VeriFone

1
VeriFone

• Jason Chen, Ph.D.
• Professor of MIS
• School of Business
• Gonzaga University
• Spokane, WA 99258
• chen_at_jepson.gonzaga.edu

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VeriFone

• The Transaction Automation Company

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Synopsis

• The VeriFone (1997) case is an excellent
  example of an organization that embodies the
  new management principles.
• Founded in 1981, the company is led by an
  aggressive CEO who has implemented such
  innovative organizational initiatives as the
  virtual organization, forward deployment, and the
  exclusive use of electronic mail for internal
  communications.
• Founded in 1981, VeriFone is not constrained by
  its past. Rather, the young, agile corporation
  has made the transition from an entrepreneurial
  start-up to a mature, midsized company.

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Case Summary

• Description VeriFone, a leading manufacturer of
  payment systems technology, was acquired by
  Hewlett-Packard in June 1997. The case describes
  the strategic challenges that VeriFone faces as
  it positions itself to compete in the Internet
  payment systems marketplace.
• Subjects Covered Information technology.
• Setting California 500 million revenues 3,000
  employees 1997
• Learning Objective To show how different
  organizational forms have been enabled by IT.

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Suggested Study Questions

• 1. Characterize VeriFones strategy and
  competitive environment?
• 2. What are the key attributes of the VeriFone
  organizational structure? Do you agree with those
  who identify Verifone as a virtual company?
• 3. What major challenges will VeriFone senior
  management face in the future?

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Strategic Use of Information Resources
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Information System Strategy Triangle
Strategy Triangle
Business (Firm) Strategy
Where is the business going and why?
IT impact and potential
Organizational Strategy
IT Strategy
What is required?
How it can be delivered?
N
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IS/IT Strategy Triangle

• Each group
• Complete the case using Strategy Triangle model

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Summary of VeriFone Case IS Strategy Triangle
Ÿ
Product High quality (reliability
value), low cost, high
volume
Ÿ
Business Strategy Innovation /
price performance
Ÿ
Organizational design
Ÿ
Technology email, tele-
decentralized network of
conferencing, meeting
centers of excellence
Ÿ
IT Strategy Distributed
Ÿ
Organizational Strategy
processing and
forward deployment Virtual organzation
communication
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Q1 To be successful...

• What must the company do well?

VeriFones strategy and competitive environment
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Q1 Strategies applied ...

• Background Sales exceeded 470 million in 1996,
  VeriFone is a major player in the electronic
  point-of-sale systems marketplace.
• Low cost, high value, high reliability and high
  volume
• The Transaction Automation Company
• automate authorization, credit, debit and smart
  card
• Leadership position on
• innovation and price performance
• 10 of revenue in RD
• global company

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Q2 Key features ...

• What are the key attributes of the VeriFone
  organizational structure? Do you agree with those
  who identify Verifone as a virtual company?
• How do you get people to understand and value an
  organizations culture?
• Do you think VeriFone employees accept the
  philosophy senior management has enunciated?

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Virtual Companies (Portable Computing)
A Virtual Company is an Organization composed of
several Business Partners that Uses Information
Technology to Link/Share People, Assets, Ideas,
Costs, and Resources for the purpose of producing
a product or service. Virtual Companies are
Adaptable and Opportunity- Exploiting
Organizations Providing World-Class Excellence in
Their Competencies and Technologies.
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VIRTUAL ORGANIZATION
N
TM -14
Dr. Chen, IT Architecture Organizing and Leading
the IT Functions
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Characteristics of Virtual Companies
Excellence
Borderless
Adaptability
Six Characteristics of Virtual Companies
Opportunism
Trust-Based
Technology
N
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Virtual Organization?

• employees stay physically close to customers and
  electronically close to one another
• VeriFone employs IT to enable coordination and
  communications.
• made VeriFone a distance-insensitive company
  held together by electronic glue.

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VeriFone Culture

• commitment to excellence
• Excellence in Thought and Excellence in
  Action
• dedication to customer needs
• combined with VeriFones IT capabilities
• promotion of teamwork
• recognition of the individual
• global mindset
• ethical conduct
• human company

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Q3

• What major challenges will VeriFone senior
  management face in the future?

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Future Challenges/Problems

• VeriFone management will be challenged to sustain
  the companys culture as it continues to grow as
  part of HP
• Keep the organization on a high growth trajectory
• Growth opportunities will lie outside of the US
  (due to US market matured)

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What would you recommend?
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Organizational Transformation

• Decision rights transfer
• cost reduction/ asset utilization
• Time compression
• Quality
• Managed complexity
• Flexibility
• Control transformation

N
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Verifone on the Web
IT is an important part of managers daily lives.
Each manager is expected to be familiar with and
use more than 160 different IT tools. Overall IT
expense has run to about 2.5 of sales.

• Http//www.verifone.com

What is the recent updated information about
Verifone?
Gores Technology
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Current Status

• Gores Technology Group announces agreement to
  acquire VeriFone from HP. 2001-11-08 2255
• Los Angeles and Palo Alto, California - Gores
  Technology Group (GTG), a privately held
  international acquisition and management company,
  announced today that it has signed a definitive
  agreement to acquire VeriFone, a leading global
  provider of secure electronic-payment solutions
  for financial institutions, merchants and
  consumers, from Hewlett-Packard Company (NYSE
  HWP) for an undisclosed amount of cash.

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Current Status (cont.)

• Gores Technology Group, which specialises in
  acquiring high-tech organisations and managing
  them for growth and profitability, has, to date,
  acquired approximately 35 companies providing
  high-tech services and products to millions of
  customers worldwide with annual revenues in the
  aggregate of over 2 billion.
• "VeriFone is a great addition to the GTG
  portfolio of companies," said Alec Gores, Founder
  and Chairman of Gores Technology Group. "We look
  at this acquisition as a long-term strategic
  investment. The company has tremendous potential.
  It is the global leader in an industry that we
  believe is going to continue experiencing
  significant growth."