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The Risk of Investment
Identifying and minimizing risks needs to be part of the ROI equation.
Posted Mar 1, 2006
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The standard definition of the word risk is the possibility of loss or injury. However, an alternative meaning that is much more relevant to the world of enterprise software is "the variability of returns from an investment." There isn't a single organization that authorizes a technology purchase without some assurance of ROI and yet the majority of companies fail to properly identify and minimize risks in order to maximize return. These risks come in a variety of forms-internal risks, vendor risks, IT risks, market risks, et cetera, and each needs to be carefully evaluated as part of the overall ROI equation. This is particularly important when evaluating customer service solutions, as they extend across numerous applications and departments across the enterprise. By moving beyond a single, dogged focus on costs, companies can more accurately calculate the return on their investments. Key risk assessments include: Organizational risks. This involves assessing the company's own ability to undertake the project. First, consider implementation timing in terms of available resources and skill sets. Next, take an objective look at organizational readiness. A customer service strategy may involve an evolving business model through a chain of various processes and organizations with the company, from HR to accounting to marketing to distribution. Be sure the company is ready to undertake the magnitude of change required for this far reaching a project. Solicit input from senior managers and strategic planners to ensure the project is congruous with the objectives of the organization. Aligning customer service goals with overarching corporate goals lessens the chance of project dollars being pillaged for other initiatives. Another important consideration often overlooked is user acceptance. Lack of user commitment occurs when employees aren't convinced of the need for a customer service technology strategy and implementation. Gaining user buy-in is a good way to ensure that all critical processes are incorporated into the software. In addition, users who are involved early on often become the greatest advocates, adopting the new technology immediately.
The likelihood of acceptance can be difficult to gauge up front. Fortunately, there are many steps you can take to minimize organizational risk. One large financial company took numerous proactive steps to ensure a commitment across multiple departments. First, the implementation was accompanied by a high-profile internal communications campaign, which included a count down calendar designed to build anticipation ahead of the go-live date. More important, employees were invited to visit the physical space where the customer service system was being set up so they could see firsthand what was being implemented and why. Staff members were given a chance to navigate around the software, which was customized to reflect the well-known look and feel of the existing business, and provide instant feedback and new ideas. Team feedback sessions were held four weeks prior to go-live to make sure all necessary solutions were deployed. To manage customer service projects effectively, set tangible benchmarks and keep stakeholders informed as each are met. Follow a phased approach to implementation. This has two benefits. First, it gives users an opportunity to learn and adapt to new processes in stages. Second, and more importantly, it provides an opportunity to demonstrate early successes as incremental metrics are achieved. Technological risk. Companies need to evaluate technological choices through a number of filters. Is the technology markedly different from what is currently in place? If it requires an entirely new operating system or application server, are the support resources in place to maintain this mission-critical system? Is it aligned with the direction the company is moving in? For example, deploying proprietary technology in an environment that is moving toward Linux or other open technologies could pose a problem. Many SAP implementations faced similar issues; the software had its own proprietary programming language. Finding and retaining SAP programmers became a painful and expensive proposition for many. Be sure not to lose sight of the end goal. It may seem counterintuitive, but CRM initiatives are at risk if too much focus is placed on the technology itself. Build processes around business drivers, not around the proposed technology. After all, without a clear business strategy, the technology is simply managing transactions instead of improving customer relationships. The goal is to move toward a more customer-centric environment. Another concern with technological purchases is the amount of integration needed. Determine how much customization and integration will be needed for the solution to work within the existing infrastructure. Also, consider how the proposed integration will impact the value of data retrieved through the integration point. Vendor risk. Talk with companies of similar size and business to glean lessons learned and best practices applied. Conduct due diligence on the company of choice to ensure the company is stable and mature enough to support you in the long term. Of course some vendors use a partner-driven model. Market risk. Uncertain times call for advanced planning. Consolidation of industry behemoths has many wary of new technology purchases, particularly when there is little synergy between the companies involved. Build these scenarios into your plan so your technology investment helps you stay ahead of the curve. Conclusion A successful CRM project encompasses people and processes that are aligned together to build stronger customer relationships. A customer service system affects the culture of the organization. Although each business is unique, there are many risk factors that are universal to all organizations, including vendor risks, technology issues, and market conditions. Careful consideration and planning up front as well as a strong partnership with the selected vendor empowers businesses to maximize ROI. Companies looking to implement a customer service technology should look to vendors that are willing to partner with them and bring best practices and expertise to the table. About the Author Paul Doughty is vice president of sales consulting for KANA Software. Please visit KANA at kana
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