Managing Global Information Strategy: Xerox, LTD.: January 2000
Managing Global Information Strategy: Xerox, LTD.: January 2000
net/publication/221599826
CITATIONS READS
6 1,383
1 author:
Philip Seltsikas
The University of Sydney
39 PUBLICATIONS 527 CITATIONS
SEE PROFILE
All content following this page was uploaded by Philip Seltsikas on 06 July 2014.
Abstract
The diversity of information management (IM) issues and problems that a large multinational company may
face are illustrated by showing how Xerox Ltd. managed its IM strategy over a ten-year period. The case study
details the IM developments and shows how the Xerox IM team managed by focusing on a six-pronged strategy:
business processes, data and information, applications, technology, organization, and human resources. The
problems that Xerox faced in each of these areas are discussed and management’s approach to resolving them
is described. In essence, Xerox’s move to managing-by-process required matching changes in IM capability
to support it. Xerox’s earlier approach, which entailed a decentralized IS model, became inadequate for
supporting the dynamic process model, and ultimately customer needs. The case then shows how the process
model became heavily reliant on the capabilities offered by IM. As business processes and information systems
became increasingly intertwined, Xerox aligned the development of both models and effectively brought their
management and coordination together. A centralization strategy was key to bringing these latter changes
about.
BACKGROUND
Xerox was founded in Rochester, New York, in 1906 as The Haloid Company. Chester Carlson made the first xerographic image
in 1938 and then spent years trying to convince business executives to take up his invention. They didn’t believe that there was
a market for even a single copier. The Haloid company took up Carlson’s invention and became the Xerox Corporation in 1961.
Since then it has grown to a dominant global company with 92,700 employees and revenues of $19.4 billion (Xerox 2000).
Xerox is well known for producing photocopiers but its product portfolio includes printers, facsimile machines, multifunction
products (printer, fax, copier), computer software, and document consultancy. The focus of this case study is the part of Xerox
that is known as the European Solutions Group. Publicly, this is known as Xerox Ltd. and until 1997 was known as Rank Xerox
Ltd. This group manufactures and markets Xerox products across Europe, Africa, and the Middle East. It comprises four
manufacturing sites, two major research laboratories, and multiple customer business units across more than 24 European
countries. The Xerox Ltd. company employs 19,500 people.
Until the 1980s, Xerox enjoyed unprecedented growth. Its products embodied sophisticated technologies that Xerox safely
guarded behind a wall of patents. As these patents expired, fierce competition developed and by 1982 Xerox’s share of global
profits had been halved. Most of this competition was from Japanese firms (Jacobson and Hillkirk 1986). As many Xerox
technologies were now being copied, Xerox looked for organizational efficiencies to succeed.
This began when Dr. Fred Hewitt became the sponsor of Xerox’s Inventory Management and Logistics (IM&L) process. This
is the business process that makes sure that the right things get to the right place at the right time. Hewitt had been the director
of distribution and technical services for Rank Xerox, and lead the way in developing multinational systems for optimizing
inventory levels among European operating units.
The executive team was known as the Multinational Inventory Optimization Council (MIOC). It was originally composed of
senior managers who were important stakeholders in the change efforts that would follow. These senior managers came from
different parts of Xerox. Their job was to look for cross-functional, cross-unit opportunities. Effectively, these managers were
791
Seltsikas — Teaching Case
an advisory council to Xerox President Paul Allaire and the top five senior executive vice presidents. They gave feedback on the
organizational and system changes that were required. In 1988, Hewitt was appointed as Vice President of Central Logistics and
Asset Management to address the implementation of these changes.
The business process reengineering that Hewitt led saved Xerox millions of dollars. Following their example, Xerox management
in other process areas implemented changes and a major organizational restructuring took place. In essence, Xerox was “forced”
to abandon the functionally oriented organizational form simply in order to survive (Watts 1994). Xerox’s management delineated
the essential business processes through which it operates and reorganized to focus on these (see Figure 1). The traditional
reductionist (Taylorist) approaches to management were replaced with a holistic, process-focused approach. The company then
wanted to address the question of how to maintain a continuing business process focus and in particular to understand the role
that information management plays in this. It soon became apparent to Xerox’s senior managers that the information management
processes needed to be brought up-to-date with the new process-based organization.
