While Xerox's research and development arm is certainly known for its role in developing the Ethernet standard, its name more likely conjures up thoughts of photocopiers. But upon closing its acquisition of Dallas-based IT services provider Affiliated Computer Services in early 2010, Xerox became a player in the cloud provider market as well.
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In the final segment in our year-end Q&A series with cloud market leaders and innovators, Xerox cloud chief Ken Stephens discussed the ups and downs of creating a channel partner program for cloud services. Stephens, who came from Affiliated Computer Services (ACS) to Xerox, where he is now senior vice president of cloud services, also reflects on his vision for service creation and development for the Xerox cloud.
What do you see as some of the major accomplishments with Xerox's cloud services in 2012?
Ken Stephens: In the last couple of years, we've really gone beyond just doing Infrastructure as a Service for our base business, and we've really moved outside of that to where we offer more [cloud] services like storage, backup, disaster recovery, MDM and hosted collaboration.
We also moved beyond just offering a broad assortment of services to our enterprise clients because we've also moved into the channel. People often think of a traditional Xerox partner that would sell printers, paper, print services, whatever. But through channel partners, we are selling cloud services as well. It's a whole new market for us, really allowing us to move downstream, so to speak, into the [small- and medium-sized business] SMB space.
The cloud space in the channel was different. It was packaging services and saying, 'No, this is the service. You buy it or don't buy it, but this is the service.' […] That was difficult for us.
senior vice president of cloud services, Xerox
We started down that path just over a year ago. We haven't gone out and said, "Let's go hit 1,000 or 2,000 or 10,000 channel partners." We [initially] went out and got 40. I won't say we [cherry-picked those partners], but we were conscious about who we wanted to do trials with. We have about 40 channel partners that are signed up. Not all of them had sold services [previously], but probably half of them have actively engaged with us to sell services through to their clients.
It's not a booming business; I wouldn't phrase it that way. But I would say it's a budding business, and we are in the process of expanding it.
What's on tap for the Xerox cloud and its channel program in 2013?
Stephens: We did our proof of concepts in 2012, and we kind of worked out all the bugs of our channel partner program -- how we pay people, how the discounts work, et cetera. We will expand that program in 2013. It's been primarily focused in North America, so we'll move [the program] into Europe and Latin America. We have budding relationships there right now. We expect to move into other continents as well.
Also in 2012, we created a lot of [cloud service] offerings. Depending on how you count, we have somewhere between 12 and 20 cloud offerings just in the IT space. What we will see in 2013 is probably less investment in [developing] new offerings and more of an expansion of our existing offerings. As an example, take Infrastructure as a Service: We clearly sell a lot of that today, so we'll do a little more with OpenStack probably and more configurations of Infrastructure as a Service.
We will not be as "R&D rich" in 2013. Instead, it will really be about growing the business, [making the most] all of our investments in 2011 and 2012, and turning it into a cash-generating machine.
Additionally, in 2012, we were very conscious of trying to expand our [services] footprint. We have a footprint in Asia, Europe and Latin America, and across North America. We were actively looking for those "anchor" accounts that would get us a global footprint, from a cloud perspective. We were very conscious of trying to get a foundation in place -- not just as a portfolio of offerings, but also as a portfolio of locations that we can deliver from. Since all of that is now in place, it really positions us for growth in 2013.
What would you say is the most important lesson you learned in 2012 about being a cloud provider?
Stephens: We had a lot of challenges early on. Learning the channel was a difficult thing for us. For those of us coming from the [managed] services business -- the original ACS staff -- we were very comfortable doing cloud deals with enterprise customers: Nike, McDonalds, Disney. The cloud space in the channel was different. It was packaging services and saying, "No, this is the service. You buy it or don't buy it, but this is the service. This is the contract. Either sign it or don't sign it." That was difficult for us, because as a services company, most of us spent our whole lives saying, "Yes. We can do that. We configure it however it is you want us to configure it." But you can't really do that in the channel and achieve scale. That was quite a challenge for us, but I think we got over those hurdles.
Read the rest of our Q&A series
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But how do you achieve economies of scale in the cloud if you're still doing custom work for enterprises?
It's very interesting how this has played out, because some of my very large enterprise customers that we sell a lot of cloud services to started out saying, "We want to customize this way. We want to change this." Every time they would say, "We want to change your standard offering," I'd say, "No problem. I can do that. But, by the way, it goes from being $6 a unit, to being $8 a unit." They would be like, "Oh. I don't know that I care that much [about customization] anymore."
As they learned to accept standard solutions, we've learned as well. We both learned together. As a result, a number of my enterprise customers have really become my best customers because they know, "I can call Ken up and get cloud service in an afternoon, versus if I wanted to do a traditional IT deal, I'd have to wait three months."
Do you have a New Year's resolution for Xerox's cloud?
Stephens: I think the big goal I have this year, in terms of our cloud business, is to make our portal more user-friendly. The portal is now very user-friendly -- if you're a technical person, that is. I think we have some room to grow, in terms of making cloud more people-friendly. If I can have my less-technical customers saying, "Your cloud is easy to use," I'll see that as a success.
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