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Fingerhut Improves CRM and Reduces Advertising Costs with

Published
  • July 01 1999, 1:00am EDT

BACKGROUND: Fingerhut Companies, Inc., one of the nation's largest direct marketing and on-line retailers, is a wholly owned subsidiary of Federated Department Stores, Inc. Fingerhut sells a broad range of products and services through catalogs, direct marketing, telemarketing and the Internet.

PLATFORMS: Fingerhut Companies, Inc. runs Orchestrate on an IBM RS/6000 SP platform. Orchestrate also runs on SUN SMP and NCR WorldMark servers and supports Linux running on Intel Xeon clusters.

PROBLEM SOLVED: Fingerhut boasts 20-40 types of catalogs, and each week they mail to 7 million active customers. In the past, the company determined its catalog mailing list by analyzing customer data including birthdays, anniversaries, payment preferences, product purchases and product interests against individual catalog profiles. However, to improve customer relationship management (CRM), Fingerhut needed to add an additional level of sophistication to its mailing system by cross-checking customer data ­ this time against multiple catalogs. The resulting mail stream optimization (MSO) program promised to reduce catalog-related costs considerably, but also increased the projected processing levels more than 30-fold. The company realized that it would not be able to process this massive amount of data using a single-processor system. To accommodate the company's needs, it purchased an IBM RS/6000 multiprocessor system and a business intelligence application to begin optimizing the catalog mailing process. Fingerhut discovered, however, that even with a multiprocessor system, the software application ran sequentially on one processor at a time, slowing run times and stalling the project. The company began to search for a solution that would enable it to leverage the power of its multiprocessor system by running the application in parallel. Fingerhut chose Orchestrate, an integration and performance framework that enables software applications to run in parallel on multiple processors. Orchestrate allowed Fingerhut to process significantly more data in less time by partitioning data across multiple processors and then streaming the data through multiple, parallel instances of each application step. The Orchestrate-enabled system allowed Fingerhut to examine up to 1,400 customer characteristics for 7 million customers against 20 to 40 catalogs. This process produced millions of scores each week with more than one trillion possible options to analyze. Before Fingerhut implemented the MSO program, its catalog advertising, printing and distribution cost the company $600 million annually.

PRODUCT FUNCTIONALITY: Orchestrate enables business intelligence applications, designed to run sequentially, to run in parallel; and it enables third-party solutions to integrate with other applications while executing in parallel. In addition, Orchestrate shields development staff from the complexities of parallel programming, enabling more immediate results.

STRENGTHS: The Orchestrate-enabled system vastly increases the availability of the data warehouse by finishing processing requests in one-sixth of the time that Fingerhut had projected. At the same time, Orchestrate allows Fingerhut to analyze larger quantities of data that enable the company to improve its CRM efforts and reduce advertising costs 10 percent while maintaining revenue.

WEAKNESSES: Orchestrate uses pipeline parallelism, which enables downstream processes to begin executing as soon as they receive data, even before the initial process has finished processing the full range of data. In its next release of Orchestrate, Torrent will leverage pipeline parallelism even more with "operator combining" which will enable some adjacent processes to execute together and promises additional increases in performance.

SELECTION CRITERIA: In benchmark tests, Orchestrate demonstrated that Fingerhut would be able to process the required data quickly and efficiently. After the evaluation, Fingerhut translated the results into a cost justification and found the advertising cost reduction would pay for the system within a year.

DELIVERABLES: Fingerhut used Orchestrate to analyze the full range of customer criteria against an enormous range of catalog detail. As a result, the company cut advertising costs, focused customer outreach efforts and provided previously unknown information about customer interests.

VENDOR SUPPORT: Torrent's responsiveness and availability have made the Orchestrate implementation practically painless for the Fingerhut IT staff and marketing end users.

DOCUMENTATION: Torrent trains staff on site and provides comprehensive documentation.

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