Sum this up and it's easy to see why the immediately visible costs don't matter. Examine your costs at a holistic level; don't goof around with simple TCO spreadsheets.
Business Constraints May Stymy CRM Benefits
There's some good news here. Vendors pay industry analysts to quantify the productivity, revenue and profitability impacts of a superb CRM implementation. Great. Use the data. Analysts show revenue improvement numbers of 30 percent or even more. To misquote the immortal words of Sybase founder Bob Epstein, "These are the numbers that the vendor guarantees you'll never be able to achieve."
Let's look a little deeper. A killer CRM implementation can mean real revenue upside when automation, follow-through and coordination are the underlying business problem. In a multi-channel sales force — particularly one where renewals and repeat business drive profitability — it really is possible to get important top-line growth. Thanks to the cost structure of sales organizations, incremental investment in CRM means that every dollar of increased sales will have solid contribution margin. Increased profits never hurt.
However, you should calibrate expected revenue upside against four constraints:
- Is there really 30 percent more demand out there for your current products or services? Is the only thing blocking 30 percent more revenue really marketing, sales or support execution? How much of a bottleneck is your lack-of-wonderful CRM?
- If you did have a perfect CRM, would your sales team's win rates go up? Would they close a month sooner? Is there that much slack in your sales function and supporting processes?
- Is your company good at change management? Are you successful at business process updates and behavior modification? Are you a learning organization?
- For the parts of a bleeding-edge CRM that touch channel partners and end customers, are they culturally willing to play? Or would a rapid switch to automation turn some of your existing customers off?
Let's try to up-level this a bit. More revenue with less profit is pointless, so let's optimize for maximal profit dollars. Doing that focuses your attention on the "opportunity costs" minimized, the pitfalls avoided, and the quality of executive decisions. Sure, those sound fuzzy, but they matter: Ignoring these factors led to Edsel, New Coke and Microsoft Bob.
CRM Investments Have a Fuzzy Bottom Line
That's the problem. The important stuff about CRM investment is tough to quantify before the project is completed. Call it Schrodinger's Cat for IT. I'm all for business cases — they do matter — but with CRM systems, the bigger the decision you try to make, the more costly and inevitable estimation errors become.
From the point of view of pure decision theory, the best decision you can make is the smallest decision you can make, and make iteratively. That's the theoretical underpinning of why an agile approach works better for CRM.
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