Postal Service Deal Helps NCR's Federal Image

Postal Service Deal Helps NCR's Federal Image

By Nick Wakeman
Staff Writer

A recent U.S. Postal Service win is helping NCR Corp. polish its image in the federal market as a niche provider of data warehousing, point-of-sale systems and transaction processing systems.

The eight-year, $110 million contract for transaction processing software "is a very strategic win for us," said Kimberly Cuthbert Baker, vice president, data warehousing solutions, in NCR's government group. The Dayton, Ohio-based company was awarded the contract in late January.

The software NCR is selling to the Postal Service will connect 70,000 point-of-sale machines - high-tech cash registers - at local post offices with the Postal Service's back-office systems, Baker said.

Kimberly Cuthbert Baker, vice president, data warehousing solutions, NCR Corp.'s government group

The new image began taking shape when AT&T, Basking Ridge, N.J., spun off NCR as an independent company in January 1997. AT&T had owned NCR since 1991. No longer was NCR part of a larger systems integration group, enabling company officials to concentrate their efforts on those areas they knew best, said Baker.

With more than $300 million in sales, the government market comprises just a small slice of NCR's $7 billion in overall revenues. But it is the company's strong commercial background that will help it in the government market, said Baker, who declined to comment on future revenue targets for that sector.

In all three of NCR's chosen niches, IBM Corp., Armonk, N.Y., is the company's chief competitor. NCR also faces competition from Oracle Corp., Redwood Shores, Calif., in the data warehousing market and Diebold Inc., Canton, Ohio, in transaction system space. In state and local markets, NCR also competes with Andersen Consulting, Chicago, and American Management Systems Inc., Fairfax, Va., Baker said.

Part of NCR's transition to an independent company has been in developing a new sales force that focuses on customer solutions rather than pushing products, Baker said.

"We want to proactively think about how we can solve customer problems," she said. "That is a very different model than we had before. It is an ongoing transition in both the government and commercial markets."

Although the revamping of the company took longer than analysts would have liked, NCR's management has moved the company in the right direction, said Jonathan Moreland, director of research for InsiderTrader.com, an online investment publication.

Rebuilding the sales force was very important, he said. "A year ago, the sales force was disseminated," he said.

"The [new sales] strategy is an appropriate one," said Michael Geran, an analyst with the investment banking firm Pershing, a division of Donaldson Lufkin & Jenrette Inc., New York. "Now it is an issue of execution."

Execution is vital because an important measure of NCR's success in the federal government is building referenceable accounts, Baker said.

Projects that NCR hopes to use as models include the Internal Revenue Service's Compliance Research Information System. NCR developed a data warehousing and mining solution to help the agency find areas of noncompliance with tax codes, Baker said. The project is part of a joint U.S. Navy/IRS database contract worth about $157 million.

The system does not target individual returns but uses NCR's Teradata product to mine IRS databases to spot areas where the agency needs to improve educational materials or clarify its rules, she said.

This type of data mining solution can help agencies spot where services are needed, where resources should be invested and how to improve services, Baker said.

Another major project for NCR is the contract with the Postal Service to install point-of-sales units in local post offices.

With 30,000 locations, the Postal Service is the largest retailer in the world, Baker said.

NCR and IBM both won contracts worth $120 million to install 11,000 units in 2,500 post offices. But the project likely will be worth $1 billion when the Postal Service expands the project to all 30,000 post offices next year. The Postal Service will pick between IBM and NCR or choose both to complete the project.

NCR has built retail sale systems including automatic teller machines and point-of-sale machines for the U.S. Army and Navy, Baker said.

The company also is looking for more opportunities to leverage retail systems, such as kiosks, into the government market. State governments especially are looking for ways to use self-service technologies to deliver more services to the public, Baker said.