EUROPEAN BUSINESS SPENDING €55 BILLION ON OUTSOURCED DOCUMENT SERVICES

Use of multiple third-party suppliers amplifying organisational document cost, as report identifies multi-billion market opportunity for Xerox Global Services

Uxbridge, UK, 20 December 2004 – Major European organisations are spending circa three per cent of their annual revenue on the outsourcing of creative development, production, distribution and storage of documents, according to an RS Consulting research report commissioned by Xerox Global Services. However, while organisations are spending such a considerable sum on outsourcing these business functions, the spending is at a tactical rather than strategic level. The research results suggest that European businesses would reap much greater efficiency and cost savings if they were to outsource more of their document activity, but to a lesser quantity of external suppliers.

The report is based on more than 600 one-to-one interviews conducted with senior management in more than 250 leading businesses in Belgium, Czech Republic, France, Germany, Hungary, Italy, the Netherlands, Spain, Sweden, Switzerland and the UK. The report found that an example company with annual sales revenues of €145m is likely to spend €4.35m on outsourced document services, but 90 per cent of businesses are sub-contracting only splintered parts of their document activity to third party suppliers.

“The research highlights two critical issues,” explains Shaun Pantling, director and general manager, Xerox Global Services, Xerox Europe. “Firstly, less than one in five organisations within that 90 per cent outsource to one or a few, select suppliers. This means that the organisation as a whole is failing to reap economies of scale across the business. Secondly, because outsourcing decisions are being taken at a tactical i.e. departmental level, senior management within that organisation may be unaware of the true cost to the entire organisation of document management and outsourcing.”

Pantling continues: “Both we and RS Consulting suspect that few European businesses are currently aware of this issue. RS made the results of this first round of research available to us in the first quarter of 2004, and we believe it is still the only in-depth research into this issue in Europe. We are monitoring it at regular intervals because we believe that, at the moment, it is still going unchecked.”

However, RS Consulting also found that there are additional savings to be made by European businesses by actually outsourcing more of their document-intensive processes.

Bryan Atkin, managing director, RS Consulting comments: “Put simply, organisations are spending money on document outsourcing, but not necessarily in the right way. In most companies there is little evidence of strategic management of spending on document related services. Tactical decision making and budget responsibility operating at functional department level has led to services being provided under multiple contracts by many vendors with no overall view, let alone control, of total outsourcing spend. There is an opportunity here for senior company management to audit where and with whom the company is spending money on outsourcing, in order to develop a solution that is best for all. Until companies start to do this in all European countries, then one must conclude that the European market for outsourced document services is still in its infancy.”

Detailed report findings are in use by Xerox Global Services now to help Xerox refine its offerings to European organisations who seek to reduce costs, increase the value provided by every document in the organisation, and reduce the time-to-market of new products and services by ensuring that accompanying product information is delivered as rapidly as possible to new markets.

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About Xerox
Xerox markets a comprehensive range of digital document solutions and services, as well as associated supplies and software. Its offerings are focused on three main areas: offices from small to large, production print and graphic arts environments, and services that include consulting, systems design and management, and document outsourcing.

Xerox also has manufacturing and logistics operations in Ireland, the UK and Holland and a research and development facility (Xerox Research Centre Europe) in Grenoble, France. For more information, visit www.xerox.com or www.xerox.co.uk.

About Xerox Global Services
Xerox Global Services, one of the three main business units of Xerox, offers a broad portfolio of services including consulting and systems integration, imaging, content management and outsourcing. We work with our clients to improve and manage their document intensive business processes - everyday processes like customer communications, billing, training, or records management. Please refer to www.xerox.co.uk/globalservices (insert local country website address) for further information.

Xerox®, The Document Company® and the digital X® are trademarks of Xerox Corporation. All non-Xerox brands and product names are trademarks or registered trademarks of their respective companies.

About RS Consulting
Established in 1984, RS Consulting is a highly respected independent research consultancy employing around 40 staff in the UK, and with an annual turnover in excess of £6 million. RS Consulting specialises in market research for leading players in the following sectors: technology; corporate finance; public policy; and industry & supply chain. More than 90 per cent of RS’ consulting and research work is international, with the company providing customers with information on: market sizing and forecasting; segmentation; pricing; new product development and concept testing; channel strategy; customer satisfaction and loyalty; buyer behaviour and the decision process. RS’ global headquarters are in central London. Please refer to www.rsconsulting.com for further information.

Getronics Offers Swinton Its Own IT ‘Insurance’

Staff shortages in the IT sector are a perennial issue. Because IT is constantly evolving and playing an increasing role in the workplace, it has become more important for senior management to consider not only when organisational change is planned, but also in day-to-day business. In short, IT management is now critical and can make or break a modern-day company.

Swinton, the UK’s largest high street insurance broker for homes, businesses, motor vehicles, pets and travel, encountered this issue in October 2003. Swinton had been using an in-house team to look after the central nervous system of its IT – its network. However, senior management could not have anticipated the impact on the business when select members of the IT team left the organisation with little warning, and took their critical knowledge of Swinton’s infrastructure with them.

