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Xerox acquires ACS, expands BPO credentials
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Xerox acquires ACS, expands BPO credentials
On 28th September 2009, Xerox announced that it is to acquire Affiliated Computer Services (ACS), a business process outsourcing (BPO) company, in an agreed $6.4 billion cash and share offer.
Before the ink was even dry on the announcement from HP that it had extended its alliance with Canon in a bid boost its managed print services (MPS) credentials, with HP Enterprise Services (previously EDS) as prime route to market, Xerox has announced its acquisition of leading BPO outsourcer, Affiliated Computer Services. Xerox will combine ACS`s services to automate paper-based work processes with its own document services and ACS will operate as an independent organisation, initially branded as ACS, a Xerox company. This acquisition has implications for the MPS market as well as the broader business process outsourcing (BPO) market.
IT services consolidation
Coming hot on the heels of Dell`s announcement to purchase Perot Systems (Sept 2009) and HP`s 2008 acquisition of EDS (now HP Enterprise Services), this has accelerated the move by hardware manufacturers into IT services which offer a steadier source of ongoing revenue and are less vulnerable to fluctuations in the wider economy. The recession has hit printer manufacturers hard, as with PCs and data-centre equipment, businesses have reduced their purchases of printers, multifunction peripherals (MFPs) and digital copiers.
Furthermore, as the complexity of the IT environment grows and lines between business process and document management blur, enterprises are evaluating services that encompass both IT and business processes more and more. The ACS acquisition appears to be a good move on the part of Xerox, further diversifying its print/copy focused brand into IT services.
The market convergence of BPO and IT outsourcing (ITO) provides a strong prospective customer base for printer hardware vendors such as HP and Xerox to expand their services beyond their traditional MPS offerings of service and maintenance to business process transformation. Today Xerox`s service business revenue (through Xerox Global Services) stands at $3.5 billion and is primarily focused on helping businesses reduce costs and improve efficiencies around their document output infrastructure. Although Xerox do offer some BPO services, the ACS acquisition propels Xerox into the wider BPO space building on its already strong pedigree in delivering enterprise document services and enabling it to better compete with HP in the managed enterprise print services space.
With its acquisition of EDS, HP has already reaped the rewards, benefiting from revenue enhancements by cross selling HP hardware to current and prospective EDS clients. Its purchase of EDS was well timed, helping it protect its bottom line when PC, printer and data centre hardware -sales were declining. Although the HP- EDS acquisition would have had some impact on Xerox, for whom it was a key strategic partner, Xerox has also expanded relationships with other IT services providers such as IBM, CSC and HCL.
What does it mean for Xerox?
Today the ACS brand is much stronger in the USA which accounts for 90% of its revenue than Europe, while for Xerox the figure is just over 50% from US customers. Xerox will give ACS a broader European reach and Xerox will need to continue to work with its established partners in Europe including CSC, IBM, HCL compete effectively with HP. With its strong brand awareness amongst CIOs and EDS`s long history of IT outsourcing in government, financial services and manufacturing, HP is already better positioned to readily exploit existing IT relationships to sell MPS and additional services
Nevertheless ACS brings Xerox a dependable revenue stream from contracts with US government agencies and health care providers and new skills it can transfer to Europe. With the US about to overhaul the healthcare system to replace paper-based systems with electronic medical records systems this acquisition seems well timed. The built-in advantage for Xerox is the larger potential audience in its expanded US customer base for its hardware, software and MPS offerings.
Quocirca opinion
Xerox has made a bold move to expand its BPO credentials and reduce its dependence on equipment and supplies. However enterprise customers are now demanding technology providers that can support both print and IT environments. In this respect HP continues to be well positioned and is unlikely to see a major impact from this acquisition.
Although this is primarily a BPO play, ACS does offer IT outsourcing capabilities and it remains to be seen how the acquisition will impact Xerox`s existing relationships with IT services providers. Additionally Atos Origin, CSC and Cap Gemini all offer some form of MPS delivered through a manufacturer partner including HP and Ricoh. Although IBM is an existing Xerox partner, it also has strong technology ties with Ricoh who together have the potential to develop integrated IT and document services and therefore compete effectively with Xerox.
If Xerox can effectively manage the integration of people, technology and infrastructure of both companies it should certainly be able to exploit the services offerings of both companies in the US to deliver BPO services. Although ACS will operate as an independent entity for the time being, Xerox will need to determine how to position the synergies between Xerox and ACS. As Xerox does offer BPO services, training on respective services will be required as will an integrated services approach.
The MPS market leaders have made it clear they mean to move beyond the delivery of service focused purely on print into broader IT and business process services. Quocirca believes that with the lines between IT outsourcing, BPO and document output blurring, the MPS market as a discrete sector which focuses on the printing infrastructure management will be eclipsed by a wider services market dominated by vendors with combined ITO, BPO and managed print capabilities.
Ultimately, to support enterprise business process transformation providers will need a range of capabilities. The shift to newer technologies, such as virtualisation and SOA, and delivery models such as software as a service (SaaS) and cloud computing means that a strong portfolio of technology skills, professional services along with support for new service delivery models will be key to the long term success for providers in this market.
