Conclusion.
Xerox's decision to outsource IT was based on a variety of financial and operational factors. We believe the decision was correct, though should have come sooner. Xerox will recognize good short and long-term benefits from the arrangement provided they actively watch for and address any obstacles that may arise.
Introduction.
In 1994 Xerox finalized a 10-year, multi-billion dollar contract with Electronic Data Systems, hereafter referred to as "EDS," that effectively gave EDS control of and responsibility for Xerox's Information Technology functions. Xerox's reasons for outsourcing their IT operations include financial as well as operational issues. Those issues, the decision to outsource IT and the relationship as we see it are discussed in the following analysis. .
Key Events Leading to Xerox's Decision to Outsource IT.
There were a number of key events that led to Xerox's decision to outsource IT operations to EDS. The first was the decision to move Corporate Information Management (CIM,) led by Patricia Barron, to the General Services Division in June, 1987. CIM's new mission was to develop the information technology strategy for Xerox and ensure that it was implemented in all of its business units. In 1988, Barrow brought in an IT strategy consulting firm which discovered a lack of leadership, direction, and control due to Xerox's decentralized IT management structure. The result of these shortcomings was the mismanagement of Xerox's $500 million IT budget.
In 1992, Xerox reorganized its management structure along customer lines instead of geographic lines, forming nine new divisions, in an effort to bring decision-making closer to the customer. During this reorganization it became apparent that the legacy systems in place were too inflexible to provide the divisional presidents with the information necessary to run their divisions. It was apparent that Xerox had a very serious problem with its current IT infrastructure.
Xerox who was the leader and giant in the copier industry is now failing Michael Hiltzik provides an account of how Xerox started. ... Xerox procedures start with its fondness for paper. Hiltzik gives an account of how Xerox operated procedurally. ... Xerox is cash strapped and desperately dodging bankruptcy. ... Xerox needs to get more out of its technology. ...
Next, several financial issues can make outsourcing appealing. ... THE BENEFITS FROM OUTSOURCING Outsourcing has identified numerous potential benefits. ... THE PROCESS OF OUTSOURCING There are many ways to manage IT outsourcing since every company has different culture, strategy, structure, people, and process. ... However, I"m here going to use Xerox's outsourcing process. ... THE PROBEMS IN OUTSOURCING Many outsourcing contracts are structured for very long periods in a world of fast-moving technical and business change. ...
Mike Johnson (1997) maintains outsourcing isn't a new idea. ... Outsourcing has fostered the concept ofcore? ... their organisations, have championed the concept of outsourcing (Klepper 1998). ... A mere handful of outsourcing success stories includes Xerox, IBM, Whitbread, Tripac International, BP, Avis Rent-a-Car, and Mambo. Xerox paid EDS over $3 billion in 1995 to manage the majority of its computer operations worldwide because they wanted to be certain of keeping up with theIT boom? ...
Introduction Any organization in business cannot afford to stand still. It must improve its ability to deliver higher quality goods and services at competitive prices or it will go out of existence. This trend has resulted in emergence of World Class Organizations (WCOs), in which enterprises can compete effectively on a global basis. This does not mean the organization has to do business in an international level. However, if a Multi National Enterprise (MNE) sets up operation locally, the WCO must be able to compete effectively or if it is a supplier, it must make a competitive bid to suppl...
Today, companies like Xerox, Eastman Kodak, Mobil, Home Depot, and Ethan Allen Furniture - to name just a few - have recycling programs that meet the needs of their individual industries. ... A solution for many companies that have limited resources for reverse logistics is outsourcing that function to third parties or transportation companies. ... As with any outsourcing decision, it's a matter of being able to focus on your core competencies and freeing up your people to work on products rather than expend your assets on [reverse logistics], suggests Brett Chyatte, senior marketing spec...
