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Innovation

Groupon: One great enterprise IT Petri dish

Groupon CEO Andrew Mason outlined a bevy of technology initiatives. Here's a look at the moving parts.
Written by Larry Dignan, Contributor on

Groupon gets attention for its daily deal, mobile efforts and rapid growth, but technology executives may want to watch the company as a fine ongoing case study.

Why? Groupon's growth borders on ridiculous and the company is basically building its technology infrastructure on the fly. In other words, Groupon went from startup to a company with legacy systems in about a year.

Before Groupon went public a bevy of software as a service vendors were jumping over each other to use the company as a reference customer. Given recent financial control issues, the Groupon as reference customer parade has died down a bit.

Also see: CNET: Groupon's Q1 shines: Chest thumping in order? | Groupon's IPO: The numbers to knowGroupon grows, grows up in a hurry with more discipline, better systemsGroupon: The IT moving parts behind the growthGroupon becomes must have SaaS reference customer for NetSuite, Salesforce.com

Nevertheless, Groupon is worth watching. Groupon CEO Andrew Mason outlined a bevy of technology initiatives on the company's first quarter earnings conference call. Here's a look at the moving parts.

Look ma, we have legacy system issues already. Mason said that Groupon's ability to roll out new features internationally is hampered by multiple technology platforms. Having too many technology platforms is an enterprise problem that's as old as IT.

Mason said:

Our international operations run on different technology platforms, which has prevented us from easily deploying technology recently developed in North America abroad. We're just starting to deploy features like Smart Deals internationally. The same is true with the marketing technologies that helped us increase our activation rate and even many of the operational tools that we provide to our salespeople to close deals. At the beginning of this month, we kicked off our first major global technology integration initiative. There will be some foundational rebuilding in the short-term, but we believe that over the long-term this project will allow us to move much faster and more keep easily apply technology to up a lot growth globally.

Welcome to the one platform dream that plagues most companies.

Customer visibility issues. Groupon has expanded into 500 markets in 48 countries, but its customer facing systems just aren't smart enough. Mason said that the company is expanding and then trying to get smarter. "Our third phase is all about making our platform smarter," explained Mason. "We intend to infuse a series of technology services and enhancements that make our e-mails our mobile products and our marketplace is more personalized, more convenient and more relevant to our customers and merchant partners. This should yield significant lift across our entire ecosystem. From there, we will work to bring all of these elements together in one operating system for local commerce."

Welcome to Sarbanes-Oxley kids. Groupon has some financial control issues and brought in board members with technology system and accounting backgrounds. The company is currently implementing controls so it can get auditor approval of its financial reporting systems.

The mobile equation. Groupon needs to come up with mobile technologies that can convert local sales on the fly. Who doesn't? "We continue to gain marketing leverage as a result of investments in technology and deeper analytics to better understand how to efficiently deploy our marketing spend," said Mason. "Some of the results have come from a shift towards transactional marketing, but it's still the early days there and we think there's a lot headroom remaining."

Mason added:

We believe that mobile commerce will evolve into becoming one of the essential and fundamental use cases of mobile. It's enabled by the ability to have a computing device and Internet connection with you at all times. We think that's mobile is an equal enabler to local commerce as broadband is for online video

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