Coming Up Roses

Back in 1910, 15 florists banded together to form what was arguably the first e-commerce system. Calling themselves the Florists' Telegraph Delivery group, their goal was modest: to exchange out-of-town orders for flower arrangements.

Today, Downers Grove, Ill.-based FTD Inc. has annual revenue topping $300 million, 20,000 member florists in the U.S. and Canada and a total of 28,000 members in 152 countries worldwide. The florists are tied together via FTD's Mercury network over platforms that date back as far as 25 years.

"Back when there was no easy way to link businesses and still make any money, FTD was driven to develop a network that was based on its business model," says Michael Dortch, an analyst at Robert Frances Group Inc. in San Francisco. "It was text-based and simple to use because they understood who they were dealing with -- florists, not technologists," he says.

"It's almost too easy to look retrospectively and laud FTD for what it did: identifying the business problem and then seeing if there's a technology that fits," Dortch says.

A Network Blossoms

Coming Up Roses
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FTD's Mercury network began in 1978 as a modem-to-modem dial-up network. A florist would key the customer's order into a Mercury console, which would dial FTD's mainframe in Downers Grove. The mainframe would dial the recipient florist, where the order would print out. FTD acts as the clearinghouse for payments to florists, collecting 7% of the payment order, plus a monthly network connection charge.

"[Business-to-business] in 1978 is very early -- at least a decade earlier than other industries, such as automotives and machine tools," says Vish Krishnan, a professor in the management department at McCombs School of Business in Austin, Texas.

The influence of FTD's model can be seen in the automotive industry, Dortch says. "Go to any auto repair shop and you'll see a text-based, green-screen, dial-up machine, designed for easily and quickly getting information like part numbers," he says.

Mercury 3000 debuted in 1989, featuring dumb terminals with 24-line displays. Those terminals were superseded by DOS-based computers.

"We have florists still operating on all of those machines," says Liz Eckhardt, vice president of technology at FTD. The Mercury Advantage system, running on Sun Solaris, added industry-specific functionality such as accounts receivable and a general ledger.

"Management at FTD were pioneers in making the e in e-commerce disappear," Dortch says. "Commerce is what it's about. The minute you frame the question 'What technology is the best?' you've missed the point. The question has to be 'What business am I trying to solve?' And 'Who are the primary actors going to be?' Then designing a system to fit. That's what FTD did."

FTD.com, the business-to-consumer flower-ordering Web site, followed in 1994. FTD.com integrates with the Mercury network, which automatically sends orders to the appropriate florist and handles billing.

Ultimately, what Web customers come back for are well-integrated back-end operations, says Krishnan.

"Attracting customers isn't trivial," Krishnan says. "But it's how you link to the rest of your operations, your supply chain, having the right items in stock, getting the fulfillment, the billing done right, that's a challenge."

Y2k Spurs Doubts

The time between 1996 and 1998 was difficult for FTD. The company was running its Unisys Corp. Mapper-built mainframe applications on a dial-up packet-switched network. The system wasn't Y2k-compatible and had to be replaced. FTD considered but ultimately rejected Java applications running on network computing devices.

Critics at the time, including former FTD IT staff, were vocal with doubts that FTD had personnel knowledgeable enough about its legacy systems to effectively transcribe them to Java and build a thin-client, network-centric system (see story).

Eckhardt, who joined FTD in the quality assurance department in 1997 and was heading development efforts for the Mercury network by 1998, disagrees with that assessment. "We have some people who have been here for 20 years," she says. "We have a great retention rate because IT people enjoy working on new things, and we're always building and adding to our systems."

While FTD was pushing ahead with development on Windows platforms, many of its florists still relied on text-based systems running on dumb terminals and DOS-based systems running on first- and second-generation PCs. "Whatever we went forward with, we also had to continue supporting those older platforms," Eckhardt says.

Probably a technologically smart move, says Mitch Kramer, an analyst at Patricia Seybold Group in Boston. "Lots of these old systems supported many, many transactions per second, and they've been tested when business hit big peaks" -- at times like Mother's Day in FTD's case, he says.

