Having grown up at the leading HP 3000 application
vendor and in South Florida, Sharon Gardner knows about heat. The
33-year-old vice president of marketing for Smith-Gardner directs the
voice of the company that created more new 3000 customers than any
other vendor last year, and Gardner has a complex challenge if she is
to repeat that kind of performance. She must tell the world how her
companys solution succeeds without relying on the legend of the
keystone of its success, the HP 3000.
company became a public one early in 1999, one whose financial
fortunes seemingly rose on the Internet economic boom of last year.
Smith-Gardner became a promising light on the e-commerce horizon,
selling software that let retailers without stores catalog and
dot-com firms reach for profits as economic opportunity shone
brightly on the Internet. More than 300 companies use the
application, and Gardner said HP told her that S-G was responsible
for more than 60 new HP 3000 installs in the last year.
But in the past few months, Smith-Gardner has had to
embrace a larger view of retailing than e-commerce and revise its
sales targets. Instead of pure e-commerce like Outpost.com or
traditional brick and mortar, the future of retailing is evolving to
click and mortar, where big outlets with stores get online-shopping
savvy. Nordstrom is S-Gs most prominent success in click and
mortar, in a client base that has household names like M&M/Mars,
Barnes and Noble, World Championship Wrestling and Hickory Farms.
Smith-Gardners application, launched twelve years ago by
Gardners father Allan and co-founder Will Smith, is being
expanded to climb beyond its catalog business roots to the larger
world of retail. Its a world where selling the e3000 is more of
a liability than an asset, Gardner says, in some measure because
Hewlett-Packards mentions of the platforms brand are
faint and few.
In the weeks surrounding the Smith-Gardner Expo 2000
and our interviews, the height of the hurdles which Gardner and S-G
management must clear to maintain the companys growth became
more apparent. The company announced that a major deal with a dot-com
theyd sold would be a no-show, a receivable that couldnt
be collected because the dot-com had gone bust. Weeks later the
company reported it would experience its first red ink since going
public in its second quarter of fiscal 2000: Sales were down because
its new click and mortar prospects were taking longer to close. Its
competitors it has no rivals in the 3000 market, but several
from IBMs space try to cast doubts on the 3000s
scalability and performance. So the company is offering a
multiple-server NT/Unix/Oracle front end in reply, but must maintain
its all-3000 solution at the same time.
Gardners roots are in the 3000 customer base, starting
with her time consulting at computer catalog Microwarehouse in the
summers while she was getting her math degree from Rutgers (she
minored in computer science). She spent her first years helping
companies set up their fulfillment divisions to take orders through
MACS, the product that is evolving into Ecometry this year. Since she
helped establish S-Gs first efforts to market beyond the
relatively small catalog industry, the Smith-Gardner customer base
has more than tripled in the last three years. Gardner understands
her company is one of HPs best prospects for selling 3000s to
brand new sites. And S-G is doing yeoman work to unseat IBM
installations and bring them into the HP 3000 fold. We asked her what
S-G needs from HP to keep succeeding, and how her company can build
on its catalog customer foundation into the more abundant bricks of
the retail world.
Your background wasnt typical of someone in
marketing, starting in the operations with Smith-Gardners HP
3000 sites. How did the experience evolve into marketing?
began my career at BSA Fulfillment for five years, starting as an
account manager for the Disney Catalog, managing the IS functions we
were supplying to them. I loved it. But I went right out of college
not necessarily wanting to work in the same business that my father
and his partner had been in. I was the third employee for the
fulfillment division of BSA, a full turnkey fulfillment house. I had
a lot of exposure to the telemarketing and warehousing aspects of the
business. When you got backorder item in two weeks before Christmas,
everybody in the firm got out into receiving, getting the item
picked, packed and shipped out the door. I started out with a lot of
operations experience as a result. For my first seven years at
Smith-Gardner I headed up client support services, training and
wanted to get into something new, and we had grown to the point where
we needed a marketing department. Prior to that we were just
marketing our company and products to the catalog industry. Its
a small industry; at most theres 20,000 catalog companies in
the US today. When you take the share of them where our solution fits
those shipping more than $5 million a year in products
its even smaller, like 5,000 companies. If anybody was looking
for a catalog management system, we were always on the list.
needed to formalize a product management function within the company,
a business alliance program. Since we were thinking of going public,
we needed to formulate a marketing plan and start targeting new
markets. With the growth of e-commerce, its opened up our
marketplace tremendously. Marketing is a critical function for us.
