Summary
With no intention to integrate ACS with Xerox, what exactly does Burns hope to achieve by buying a company with 74,000 employees focused on services? The Xerox partner network of distributors is adept at selling copying services and all that goes along with Xerox hardware and consumables.
Analysis
ACS is an outsource back room service provider, all be it a big one. Xerox makes great copier solutions and has bundled services to manage large corporate copy centers. Bringing these two companies together under one stock ticker hardly ensures an accretive growth result. Companies struggling to lower costs and increase revenue need real help in the form of Business Process Management. To compare this move into services to the IBM service model is a stretch. The basics are missing in that neither organization has the domain knowledge necessary to help their customers improve their over all business processes. When IBM, EDS, or Perot engage their customers on a service model they do so by first demonstrating intimate domain knowledge of the customer's business.
There is no question that there are many individuals at Xerox who understand the services opportunity. The Xerox Health Care Blog entry by Nancy Richardson on September 27th proves that point. http://healthcareindustry.blogs.xerox.com/2009/09/27/providers-say-tell-us-where-were-crazy/ After reading this blog I was left with the empty feeling that once again Xerox has great people who see the need, but are organizationally challenged to field the people with the domain expertise to really help.
Nancy Richardson does an excellent job of defining a common and serious problem in the health care space. She offers no solution. For Burns to spend a bundle on an acquisition that she does not intend to integrate suggests that there really is no master plan at Xerox that thinks outside the "box". If the deal is accretive to earnings it will be on the rising tide of health care costs and selling Xerox hardware into ACS customers.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
