Microsoft



|Overview | | |“Microsoft Financing’s responsiveness was a huge value during the proposal process. They moved much |

|Country or Region: United States | | |more quickly than anyone else did.” |

|Industry: Security fixtures and decorative | | |Amy Sabala, Senior Director of Corporate Finance, Hampton Products |

|hardware | | | |

| | | | |

|Customer Profile | | | |

|The Hampton Products International Corp. is a| | | |

|global marketer of security and architectural| | | |

|hardware products. Headquartered in Foothill | | | |

|Ranch, California, Hampton manufactures and | | | |

|distributes a full range of security and | | | |

|decorative hardware products for home, | | | |

|office, travel, and automotive use. | | | |

| | | | |

|Business Situation | | | |

|With rapid growth outpacing the company’s | | | |

|current enterprise resource planning system | | | |

|(ERP), Hampton decided to overhaul its IT | | | |

|infrastructure with a solution based on | | | |

|Microsoft Dynamics® AX software. The problem?| | | |

|How to pay for it. | | | |

| | | | |

|Solution | | | |

|Through Microsoft® Financing, Hampton was | | | |

|able to implement the Microsoft Dynamics AX | | | |

|solution, with little money down and a | | | |

|consistent, predictable framework for | | | |

|payments. | | | |

| | | | |

|Benefits | | | |

|World class software at a predictable cost | | | |

|Estimated annual cash-flow benefit of | | | |

|U.S.$1.8 million | | | |

|Projected five-year return of $9.1 million | | | |

| | | |Founded in the 1970s to build weatherproof locks for spare tires, Hampton Products International |

| | | |Corp. has grown by nearly 700 percent over the past decade alone. When the resulting stress on its |

| | | |enterprise resource planning (ERP) systems started to become a problem, Hampton looked to implement a|

| | | |new system from a top-tier provider. Microsoft® Financing helped put that package in place without |

| | | |putting a strain on the operating capital or lines of credit Hampton needed to sustain its growth |

| | | |model. |

| | | | |

|[pic] | | |[pic] |

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Situation

Hampton manufactures and distributes high quality home décor, lighting, security and automotive accessory products to national retail chains throughout the United States. Hampton’s creative merchandising programs, outstanding service levels and on-time customer delivery have enabled the company to expand exponentially over the past decade.

With Hampton’s high rate of growth, its former enterprise resource planning (ERP) system was not flexible enough to manage the company’s business. As a result, many workarounds and third-party applications were created and implemented to help keep up with the demands of Hampton’s growing customer base. Also, the company’s 2005 acquisition of Keeper Corp. created an integration problem in consolidating the two companies’ technology platforms.

“We were running into a number of different capacity and complexity issues that our current system could not handle,” says Amy Sabala, Senior Director of Corporate Finance at Hampton.

Simply put, the company had outgrown its ERP system. As its customer requirements became more complex, and its manufacturing and global supply chain processes became more dynamic and more complicated with longer lead times, the current ERP platform could not sustain Hampton’s continued growth—or meet the requirements of large customers such as Wal-Mart Stores, Inc., The Home Depot, Lowe’s, Ace Hardware, and others, to which Hampton is a supplier.

After a lengthy proposal process, Hampton selected Hitachi Consulting to be the systems integrator of the project. “We worked closely with the Hampton Products team to clearly understand their critical business issues and architect a solution that would fit their operation requirements today, while supporting their aggressive growth objectives moving forward,” says Greg Carter, Vice President of Hitachi Consulting.

Ultimately, the company settled on Hitachi’s proposed implementation of Microsoft Dynamics® AX business management software, with a vision to provide integrated business processes, applications and visibility across the organization, including visibility of financials, marketing, research and development, supply chain, distribution, production, and human resources.

The solution would consolidate Keeper’s manufacturing and distribution processes, improve collaboration with global trading partners, optimize the product development life cycle, and standardize the entire organization on a stable technology platform that could sustain Hampton’s growth well into the future. It was exactly what the company needed.

However, with a company in such rapid growth mode, having recently acquired a subsidiary and expanded operations to include offshore processes, Hampton’s operating capital and bank lines of credit were crucial business assets that the company was reluctant to tap.

“We’re in growth mode, so we don’t retain and hold a great deal of cash,” Sabala says. “Once the decision had been made, it was up to me to figure out how to pay for it.”