“We were forced to learn about the issues of knowledge management and IT staffing the hard way,” explains Rob Barrett, head of service delivery, Swinton. “We considered trying to reassemble our in-house IT team to improve the standard of network management but couldn’t recruit all the people to be able to do it. We had to outsource, but, at the time, hadn’t done so on a grand scale and were uneasy to relinquish control of such a critical part of our organisation to a third party.”

This dilemma for Swinton management was a common one to UK businesses. However, in the absence of a replacement team, and with network outages already running at unacceptable levels, the organisation had little choice. Swinton developed a brief and took tenders from BT, Synstar and Getronics late in October 2003.

“We went with Getronics in November that year because it was a good cultural fit for our organisation,” explains Barrett. “Whilst their offering wasn’t the cheapest, we were confident that they could meet our expectations and respond to our service level agreement better than anyone else. Getronics had helped us in the past with some smaller projects and exceeded our expectations. For an organisation outsourcing something so crucial for the first time, this feeling of reassurance was paramount.”


Getronics’ role in supporting the Swinton business had begun before March 2003, just with the upgrade and management of the local area network (LAN) around the company’s headquarters. From November 2003, Swinton extended Getronics’ responsibilities to include support of Swinton branches not only in the company’s heartland in the Midlands, but also around the rest of the country. Getronics is now responsible for: LAN and WAN network configuration, switches and routers; fault fixing; remote management with 24/7 telephone support for Swinton employees; virtual private network connections that traverse Swinton’s corporate firewall; new installations; network migration and enhancement; and incident management.

“We monitor Swinton’s network remotely through the Swinton Network Management Centre,” explains Diane Hames-Goodey, Infrastructure Operations Manager, Getronics UK. “This enables us to anticipate any problems before they happen rather than having to respond once a network outage has occurred. We’re also the interface for third party contracts such as BT DSL services, giving Swinton a single point of contact.”

Key Getronics personnel assigned to the Swinton account were also Cisco-trained and therefore able to complete routine server maintenance, enabled by Getronics’ status as a Cisco Gold Certified Partner. Before Getronics took over, the Swinton network was likely to have up to three branches offline at any one time. Hames-Goodey concludes: “We are dealing with line-outs and re-routing network connections where necessary and expect to continually improve Swinton’s network availability significantly.”

Getronics’ expertise was put to the test on 29th March 2004 when a fire in a BT tunnel in central Manchester severed Swinton branch contacts with its head office. “It was the situation any network manager dreads,” admits Hames-Goodey. “At about half-past two that Monday morning the screens in our Network Management Centre switched from their usual green to flashing red. The entire Swinton branch network disappeared – literally – in a puff of smoke. Some of our other customer networks in the same area went offline at the same time, so we knew it wasn’t an internal problem.”


Outside Getronics’ Network Management Centre, the BT fire had cut off 130,000 residential and business phone lines in the North West UK. Even the emergency ‘999’ services in Cheshire, Merseyside, Lancashire and North Derbyshire were affected. Internet services from BT, AOL, and Freeserve were also disrupted. By 3.30am BT had alerted the Greater Manchester Fire Service, but when they arrived on the scene they had to ventilate the tunnel before BT engineers could get 100 feet below ground level to repair the damage. Manchester was closed for the rest of the day while fire teams and BT engineers worked to resolve the problem.

Meanwhile, Getronics was working against the clock, because Swinton needed basic network functionality by the time its branches opened at 9.30am later that day. More importantly, while Swinton as a business could operate without its entire network, at the end of the day it would need to perform cash collection and process credit card applications – neither of which was possible without a link between Swinton’s headquarters and its branches.

It was at this point that a Getronics network architect spotted a potential temporary resolution to the problem. “One of the team supporting Swinton identified one last ADSL telephone line into Swinton’s Manchester headquarters that was still working,” explains Hames-Goodey. We got back into the network through a dial-in service we discovered in East Anglia, and were able to reconfigure it through this so that business-critical files could be transferred across the network to make sure Swinton stayed solvent. It helped that we’d had to deal with similar issues for other clients in the past.”

By close of business on Monday 29th March, Getronics had reconfigured Swinton’s network enough for business to continue as close to normal as possible. By the end of the next day, normal network availability had been restored, even though BT in Manchester would not be completely up-and-running again until the Friday of the same week.

“The whole scenario made us reconsider our disaster recovery plan,” explains Barrett. “Particularly as we’d paid BT for network re-routing but had discovered, thanks to the fire, that both the main and back-up cabling were being run through the same tunnel.”


Getronics’ business with Swinton has since grown to a three-year, €450,000 contract to manage, maintain, and enhance local and wide area networks in the UK. Getronics now holds day-to-day responsibility for the network of 340 UK branches and Swinton’s headquarters in Manchester, and supports 500 users on a daily basis.

“I have to say that the experience has instilled our faith in outsourcing IT,” continues Barrett. “Getronics has been on-hand whenever we need them, and their personnel work well with our own staff. Chemistry like this is important anyway, but becomes all the more important at a time when a technical issue needs to be resolved quickly.”

Swinton’s network availability has risen to 99.7 per cent since Getronics took over. “In the insurance business, price is all-important,” says Barrett. “When it comes to our network, price, reassurance, and peace of mind are all equally important. The fact is that we have been able to re-deploy some of our IT staff internally to more strategic tasks without having to worry about the ‘nuts and bolts’ of network management.”