Source:
http://www.it-director.com/business/content.php?cid=11586
Before the ink was even dry on the announcement from HP that it had extended its alliance with Canon in a bid boost its managed print services (MPS) credentials, with HP Enterprise Services (previously EDS) as prime route to market, Xerox has announced its acquisition of leading BPO outsourcer, Affiliated Computer Services. Xerox will combine ACS`s services to automate paper-based work processes with its own document services and ACS will operate as an independent organisation, initially branded as ACS, a Xerox company. This acquisition has implications for the MPS market as well as the broader business process outsourcing (BPO) market.
IT services consolidation
Coming hot on the heels of Dell`s announcement to purchase Perot Systems (Sept 2009) and HP`s 2008 acquisition of EDS (now HP Enterprise Services), this has accelerated the move by hardware manufacturers into IT services which offer a steadier source of ongoing revenue and are less vulnerable to fluctuations in the wider economy. The recession has hit printer manufacturers hard, as with PCs and data-centre equipment, businesses have reduced their purchases of printers, multifunction peripherals (MFPs) and digital copiers.
Furthermore, as the complexity of the IT environment grows and lines between business process and document management blur, enterprises are evaluating services that encompass both IT and business processes more and more. The ACS acquisition appears to be a good move on the part of Xerox, further diversifying its print/copy focused brand into IT services.
The market convergence of BPO and IT outsourcing (ITO) provides a strong prospective customer base for printer hardware vendors such as HP and Xerox to expand their services beyond their traditional MPS offerings of service and maintenance to business process transformation. Today Xerox`s service business revenue (through Xerox Global Services) stands at $3.5 billion and is primarily focused on helping businesses reduce costs and improve efficiencies around their document output infrastructure. Although Xerox do offer some BPO services, the ACS acquisition propels Xerox into the wider BPO space building on its already strong pedigree in delivering enterprise document services and enabling it to better compete with HP in the managed enterprise print services space.
With its acquisition of EDS, HP has already reaped the rewards, benefiting from revenue enhancements by cross selling HP hardware to current and prospective EDS clients. Its purchase of EDS was well timed, helping it protect its bottom line when PC, printer and data centre hardware -sales were declining. Although the HP- EDS acquisition would have had some impact on Xerox, for whom it was a key strategic partner, Xerox has also expanded relationships with other IT services providers such as IBM, CSC and HCL.
What does it mean for Xerox?
Today the ACS brand is much stronger in the USA which accounts for 90% of its revenue than Europe, while for Xerox the figure is just over 50% from US customers. Xerox will give ACS a broader European reach and Xerox will need to continue to work with its established partners in Europe including CSC, IBM, HCL compete effectively with HP. With its strong brand awareness amongst CIOs and EDS`s long history of IT outsourcing in government, financial services and manufacturing, HP is already better positioned to readily exploit existing IT relationships to sell MPS and additional services
Nevertheless ACS brings Xerox a dependable revenue stream from contracts with US government agencies and health care providers and new skills it can transfer to Europe. With the US about to overhaul the healthcare system to replace paper-based systems with electronic medical records systems this acquisition seems well timed. The built-in advantage for Xerox is the larger potential audience in its expanded US customer base for its hardware, software and MPS offerings.
Quocirca opinion
Xerox has made a bold move to expand its BPO credentials and reduce its dependence on equipment and supplies. However enterprise customers are now demanding technology providers that can support both print and IT environments. In this respect HP continues to be well positioned and is unlikely to see a major impact from this acquisition.
Although this is primarily a BPO play, ACS does offer IT outsourcing capabilities and it remains to be seen how the acquisition will impact Xerox`s existing relationships with IT services providers. Additionally Atos Origin, CSC and Cap Gemini all offer some form of MPS delivered through a manufacturer partner including HP and Ricoh. Although IBM is an existing Xerox partner, it also has strong technology ties with Ricoh who together have the potential to develop integrated IT and document services and therefore compete effectively with Xerox.
If Xerox can effectively manage the integration of people, technology and infrastructure of both companies it should certainly be able to exploit the services offerings of both companies in the US to deliver BPO services. Although ACS will operate as an independent entity for the time being, Xerox will need to determine how to position the synergies between Xerox and ACS. As Xerox does offer BPO services, training on respective services will be required as will an integrated services approach.
The MPS market leaders have made it clear they mean to move beyond the delivery of service focused purely on print into broader IT and business process services. Quocirca believes that with the lines between IT outsourcing, BPO and document output blurring, the MPS market as a discrete sector which focuses on the printing infrastructure management will be eclipsed by a wider services market dominated by vendors with combined ITO, BPO and managed print capabilities.
Ultimately, to support enterprise business process transformation providers will need a range of capabilities. The shift to newer technologies, such as virtualisation and SOA, and delivery models such as software as a service (SaaS) and cloud computing means that a strong portfolio of technology skills, professional services along with support for new service delivery models will be key to the long term success for providers in this market.
Source:
http://www.it-director.com/business/content.php?cid=11586