The path FTD chose was to migrate Mapper applications' functionality to the IBM AS/400 minicomputer, continue developing Mercury Advantage, and in 1998, add and integrate its Windows-based Mercury Wings platform. Mercury Wings comes with order sending and receiving, an electronic order log, floral directory search and lookup services, a customer database, business analysis and marketing templates to use with Microsoft Office.

"We realized that while Wings served a particular segment of our market, another segment either couldn't afford it or already had a PC," Eckhardt says.

Mercury Direct let florists -- about 2,000 today -- who had PCs, Internet access and Web browsers, access FTD services and send orders to other florists via the Web.

In March 2000, FTD.com was relaunched. Management of the site was outsourced to Intira Corp. in Pleasanton, Calif. Then on Mother's Day 2000 came the next IT enhancement: FTD.com's wireless flower-ordering system. FTD reached agreements with Sprint PCS Group and Redmond, Wash.-based AT&T Wireless Group that gave FTD key screen positions on the carriers' wireless Web networks.

What's Ahead

Mercury Advantage now runs on Linux and offers automated order entry and point-of sale capabilities, automated credit-card processing, auto wire reconciliation, a full accounting package that includes accounts receivable and sales analysis, and access to all major floral directories for ordering flowers and supplies.

By tapping into FTD's supply chain, member florists get access and efficiencies they probably couldn't get on their own, Krishnan says. "Suppliers aren't usually all that eager to exchange information," he says. "But if you're the big player in that supply chain -- like FTD -- you can coax others to do so."

"What FTD seems to be doing is similar to what cooperatives try to do with collective investments in technology," Krishnan says. "But what is interesting is that they are not a cooperative."

Optional software modules add payroll and time clock, accounts payable, a general ledger and Zap It, an address validating application. A flat network connection fee offers basic management applications and e-mail. As the size of the business scales up, further management modules are available.

Florists that have a dozen or more locations and bring in several million dollars a year need more sophisticated management systems. They can select from a menu of FTD services that includes applications that are similar to standard enterprise resource planning (ERP) packages but are developed in-house by FTD and tailored to the florist business.

The ERP-like software was a challenge for developers, Eckhardt says, because, although FTD offers training and phone support, many if not most member florists operate with minimal or no on-site IT support staff. "FTD grew up doing this and started doing it when there were no products [such as today's ERP packages from PeopleSoft Inc. and SAP AG] to base it on. They probably know more about the florist industry than anyone else," Kramer says.

Other industries noted FTD's success and followed suit. First Data Corp. "offered their capabilities as a service in the financial services industry," Krishnan says. "Covisint is attempting to do this now, but in the automotive industry."

Other FTD services let florists "take a business snapshot at any time," Eckhardt says. "They can go back and see, for example, how many teddy bears they sold between Feb. 12 and Feb. 14 of last year to see how many they should order this year."

A marketing feature lets florists "slice and dice their customer data any way they want," Eckhardt says. They can use the information to, for example, identify their top 10 customers, determine how many poinsettias business customers ordered at Christmas or send out birthday reminders.

The company continues to roll out new technology products. Last month, it added FTD InternetLink, an Internet service provider for member florists. Available to FTD florists using PCs, Internet access costs $19.95 monthly and includes up to five e-mail accounts.

As Web use increases, expectations change, Eckhardt says, "and we'll have to provide services to meet those expectations." The Mercury network provides delivery confirmation for florists. Consumers want that same functionality. "It's the No. 1 need requested," she says.

A mobile network isn't far off, she says. The model calls for a wireless device in delivery trucks so that when a delivery is made, the driver can enter that information and have it relayed via mobile phone or other wireless device to the consumer.

But FTD's business model calls for new technology to be available, not mandatory, Eckhardt says. "Florists are traditionally family-owned businesses," she says. "They tend to like the same way of doing things. Then a new generation comes in, and they want new technology, they want to do things faster. We have to provide for both groups."

Lais is a freelance writer in Takoma Park, Md. Contact her at sami_lais@computerworld.com.

Copyright © 2002 IDG Communications, Inc.

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