Solution

Compounding the problem was the fact that a mere two weeks would elapse between the decision to go with Hitachi’s plan and the time the deposit was due. The company didn’t want to purchase the technology outright, so Sabala looked into several avenues for financing the solution. Using operating capital would put pressure on the company’s revolving line of credit. A term loan would take more time than the deal allowed.

“Because we’re growing right now, to put more pressure trying to finance it out of our operating capital wasn’t a good option for us,” Sabala says.

Furthermore, equipment-leasing companies that Hampton had used in the past had competitive offerings but were unwilling to finance the services portion of the deal.

“And Microsoft was willing,” Sabala says. “They were willing to—in full—finance the software and the implementation. They were exceedingly responsive and very easy to deal with. Ultimately, Microsoft® Financing was able to finance the whole package.”

According to Carter, who helped facilitate the deal, the level of service played as big a role in the decision as the ability of Microsoft to finance the entire deal with a competitive rate.

“Their level of service helps you win business,” Carter says. “When you’re working with a financial executive, the ability to back up what you’re saying, stand behind the offer, or even sweeten it, creates credibility and trust. Some other financial vendors can’t always deliver on that.”

Benefits

As with most major software platform overhauls, the benefits of the Microsoft Dynamics AX software are clear: more efficient use of IT systems, improved administration and maintenance of IT systems, greater efficiency in business processes and user procedures, increased visibility into supply chain operations, shortened cycle times, improved responsiveness, and a reduction in on-hand inventory—all of which lead to improved cash flow.

Hitachi estimates an annual cash-flow benefit for Hampton of more than U.S.$1.8 million between the revenue generation opportunities and cost savings. All told, Hitachi estimates the software will pay for itself in a little more than eight months. The total five-year cost-benefit analysis projected a return of $9.1 million against an outlay of just under $1.5 million.

World Class Enterprise Software at a Predictable Cost

Through Microsoft Financing, Hampton was able to obtain all these benefits with little money down and a consistent, predictable framework for payments.

“They know every month what their payment is going to be, and it’s not going to go up and down depending on how many people are on site or what they’re going to buy,” Carter says. “The other benefit is that because they leveraged Microsoft Financing they were able to purchase all of the software required for the project up front in the initial purchase and bundle in the services, so those costs are locked in and paid for.”

Microsoft Financing was also able to work through an organization called California Manufacturing Technology Consulting (CMTC), a facilitator of federal grant money for manufacturers and distributors that invest in technology to improve their work force and keep jobs in the United States.

“Through that program, they were able to reduce the services cost to this project by 7 percent, even higher for training purposes,” Carter says. “The savings is significant when you’re talking about more than $1 million in services. And that wasn’t something that any of the other banking faculties were able to address.”

High Business Value

Even with all that extra value in the financing package, according to Sabala, the decision to go with Microsoft Financing for the Hampton implementation came down to fundamental business.

“Microsoft Financing’s responsiveness was a huge value during the proposal process,” Sabala says. “They were very communicative and responsive, and they moved it along in just two weeks from beginning to end. They moved much more quickly than anyone else did, they came in with an aggressive offer, and, in the end, I was very happy to award Microsoft Financing the business.”

Microsoft Financing

From smaller to large-scale organizations, Microsoft Financing and its finance solutions partners provide affordable, innovative financing programs to customers in 14 countries for licensing and financing their Microsoft solutions—helping customers around the globe acquire the IT solutions they need to stay competitive. 

For more information about Microsoft Financing, go to:

financing

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| |Software and Services

■ Microsoft Financing

■ Microsoft Dynamics AX |Partner

■ Hitachi Consulting Corp. | |

This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.

Document published June 2008 | | |

For More Information

For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:

For more information about Hitachi Consulting Corp. products and services, visit the Web site at:

For more information about Hampton Products International Corp. products and services, visit the Web site at:

“We’re in growth mode, so we don’t retain and hold a great deal of cash. Once the decision had been made, it was up to me to figure out how to pay for it.”

Amy Sabala, Senior Director of Corporate Finance, Hampton Products

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“They were willing to—in full—finance the software and the implementation. They were exceedingly responsive and very easy to deal with. Ultimately, Microsoft Financing was able to finance the whole package.”

Amy Sabala, Senior Director of Corporate Finance, Hampton Products

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