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A New Legacy

Ailing Fingerhut threw out its old systems and developed new software in just six weeks. The result was twofold: a second chance for the catalog retailer and a new software company
HighJump CEO Chris Heim says Nazca brings a fresh approach to the market, with Fingerhut as proof that there's a strong case for replacing aging systems with newer apps that increase functionality while lowering costs. Fingerhut's rip-and-replace strategy was "astonishing" in its success, Heim says. "I think they will be able to achieve that for other companies as well."

At the center of Nazca's applications is a so-called direct-commerce automation engine, based on XML, that automates customer-facing business processes and manages transactions, orders, and fulfillment. Using the software, Fingerhut cut the time it takes to get a product moving, once an order comes in, from a couple of days to a few minutes. By linking Nazca's order- and transaction-management capabilities with Microsoft's customer-relationship management and HighJump's supply-chain apps, Argir says, midsize companies will be able to develop real-time, customer-oriented transactional systems that can work with or without ERP systems. "What we're saying is, let's create one system of record on the front end," he says.

Nazca is targeting companies that, like Fingerhut, have catalog and E-commerce operations, ranging in size from $50 million to $2 billion. Mondale says it has nearly a dozen prospects. Prices start at about $100,000 for Nazca's software.

With many other companies already selling order-management capabilities, Nazca is entering a crowded market, Yankee Group analyst Mike Dominy says. But Nazca's real-world roots in Fingerhut and high-caliber partnerships give the company a reasonable chance at success. "That's a fantastic start," he says.

So how's the slimmed-down Fingerhut doing? Officials of the privately held company won't reveal sales figures. But executive VP Megan Kavanaugh says the company is "exceeding expectations" in its business plans. In April, Fingerhut secured a $100 million line of credit to finance inventory, receivables, and working capital. Its mega data center--so big that the company used to resell excess electricity to local municipalities--was sold to United Healthcare.

Dave Hemler, a VP of small and midmarket solutions with Microsoft, says Fingerhut's story is compelling because the company demonstrated not only business agility but "business reconstitution." As for Nazca's applications, Hemler says: "They've got a lot of runway in front of them." If, that is, they can convince midsize companies to climb aboard.

Photo by Doug Knutson