 Beth Eisenfeld Analyst Gartner Group melissa.hennesey@gartner.com |
Q. What are the four major tools used to develop CRM economic justifications? The major tools used by clients to support their CRM economics are TCO, benefit calculations, the project work plan and ROI (including break-even analyses). TCO Model: The TCO model views costs over time for a CRM project holistically across the enterprise. It includes people, process and technology costs and is a fundamental decision support system tool. Benefit Calculations: Many project managers are unclear about calculating benefits. To calculate CRM benefits, begin with pertinent data (i.e., turnover rates, head count, training costs, operating revenue and contribution) from sales, operations, human resources, training, public relations, finance, marketing and customer service and support. Some enterprises have used Activity-based management (ABM) frameworks to assign fully loaded costs to activities performed within sales, marketing and CSS. When determining the costs and benefits for each of these items, it is crucial to achieve consensus from each functional and departmental champion, as well as the CFO. Project Work Plan: The application domains of CRM (including TES, TEM and CSS) require unique, individual work plans with specific phases, activities and tasks. Work plans must be broken down into manageable components (e.g., project management, business process design, application design, information management, infrastructure and change management). Each domain plan must be aligned with the overall CRM vision, business process and infrastructure plan, which details execution of the strategies, tactics, process, skills and technology. Each project work plan must also be tied to the costs and benefits. ROI: ROI (including break-even analyses) is a financial analysis of how a project affects an enterprise's financial statement. To fully appreciate the ROI expected as a result of CRM, a full business-case analysis must be completed prior to undertaking any initiative. The focus should be on understanding the total costs, as well as benefits, of undertaking a CRM initiative and the factors that may affect the achievement of the expected return. Bottom Line: Successful enterprises need to develop a measurement system that captures the information necessary for calculating costs and benefits prior to CRM investments. These measurement systems will be used to recalculate costs and benefits during pilots, rollouts and throughout ongoing life cycle support for CRM implementation. |