MANAGING GLOBAL INFORMATION SYSTEMS STRATEGY XEROX LTD

The diversity of Information Management issues and problems that a large multinational company may face are illustrated by showing how Xerox managed IM strategy over a ten year period. Part one of the case study details the IM developments and shows how the Xerox IM team managed by focusing on six areas : Business Processes, Data & Information, Applications, Technology, Organisation, and Human Resources. The problems that Xerox faced in each of these areas are discussed and management’s approach to resolving these is described. In essence, Xerox’s move to managing-by-process required matching changes in IM capability to support it. Xerox’s earlier approach that entailed a decentralised IS model became inadequate at supporting the dynamic process model – and ultimately customer needs. The second part of the case shows how the process model became increasingly reliant on the capabilities offered by IM. As business processes and information systems became increasingly intertwined Xerox aligned the development of both models and effectively brought their management and co-ordination together. A centralisation strategy was key to bringing these latter changes about. TEACHING CASE MANAGING GLOBAL INFORMATION SYSTEMS STRATEGY XEROX LTD. Page 2 Background Xerox was founded in Rochester, New York in 1906 as The Haloid Company. In 1938, Chester Carlson made the first xerographic image and spent years trying to convince business executives to take up his invention. They didn't believe that there was a market for even a single copier. The Haloid company took up Carlson's invention and became the Xerox Corporation in 1961. Since then it has grown to a dominant global company with 92,700 employees and revenues of $19.4 billion (Xerox, 2000). Xerox is well known for producing photocopiers but its product portfolio includes printers, facsimile machines, multifunction products (printer, fax, copier), and document consultancy. The focus of this case study is the European Solutions Group (Xerox Ltd. which was known as Rank Xerox Ltd. up until 1997) that manufactures and markets Xerox products across Europe. It comprises four manufacturing sites, two major research laboratories, and multiple customer business units across more than 24 European countries. Xerox Ltd. employs 19,500 people. Until the1980s, Xerox enjoyed unprecedented growth. Its products embodied sophisticated technologies which Xerox safely guarded behind a wall of patents. As these patents began to expire, competition developed and by 1982 Xerox's share of global profits had been halved. Most of the competition was from Japan (Jacobson & Hillkirk, 1986). Xerox looked for organisational efficiencies to succeed. In 1988 the Central Logistics and Asset Management group experimented with business process reenginering and saved Xerox millions of dollars. Following their example, management implemented a major organisational restructure and in essence was ‘forced’ to abandon the functionally oriented organisational form, simply in order to survive (Watts,1994). Xerox's management delineated the essential business processes through which it operates and reorganised to focus on these (see figure 1). The traditional reductionist (Taylorist) approaches to management were replaced with a holistic, processfocused approach. The company then wanted to address the question of how to maintain a continuing business process focus and in particular to understand the role that information management plays in this. It soon became apparent to management that the information management processes needed to be brought up-to-date with the new process-based organisation. Figure 1: Xerox Business Process Architecture TEACHING CASE MANAGING GLOBAL INFORMATION SYSTEMS STRATEGY XEROX LTD. TEACHING CASE.DOC Page 3 Information management is part of the 'infrastructure' core process and is particularly complex because Xerox performs all of the activities in the Value Chain (Porter, 1985), from manufacture, through to distribution and service. Having reorganised around business processes, Rudge, the director for Business Processes and Information Management (BP&IM), felt uneasy about the suitability of Xerox’s existing ‘information management’ in supporting the ‘new’ organisation. The question Rudge posed in 1995 was ‘how can IM best support the process oriented enterprise? ’. During the period 1992-99, two major stages in IM development took place. The following sections describe what happened. PART ONE: THE TWO STAGES OF INFORMATION MANAGEMENT (1) Stage One Information Management While the Xerox focus on managing by process began in 1988 by 1992 there were explicit attempts to bring the process and information architectures together. The original developments in IM at Xerox (stage one) were intended to support the new process-based organisation that was being formed. This IM ‘era’ relates to the 1992-95 period. The Xerox IM team focused on six areas: (a) Business Processes, (b) Data and Information, (c) Applications, (d) Technology, (e) Organisation and, (f) Human Resources. These areas can be considered as Xerox management’s' definition of IM (at least during that period) — i.e. IM is a process that involves the management of each of these six areas. The following six subsections describe their approach in each area. (1a) Business Processes Xerox management declared: “Business Processes will drive the Information and Applications Architecture” (Rank Xerox, 1993b, p. 5). During this stage of IM development the ‘aims’ were to ensure that the process infrastructure was understood across Rank Xerox and that it was implemented in a consistent manner. The Business Processes & Information Management (BP&IM) group planned to ensure that process standards were well defined and that tools were available for the analysis and design of business processes. The responsibilities of the BP&IM group included process training for management and ensuring that they had all the necessary information with which to evaluate existing processes so that they could plan improvement projects. Fundamental to the strategy at this stage was to refocus ‘vision and planning’ — “. by process area rather than functional” (ibid., p. 36). It is notable that the responsibility for process training and coordination was based in the IM group — hence the name BP&IM. The management of business processes that was co-ordinated by the central BP&IM group – for the entire Rank Xerox region. This was ‘logical’ given management’s desire to bring process and information architectures together. (1b) Data and Information In terms of ‘data and information’ the 1992-95 strategic focus was that the BP&IM group would work towards providing Rank Xerox with a consistent and integrated data architecture to allow easy access to information. This was a requirement because ‘information’ was considered by management to be, and was being ‘promoted’ as a ‘corporate asset’. The TEACHING CASE MANAGING GLOBAL INFORMATION SYSTEMS STRATEGY XEROX LTD. Page 4 consistency and integration of data was to be achieved by harmonising the data codes that were used for the applications databases. These differed from country to country in the Rank Xerox area to the extent that even basic codes such as those for the same products or customers differed. The strategic goal was to bring together the companies’ data and use this to build a ‘data warehouse’. The harmonisation of data models was a prerequisite to building the data warehouse. The data warehouse was then to be used as the basis for information with which decision support systems and executive information systems could operate. One of the key goals was to make ‘common management and performance reporting’ possible. Thus far, it was extremely difficult to compare the business activity of each business unit between countries, except at the bottom line. In terms of physical architecture, each country was to have its own ‘operational database’ which was to be based on a common data model. The operational databases would ‘provide’ data to the central data warehouse (see figure 2). The common data model was to eventually “support the information requirements of the Business Processes (in line with process design priorities)” (Rank Xerox, 1993, p. 49).