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Sweet marketing music

Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

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by Andrew Tellijohn
December 2003

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Tech Audits: The fix


The fix

How four firms found tech salvation

by Neil Orman  

With the ’90s behind us, technology strategy might seem like a distant concern for most businesses today.

Not so for the four local firms featured in this story. Each has launched or broadened major computer-related projects in the last few years. Here their projects are profiled, including the factors motivating it, what it cost in time and money, and the results.

Two of these projects launched in the 1990s, while the rest started more recently. The former two firms have continued to build on their technological foundations with new features and improvements. The latter two prove that small businesses continue to do major upgrades when they see advantages in doing so.

All of these stories show that firms increasingly prefer to outsource much, if not all, of their technology services. Here are snapshots:

• Arthur Shuster upgraded from a 20-year-old mainframe-based system to a state-of-the-art client-server network, and it is about to launch a new e-commerce site.

• Helgeson Enterprises built a new database architecture to replace its inadequate predecessor, and also launched accompanying Internet capabilities. And the firm has steadily added to that foundation ever since.

• Applied Policy Research launched an Internet- and e-mail-based platform allowing it to better communicate with distant clients, which also has continued to grow and evolve.

• Midwest Diamond & Watch Co. has built a series of e-commerce sites to help reach more customers.

Goodbye ‘dinosaur’
At the beginning of this year, Arthur Shuster’s office looked like a technology museum.

The St. Paul firm provides interior design and contract furnishings to the senior housing and hospitality industries. From 1982 to the fall of 2002, it used a mainframe-based network that employees jokingly referred to as “the dinosaur.”

The company was founded in 1959 by Arthur Shuster, and today it is run by his two sons, Stan and Chuck. 

“My attitude at the time was, ‘If it’s not broken, don’t fix it,’ ” says Chuck Shuster, executive vice president.

Shuster’s attitude changed as his employees began to have trouble communicating with clients and each other, and they often had to repeat work, due to limitations of the system.

For example, they had to type in much of the same information again when they created proposals for each new client.

As the Year 2000 approached, the firm struggled with whether or not to stay with the same system. It hired a software consultant in 1998 to help the company write a more advanced application. Unfortunately, that consultant was a “bad fit,” Shuster says, and the company looked to find someone else at the end of 1999.

It decided to return to Tom Frishberg, the man who designed the application the company had used for the previous two decades. Frishberg, who is vice president of technology at Synergistic Software Solutions of Minneapolis, recommended a customized version of an operating system called Navision, a proposal-generation and purchasing system. He also recommended the firm bring in Eagan-based Orbit Systems to recommend new hardware and provide outsourced IT services.

Orbit switched the firm to the new system over about three weeks in March and April 2003.

“We didn’t miss a call or lose an e-mail” over that time, Shuster says.

The ultimate result: “I can now conduct my business. I don’t have to be in the IT business.”

Also, Shuster let go of his one in-house technology expert, and outsourced all his technology needs to Orbit, which provides the firm with Web site and e-mail management, and technical support.

“They can even take control of our computers remotely,” Shuster says. “Even an in-house IT person could only deal with one problem at a time. We can have three to four people talking to the help-line at once.”

Shuster declined to specify what he’s paying Orbit, although he said it’s “under $100,000” and less than the cost of the internal IT person he let go.

Frishberg declined to disclose what he charged Arthur Shuster to develop the software application.

As a sign of how far the company has come, it launched a new e-commerce site in October: asionlinestore.com. The site provides options for customers with small-scale furnishing needs.

Distant clients
Applied Policy Research is another firm that has come a long way technologically.

From 1996 to 1998, the firm gradually migrated to an e-mail- and Web-based system for better communicating with distant clients.

That system, which was sorely needed, has evolved ever since. The Minneapolis firm provides highly specialized consulting to help universities set their fiscal policies and tuition rates.

Before 1996, Bill Hall, the firm’s chief consultant and co-founder, had to travel constantly to consult with clients around the

country. Growth was limited by how many miles Hall could fly. And, to communicate information, the firm relied upon FedEx to deliver the complicated tables, graphs and other data it uses to support its proposals to clients.

Hall began to consider going electronic after conversations with Kirk Hoaglund, an information technology consultant who occupied a nearby office. Both men were tenants at University Technology Inc., a technology incubator that houses a variety of technology firms and experts.

Hoaglund advised him he could experience a 300 percent productivity improvement by relying more on e-mail- and Web-based communications.

“He asked me if I’d ever heard of e-mail,” Hall recalls. “He explained that it was secure and reliable. We didn’t even have Internet in the building at the time.”

Hall hired Hoaglund’s firm, which is now called Clientek in Minneapolis, to build an electronic system for better disseminating and managing information.

By 1998, the firm added a Web-based system for sharing its financial models and other information with clients.

Today, Hall can point clients to Web pages on his site hosting their projects and explain them over the phone, right from his office next to Dinkytown.

In addition, he has the advantage of having another neighbor who is an Internet service provider, Professional Network Services. With the help of Clientek and his ISP, the firm built a technological infrastructure that Hall says is now a major selling point with clients.

“It gives us more substantial standing, especially for a one-consultant company,” Hall says. “We’re not just a bunch of people with green eyeshades and an abacus.”

The company grew from five to 15 clients between 1996 and 1998, and Hall says Hoaglund’s promise of a 300 percent productivity improvement has been realized.

Although Hall could have expanded his company every year, he has kept the firm’s revenue flat at or slightly above $500,000 a year since 1999, because he didn’t want to add more consultants to handle additional clients.

