ACS brand could disappear "quite quickly" with merger into Xerox

Senior ACS officials tell us that the ACS brand could be phased out quite quickly in favor of Xerox, their new parent company. For now it is "ACS, a Xerox company" (see new logo below) but soon all ACS products and services will be sold under the Xerox brand.

We had a telephone conference call this week with Ken Philmus, a senior VP and managing director
transportation systems and services ACS, and Ken Ericson, director corporate communications ACS.

Philmus is an old toll hand (see picture) having risen in the ranks of PANYNJ to be in charge of toll operations at the George Washington Bridge, Lincoln Tunnel, Holland Tunnel and the Staten Island toll bridges. Before joining ACS he was director of the tunnels, bridges, terminals division at PANYNJ.

At ACS the New York/New Jersey toll authorities are his biggest clients with ACS running the customer service/back office operations for their E-ZPass transactions.

Xerox brand is strong

Xerox is a household word the world over, the two noted in our telephone call, whereas outside a small circle of toll people and others directly employing the company, ACS is almost unknown.

"We get mixed with the American Cancer Society, or with the Spanish ACS," said Philmus.

The Xerox brand will help the group internationally.

ACS - at least the transportation group - has so far ventured little beyond north America.

The company recently got work on a major parking charge system in Beijing, but China and other growing Asian toll markets have hardly been tested by the company. Under the Xerox brand it should be far easier to open doors.

Xerox very big on strategic R&D

Philmus says the major reason they're excited about their merger into Xerox is that it will bring the potential for much deeper research and development.

By itself ACS, he says, did 'just-in-time research and development,' that is R&D geared to upcoming RFPs, or in support of upgrades to existing systems.

By contrast Xerox has the resources to do R&D of a strategic character aimed at developing whole new product lines and solutions.

"They spend a boatload of money on R&D. It's part of their corporate culture to invest very heavily in advancing the technology."

Ken Ericson says that Xerox spent $880m on R&D in 2009. 4% of revenue is dedicated to R&D and engineering at Xerox. Xerox has more than 9400 active patents.

It has major R&D centers in Palo Alto California, Grenoble France, Rochester NY and Toronto Canada.

ACS did not break out R&D spending as a separate budget category but it was "far, far smaller" than $880m/year.

Document handling is Xerox specialty

ACS could benefit from Xerox skills in document handling at the backoffice systems it operates for E-ZPass.

Philmus says Vector 4, the ACS-developed system in use for about a year now at E-ZPass centers in New Jersey and Maryland is leading edge, but he says Xerox document handling will enable the next generation of back office toll systems to be better.

"When people call in to customer service every second you can save pulling up relevant documentation helps you deal with the problem more quickly. That benefits both the caller and your customer service operation."

In terms of new products the new two Xeroxis see the company as looking for new ways to implement broader network road and parking pricing and to improve cashless tolling - although meanwhile Xeriox-ACS will continue to offer multi-payment machines that accept coins/bills/bankcards of the kind they recently installed on the Ohio and Kansas turnpikes.

Still market for cash toll collection

Ken Philmus said "there's still a market" for some cash/card machines especially at ramp plazas and other less trafficked toll points. But it's a declining market, he said, given the promise of all-electronic tolling.

Xerox-ACS will go aggressively after toll system procurements that offer the opportunity to do whole networks of tolling rather than just a single road - the kind being sought by North Carolina Turnpike and Washington state in present procurements.

Industry reorganization

The industry, they observed, is going through a very dramatic reorganization - not so much consolidation as integration - hookups with synergy.

Xerox prior to the ACS buy had no transportation systems element. Therefore the ACS buy doesn't consolidate or increase concentration, so much as hook them up with other product/service lines that - hopefully - offer the prospect of synergy.

Others doing it too

Federal Signal has been doing something similar in buying Sirit (transponder-reader systems), Diamond Consulting (electromagnetic vehicle classification) and PIPS (camera systems).

TransCore's purchase of Jim Allen's United Toll Systems similarly added an electromagnetic vehicle classification technology plus some clever small toll systems thought out from first principles to their range of product.

TOLLROADSnews 2010-02-11