Information management is part of the infrastructure core process. The Xerox model of business processes is particularly complex
because Xerox performs all of the activities in the value chain (Porter 1985), from manufacture through to sales, distribution, and
service.
Having reorganized around business processes, Rudge, the director for Business Processes and Information Management
(BP&IM), felt uneasy about the suitability of Xerox’s existing information management in supporting the new organization. The
question Rudge posed in 1995 was “how can IM best support the process oriented enterprise?” During the period 1992-99, two
major stages in IM development took place. The following sections describe what happened.
While the Xerox focus on managing by process began in 1988, by 1992 there were explicit attempts to bring the process and
information architectures together. Early developments in information management (IM) at Xerox (referred to here as stage one)
were intended to support the new process-based organization that was being formed. This IM era relates to the period from 1992
through 1995. The Xerox IM team focused on six strategic areas:
792
Global IS Strategy: Xerox, Ltd.
This was a six-pronged strategy that guided Xerox’s IM managers through the early years of considerable organizational change.
The following sections describe the approach that they took in each area.
Business Processes will drive the Information and Applications Architecture. (Rank Xerox 1993, p. 5).
During this stage of IM development the aims were to ensure that the process infrastructure was understood across Rank Xerox
and that it was implemented in a consistent manner. The Business Processes and Information Management (BP&IM) group
planned to ensure that process standards were well defined and that tools were available for the analysis and design of business
processes. The responsibilities of the BP&IM group included process training for management and ensuring that they had all the
necessary information with which to evaluate existing processes so that they could plan improvement projects. Fundamental to
the strategy at this stage was to refocus “vision and planning”—“by process area rather than functional” (Rank Xerox 1993, p.
36). The management of business processes was coordinated by the central BP&IM group for the entire Rank Xerox region. This
was logical given management’s desire to bring process and information architectures together.
In terms of data and information the 1992-95 strategic focus was that the BP&IM group would work toward providing Rank
Xerox with a consistent and integrated data architecture to allow easy access to information. This was a requirement because
information was considered by management to be, and was being promoted as, a corporate asset. The consistency and integration
of data was to be achieved by harmonizing the data codes that were used for the applications databases. These differed from
country to country in the Rank Xerox area to the extent that even basic codes such as those for the same products or customers
differed. The strategic goal was to bring together the companies’ data and use this to build a data warehouse. The harmonization
of data models was a prerequisite to building the data warehouse. The data warehouse was then to be used as the basis for
information with which decision support systems and executive information systems could operate. One of the key goals was to
make common management and performance reporting possible. Thus far, it was extremely difficult to compare the business
activity of each business unit between countries, except at the bottom line.
In terms of physical architecture, each country was to have its own operational database, which was to be based on a common
data model. The operational databases would provide data to the central data warehouse (see Figure 2). The strategic plan was
that the common data model was to eventually “support the information requirements of the Business Processes (in line with
process design priorities)” (Rank Xerox 1993, p. 49).
(1c) Applications
By 1992, there was a considerable mixture of applications and databases across the operating units. They provided support of
varying effectiveness to the business operations (Rank Xerox 1993). Three key problems were cited with the applications
environment at that time. First, the time it took to develop applications was unacceptable to management. Second, the cost of
applications development was unacceptably high. Third, there were problems adapting applications sufficiently quickly in
response to changing business conditions. The applications environment was highly fragmented and this led to increasing support
costs.
793
Seltsikas — Teaching Case
OPERATIONAL DATABASES
GLOBAL
RX DATA WAREHOUSE DATA
WAREHOUSE
(INFORMATION DATABASE)
COMMON
DATA MODEL
DECISION SUPPORT / EXECUTIVE COMMON MANAGEMENT /
INFORMATION SYSTEMS PERFORMANCE REPORTING
For applications, the IM strategy in 1992 was to reduce IM costs to 3% of revenue. Consolidating the applications architecture
was seen by the BP&IM group as critical to meeting this goal. Although the applications throughout the Rank Xerox region were
relatively suited to the local needs of the operating units, they were not appropriate for supporting another key strategic objective:
“to allow interchange of information across units or [to] satisfy requirements for consistency of information at a pan-Rank Xerox
or global [pan-Xerox] level” (Rank Xerox 1993, p. 57). Strategically, the emphasis was to move away from applications that
support business functions and toward business process driven applications.