“I’ve been turning potential clients away,” he says.

Not anymore. Hall plans to hire a second consultant by next summer. He projects this year’s revenue will grow to $650,000, or about 30 percent, and to $1 million by the end of 2004.

Since the launch of the Web-based system, the company has added new capabilities, such as the ability to put voice recordings on the Web site, which explain the firm’s financial models to clients. And this Christmas, Hall plans to move to faster Web servers that are co-located in a secure room managed by Professional Network Services. The facility provides uninterruptible power supplies, climate control and other features.

 Due to those new services, Hall’s monthly bill from Professional Network Services will increase from $300 to $1,000. But Hall says the steeper bill with be worth it for the added peace of mind.

In addition, Hall now has monthly meetings with Clientek’s Hoaglund to make sure his company stays up-to-date.

Like Arthur Shuster’s leaders, Hall has become a big believer in the strategic use of technology outsourcing.

“Their work allows me to focus on building the company,” Hall says.

Limited growth
In the middle of 2000, technology was limiting the growth of Helgeson Enterprises.

The company, which provides rebate fulfillment and data-entry services, had outgrown the capabilities of its database system, which was based on Microsoft Access.

But, unlike many firms with tech challenges, Helgeson didn’t opt for a band-aid solution. Instead, it brought in Solutia Consulting of Stillwater to create an entirely new database and Internet platform for the company.

“They knew it was holding their business back,” says Rick Kuula about Helgeson’s old system. He’s president of Solutia Consulting. “They recognized they were being constrained and they took care of it right away.”

In fact, the company created a platform on which it has been building ever since. The company’s customers include Sony, TDK, Imation, Sharp Electronics, Carlson Marketing and TGI Friday. It employs about 90 people.

 Helgeson’s main business is handling rebate programs for such companies. That means if you cash in a rebate from Sony, for example, you may be dealing with Helgeson.

Three years ago, the company began to experience problems with Microsoft Access as its database reached one million records. Those records consisted of rebates that customers have turned in, and which Helgeson’s data-entry operators have entered into its system.

The problems: Screens wouldn’t refresh. Response times for the firm’s customer service reps took too long.

“The wait times were significant,” says Tom Helgeson, president of the company, “and customers on the phone can’t be made to wait too long.”

Solutia’s Kuula says Microsoft Access is not built for large-scale databases, and its performance begins to deteriorate when they reach a certain size.

He recommended a more robust database software, Microsoft SQL/Server, and his firm took a “modular” approach to designing the system. That means the software design would make it easier to quickly implement enhancements and expand the system with the company’s growth.

And indeed, Helgeson’s system has included a number of iterations, some of which were managed by Solutia and some that were managed by Helgeson’s own five-person IT staff.

Solutia built the foundation — a new database system and also an Internet-based feature allowing customers to type in their own rebate information and check the status of their rebates. That work was completed by February 2002.

Since then, Helgeson’s own people have added several features. Those include Internet-based membership capabilities and an Internet-based key-from-image system, allowing the firm’s data-entry operators to type from information contained in online images.

Helgeson says the system Solutia provided was worth its $400,000 price-tag; and, like the other firms in this story, he has resolved to bring in consultants when necessary.

Just because you spend a lot of money on something, doesn’t mean it’s going to work, especially a custom-type application,” Helgeson says. “But we’ve been very happy."

Baby steps
Craig Zaligson, the president and founder of Midwest Diamond & Watch Co., has take baby steps into the world of e-commerce.

His company sells watches, diamonds and watch winders (wooden boxes that store mechanical watches and keep them wound). It has launched a series of e-commerce sites to help broaden its market: diamondsandwatches.com in 1997, watchwinders-watchwinders.com in 1999, and watchwindersplus.com in 2003.

Voyageur Information Technology, a St. Paul-based Web design firm, built and manages his Web sites. He has worked with the firm since 1997.

But Zaligson is no technophile. For example, until recently, he didn’t want to pay the expense of adding shopping cart capabilities to his Web sites. Instead, customers would send their credit card information through the Web site and he would process it manually.

“Craig’s not super in-love or comfortable with technology,” says Suzanne McGann, Voyageur’s president. “But he’s always understood the vision of what the Web could do for his firm.”

And Zaligson says he has been very happy with his Web business, which has allowed him to double his sales since 1997. His one-man company made $1 million in sales last year, and generally grows 25 percent to 30 percent a year, he said.

Christmas is his biggest season, by far. Last December, Zaligson received 150 Internet orders averaging $400 a piece for a total of about $60,000.

The Web sites have also helped the firm reach new customers in exotic locales such as Kuwait, Chile and Singapore. Today international sales comprise about 10 percent of Zaligson’s revenue, but they make up 15 percent of the profit because foreign customers buy more expensive items.

Zaligson eventually consolidated all his technology needs into the firm, including Internet service, e-mail and Web site maintenance.

Before that, he had a separate ISP and e-mail provider.

“I’d run in to a problem and one would always blame the other,” he says.

He has paid Voyageur about $40,000 over the last five years. Those expenses includes $8,000 for the development of a shopping cart system, about $20,000 in Web design services, and $1,500 a month for the last year for search engine advertising and services from Yahoo and Google.

But he says the price-tag has been well worth it.

They help me “increase my business and lower my stress level,” Zaligson says. “That’s really important for a one-man shop. All I have to do is pick up the phone and my problems get solved.”

Still, Zaligson is not in love with the Internet.

It’s “like any technology,” he adds. “If you don’t embrace it, it will run you over.”