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NCR, Tidel partnership gets off to a good start
NetWorld Alliance executive Bob Fincher shares a few predictions about NCR's acquisition of Tidel Engineering.
February 14, 2006
Editor's note: The writer is an executive vice president at Louisville, Ky.-based NetWorld Alliance, the publisher of ATMmarketplace.
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Bob Fincher is an executive vice president at Louisville, Ky.-based NetWorld Alliance, the publisher of ATMmarketplace. |
NCR Corp. last month wrapped up its acquisition of Tidel Engineering LP. (Read also, A marriage made in heaven?) The deal, which had been in the works for months, makes official NCR's renewed commitment to becoming a leader in the retail ATM sector.
But if past is prologue, some would say the success of this most recent attempt by NCR to extend its reach beyond banks is anything but certain.
The company's past performance proves that desire for leadership does not equal leadership in fact.
My own experiences with NCR, as well as acquisition-hungry Maytag, gave me similar pause, at first, when it came to the Tidel deal.
About eight years ago, I was the person responsible for upping the distribution of the TBS First ATM. I was there when NCR merged its retail ATM efforts with those of TBS First, and watched wonderful NCR people with wonderful intentions badly fumble the opportunity nonetheless. (Read also, With Tidel in its quiver, will NCR have a new shot at retail?)
For the 19 years before that, I was in sales and marketing management with Maytag and eventually became a Maytag/Jenn Air distributor. While I was there, Maytag acquired The Hardwick Company, The Jenn-Air Company, The Hoover Company and others. People inside Maytag assumed that once the separate acquisitions were complete, the appliance giant would be able to organize and manage the new properties like miniature Maytags.
That strategy didn't work.
Maytag didn't grasp that greater success would have come from allowing the acquired companies to operate virtually autonomously, remaining connected to their individual heritages, philosophies, relationships and core values.
Instead, when I look for an example of a deal done right, the Dover acquisition of Triton stands out as a perfect example.
Dover, unlike NCR (and fortunately for Triton), was not encumbered with other business interests against which Triton's success would be balanced and neutralized. (Read also, Capital gains.)
Questions in need of answers
Relative to the NCR acquisition of Tidel, here are key issues to watch out for:
- Will the banking ethos of NCR challenge and diminish the efforts required for a serious retail ATM effort as it has in years past?
- Will NCR, for the first time ever, allow a person with strong retail ATM experience to lead the retail ATM charge?
- Will products be developed within the NCR banking culture, resulting inevitably in a miss with the retail marketplace?
- Will the NCR/Tidel ATMs be produced in NCR factories, thereby picking up costs that translate to prices that are deadly high in the highly competitive retail marketplace?
- Will the NCR/Tidel sales distribution vision allow the financial and retail ATM sales forces to remain significantly different?
- Will the pricing and incentive programs between financial and retail ATMs be completely different and realistic for their individual marketplaces?
As NCR and Tidel stepped ever closer to the altar, I asked questions of my own and pushed hard, wondering whether I would hear NCR managers (a group that now includes a key executive from Tidel Technologies) spin a success theory or reveal a legitimate plan backed up with the structural changes necessary to pull it off.
Would NCR be defensive about its past shortcomings, or admit those shortcomings in the context of lessons learned? In other words, was NCR in denial or had it come clean?
I spoke with Mike Hudson, NCR EasyPoint ATM LLC general manager; Brad Lozier, NCR Corp. vice president of product management, Financial Solutions Division; Dan Palczynski, NCR Corp. manager, convenience and retail marketing, Americas region, Financial Solutions Division; and Lorraine Russell, NCR Corp. global public relations, Financial Solutions Division.
I was amazed by their candor. They answered questions and offered additional information in a very straight-forward way. No issues were dodged, and there were no attempts to "sell" any point.
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No one at NCR was in "denial" about NCR's past retail marketplace problems. Their answers were well-developed and so specific that it was clear they had been very busy for many months wrestling with and developing the strategies they now thoroughly believed in.
It also was clear that the folks leading the charge, both in Texas (Hudson) and in Dayton, Ohio (Lozier), have the autonomy critical for success. They are fully aware that they will maintain that autonomy through consistent performance and wise collaboration with and by the highest-level executives at NCR.
My discussions with NCR demonstrated uncommon humility, which I sensed was the result of past battles combined with stone-cold determination - likely a result of the merger that provided deeper pockets and synergies to the enterprise. (Read also, Troubles at Tidel, Tidel says it is still seeking to recover CCC debt, Tidel earnings take a CCC-related hit, and Small order.) There is a sense that the toughest battles are behind and that new, more winnable, and therefore more enjoyable battles, are ahead.
The following structural factors are real and they combine to be meaningful:
The new NCR/Tidel effort will have a serious Tidel look and feel. This is critical if NCR is to be successful at retail.
Hudson, no newbie to retail ATMs, will lead the charge, managing all aspects of the Tidel EasyPoint ATM business. During questioning, NCR folks consistently deferred to him. There is no doubt: Hudson will have the authority required for success. NCR will continue to be wise if it allows Hudson to run the show, as he understands the low-cost model better than anyone.
In addition to Hudson, more than half of Tidel Engineering's workforce - nearly 60 people - will also join NCR to manage a variety of functions and to produce the products in the former Tidel manufacturing facility in Carrollton, Texas. Hudson will have full responsibility and authority over product research, development and engineering.
The Tidel EasyPoint ATM will possess retail-appropriate features and benefits. It will be fully differentiated from other NCR ATMs, and no extraordinary cost or debt load from the Tidel Technologies/Laurus deal is being tacked on. (Read also, Tidel improves its balance sheet with refinancing.)
Tidel EasyPoint ATMs will have a cost structure that allows them to be competitive in a competitive marketplace.
The Tidel EasyPoint ATM sales force in the United States will be significantly different from the NCR sales force selling ATMs to the financial marketplace. Tidel EasyPoint ATMs will be sold into the retail marketplace primarily by those who understand the retail marketplace best: independent distributors.
In addition, pricing, programs and incentives will be fully differentiated from NCR's financial ATM strategies, allowing the Tidel EasyPoint ATM strategy to be retail and distributor appropriate.
I predict Hudson will have a challenge in regaining strong loyalty from a significant number of U.S.-based distributors, but if anyone can do it, Mike can.
Meeting the challenges
The Tidel EasyPoint ATM enterprise will have plenty of challenges. The ATM industry, while not close to saturation, is (depending on geography) mature or maturing, and wonderful products are currently sold at great value from several manufacturers that are well entrenched.
But never before has an organization with the retail experience and capable leadership of Tidel merged with a worldwide No. 1 ATM manufacturer with such a determined and dedicated effort. Never before has Tidel or Mike Hudson had such financial power and such worldwide ATM credibility as part of the equation.
I would not bet against the success of these people and this enterprise.
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