(1d)Technology
In the period from 1992 through 1995, the technological diversity in terms of computing was such that there were more than 55
development tools and languages being used with 15 different network protocols. This diversity was proving to be costly.
Centralized computing was considered as being a more effective way to control costs. The strategic plan was to rationalize
technologies. Three critical success factors were identified for the future technology strategy: (1) the coordination of technological
directions throughout Rank Xerox, (2) the use of measurable and benchmarked software and hardware tools, and (3) a continuous
emphasis on learning about and investment in new technology.
(1e) Organization
During the period from 1992 through 1995, plans were made for the reorganization of IM. This was needed for three key reasons.
The first was because of a need to provide IM support at a pan-European and business group level instead of at the local unit level
as was the case during the early part of stage one. The second was because Xerox’s senior executives asked the BP&IM group
to lower costs—from 4.5% of revenue to a benchmark (typical of other high technology industries) figure of 3%. The third reason
was critical to Xerox:
794
Global IS Strategy: Xerox, Ltd.
FROM TO
Technical Orientation Business Orientation
Detail High Level
Introspective Global
Point Solutions Integrated Solutions
Single Media Multi-Media
Data Processors Information / Knowledge brokers
Software Builders Information Architects
End Point Providers Infrastructure Providers
Slow/Deliberate/Inflexible/Resistant Fast/Correct/Flexible/Resilient/Accelerators of Change
Figure 2. IM Trends
PAST FUTURE
Hierarchical organization Cross functional partnerships, Self directed work groups
Functionally driven Integrated processes
Roles defined Directional, portfolio, matrix
Acceptance of surrogate user Shape business
Specialists Generalists and specialists
795
Seltsikas — Teaching Case
The tables show the business and IM changes that the BP&IM group expected and the changes that they believed were necessary
in order to support the future state of Rank Xerox. Particularly important is the recognition (shown in Table 2) of the company’s
move away from a hierarchical and functionally oriented organization. The strategic assumption was that unless the changes
detailed in Table 1 were implemented, the IM group would not be in a position to effectively and efficiently support Rank Xerox
as a process focused organization. Highly important changes are the shift from a technical to a business orientation, and the move
away from a focus on software and data to an emphasis on the management of information.
Stage two IM describes IM at Xerox Ltd. during the period from 1996 through 1999. During stage two, IM was continually being
refocused and reorganized so that it could better support the Xerox process model. There were three prevalent elements of IM
strategy that integrated the previous six: (1) business process led common applications, (2) technology consolidation, and (3) the
centralization of business processes and information management and control.
By 1997, there were more than 1,300 applications in operation across Xerox Ltd. The applications in France, Germany, UK,
Spain, Central and Eastern Europe, the Middle East, and Africa were considerably different from each other. The remaining
countries did in general operate common applications. Many of the applications were used to support business processes that were
now represented by the Xerox Business Process Architecture and they were classified by process area. However, many of the
applications had been modified in each location (country, business unit, etc.) and the result was multiple implementations of
common systems. In most cases, the changes to applications had been made locally in order to support local needs. The common
systems became highly fragmented. The medley of applications and technologies was not providing effective support for the
process-oriented enterprise. One employee commented:
Process management at the moment, it’s horrible really because we’ve got such a mish-mash and hotchpotch
of applications. And it’s getting to the point now—for example the DPG thing [systems to support a new
business model] that there’s loads of other requirements that they have. And it doesn’t matter which way you
try and bend it—we CAN NOT satisfy their requirements. We can’t.
This was because applications and processes had not evolved in parallel and empowerment provided flexibility to operating units
to diverge from the centrally coordinated models. The applications architecture became particularly problematic because it was
characteristic of the old business model. The applications had been designed to support different markets and to work with
different technological capabilities (mainframe computing, batch processing, etc.). By 1997, business characteristics were
changing fast. New business models (e.g., document consultancy) could not be supported using existing systems.
