Xerox 2011 Annual Report Download - page 7

Xerox 2011 Annual Report 5
Transformation of Xerox
Changes are taking place in our heartland industry of document
technology. We won’t see a paperless office anytime soon, but we
are seeing less reliance on paper in our daily lives, both at work and
at home. One example I often use, because everybody gets it, is bank
statements, credit card bills and things of that sort. Most of you likely
now receive your bill statements online instead of paper statements
in the mail. And you’re probably paying for those bills online too.
Somewhere in that transactional process, Xerox is very likely behind
the scenes making it happen.
That’s because we didn’t resist what’s been taking place in our
industry and we didn’t stick our heads in the sand to avoid seeing the
changes. We have had our eyes wide open, embraced the changes
and in many cases led them. In fact, we started to transform our
company more than a decade ago.
Once synonymous with copying and then printing, some of you
might recall we began referring to ourselves as The Document
Company – a signal that we had expertise in paper and digital
documents and a sweet spot in helping customers navigate
seamlessly between both worlds. We started to make niche
acquisitions that enabled us to handle digital discovery for lawyers,
electronic mortgage applications for banks and others. The more
we did, the more our customers wanted. That’s a great place to
be – a window of opportunity that doesn’t come often.
As you know, we leapt at the opportunity. Two years ago, we acquired
Affiliated Computer Services (ACS), a major player in the business
process and IT outsourcing market. Overnight, our $3.5 billion
services business became a $10 billion business. And, through our
growth in this area, revenue from services now represents the largest
portion of our business. As I like to point out: lots of companies talk
about transformation; we’re doing it.
Since acquiring ACS, I’ve done a lot of reflecting on how it has
changed our company. Two paradoxical thoughts keep coming back
to me. One is that the more things change, the more they stay the
same. From our earliest days, our purpose was never about making
copies. It was about making it easier for people to share information.
Chester Carlson, the inventor of xerography, said as much when he
described his goal as “making office work a little simpler, a little less
tedious and a little more productive.” Making things simpler has
always been in our DNA. When you walk up to a Xerox device, then
as now, you select your features, push a button and a lot of very
complex technology takes over – technology the customer doesn’t
care too much about or need to know about. By the way, much the
same is true of the ACS tradition – a company that was built over
time on the premise that being exceptionally good at back-office
work gave its clients one less thing to worry about.
’07 ’08 ’09 ’10 ’11
12,475 12,929 11,629
17,776 18,770
72%
73%
77%
82%
83%
’07 ’08 ’09 ’10 ’11
1,871
1.554*
2,208
2,726
1,961
939
’07 ’08 ’09 ’10 ’11
10.0%
8.4%
6.8%
9.6% 9.8%
Annuity Revenue
(millions – percent of total revenue)
Net Cash from
Operating Activities
(millions)
Adjusted Operating Margin*
“Making things simpler has always been in
our DNA.”