Intelligent Enterprise

Thinking about the potential ROI of your customer relationship management (CRM) project should start during the selection process. Before you write an RFP or start talking to vendors, you need to do some homework to ensure that you're on the right track to maximize ROI.

IDENTIFY THE PROBLEM — AND THE SOLUTION

Before you start thinking about vendors, you should define your problem in clear business terms. Do you need to improve management visibility into the sales pipeline? Reduce customer support costs or improve customer support? Reduce customer related administrative overhead? Making your CRM challenges specific will help you determine which technologies or components are most likely to deliver ROI and how you can prioritize your development and deployment plans. Most companies' CRM goals fall into a couple of main categories:

• Improved sales performance
• Improved management visibility
• Improved customer support
• Improved marketing
• Reduced costs

If your CRM goals fall into more than two of these categories, you'll likely want to prioritize one over the other and plan a phased deployment. Depending on how interlinked the people impacted are, you may want to consider two different projects altogether.

Regardless, now is the time to start thinking about the executive sponsor or project champion who can help you keep things on track if politics or budget issues get in the way. Getting feedback and support early in the process will save you time and energy down the road.

It's also a good idea to know at this point what your likely budget is, how flexible it is, and what your procurement officer or CFO will be looking for in terms of business justification. If you know walking into the project that you'll need to show a six-month payback period, for example, you can plan accordingly.

Make the Short List

Regardless of your relationship with existing vendors, previous experience, and technology environment, you should make a short list of potential vendors and give them a fair evaluation before you make a decision. Your short list should be easy to define based on these factors:

• Your CRM goals. The vendors whose functionality meets your needs will depend on whether you're looking for improved sales, improved reporting and forecasting, improved support, improved marketing, or a combination of different customer-related technology. The vendor profiles section of this report provides profiles of many of the leading vendors.
• Your existing environment and IT philosophy. Do you have existing databases, order systems, or contact lists that will need to be integrated or migrated into your CRM solution? Do you expect to do your own development or use consultants or systems integrators? Are you comfortable outsourcing your sales and marketing data in its entirety — or in part? Answering these questions will help you determine whether a large-scale CRM infrastructure, a hosted solution, a point solution, or a broad solution is likely to deliver maximized ROI.
• Your user dynamics. Are the employees you expect to use the solution technology savvy and open to change, or are they the ones still using pencils and paper to track leads? The greater the magnitude of the change you expect them to make, the greater the risk that adoption will slow the ROI of your project. You'll want to explore usability of the different solutions based on your users' level of experience and comfort with technology, the potential cost of customizing them to better align with you current profile, and your ability to easily and quickly customize them as your needs change.
• Your budget. CRM solutions such as Siebel and SAP can cost millions of dollars to deploy and require a team for ongoing support and maintenance. On the other end of the spectrum, Microsoft CRM and FrontRange (for example) can cost considerably less. You can expect a hosted solution to have a minimal upfront investment and from $500 to $1500 per user per year.

Clearly defining your requirements and characteristics in each of these key areas will prepare you for the next step — evaluating each individual solution's ability to deliver returns based on the costs and benefits associated with a deployment.

Check Resumes

Once you've identified the likely vendors to deliver the best solution for you, you'll want to check their references — and this doesn't mean just reading case studies on their Web sites. Look to independently developed case studies and your own interviews with references to learn about their decision process, project successes and challenges, and whether or not their spending — and benefits " met expectations. Any vendor that won't give you names and numbers of references to call is sending up a red flag; it either doesn't have many customers or is not sure its customers are as happy as its marketing says.

Find a Partner (Check Resumes, 2)

In the CRM world, few companies will deploy a solution without some help from external consultants or systems integrators. Selecting and planning how you work with consultants is just as important to your project's success as the technology you choose. It is not enough to take the solution vendor's word for the ability of a partner or consulting firm — you'll want to vet the service provider just as you evaluate the vendor: by checking references and carefully planning how you'll interact with both the vendor and the service provider and agreeing in advance who takes the lead in taking responsibility for a successful deployment.

AVOID A PITFALL: CHECK REFERENCES

One company deploying Siebel said, "Our main problem was inexperienced consultants. They were a partner of Siebel and were recommended by Siebel, but they didn't have the experience to show us the maximum benefit and ways to exploit the solution."

Justify Your Investment

Once you've identified your goals and selected a short list of vendors, you can use a structured evaluation of costs and benefits to determine the best solution in terms of ROI and build the business case for moving forward. On the costs side, you'll want to consider the initial and ongoing software, hardware, consulting, internal personnel, and training costs associated with the project.

Here are a few guidelines to keep the ROI from your CRM project on track:

• You should spend less on software and consulting than 70 percent of expected annual direct benefits.
• You should be able to deploy and achieve some returns in fewer than six months (even if it's only a pilot).
• For a hosted solution, you should see benefits in fewer than 60 days.
• Consulting costs should not be more than twice your initial software investment.
• Training users should take fewer than four hours.