The highly fragmented applications architecture was seen by management to be unsatisfactory. Two problems were emphasized:
(in)flexibility and (high) cost. In terms of flexibility, implementing any changes to the existing applications on company-wide
basis at Xerox Ltd. was extremely difficult. For example, a change to the Customer Services systems would need to be made to
more than 70 different but common applications. This was further complicated when in July, 1994, Rank Xerox signed an
outsource agreement with Electronic Data Systems plc (EDS), who from then on undertook the maintenance of existing
applications. Making many different changes to a common system as opposed to making the change once on a central system put
a huge financial strain on Xerox Ltd.’s information management costs—particularly now that a third party was paid to make the
changes.
The three largest countries (France, UK, and Germany) had considerably different applications from each other. The diversity
across Xerox was the reason that management at headquarters gave for their problems (time to develop applications and cost of
change). But these were also the reasons given by managers of the large countries for their becoming divergent: the center could
not support them quickly enough nor cater for all their needs.
Essentially the root problem was the fragmentation of applications and processes. Figure 4 shows the problem of increasing
applications and process fragmentation. The result is that BP&IM at the center is rendered ineffective with respect to the large
country units (France, Germany, and the UK).
796
Global IS Strategy: Xerox, Ltd.
BP&IM
(center)
BP&IM
(in large entity)
Management at the center were distressed. The fragmentation caused increasing complexity and high costs.
[The] problems that we have with this kind of configuration is that it’s an upgrading nightmare. It really is.
One of the BP&IM managers explained the problem. The effect of allowing process and application change meant that from an
enterprise-wide perspective there was little commonality between entities. Freedom to diverge from a centrally coordinated model
(empowerment) had been given to entity management and this had resulted in loads of processes. This was largely due to a focus
on short term planning and an emphasis on management at an operations level. Strategic and long term planning was not common.
1997 was a critical year for IM at Xerox. A major process and information management reorganization was planned. In terms of
applications, the key strategic plan was to implement a single core application to support each core business process area. The
plan was that these core applications would be implemented throughout Xerox Ltd. and would include the large operating
companies (France, Germany, and the UK). The applications would be maintained and physically located on servers in one central
location. Modifications for differences in language, currency, and legal requirements between countries would be allowed (where
absolutely necessary), but these would not be allowed to affect the underlying core application. Through the implementation of
these core systems that were being designed to support core process areas, the business processes were to be standardized
throughout the Xerox Ltd. region. The core applications were being developed centrally by BP&IM and in close collaboration
with the core process owners - the managers of the core business processes.
In general, a package approach to applications development was being used by BP&IM. This meant that where possible off-the-
shelf software applications were purchased. Flexible applications were investigated—those that allow process variation. The focus
was not to look at the outputs that can be produced by the application, but to ask “Can the system do what Xerox Ltd. wants it to
do: support a process and therefore support an operation?” Systems development starts with the definition of the business
processes and aims to match a system (package) to support those processes. The focus was totally on the operation at process
level—on the way of doing things. The data in the system was seen as secondary to developing a system that effectively and
efficiently supports a particular way of doing things and the consequence is that the strategic use of data—enterprise-wide data—
was lost. The benefit of this approach was that IM is close to the business. These packages were then tailored to meet process
needs.
The package approach was seen as being a more rapid means of satisfying (internal) customer needs. The main exception to
buying packages was the application (Xcalibur) that was being developed by BP&IM through an Indian software house. This was
being designed to support the customer facing part of the market to collection core process. It was based on the capabilities of
a package (TeleMagic) that had already been implemented across much of Xerox Ltd. to support telephone sales. Telemagic was
not suitable for a large-scale operation, and Xcalibur, with enhancements to satisfy the large trading companies (UK, France, and
Germany) was being developed. The processes that Xcalibur handled were Xerox’s most customer facing—bespoke development
of this application was seen by management as key to sustaining competitive advantage.
797
Seltsikas — Teaching Case
(2b)Technology Consolidation
At Xerox headquarters, a small group of people is responsible for the management of technology and infrastructure throughout
Xerox Ltd.—the Technology and Architecture (T&A) group. A large part of the outsourcing agreement in 1997 was for EDS
to manage the implementation and maintenance of the technical infrastructure and computing hardware for Xerox Ltd. The T&A
group at the center were effectively left to manage the T&A strategy and to coordinate the EDS contract.
