The past 15 months have been more than a little eventful for Norwalk, CT-based Xerox Corp. Recent headlines have focused on the battle for control of the 112-year-old OEM, the near combination with Fuji Xerox and the dissident shareholder stand taken by Darwin Deason and Carl Icahn. The corporate battles came on the heels of the company’s most ambitious product unveiling in its history, the 2017 launch of the 29 ConnectKey-enabled AltaLink and VersaLink Workplace Assistants, which have been greeted with much fanfare.
Pete Peterson has enjoyed a front-row seat for the OEM’s saga, having joined the firm 15 months ago. As president of Xerox Channels, Peterson is tasked with shepherding the transformation that is taking place within the organization as it seeks to gain a stronghold in the SMB space through the ConnectKey tools and its enhanced MPS solutions. He took some time recently to explain how Xerox is leveraging its channels ecosystem to take full advantage of the opportunities it sees from that SMB perspective.
Tell us about your first 15 months on the job.
Peterson: I spent the first six to nine months focused on our global strategy, assessing our tools and programs, along with spending time in the field with our partners in North America as well as Europe. I’ve been getting a feel for what’s working and perhaps what we can do better. We’ve received some great feedback. Xerox put out a survey on the effectiveness of some of the offerings, and then we transitioned into build and enhance mode. Some of the tools and offerings we had were actually well received or perhaps just needed a little tweaking, and with others, we’re constructing a model that builds assets we feel are going to help our company and channel ecosystem be successful for the foreseeable future. So the first three to six months involved assessment, and the next six months were gauged toward, OK, what are the low hanging fruit, the easier opportunities where we can make a difference? We balanced that with some of the long-term things we think we have to do in order to be competitive in the marketplace.
With more than a year under their belts, how would you assess the reception of the 29 ConnectKey-enabled AltaLink and VersaLink Workplace Assistants?
Peterson: We launched the 29 new products under the ConnectKey platform in March of 2017 and it’s been very successful. We have seen pretty significant growth, particularly in our A4 and A3 space. Our year-end activity is up pretty significantly. App adoption has been a big hit. All our ConnectKey products are built on a common platform, and they all have the ability to let you build or acquire apps. This has been a key differentiator in the marketplace. A lot of the bigger and more significant wins that we’ve seen have been driven by our apps. It’s interesting to note that we had roughly 30 apps in our Apps Gallery a year ago, and we’ll end 2018 with somewhere close to 100 available. Many were built by our partners—whether it’s from our dealer community or our agent community, and made available for consumption by other partners—or they were built by Xerox. Our Easy Translator app allows you to feed one of our MFPs with a document written in one language and allows you to convert it to a different language. We’ve seen really positive results from that app specifically. These apps are designed to allow you to be more efficient in the workplace. Whether it’s a classroom, traditional office or home office, these apps are built to make lives easier, more efficient and more effective.
Xerox recently announced a couple large MPS wins by partners. How has contractual growth fared this year among your partners?
Peterson: One area that is certainly attractive to us, specifically channels, is the SMB piece of the MPS market. We’re growing at a rate of 2X. As we continue to help and support our partners in that regard, programs like our MPS accreditation program and offers like our Essentials Suite allows our partners to be efficient and ultimately take advantage of those managed print opportunities. I was also pleased to see where one of our larger distributors, Ingram Micro, announced an MPS tool that they just launched, all built around supporting their SMB reseller community, particularly in the IT reseller community, to leverage and optimize the managed print services opportunities that they may have in their respective markets.
What are the challenges you’ve faced in the dealer segment, and what are your plans for growth?
Peterson: We have a fairly unique model for how we segment our channel ecosystem. It’s really a three-pronged go-to-market approach. We have our agents in the U.S., which are called concessionaires in Europe. They’re contractually obligated to support Xerox solutions only, and it’s a big chunk of our business. In the U.S., we probably have a couple hundred agents, and twice as many in Europe. Because of the relationship we have with them and how long we’ve been doing business with these agents, its vital to keep the business current with new tools while enhancing the global partner program we successfully launched here at beginning of the year. It’s around making sure they’re leveraging the tools and channel-enablement assets that we offer.
The second route to market is what we call DTP, document technology partners. These are print-centric dealers—there are literally a couple thousand of them in the U.S. and several thousand across Europe. They sell competitive offerings, whether its Canon, Ricoh, Konica Minolta and others, and we’ve had some great success here in the last year or two while building out that part of our channel ecosystem. In the U.S., we probably have a couple hundred and we’re signing new dealers on a quarterly basis. We have the same strategy in Europe. This allows us to extend our reach pretty significantly into the SMB market, specifically in the midmarket segment. These DTPs have other solutions that they can sell, so we have to make sure that we’re competitive in terms of our offerings. We have to make sure that our products are positioned appropriately so that they can leverage them. One of the biggest attractions for that DTP community is our strong production fleet of products. We’re seeing pretty strong growth across the North American landscape as well as in Europe. The challenges for us are to recruit, enable and ultimately help execute in the marketplace.
The third route to market is what we call our Velocity business. These are the traditional IT resellers. We focus on the U.S. segment. There are roughly 15,000 resellers out of about 75,000 total resellers that are buying some type of print solutions. We serve roughly a couple thousand of those partners, mainly through our distributors like Tech Data, Ingram Micro, Supplies Network and Synnex, but we serve them through both distribution relationships. We’re selling predominantly in the SMB market space, so this gives us an opportunity again to expand and offer Xerox products and services, whether it’s the 29 ConnectKey products, of which 17 are in the A4 space, or from an MPS perspective, where we’re seeing significant growth.
Have there been any distractions from the Fujifilm situation? Has it impacted dealer confidence?
Peterson: There’s been a dialogue between me, my team and our channel partners. My job and the team’s responsibility is to engage and communicate what we can and what we know as it relates to the Xerox organization. We’ve jumped in front of that and I’ve had the chance to personally speak with many of our partners, whether in large group sessions or through advisory council opportunities. There’s a common theme to the message: Xerox is a 112-year-old company. We’ve had great success, and a lot of that success in the last two decades has really been because of our growing channel partner ecosystem. That’s not going to change. We have great products and solutions. That’s not going to change. Our commitment to driving value and opportunities for the channel is not going to change. At some point, it just becomes noise. My message is to stay focused and make sure we’re doing everything we can to support them. I don’t know of any deals or opportunities that have been derailed because of whatever they’re hearing about in the news. Our channel partners have been very receptive.
What are your goals for the balance of this year and 2019?
Peterson: Each year, we send out partner experience surveys. One of the more common themes for this year was “help me simplify my experience with Xerox.” If you think about a company that has historically been focused on its offerings in the enterprise space, being nimble and predictable from an engagement perspective in the SMB market is a must-have. That’s what we’re doing every day at Xerox with the operations teams, whether it’s with our channel sales teams or our marketing programs and the various portals that our partners use to drive business…how do we simplify that experience? Another goal involves expansion, identifying and recruiting new partners, specifically in that DTP route-to-market, as well as within our Velocity business. For example, we sell to roughly a couple hundred DTPs, and there are about a couple thousand in the U.S. overall. In the Velocity space, we sell to 3,000 Velocity partners, and there’s approximately 12,500 to 15,000 of them overall when we look at data from our distributors. So there’s an opportunity there with our Velocity and DTP partners while going deeper and more strategic with our agent business.