I had the opportunity recently to speak at the first SRII Symposium - The Services Research Innovation Initiative. The theme for the day was "The Challenges and Opportunities of Services Research and Innovation." Let me share with you some of the messages I conveyed on how Xerox and our scientists and researchers are spearheading Services Innovation.
I was especially honored to be on the stage with individuals such as John Seely Brown my former colleague from Xerox PARC, and Irving Wladawsky-Berger from IBM, where I began my professional career.
For the purposes of this talk, I covered three key areas:
1. The challenges and opportunities of doing services research in industry
2. A peak into how we do this at Xerox and what we do
3. Some lessons learned on how to successfully innovate.
Let's start with challenges and opportunities
A huge opportunity for our researchers is that via our Xerox sales force and the Xerox services consultants, we have direct access to our customers to try out new ideas and technologies. In fact, if we do this well, our customer's sites become our laboratories. Understanding the customer's "pain points" becomes the source of novel ideas and our customer sites become the place to pilot them. In our services research portfolio it is often the customers that help us articulate and drive our research agenda.
The first challenge is that in order to innovate, a bright services research idea is not sufficient. The services research projects must either result in:
1. A service offering that our customers want Xerox to perform for them as they see significant value to their business. If the service is co-created from the start, this is easier to achieve;
2. Or, the research project must result in making Xerox's own consultants, services and sales teams more efficient and effective.
Only when achieving either one of these results will our services research projects create profitable revenue growth for Xerox.
The second challenge, maintaining the services gross profit margins, is extremely critical. Our gross profit margin in our equipment and software businesses has traditionally been high. Executing a people-intensive consulting business is very different. It is therefore critical that the services are supported by scalable, reusable software platforms that once piloted and deployed in one customer site can be re-used across customers in one industry, or across vertical industries. Otherwise there will never be enough researchers and service engineers to support our many customers worldwide and to quickly implement the service offerings. Our services research must also support this goal.
As data shows whole countries are being transformed from agricultural and manufacturing societies to services-based societies. The growth in services is significant across the globe. By 2010, most of the people in the rich world, but also a significant portion of the labor force in developing countries such as China, India or Russia will be employed in the service sector industry instead of in manufacturing or agriculture. This is a significant change over a few decades ago!
Xerox has always supported people working in the services industry with conventional imaging, printing and publishing systems developed by PSO and XOG.
Now our services consulting business (XGS) is focused on helping customers effectively execute their document intensive business processes. Examples are legal firms mining enormous amounts of evidence, universities dealing with their document-intensive admission, course work and fundraising processes, or enterprises and small businesses dealing with global customer information etc… Often the knowledge required to effectively run these businesses is contained in documents and information distributed across multiple sites and repositories, either in paper or electronic form.
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Today at Xerox, we generate about 20% of our revenue from professional services and this portion of our business grew 15%, faster then our conventional hardware businesses. Even though the services are hardware agnostic, these consulting services enable additional systems and software revenue over time.
Our many assessments have shown that a typical enterprise spends about 3 to 5% of their revenues on managing documents; this cost is frequently higher than what they invest in research and development for their own products and services. Worse, the cost is often unknown and hidden in fragmented silos in the company. Document costs include designing documents, storing documents, printing them, mailing and distributing the documents, warehousing, etc. These costs don't yet include the costs related to finding the information they need in the document which is even more difficult to quantify.
Today we promise customers that by allowing Xerox to take over their document intensive business processes they can cut cost by an average of 20%, while at the same time creating a more personalized experience for themselves and their customers resulting in better business results (more revenue).
Why do I talk so long about these business issues at a research symposium? Because I know that breakthrough services technologies are critical to enabling these services offerings to be profitable, scalable, and differentiated. The results we are promising and delivering to our customers would just not be possible otherwise.
Research in Services
Our investments in innovation for services have traditionally been less then our investments in innovation in systems and software. Only in the past decade has this shifted.
One of our main research planks most aligned with the SRII innovation initiative is focused on innovative technology breakthroughs in services and solutions that will improve our customers' document intensive business processes. We focus on processes that depend on the information and content contained in the documents, especially those documents that trigger critical processes and decisions across the enterprise. These documents could either be digital or physical. The huge amounts of information that continues to be generated will continue to explore, resulting in huge amounts of untapped knowledge. Providing extraction, text mining services such that the info generation explosion becomes manageable, scalable and customized is critical. At the same time privacy, trust, non-invasiveness and security must be guaranteed. So many great challenges for researchers to work on!
Today a significant portion of our research investments are exploring this area which we call intelligent document services (or smart document services). It's about finding unique ways to make both the documents themselves as well as the ability to handle these documents smarter. We're inventing ways to add intelligence and structure to unstructured information found in both digital and physical documents. The answer lies not in having more and more people manage these documents, but by making the documents know what information they contain and then automatically act on this information.
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You could envision a document as a cargo carrier for words and images. You'd think a document should at least be as smart as the cargo containers in use for physical transportation of goods. After all, cargo containers know where they're supposed to go… they're RFID encoded with the information they need to reach their destinations and they let inspectors know what's inside and customers track where the container is.
But documents, information and word containers, don't know much at all. Current documents are easily produced and easily filed, but they don't have a clue where they're going, who needs them or what action to trigger next. And so valuable information contained in documents - the knowledge you need to launch that innovative solution or capture the next customer sale - is lost. Key information lost in a paper mountain or in the vast distributed information contained in multiple repositories in corporate environments and on the web.
Our services research is focused on providing the documents with their own intelligence. This way you can eliminate many error-prone manual processes, automate the business processes and allow the customer to capture the cost savings and revenue growth opportunities. The service platform must be scalable and re-usable. The more you can re-use common components and plug/play them on common platforms, the more scalable your service becomes and hence the faster you can capture the profitable revenue.
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