Case 1

1. 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. VeriFone Web Link

20. Case Review • future of VeriFone; challenges; statement of problem • the operating environment in which VeriFone is operating-- industry, competition, strategy • VeriFone’s organizational culture, structure, and core competency(ies); how IT relates • how organizational growth has helped/hindered growth of the organization from a entrepreneurial start-up to a mature mid-sized organization; relate change of ownership; how does current ownership better fit the culture of the organization