Weve heard of several of your customers here
whove moved their operations to the 3000 from IBM platforms.
Whos the competition in the AS/400 market?
Our biggest competitor in the catalog business is a
company called Commercialware. Theyre about half our size,
though, in terms of client companies, revenues. Theyve got some
good accounts, though, some marquee accounts. (Ed. Note: most
notable are Saks Fifth Avenue, Brooks Brothers and the
How do those marquee firms work for you in selling to
prospects? How much weight do they carry?
Its big. It helps build that trust factor. Nordstrom
runs on us, and they know Nordstrom as a traditional IBM shop
but theyre running their entire catalog division and dot-com on
Nordstrom.com was identified as a dot-com with a good
future by analysts, who havent been kind to dot-com ventures
recently. The difference seems to be its brick and mortar backing. Is
that whats behind your recent focus on traditional retailers as
Thats absolutely our whole theme. Customers want
convenience, and they want to be able to shop from the channel of
their choice at the moment. Its based on what they need and
their time factors. The retailers need to be able to customize and
personalize equally from all three channels: catalog, online and
Why did you decide to go to retail, beyond your heartland
customers who dont have brick and mortar?
Every retailer is forced into online direct marketing with
e-commerce. Every single retailer is in our business now. Weve
struggled with what we call what we do. Is it indirect sales,
encompassing both catalog and e-commerce? Our investment bankers told
us when we went public to refer to it as non-store,
concerned that if we called it direct marketing wed be
pigeonholed into the catalog and direct marketing arena. They wanted
to position us as not only that it was 95 percent of our
revenues at the time. Since then weve adopted direct commerce
and direct sales
Were positioning ourselves as a multichannel
infrastructure solution. E-commerce is absolutely a big focus,
because we believe that cataloging will change. There may not be
every single product in the book in the future.
Coldwater Creeks business, theyve seen 20 percent shifted
to the Web. To be able to empower customers to take their own orders
is a huge cost savings. Theyre definitely a forerunner for us,
especially in the apparel industry.
Coldwater Creek represents your first kind of customer, catalog and
direct marketing, and then theres dot-coms, where S-G was
posting a lot of new sales over the past year. The traditional
retailing companies are next?
Theyre getting into direct sales for the first time
through the Web. The dot-coms will be less of a priority in our
target markets, in terms of the e-commerce marketplace. Were
absolutely continuing to continue to market to the traditional
catalogers and direct marketers. But Wall Street is most interested
in our e-commerce opportunities, and from that view its the
major retailers were going after.
Im tempted to believe these larger retail sites are
asking if their back-end engine can run on something other than an HP
Sometimes we run into that issue. But now, because our
product is available on Unix, well always be invited to
participate in the demonstration. Once we get in there and sell the
software, we sell them on why its better to run it on the HP
your new architecture relies on Unix or NT boxes running Oracle to
front-end the HP 3000 commerce engine. Why the change?
have not had performance or scalability issues with any client to
date on the 3000. The large clients, for whatever reason, dont
feel comfortable tapping the HP 3000. Theoretically [the new
architecture] is faster if all the product information is accessible
from a Unix or NT box, but were just talking about the product
information. What weve done is ported product information,
pricing information, taxes, to that NT or Unix box in an Oracle
database. These are the pieces that dont require heavy online
Some of our larger customers want more flexibility, and
their Web site developers know nothing of the HP 3000. The Web
developers are not happy that everything they need to get to is in an
HP 3000 database. Its the bigger customers that have the
problem with it. Our small- to medium-size customers have no issue.
[The 3000] is easy to maintain.
The Smith-Gardner IT managers weve talked with seem
to need more HP 3000 tools. Since youre drawing all this new
business to the platform, are you being flooded with offers to
partner with third-party tool providers?
are. I get three to six calls a day, looking at our client base and
really excited about putting something together. But a very small
percentage of those calls are specific to the HP 3000, because
were an enterprise-wide system.
