First Data Corporation

Article excerpt

Presented by Ric Duques, Chairman and Chief Executive Officer

First Data Corporation (FDC) is a leading provider of payment systems, electronic commerce, and information management services to financial institutions, merchants, insurance companies, public utilities, and consumers around the world. Formerly part of American Express Information Services Corp., First Data became a separately traded corporation in 1992. In 1995 First Data merged with First Financial Management Corp. In 1997, it formed MSFDC, an online bill-paying joint venture with Microsoft. FDC employs 40,000 people across 35 business units in 130 countries. based on market capitalization, it is among the 100 largest companies in the United States.

Ric Duques is First Data's first chairman and chief executive officer. He joined American Express in 1987 after leaving Automatic Data Processing, Inc. (ADP) as Group President, Financial Services. He is a graduate of George Washington University, where he earned a Bachelor of Business Administration in accounting and an MBA in Accounting and Finance.

Mr. Duques spoke to the participants in the 1997 Corporate Sponsor Forum about the strategic imperatives and organizational characteristics that have driven the growth of First Data and influenced its approach to mergers with other organizations - particularly its merger with First Financial Management Corp. in 1995. He told a powerful story, remarkable for its comprehensive and coherent approach to a complex marketplace and indicative of the need for agility in today's environment.

Strategic Imperatives

To reach its vision, "Every client recommends First Data," the company has set two very aggressive goals for itself:

* To be the clear leader in payment and related information services worldwide

* To choose markets that afford the market leader the opportunity to grow revenues and profits by 20% each year

Mr. Duques believes achieving these goals and retaining competitive advantage means First Data must mirror the attributes of a small company: flexible, fast, entrepreneurial, empowered, and customer-driven, with few management layers. Five sources of growth (Exhibit 2) have been identified to increase market share, capture new clients, and enhance services. Continued acquisitions and expansion into adjacent markets with existing clients are part of FDC's growth strategy.


Five Sources of Growth

Internal Growth         Our markets grow
                        Our clients gain share

New Clients             Trend toward outsourcing
                        Joint ventures, partnerships, and alliances

Enhanced Services       Product development
                        Product acquisitions
                        Cross selling

Adjacent markets        Core competencies
                        Untapped client bases

Acquisitions            Market penetration
                        Entry into new markets

In pursuing its strategy, First Data operates with six strategic imperatives:

* Maintain or seize leadership in each significant electronic commerce segment (existing and emerging) of the payments system

* Leverage FDC's transaction and information databases to become the provider of information-based services focused on credit and target market opportunities

* Build the leading international position in FDC's core transaction processing, payments, and information markets

* Drive the principles of the Service-Profit Chain [ILLUSTRATION FOR EXHIBIT 3 OMITTED] into the organization in order to retain and grow FDC's existing client relationships

* Maintain or improve margins in the face of increasing pressure

* Improve or divest under-performing and low-growth businesses

Organizational Characteristics

Mr. Duques was insistent that aggressive goals and growth must be supported by a strong adherence to organizational values. …