Wincor-Nixdorf Branding and Promotion Strategy Analysis

Company Overview and Market Position

Wincor-Nixdorf is one of the world's leading manufacturers and resellers of electronic Point of Sale (POS) systems for banking and retail globally. At the close of their latest fiscal year, the company operated subsidiaries in 41 countries and was represented by partners in 60 additional countries. Wincor-Nixdorf generated €2.25 billion in Group Sales, €718 million of which was generated by the Retail Group and €1.5 billion from the Banking Group. Sales analysis by division from 2005 to 2008 illustrates how the Banking Group grew in net sales despite a global recession, while the Retail Group continued to struggle to achieve positive growth during the same period.

Wincor-Nixdorf generates 58% of revenues from hardware and 42% from software. The company is well-known for its engineering capability and speed of product development, yet has consistently struggled to succeed as a system integrator of its technologies into the more complex process areas of banking and retail.

Wincor-Nixdorf came into existence in 1999 when the Siemens Group was acquired by investment bankers and venture capitalists Kohlberg Kravis Roberts and Goldman Sachs Capital Partners Group. By May 19, 2004, the investors were ready to take Wincor-Nixdorf public and began offering Prime Standard securities on the Frankfurt Stock Exchange. This enabled the company to invest in new technologies and accelerate its product lifecycle strategies for electronic POS systems. As of the close of 2009, Wincor-Nixdorf had successfully engaged 23 of the top 25 banks in Europe with its automated POS systems and 20 of the top 25 retailers in Europe with its retail systems. Globally, the company had won business with 19 of the top 25 banks and 14 of the top 25 retailers worldwide.

Wincor-Nixdorf accomplished this by concentrating on a rapid product development cycle, placing terminals and cash products on a fast track in the Banking Group. The Retail Group also received significant product line investment, and retail hardware and POS systems improved substantially between 2004 and the time of this writing. Nevertheless, the company is considered an industry leader in technology while struggling to deliver end-to-end solutions of a strategic nature to its customers. As a result, Wincor-Nixdorf is often viewed as exceptionally strong in technology yet lacking in its ability to create system-wide, process-based solutions capable of transforming customers' businesses.

Problem Statement: Hardware Ethnocentrism and Cultural Barriers

Wincor-Nixdorf has a corporate culture heavily influenced by engineering-based values and mindsets, including a high degree of technology ethnocentrism. These factors have collectively led the company toward a myopic, short-sighted view of how its automated POS systems function as part of the broader enterprise systems and platforms of the markets it serves. As a result, hardware engineering, electromechanical engineering, and mechanical engineering carry high organizational status, while the key engineering disciplines required for creating highly integrated, solution-oriented products are comparatively underdeveloped. The lack of expertise in complex software engineering, software development, and software quality assurance all contribute to a deficit in system integration capability.

Because both prospects and existing customers perceive the wide gap between hardware and software systems design expertise, Wincor-Nixdorf is trusted in the former domain but not the latter. To overcome this perception, the company would need to first transform its culture to regard software engineering and integration expertise as critical to growth, while simultaneously embracing advanced software development technologies to fuel solution-based systems development.

Customers have complained that the banking and retail systems do not communicate with one another — further evidence of the company's deficiency in system integration. The company also lacked consistent standards for data transmission and transaction validation between the banking and retail business units, a strategic weakness given that both units form part of the same value chain for many customers (Bushrod, 2003). The hardware engineering-centric culture was producing a balkanized state across systems that were critical for the existing and future needs of enterprise accounts globally (Bushrod, 2003).

While partnering with system integration companies such as SHL Systemhouse, Accenture, IBM Global Services, and Indian firms Infosys, HCL, or Satyam could have addressed this deficiency and allowed Wincor-Nixdorf to remain purely hardware-focused, it was clear that such a path would result in a limited future. To transform the company's culture, products, processes, sales force, and services toward a more services-based model represented the greatest challenge the company had faced in its history (Bushrod, 2003).

Conclusion

The transformation Wincor-Nixdorf underwent — moving from being a box mover to concentrating on services and solutions and ultimately becoming a system integrator — required the subordination of technologies to customer needs. The focus had to shift entirely from placing products at the core of the business to being solution-focused. To aspire to and attain the role of trusted advisor (Dawson, 2001), technologies must serve solutions and customers first. This is the transformation that Wincor-Nixdorf achieved, and the company today uses advanced POS technologies including RFID to better manage broader process areas for clients, rather than simply selling more terminals and hardware (Resatsch, Sandner, Leimeister, & Krcmar, 2008). The transition from product-centric to solution-focused operations, illustrated through the company's IT Services and Business Process Services model, represents the full arc of Wincor-Nixdorf's strategic and cultural evolution.

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