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Quarterly ROI: Foolproof or Foolishness?
Chasing quick returns on strategic initiatives does not make much sense--or does it?
For the rest of the August 2002 issue of CRM magazine please click here
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Conventional wisdom says companies should roll out CRM modules slowly, keep tight tabs on costs and demand to see quick returns on investment (ROI) from their enterprise software vendors. Indeed, nary a deal is made without a proof-positive, six-month ROI. But Albert Stroucken, chairman, president, and chief executive of H.B. Fuller Company, a 115-year-old global manufacturer of specialty chemical products, posting $1.27 billion in annual revenues, has a different opinion. In the dry Arizona heat at AMR Research's recent executive summit, Stroucken gave the more than 800 attendees a dose of cool courage, advising them to make strategic IT decisions based mostly on "a gut feeling that this is the way to go." What about costs and ROI? "Tracking them is practically impossible and a waste of time," Stroucken says. Stroucken's words ring of heresy, but his thinking is sound. Enterprise CRM is as weighty and complex an undertaking as ERP. Simply put, CRM is not software, but a strategic decision to transform your company. It is the kind of groundbreaking project whose rollout should not hang on quarterly returns. "If you're going to do it, then you better be willing to commit huge resources and see it through to the end," Stroucken says. "Can you live with this?" To be fair, H.B. Fuller Company is not embarking on a CRM project yet and probably will not do so with a packaged offering. Stroucken is considering whether his company has the "mindset to actively use CRM tools." And so far, Stroucken is not impressed with packaged CRM solutions on the market today. "Based on what I've heard so far, I don't think we would make an investment in CRM and buy a CRM package and try to implement it," he says. "We probably would have to put something together that fits us initially." Call it lessons learned. A few years ago H.B. Fuller picked Prism as its ERP software vendor, and the vendor eventually went belly up. "We also made many decisions on pursuing purchased software solutions that in fact were not solutions at all, because they required us to change our processes and there was no inherent willingness in the organization to do this," Stroucken says. "So we bought a nice toy, and now no one's using it. We've cut down on those."
Will H.B. Fuller take on CRM? Stroucken is still waiting to have that gut feeling. It is a feeling broken down into a simple formula. "We make the decision based on the potential impact to the company, and the risk of us putting money into this direction," he says. The gut check is "possibly finding out two years from now that it didn't work." AMR Research, though, claims that the CRM market still adheres to the ROI-or-bust mantra. The current environment will only support pragmatic, tactical CRM deals based on solid ROI justifications, an AMR Research report concluded. Moreover, the CRM market cooled considerably last year, posting a paltry 6 percent growth. And this year does not look much better: AMR Research predicts only 10 percent growth. But the long-term outlook is rosy, with a 19 percent compound annual growth through 2006. Joanie Rufo, an analyst at AMR Research, agrees with Stroucken about having a long-term CRM vision. "If you have an enterprise CRM objective to reorient your company around the customer, then that is without question not a six-month process," she says. "[Stroucken] is clearly looking at it from a business process--and it's phenomenal." On the other hand, CRM is composed of such bite-size applications as sales force automation, call center routing, marketing campaign management, and Web self-service "that can and should be a six-month process," Rufo says. Stroucken also understands his job is "a balancing act to meet quarterly earnings per share, while taking steps to ensure the business is alive and kicking ten years down the road." And CRM clearly falls in the latter category. "Where we've been able to get some benefits is making sure that what we are spending on IT is related to our long-term, strategic business objectives," Stroucken says. "This is where you really get the value." --Tom Kaneshige
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