1. VeriFone: The Transaction Automation Company
Case 1
VeriFone:
The Transaction
Automation Company

2. Issues to Consider
Describe the business and competitive environment. What determines V’s success? (Industry)
What are VeriFone’s core competencies? How does IT relate?

3. Issues, cont. Describe the corporate culture.
What are key attributes of the organizational culture? What is the “corp blueberry pancake model”?
How has IT shaped corporate culture?

4. Issues, cont. Describe and evaluate the role of the CIO.
What future challenges face the organization?

5. Describe the business/ competitive environ.
Sales of over $500 million in 1996.
Major player of point-of-sale systems; have breadth of applications to which its technology can be applied.

6. Competitive environment, cont.
Transaction automation
credit card authorization
debit cards
smart cards
food processing Strategy--low cost, high value, high reliability, high volume

7. Competitive environment, cont.
Strategy--low cost, high value, high reliability, high volume
All system components specific to TA systems (card readers) were manufactured in-house; outsource those not exclusive to TA (microprocessors, modems, etc.)

8. Competitive environment, cont.
Innovation and price performance central to the company having a leadership position.
Invest 10+% of revenues in R&D.
Truly a global company--manufact., R&D, app dev.

9. Core Competencies? What are VeriFone’s core competencies?
How does IT relate?

10. Key attributes of org. structure?
Decentralized network of locations--all berries same size; all locations equal.
Tyabji’s dislike for notion of a “corporate headquarters”

11. Organizational structure, cont.
Functions located near critical people.
Locations near centers of excellence--key to competitive advantage
enables “global strategy,” forward deployment

12. Organizational structure, cont.
Pros and cons of centers of excellence approach:
Pros
locations near areas of expertise versus moving personnel
have a presence where you do business
Cons
infuse corporate culture in disparate locations

13. Culture and Nationality
Tyabji wrote that “culture and nationality” are irrelevant; only operations excellence, relevant.
How do you get people to understand and buy into the culture of an organization? Are employees buying into the philosophy of senior management?

14. Culture and Nationality, cont.
Why is Verifone referred to as a “Virtual Corp?”

15. How has IT shaped corporate culture?
Allowed forward deployment
Allowed decentralized control with centralized coordination.

16. Describe and evaluate the role of the CIO
Pape’s role, to provide the company with information to run its business. Senior mgmt team monitors the progress of the company daily. Heavy emphasis on analysis, not just providing data (information).
Should CIO be technologist and manage/develop IT resources?

17. Future Challenges
Sustaining the culture of the company as it continues to grow.
Leveraging local resources at a worldwide level and prevent decentralization philosophy to vary from corporate goals--think and act locally.

18. IT/Organization Structure
Modern information technology enables work to be organized in very different ways if managers so desire.
IT doesn’t force but enables new alternatives.

19. Corporate Update
Acquisition(s)
Why?
Cultural clashes?

20. Otis: Centralization
The upward arrow indicates that between 1986 and 1990 all decision-making related to the dispatching of service reps at 122 branch locations had been centralized over two years in a corporate unit called “Otisline.”
Result: 50% reduction in # of service calls.

21. Frito-Lay: Decentralization
Product planning and pricing decisions related to the 5 million accounts to which products were sold had been made at corp. headquarters in Dallas.
Subsequently, delegated via a WAN to the 22 regional sales districts that were physically closer to (and,thus more in tune to local issues and tastes) markets that were serviced.

22. Frito-Lay, cont.
Relevant corp database elements sent to that location.
By bringing decision-making closer to the market, sales per square foot increased by 15%.

23. Chemical Bank: Reengineering
The two upward arrows indicate a sharp increase in operational efficiency in the mid-market loan department consequent to the installation of Lotus Notes.

24. VeriFone: Virtual Organization
The straight arrow beside VeriFone symbolizes the virtual organization in action.

25. P&G/HEB: Boundary Spanning
The two-headed arrow depicts how new technologies enable decision rights, costs, and assets to be deployed up and down the industry value chain.
The notion of what lies inside the boundary of a firm is thus open to complete rethinking.

26. VeriFone
Web Link