laser printers: +47% Mono laser printers: +43% Source: Xerox Internal Analysis

18 Small / Medium Businesses Expanding distribution Xerox Channels Partners Customers Indirect: N.A. agents European concessionaires Direct Teleweb Specialists Resellers / Value-added Resellers OEM Small and medium Simple and advanced to reach more customers

19 In Summary Large Enterprises Services led, integrated account management and service Increase share of document wallet Graphic Communications Leading technology and business development tools Market creation Small / Medium Businesses Breadth of competitive offerings through expanded channels Greater share of decisions customer engagement strategy will deliver growth