During stage one, the diversity of Xerox Ltd.’s technological infrastructures were considered to be unsatisfactory. By 1997, there
were seven different technical architectures. This contributed to the fragmentation of the applications architecture because
different versions were needed for different architectures. Throughout stage two, legacy applications (those running on mainframe
computing) were being retired and replaced by client-server technology. In late 1997, together with the plans for the
implementation of core process applications, the strategy for technology and infrastructure was to continue the technological
consolidation.
Technological interoperability was to be achieved through an arbitrating layer of infrastructure (integration layer), which is known
at Xerox as message broker. This is a highly complex application that allows incompatible software to be integrated.
By late 1997, BP&IM’s managers realized that they needed to take control (Xerox Ltd. 1997). It was an implicit recognition that
the center did not have control but needed it in order to implement the centralized core process applications strategy that had been
proposed. Effectively, control needed to be taken away from IM management in the various countries. What was really being
taken away was the freedom that the management in the countries had to diverge from central BP&IM plans. BP&IM saw this
freedom as having caused the high fragmentation of applications and technical architectures. This fragmentation was now seen
by BP&IM to be preventing the effective implementation of the process model and its integration: it was becoming increasingly
difficult and costly for BP&IM to support the businesses needs. IM costs were increasing (Xerox Ltd. 1997). In order to avoid
the core process applications from becoming fragmented, any modifications would, in future, need to be sanctioned by senior
management at the center.
IM strategic plans since 1997 were characterized by centralization, consolidation, simplification, rationalization, commonality,
and consistency. The centralization of applications and processes in separate pan-European organizations were planned to achieve
strategic goals of lower costs, and increased productivity and customer satisfaction. Centralization was considered to be the key
to supporting the process model of organization—a model that includes enterprise-wide process commonality.
Enterprise-wide management information, which was considered by management to be critical for implementing long term
corporate strategy, was to be gained through the centralization of IM. Business processes that do not require direct engagement
with the (end) customer were to be centralized in pan-European centers. For example, back-office processes for the entire Xerox
Ltd. region (e.g., invoicing, credit collection, etc.) were being centralized in a single center in Dublin, Ireland. This was to be
achieved through the core applications strategy.
Since 1988, Xerox management realized that if Xerox was to survive, functional organization needed to be replaced by a business
process focused approach. However, the customer focused process model required continual updating to match customer
requirements as they changed. From time to time, customer needs and process capability drifted apart. By 1993, the two had
drifted so far apart that management were planning another large reengineering effort—similar to that of the 1980s.
A second cycle of reengineering was planned (between 1993 and 1998, with plans through 2000). In parallel, the two distinct
phases of IM development—stage one IM and stage two IM—took place. The second cycle of reengineering and stage two IM
are intertwined. Because of uncoordinated local process improvements and IM modifications, the holistic process model became
fragmented, both in terms of processes and IM. This and a rapidly changing business environment has forced Xerox through this
second cycle of change.
The second cycle of reengineering (re)creates a process model that is capable of exceeding customer requirements. In this second
cycle, however, IM and specifically enterprise-wide applications were being used as the structuring and coordinating mechanism
to reengineer the process model. The centralization of process management and information management are critical to achieving
this.
798
Global IS Strategy: Xerox, Ltd.
Since the early stages of the development of the process model, IM plans clearly intended to support and receive direction from
the business (process) model. This was the case both during stage one and stage two. The activities of the BP&IM group are
specifically managed to provide support to the process model. BP&IM teams are arranged by core process area. What has varied
with time is BP&IM’s capability to support process. This was shown in Figure 4 with the fragmentation of the process model and
applications architecture. During the first stage of IM development, the IM capability at Xerox supported the evolving process
capability with the integrated applications that were developed.
By 1997, IM support for the process model was becoming less effective and more costly. This was due to the high fragmentation
of both the process and applications models. Plans to realign the process model to match customer needs were matched by IM
plans to support the updated process model. These stage two IM developments improved IM capability in terms of the process
model. The stage two IM applications were being explicitly designed to support new processes. Effectively, the new core
applications were being developed as the process itself. Increasingly, the process is the application.
