Business Model Shake-Up
Dendrite's new president and COO is part tsunami and part gamesman.
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When Paul Zaffaroni officially took the day-to-day operational reins at Dendrite International Inc. late last year, his plans to put the company on a fast growth track meant shaking up the CRM software and services firm's outdated business model.

Given the economic climate, this year's projected revenue growth will be between 8 percent and 15 percent, says Zaffaroni, formerly a senior executive at Acxiom Corp. Dendrite reported revenue of $214 million in 2000 and an estimated revenue of $225 million in 2001. That falls below Zaffaroni's goal of 20 percent to 25 percent annual growth over the next six years.

To get back on track, the company needs a fresh approach and new partnerships to penetrate accounts. "We are opening up our business model for the first time," says Zaffaroni of the changes he has made to Dendrite's go-to-market strategy. "Last August I started conversations with the Big Five consultants and they were very receptive to partner with us, mainly because they are finding our solutions fit the requirement of the client. Before, we looked at them as competitors."

Zaffaroni's multipronged strategy includes a decentralized organizational structure; a plan to create partnerships with Big Five consulting organizations to extend Dendrite solutions; an intent to building on an existing relationship with Oracle Corp.; the assigning of profit and loss responsibility for each company division; and plans to build a training and help desk business.

Dendrite's new president says that a primary path to growth will be to increase deeper penetration with pharmaceutical clients through its Clinical Trial Services Division that cuts the time and cost of clinical trials by allowing pharmaceutical companies to outsource this process. Zaffaroni says the division, which has revenues of $25 million, can be grown into a $100 million a year business.

Zaffaroni also wants to create a training and help desk business offering services not only to clients but to other companies. He envisions growing that unit from its $20 million yearly run rate into a $100 million business over the next five years.

Zaffaroni is bringing to Dendrite a fresh way of thinking. He has changed what he considers one of the company's key obstacles to growth: its organizational structure. The company, he says, had only two executives that owned all of the customer relationships. But that has changed. "starting last month we have 12 executives who will be with all our customers. What I want to see is more executives with more customers on more of a frequent basis," Zaffaroni says.

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