The plan calls for EDS to act as lead integrator for Xerox copiers, printers, and fax machines and offer its customers advanced Xerox support services such as procurement assessment and asset management.
EDS officials say the arrangement will help users of desktop and office printing equipment save money by acquiring and managing imaging systems more efficiently. To date, EDS service line manager Jerry DeAngelo says, companies have acquired imaging systems on a department-by-department basis, often leading to duplication. "In any given office, you'll see a printer next to a copier next to a fax machine next to some sort of all-in-one device," DeAngelo says. The deal with Xerox will let EDS help its customers centralize the purchasing and deployment of office printing equipment in the same way most have centralized IT purchasing, he adds. To make that happen, he acknowledges, EDS will have to overcome the fact that in most companies the purchasing of IT equipment such as desktop computers and office equipment such as copiers is handled separately. "It will be a challenge," he says.
DeAngelo says that while the deal is limited to office printing systems for now, he expects it will ultimately be extended to include more expensive data-center and production printing systems.
Analysts say the deal makes sense. The integration of desktop outsourcing with document management represents a "major market opportunity," as businesses look for more ways to cut costs, Gartner principal analyst Peter Grant says. According to IDC, office printing represents anywhere from 1% to 3% of total spending by businesses.
For their part, Xerox execs say the deal will help their company, hurt in the past by botched sales reorganizations, get a better handle on the business market. "It's going to broaden our reach into IT departments," says Gil Hatch, president of the office systems group at Xerox. Hatch says he's confident that the deal will generate as much as $400 million in revenue for Xerox over its three-year lifespan. As part of the agreement, Xerox becomes the preferred printing equipment supplier for EDS's internal use. EDS had already been working as Xerox's primary IT outsourcing contractor.