The fall in the cost of operating a pan-European business infrastructure is closely linked with modern IM capabilities and
reductions in the cost of telecommunications. Client-server technology, wide area networking, and the Internet are among the
many technological advances that have contributed to the improved cost economics of operating a pan-European business (Scott
Morton 1992). Lower cost communications have meant that information systems may be “live” throughout a pan-European
business and information exchange can be almost instantaneous across vast distances. These capabilities are critical in operating
a centralized model. IM capabilities such as overnight batch processing of data across national boundaries did not provide the
consistency or speed of data and its interchange that is needed to drive a centralized operation. The technology strategy in stage
two IM planned to rectify this.
With the centralization of non-customer facing processes, the operating units were left to concentrate on the sales processes.
Processes such as credit collection, invoicing, customer record management, contract management, etc., were until now duplicated
in each operating location (customer business unit/entity). The IM capabilities of providing wide area network infrastructure and
real-time information access (enabled through, among other things, the fall in telecommunications costs) support this arrangement
of processes: both customer facing units and senior management at the center can be provided with up-to-date information.
In addition to the careful development of applications in support of the process model, the Xerox technical infrastructure and the
capabilities that it provides make the process model possible. By 1998, the Xerox technological infrastructure had changed
considerably and the capabilities were such that the implementation of integrated applications supporting enterprise-wide
processes was possible.
The centralization during stage two IM involved consolidation of some of this technology, particularly the applications servers.
The key point is that, without the technological capabilities, the process model would be impossible to implement. Thus the Xerox
process model is heavily dependent on the implementation of suitable supportive or enabling information technologies. The
realignment of the process model and the business change that had taken place demanded more of an end-to-end approach to the
applications development than that provided by the legacy systems. The new core process applications were being developed to
take advantage of Xerox’s technological capabilities. It would not have been possible to organize information on such a large scale
with the integration and speed that was necessary for the process model to work without the enabling technology.
Centralization meant that many processes were located (managed and operated) in one physical place. Repetition and duplication
was reduced and the process model also became technologically easier to support.
CASE SUMMARY
Xerox’s management were forced to transform their organization to survive the competition. They reorganized the company and
focused on business processes. The information management capability was critical in producing and sustaining the new
organizational form. Over the last decade there were two main stages of IM development. IM managers have had the complex
task of transforming applications architectures and technical infrastructure to support and create the new organization. In doing
this, an elaborate web of organizational and technical issues needed to be confronted and resolved. One Xerox manager
commented that, in practice, it was “like changing an aircraft’s engine whilst in-flight.”
799
Seltsikas — Teaching Case
Six main areas were the focus of management’s attention: (1) business processes, (2) data and information, (3) applications,
(4) technology, (5) organization, and (6) human resources. The decentralized information management approach that
characterized the earlier years could not be sustained and during the latter years a centralization and consolidation of technology
and applications architectures took place. This supported, in fact made possible, the centralization of the management of the
process model of new organization. The modern advances in information technology have made this previously unimaginable
organizational form a reality.
References
Jacobson, G., and Hillkirk, J. Xerox: American Samurai, New York: Macmillan, 1986.
Porter, M. E. Competitive Advantage: Creating and Sustaining Superior Performance, New York: Free Press, 1985.
Rank Xerox Ltd. Business Process and Information Management Strategy : 1992-1995, Xerox Internal Document, BP&IM
Strategy Group, Issue 2, April 1993.
Scott Morton, M. S. “The Effects of Information Technology on Management and Organizations,” in Transforming
Organizations, T. A. Kochan and M. Useem (eds.), Oxford: Oxford University Press, 1992, pp. 261-279.
Watts, J. “The Business Change and Re-engineering Interview: Tom Davenport: Director of Research and Partner, Ernst &
Young, USA,” Business Change and Re-engineering (2:1), 1994, pp. 2-6.
Xerox Ltd. BP&IM Strategy Presentation, Internal Document, December 1997.
Xerox Ltd. URL: www.xerox.com, April 18, 2000.
800