The Future of Manufacturing: NCR

The 135 Year-Old Startup

From the dawn of the product economy to the dawn of the Subscription Economy, NCR has a habit of anticipating sweeping commercial shifts. In just under a decade, this multi-billion dollar enterprise has transformed itself from a leading technology vendor to a truly customer-centric service provider. Today that transition is reflected in its prescient leadership, its operational mindset, and its dynamic business model. But in fact, the story of NCR and innovation traces its roots to the birth of the modern American economy.

NCR got its start in 1884, selling cash registers to saloons and retail establishments throughout the Western United States. Founder John Patterson took advantage of what he perceived to be a profound commercial shift—a largely regional bartering economy was shifting to a national, cash-based product economy. With that broad vision in mind, Patterson started the country’s first sales training academy, introduced the concept of sales quotas, and eventually spread his business to over 120 countries. (In 1914, Mr. Patterson made one misstep, however, in firing a top sales executive named Thomas Watson, who later went on to found IBM.)

Since those early days, the former National Cash Register company has moved from strength to strength, inventing the electronic cash register, the magnetic credit card strip, and self check- out machines along the way. Today the company provides leading business solutions for industries large and small, including banks, restaurants, grocery stores, theaters, airlines, and modern stadiums and arenas. From pop-up food trucks looking for a way to accept credit card payments, to global restaurant brands looking for enterprise restaurant POS systems, NCR has a solution.

It’s been eight years since NCR first ventured into subscriptions and services with its acquisition of Radiant Systems in 2011. Back then, NCR started with $50M in subscription revenues, largely handled with spreadsheets and ERP solutions. Today 40% of the company’s revenue mix is recurring, and NCR has plans to grow that figure to over 60% within five years. What began as an operational experiment has quickly evolved into a corporate mandate.

What kind of priorities does Joe Koscik, Vice President of Information Services at NCR, look for in a subscription management strategy? “Number one, can it support how our strategy team wants to go to market? In most cases, we’re able to do that very quickly. Number two is the agility. How fast can we get that business up and running? Today, we are looking at selling our entire Point-of-Sale system as a subscription—so think about the terminal, the software, the loyalty, the back of the restaurant.”

His CIO Bill VanCuren concurs: “Gone are the days of buying large up-front enterprise licenses. Our customers are demanding variable pricing models. Why? Because the time to implement is more aligned with their needs. The lower cost of entry is much more appealing, and it’s simply less of a balance sheet obligation for them up front. Our customers want choices.”

For 2019, NCR has defined six strategic growth platforms for investment: digital-first banking; digital-first restaurant; digital-first retail; digital connected services; digital convenience and fuel; and digital small business essentials. As CEO Michael Hayford noted on a recent earnings call, “We are elevating our investment in digital-focused strategic growth platforms as we look to accelerate our mix shift to recurring software and services revenues.”

And the entire organization is clearly aligned around these priorities. As Mark Sisco, Director of Operations, said, “The ability to switch from Capex to Opex has been one of the main drivers from NCR to explore new business models. The subscription model has allowed us to introduce offerings that are very robust, quite affordable, and easy to access by small customers who don’t have a lot of technical knowledge or a lot of capital to outlay.”

NCR understands that the future really isn’t about products so much as people—delivering relevant outcomes based on customer needs. And the company has an excellent track record of recognizing those needs (not to mention larger macroeconomic trends). Here’s to the next 135 years!

Continue reading other inspiring stories of digital transformation in the latest issue of Subscribed Magazine!

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