Groupon: The IT moving parts behind the growth

Groupon's growth---revenue, subscribers and merchants---is off the charts and under the hood rests on whale of an information technology story.
Written by Larry Dignan, Contributor

Groupon's growth---revenue, subscribers and merchants---is off the charts and under the hood rests on whale of an information technology story.

In many respects, Groupon is the ultimate IT petri dish. In two years, it has grown from a company that could be run on a simple spreadsheet to one that needs systems spread across the globe. Meanwhile, Groupon is a greenfield opportunity---there aren't legacy systems dating back decades.

As noted previously, Groupon has bet big on NetSuite to be its system of record and Salesforce.com for its salesforce management. Groupon is going cloud and I've talked to at least five SaaS integrators and on-demand application providers that are pitching the company heavily.

Aside from those cloud details, Groupon's systems have been a bit of a mystery. Fortunately, Groupon's initial public offering filing also serves as a bit of a IT confessional. Here's a look at the key IT related disclosures:

Data centers: Groupon has hosted data centers in Miami and Dallas in the U.S. International data centers are in Asia and Europe.

Internal systems: Groupon said it plans to combine internal systems in North America and abroad. This technology platform "includes business operations tools to track internal workflow, applications and infrastructure to serve content at scale, dashboards and reporting tools to display operating and financial metrics for historical and ongoing deals, and a publishing and purchasing system for consumers." This reference appears to be linked to the NetSuite project.

Security: Groupon said:

We use commercial antivirus, firewall and patch-management technologies to protect and maintain the systems located at our data centers. We have invested in intrusion detection and pattern detection tools to try to recognize intrusions to our website. We have also engaged a third-party internet security provider to test the security of our website and identify vulnerabilities. In financial transactions between our website and our customers, we use Secure Socket Layer to provide encryption in transferring data.

IT employees: Groupon said it employed 253 IT professionals

Call centers: Customer reps can be reached 24/7 via phone and email. The company has 825 customer service reps.

Redundancy: Groupon said it is spending heavily to scale computing and network infrastructure.

As our subscriber base and the amount of information shared on our websites and applications continue to grow, we will need an increasing amount of network capacity and computing power. We have spent and expect to continue to spend substantial amounts on data centers and equipment and related network infrastructure to handle the traffic on our websites and applications. The operation of these systems is expensive and complex and could result in operational failures. In the event that our subscriber base or the amount of traffic on our websites and applications grows more quickly than anticipated, we may be required to incur significant additional costs. Interruptions in these systems, whether due to system failures, computer viruses or physical or electronic break-ins, could affect the security or availability of our websites and applications, and prevent our subscribers from accessing our services. A substantial portion of our network infrastructure is hosted by third-party providers.

Antifraud tools: Groupon has also been spending to prevent counterfeit coupons.

Groupons are issued in the form of redeemable coupons with unique identifiers. It is possible that consumers or other third parties will seek to create counterfeit Groupons in order to fraudulently purchase discounted goods and services from our merchants. While we use advanced anti-fraud technologies, it is possible that technically knowledgeable criminals will attempt to circumvent our anti-fraud systems using increasingly sophisticated methods. In addition, our service could be subject to employee fraud or other internal security breaches, and we may be required to reimburse consumers and/or merchants for any funds stolen or revenue lost as a result of such breaches. Our merchants could also request reimbursement, or stop using Groupon, if they are affected by buyer fraud or other types of fraud.

Customer facing tools: Groupon has built systems for merchants to track deal performance and analytics for demographic data and capacity. In addition, there are developers for Groupon's mobile apps.

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