The centerpiece of Xerox’s year has been February’s $6.4 billion acquisition of business-process-outsourcer Affiliated Computer Services (ACS), helping reposition the copier icon as a technology and services giant. But major groundwork was laid through a finance reorganization and team-building effort that Lawrence Zimmerman began eight years ago after ending his retirement from IBM to become Xerox vice chairman and CFO.
“The big change Larry brought was to make the accounting unit independent of all other organizations,” says Gary Kabureck, who stayed on as chief accounting officer after Zimmerman joined Xerox. “That was a huge, very positive change.” The independent model, says Kabureck, replaced a Xerox structure that had tied accounting to business units. Now, accounting is used for “measuring operational results, which may not be what the local operation manager wants them to be, but it’s what the CFO wants them to be.”
On Zimmerman’s part, the reorganization was a bit of a
no-brainer as he reviewed the needs of Xerox, where he was following a 31-year career at IBM. “Accounting is better managed centrally to ensure we have consistent disciplines worldwide,” he tells CFO. Plus, it is a less-costly arrangement.
In Kabureck’s view, the timing of the new independent model was perfect. “I would say it really helped me out in my role as chief accounting officer once the Sarbanes-Oxley Act became effective,” he says. “A consequence of Sarbanes-Oxley was there became a lot more accounting independence required, and we were already there. We had a big leg up.”
But while Zimmerman agrees with Kabureck that reorganizing the accounting structure was vital to preparing the company for future growth, the CFO takes special satisfaction in the personnel moves that shored up finance just as Xerox began to move in new strategic directions that eventually resulted in the ACS acquisition.
Assembling Zimmerman’s new finance team started, he says, with a simple need to fill the treasurer and controller positions. “The jobs opened up when Anne Mulcahy was named CEO, and she wanted the new CFO to have the opportunity to build his or her new team,” he recalls. (Mulcahy retired as Xerox chairman last year.)
Soon Zimmerman began his high-level team expansions, as it became clear that strategic change was ahead. Kathleen Fanning, Xerox’s vice president, worldwide tax, came from the heralded General Electric finance organization. A second former GE person hired, in 2003, was Xerox treasurer Rhonda Seegal, who had served four years as GE’s deputy treasurer.
For the most part, Zimmerman lacked the luxury of knowing Xerox’s future strategic direction as he populated the finance team. “I always strive to have the best person I can in the job as fast as I can,” he says, “realizing everything can’t be changed at the same time.” But as the plan for a tech-and-services Xerox took shape, the new hires worked well with the base of existing Xerox finance leaders, such as CAO Kabureck.
“Where more strength is needed, we go outside,” comments Zimmerman. But the company is “fortunate to have extremely strong internal depth, so many roles can be filled internally.” Reporting to Zimmerman now are investor relations, audit, and merger and acquisition teams, in addition to tax, treasurer, controller, and the CAO. The finance chief now reports to Ursula Burns, a 29-year Xerox veteran when she took over for Mulcahy as CEO in 2009.
Following the company’s announcement in September of last year that it would acquire ACS, “the expertise of our finance people, coupled with their hard work and dedication, allowed us to coordinate and implement the acquisition very smoothly,” says Zimmerman.
The synergies by which Xerox has developed equipment and business processes into “managed print services” are already paying off, says Craig LeClair, a Forrester Research analyst who follows the company. In such arrangements, “you pay for everything you print or scan, and let Xerox own” the systems. “It’s a wonderful alignment of incentives, so the hardware guys don’t try to sell you what you don’t need, as they did in the past,” he says. Instead, “they try to take equipment out.”
LeClair says Zimmerman’s Xerox years coincide with a solidification of the company’s approach toward investors and customers. “Xerox in the past has reorganized a lot, often with a lot of internal arm-wrestling over their issues,” the analyst says. The clearer corporate picture at the
tech-and-services Xerox these days puts LeClair in mind of IBM, and the success that company owes to brand leverage.
“There’s comfort and security for the client. You’ll never get fired for having an IBM product,” says LeClair. “In a way, Xerox does the same thing.”