The HP 3000 division refers to Smith-Gardner in nearly
every presentation to their installed base as the leading source of
new business for the platform. How does that make you feel?
got a call from HP and they told us Good news: You guys
represented the Number One vendor for bringing new business to the HP
3000 in 1999. We werent the first in revenue, but in
individual new accounts. We were partly worried, because for the year
it was only 60 or so. Theres no other VAR thats selling
more than that. Its been a concern of ours that its going
to survive. Its a killer platform, and no other system can
crank out more than 300,000 orders in a day and still have
instantaneous response at the cost. Other systems would cost two to
three times as much to handle that kind of input.
have struggled a bit with HP, wanting to get them to more proactively
position and market that product. To change the image in the
marketplace. Theres definitely a perception in the marketplace
that its old technology, not open and proprietary.
you want HP to give the HP 3000 a better profile, to ease your new
They think the application provider has to do the sale.
The only issue is that we are too small to correct the perception.
Well keep attacking the issue. But for HP to take a position on
the 3000 to the general populace is going to do wonders for the
perception in the marketplace. We cant fight that battle on our
own. Thats what we need help with, because there is a negative
perception in the marketplace today for the HP 3000. Big issue.
Thats one of the reasons we ported to Unix and NT, so we can
put a check in the box. Then well sell them the 3000 once
were in there.
Were losing more deals than we have traditionally
because of this image. Its the Web techies. Unless its
Java running on an Oracle database on a Sun platform...
sounds like theres only so much that the 3000 division can do
for you in this battle. True?
wanted to get some attention from HPs corporate level. We
cant get anywhere. Our phone calls and e-mails just go
unreturned, from our business development manager to myself to our
CEO. Weve tried Carly Fiorina, and she has people staked out to
help talk to everyone who tries to connect with her. If she said
something, and understood what the combination of the 3000 and our
product is doing for direct commerce if shed just give it
a little juice, wed get tremendous mileage out of that. We also
have tried to make contact multiple times with the head of the
e-commerce division within Hewlett-Packard.
Hows that e-services plan working out for you? Is it
providing any opportunities yet, or is it mostly high concept?
High concept. We cant envision getting our product
to the point where a customer would be satisfied with just a canned
implementation. Theres no money to be made, its costly to
do it and the margins are so low, its just not worth our time
and effort. Weve tested it with some offers to prospects, but
its just not attractive. I think certain applications just lend
themselves to the ASP model, and ours does not. We have 1,500
switches in our software, and you need to understand how the system
works, so you can see how the business should be run.
How does it feel to represent a new generation of blood
for the HP 3000 community, working in a company your father helped
interact with Allan and Will every other day, but we work very
closely together. Im pushing for we need these bells and
whistles based on what the markets asking for.
you feel like your requests get any more attention because of your
[Laughing] Actually, it works against me. Theyre
real good to being open to some of that. Theyve been very
adaptable to a lot of new stuff were doing. Things are
changing: For example, people want to customize some promotions
targeted to more affluent people based on their demographics, and
lower-priced items to more average wage earners.
Your shirts at your conference all said Ecometry, rather
than Smith-Gardner. How crucial is the new branding to your
Its absolutely helping us reposition what we do: an
e-commerce solution. We want to brand Ecometry heavy right now.
Well see if it could lead to us changing the name of the
company. Its a good time for us, because the evolution of
e-commerce has played out far enough that people are identifying the
value of having an integrated system. Its not enough to have a
Web site that can take orders. That Web site has to be fully
integrated with a back office system built specially for direct
sales. We compete with Oracle, not SAP, which has no idea what a
Federal Trade Commission notice is for a back order.
Whats the major challenge for the company in the
Overcoming the negative perception about the technology
were running on. Getting more support for the HP 3000 and what
were doing. If we could change the perception and position the
3000 as the number one platform for order management, order
fulfillment, direct sales, that would be dynamite.
asked our HP reps, Do you think that Carly knows that a
Smith-Gardner, Ecometry, or MACS even exists? They both said,
Probably not. Thats a problem, and why we started
to try to connect with her directly. The 3000 folks are great, but it
would be great if we could get some corporate-level HP support.