Fuji Xerox to zoom in on software, services

By Edwin Yapp November 2, 2015

Chairman to focus on long-term growth strategies; president on execution
Growth to come from emerging SEA countries, expansion of software and services

Fuji Xerox to zoom in on software, services

FUJI Xerox Co Ltd is on a mission to reinvent itself, by diversifying to become more service-oriented and also by expanding its Asia Pacific market.

The company – a 75%-25% joint venture between Japanese conglomerate Fujifilm Holdings Corp and US document management company Xerox Corp – may be a household name in printing and document management solutions, but believes that its future lies in services and software, according to top company executives.

Speaking at a recently concluded media tour of its facilities in Tokyo and Yokohama, outgoing Fuji Xerox president and chairman of the board Tadahito Yamamoto (pic above) said that in order to facilitate this overall shift, both business execution and management strategies will also need be transformed.

He said that in the eight years he served as president of Fuji Xerox, his focus was on strengthening its core multifunction printer (MFP) and production printing businesses as a foundation first, before looking into services.

“To strengthen our position, I focused on reinforcing points of contact with customers, improving customer satisfaction, and revamping our sales organisation.

“I also improved our cost structure by separating the development and production functions by establishing different companies to handle the two key roles,” Yamamoto told a media briefing.

Yamamoto said that these strategies have largely been successful and helped the company pull through tough economic times in the past few years, referring to global slowdown caused by the 2008 US subprime mortgage crisis, as well as the earthquake in Japan in 2011.

He declared that, having recovered from those challenges, Fuji Xerox is now a mature ‘copier company’ and that the time was right to work on further strengthening the services side of the business.

The shift away from being “just a copier company” is a needed one, according to Yamamoto, acknowledging that unlike a device-only business, the services business is one that must help customers solve problems and as a result, customers need more than just good hardware.

“If our operations at Fuji Xerox are inefficient, customers are unlikely to come to us and consult us about their own challenges,” he said.

“I have encouraged my own people to share with our customers our own business process reform, and the experience [we] gained,” he added.

New president’s priorities

The “transformational change” Fuji Xerox is undergoing requires the company to renew its management structure, said Yamamoto.

As he relinquishes his president’s post, he said his chairman’s role will be to specialise in management while his successor, Hiroshi Kurihara, will concentrate on day-to-day business execution.

“As a special member of the board of directors, I will determine and supervise the implementation of key strategies such as management policies, mergers and acquisitions (M&As), and company-wide reorganisation, as well as to accelerate decision making,” Yamamoto.

“Hiroshi [Kurihara] will dedicate himself to business execution as he leads the entire company towards meeting new mid-term targets for fiscal 2016 and increasing sales from overseas – from where we hope to achieve 60% of our total revenue,” he added.

A lifelong employee of Fuji Xerox, Kurihara assumed the president’s position in July. He began his career at the company in 1978 in sales, and rose through many positions, culminating in being named the executive vice president in charge of sales and marketing for Fuji Xerox’s domestic operations.

Fuji Xerox to zoom in on software, services “One of the first things I plan to do as [the new] president is to visit our overseas customers and listen to them in order that I may identify their needs,” said Kurihara (pic).

“I also want to provide our executives with opportunities to communicate with each other so we can break the vertical barriers between departments,” he added.

Kurihara said he also plans to boost Fuji Xerox’s corporate structure with the aim of making it more global and customer-oriented.

“I plan to promote personnel interchanges amongst our headquarters in Japan and other global locations,” he shared.

“I’d also like to encourage close collaboration between R&D (research and development) and sales, and involve all kinds of personnel to grow our company,” he declared.

Asia Pacific growth

Fuji Xerox has been on a growth trajectory for the past five years, having experienced an approximate 4.7% compound annual growth rate in its operating margin from 2009 to 2014.

In its latest financial results, revenue grew from 1,133 billion yen (US$9.38 billion) with an 8.5% operating margin in 2013, to 1,178 billion yen (US$9.8 billion) with an 8.6% operating margin in 2014.

According to executive vice president Katsuhiko Yanagawa, the company’s growth strategy is based on having a mix of a horizontal global business strategy and a localised approach that is optimised for each market it operates in.

“By horizontal, I mean having a direct sales strategy with a global account-based marketing and a global product lineup; while being localised means that we still have local account-based marketing and a product and service lineup that follows different market conditions,” he said.

One avenue for growth would be to increase its presence in the markets it operates in, according to Fuji Xerox senior vice president Masashi Honda.

To this end, the company has moved beyond its established markets in Asia Pacific and is targeting two emerging countries, namely Myanmar and Cambodia.

“The Myanmar branch opened in 2013 and its revenue has grown three times in the last three years,” Honda claimed.

“In October this year, we opened the Cambodian branch and we expect four times’ revenue growth in the next four years,” he said, adding that the Cambodian office has about 10 people.

Quizzed as to how much revenue these countries bring in, Honda, also the president of Fuji Xerox Asia Pacific Pte Ltd, declined to say.

“We cannot reveal growth and revenue figures. Although the total sum is not that large, we are confident we can achieve our target,” he said.

“What we can say is that we started the company in Cambodia because many of our key account customers have offices in Cambodia and this way, we can provide the same solutions as we do in Japan, China and [South] Korea,” he added.

As far as diversifying its business away from MFP sales towards more service-oriented solutions such as managed print services (MPS) and business process outsourcing (BPO), Honda said these efforts are ongoing in more advanced markets such as Australia.

Fuji Xerox to zoom in on software, services Asked when these more advanced services will be pushed in South-East Asia, including Malaysia, Honda (pic) said there are huge opportunities for Fuji Xerox in this region.

He said today’s customers’ requirements are getting more complicated as they want more security embedded into their document management solutions as they move away from paper-based solutions.

“We already have these solutions in Australia and we want to deploy this to South-East Asia, including Malaysia,” he said.

“However, we are also mindful of the different market maturity in the region so the market situation will dictate our deployment.

“Our strategy will comprise a combination of direct sales by Fuji Xerox, and sales via our premier partners. This is our strategy for the region going forward,” Honda (pic) added.

To help accelerate Fuji Xerox’s plans to reach the region more with its software and services, the company has recently announced the establishment of the Fuji Xerox Innovation Office, a new research base in Asia Pacific that began operations on Oct 1.

The new centre will collaborate with Fuji Xerox’s existing two research facilities: Fuji Xerox R&D Square in Yokohama, and FX Palo Alto Laboratory Inc in California.

The aim of the innovation centre is to work on technologies that will eventually resolve current and future business challenges, company officials had said then.

It has also launched a new Tier-3 data centre that it said was designed to meet the emerging needs of businesses for industry-specific solutions and cloud-based IT infrastructures, and which is aimed at businesses in both emerging and high-growth industries.

The news services available are Private Cloud Plus, Disaster Recovery Services, and Managed Services, which the company said will complement its software and services focus for the region.