After Fingerhut’s 2002 merger, they found themselves with $250 million in software from PeopleSoft and Oracle. Fingerhut was software-rich but functionality-poor. Their challenge was to have a system up and running in weeks. It was November, and for Fingerhut, the timing was critical because 80 percent of the company’s sales are made in December.
Microsoft® Business Solutions–Great Plains® and Microsoft SQL Server™ helped Fingerhut deploy a web ordering solution in weeks and reduced their IT budget to a fraction of the previous budget. “What we pulled off is remarkable. Within a matter of weeks, we went from having no system to having a solution that links together various parts of our infrastructure,” Argir says. “We were very limited in the old legacy environment, but now we can entertain new software applications and interface with other previously disparate databases.”
Tom Petters, Chairman and CEO of the Petters Group, holding company for Fingerhut says that Fingerhut saved more than 89 percent over traditional systems.
For years, Fingerhut’s glossy-paged catalog was a mailbox mainstay, offering consumers convenient shopping on items from towels to sheets to shoes and more.
The Minnesota-based company, once the second-largest consumer catalog in the United States, faced challenging economic times two years after it had been purchased by Federated Department Stores, Inc. Eventually, Federated shut the business down in the spring of 2002. Later that summer, the Fingerhut assets were purchased by FAC Acquisition, in which Tom Petters and Ted Deikel are the principals. Fingerhut Direct Marketing was lauched in November 2002.
$250 Million Worth of Software and a Large IT Budget
Fred Argir, CIO and Senior VP of Petters Group, the holding company of Fingerhut Direct Marketing, found his IT team in an environment that owned $250M worth of software from the merged companies. The potpourri of software included the entire suite of Oracle and Peoplesoft, two mainframes, a Hitachi supercomputer, 274 Sun boxes, and over 500 servers.
All of this equipment carried with it a very large IT operating budget. “The IT operating budget was not only cost prohibitive, it was business prohibitive. It would not have been a business going forward if we had continued with this legacy model,” says Argir.
Needed to Implement in Weeks
It was already November. For Fingerhut, the timing was critical because 80 percent of the company’s sales are made in December. Argir and his team were faced with the daunting task of converting their business to the web, implementing a 24/7 business model, and completing the implementation within weeks.
Fingerhut went shopping—quickly. Argir “talked to all the big shops,” including SAP, Oracle, EDS, and IBM. Everybody had a solution, but the shortest projected implementation time from any of these companies was six to eight months, according to Argir. Some of the big shops didn’t even return his phone call until after a Microsoft solution had already been implemented.
Fingerhut reported that all of the competitors who did respond projected costs that were “millions of dollars” for implementation costs alone, even though Fingerhut already owned the associated software.
Fingerhut Calls in Microsoft
Argir then decided to contact Microsoft. He had always had a dream of building an organic IT infrastructure utilizing Microsoft applications, using .NET, XML, and SQL. Argir called Microsoft on a Wednesday. The following day, four Microsoft representatives were on-site at Fingerhut. The deal was signed on Friday evening, and “by [the following] Monday morning, we had 13 Microsoft people in our office implementing Great Plains,” says Argir.
A Remarkable Feat
“What we pulled off is remarkable. Within a matter of weeks, we went from having no system to having a solution that links together various parts of our infrastructure,” Argir says. “We were very limited in the old legacy environment, but now we can entertain new software applications and interface with other previously disparate databases.”
Web Site Launch
The newly revived Fingerhut kicked off the holiday season with the release of a 216-page catalog in early November 2002. Days later, the Fingerhut web site was launched and ready for orders. Argir says, “Fingerhut chose Microsoft Business Solutions–Great Plains and hasn’t looked back.”
Future
Argir’s enthusiasm about the future at Fingerhut is contagious. When asked how he viewed Fingerhut’s plans for the future, he highlighted two key items.
· Aggressive growth. Fingerhut has aggressive sales projections, but the company continues to see growth. “The engine keeps rolling—it’s fun to watch,” Argir says.
· Building a .NET environment. Fingerhut is looking at the applications as not just applications, but as solutions across an infrastructure. “As we go global, the entire enterprise is being built on Microsoft. It’s increasingly imperative that we are able to move data quickly and efficiently and input data globally. We’re building a .NET environment where we can grant access to partnerships around the world in a matter of minutes,” Argir says.
Rapid Implementation
As a result of the rapid implementation, savings were realized and profits gained within the 2002 holiday season. While competitive products estimated implementation timeframes ranging anywhere from eight to 12 months, Microsoft Business Solutions was up and running in just six weeks.
Cost Savings and Return on Investment
· IT operating budget slashed Fingerhut’s IT operating budget was reduced to a fraction of the previous budget. IT costs as a percent of revenue are approximately half of the industry average.
· Labor costs cut by 90%. Fingerhut’s number of full-time employees was reduced from 550 to 55. Because of increased profits brought about by the new environment, that number will climb to a projected 74 FTEs by year end.
· Ten times return on investment over competitors. Because the purchase price for competitive solutions was as much as five times higher, Implementing Microsoft Business Solutions resulted in immediate savings. Argir estimates return on investment to be ten times what a competitive solution would have provided.
Secure, Simple Shopping
Visitors to the Fingerhut web site enjoy an improved shopping experience. “Within the infrastructure we have an engine built on the powerful Microsoft SQL Server. There is no delay for customers. When a customer orders on the front end, customer service can respond on the back end,” Argir says.
Flexible Technology
“We exchange data with a broad range of audiences, so it’s all about speed, reliability, security and scalability,” Argir says. “We’re a credit card company; security is primary.”
Global Needs Satisfied
Other businesses within the Tom Petters group of companies have come to rely on the benefits of Microsoft’s .NET strategy, which calls for data to be shared instantly across a broad range of devices and in formats suited to the audience.