Collins is set for his debut against Motherwell at Easter Road on Sunday after joining the Scottish Premiership side from Swindon this week.
The 22-year-old netted 18 times for the League One side last season but Fenlon believes the 6ft 2in striker will provide more than just goals to the team.
Fenlon, whose other new forward addition Rowan Vine is suspended for Sunday's game, said: "It was important we got another striker in. It was a position we needed to strengthen and we've done that with a real quality player.
"We watched him a few times at Shrewsbury and then he got himself a real good move from Swindon and did really well. Fortunately we managed to take him from there and bring him to the club.
"He will be a big addition. Obviously he has a very good goalscoring record but he is a real centre-forward and that's something we have missed."
Hibs had something more than a centre-forward last season in the shape of Leigh Griffiths, who terrorised defences with his directness and his ability to score from outside the box.
But Fenlon does not expect Republic of Ireland Under-21 international Collins to be overawed by the task of replacing Griffiths, who returned to parent club Wolves after scoring 28 goals during his second loan spell.
"It can be a challenge to people," Fenlon said.
"It depends on the way you look at it as a player. James is the type of player that will embrace that.
"He is a completely different type of player to Leigh as well."
- Sports & Recreation
- Scottish Premiership