The 2011 CRM Elite
During a challenging economy, it’s no surprise that organizations are forced to do more with less. Sometimes, cutting costs and streamlining operations are the impetus behind a CRM investment. That was certainly the case for one of this year’s Elite winners, which is now saving roughly $40 million per year thanks to its CRM installation. Conversely, another Elite winner impressed us by generating millions in revenue from the implementation of its global customer database. And others, like the Elite winner on the next page, have even broader aspirations, seeking to cut costs, streamline operations, sell more, gain better insight into product inventory and customer behavior, and improve customer satisfaction. All of these are attainable goals, as this year’s CRM Elite winners have proven.
Cincinnati Zoo and Botanical Garden
Archaic, Disparate Systems Demanded Integration
The Cincinnati Zoo and Botanical Garden last year hosted 1.3 million visitors. The 137-year-old, 71-acre park has a $26 million annual operating budget, but only about a quarter of the funding comes from government sources.
“Because we rely less on the government and more on our own to generate funds, we operate more as a for-profit organization. We’re driven to innovate because we have to,” says John Lucas, the park’s director of operations.
So it comes as no surprise that about two years ago, the park took a serious look at how its current systems were inhibiting revenue growth and customer service. It found a jumbled mess of multiple point-of-sales systems—one for ticketing, one for retail sales, and one for food and beverage sales—and a lack of insight into who came to the park, what they did while there, and where they spent their money.
“We knew we were doing a little more than $4 million in food sales, but it could take a week or two to run a sales report” because the staff had to sift through register tapes, Lucas explains.
In July, the Cincinnati Zoo turned to IBM and its business partner BrightStar to replace the siloed systems with one integrated solution powered by IBM’s Cognos business analytics software. All 54 POS terminals in the park were put onto Gateway Ticketing Systems’ Galaxy Point of Sales, and all revenue—every dollar spent by every guest—enters a central repository that can generate real-time reports. Cognos lets park management see real-time sales data to ensure inventory and staffing meet the demand.
Since installing the system, sales at the park’s 16 food and beverage concessions have increased by 25 percent, and retail sales have risen by 20 percent. Managers can also forecast precisely how much inventory to buy ahead of time; in the past, they guessed. “We are able to make much smarter buying decisions,” Lucas says.
Another benefit of the system has been improved marketing. For example, the zoo can track the ZIP codes of every visitor and better direct its marketing and promotions message to areas where it will get the most for its dollars. Using the customer location data, the zoo was able to cut about $90,000 in discounts on park memberships and admissions that weren’t providing a high enough return. In addition, $40,000 was cut from the marketing budget. And, as a result of better marketing, the zoo expects to increase the number of visits by 50,000 during 2011.
Another cost-saver for the zoo comes from better allocating staff to the areas of the park drawing the most attention, and doing so in real time. That kind of labor optimization is important because the zoo spends about $1 million a year on part-time labor.
Beyond the sheer financial impact, though, the park has been able to improve the service it provides to guests before, during, and after visits. Cognos enables two key groups to be targeted for special promotions: season pass holders and non–pass holders. Promotions can be tailored to guests’ spending and marketing efforts readjusted along the way.
If, for example, a member shows an interest in wine tastings, movies, or special exhibits that the zoo offers, management can tailor his membership package with discounts and exclusives to premiere shows, exhibits, and other events. Or, if a customer always buys lunch at the zoo but never buys anything in the gift shop, the zoo can stock his membership with food and drink discounts.
“Before, everyone got the same membership package. Now, we’re marketing to you in ways we know you’ll be most interested in,” Lucas says. “Now we can get a total picture of our members’ behavior at the zoo and break them into segments so…we can tailor the member benefits for each person.
“I’m blown away by our ability to get at the information that we never knew was available or that we knew was available but didn’t know how to get,” Lucas adds.
For Lucas, the difference between now and prior to the Cognos implementation is huge. Cognos “changed our business in almost every way,” he says. “We could not have been any more archaic three years ago. We were light years behind where we are now.”
Based on the results the Cincinnati Zoo has seen with Cognos, this year the park will integrate its payroll and labor scheduling into the system. The zoo also hopes to initiate a loyalty program. “We see this growing. Every time we look for one opportunity, we find two more,” Lucas says.
State of Illinois
Know When to Hold 'Em
The Department of Corrections (DOC) for the State of Illinois is a $1.34 billion operation that houses about 50,000 inmates, and in late 2009 it had a huge problem on its hands.
Contrary to Governor Pat Quinn’s express directives, some violent offenders had been released prematurely under an accelerated-release program that quickly became a source of political embarrassment when an Associated Press report was published before Christmas. Sean Vinck, then the intergovernmental affairs director for the governor’s office and now the state’s CIO, was asked to step in as special administrator to fix the problem.
“What we quickly discovered was that the DOC operated its IT in an absolutely archaic, antiquated fashion,” he recalls. “The number of years a person needed to serve in prison, how much good time credit that person was eligible for, when they would go on parole, and so on, all were being calculated manually on pieces of paper by state employees with little or no legal training.”
The DOC’s research department first reported to the governor in December that 1,718 inmates had been released early, then revised the number to 1,745, then to 1,754. To make matters worse, in the first two estimates, 200 offenders had been misidentified. This mistake became the subject of a New York Times article, titled “Illinois Governor Struggles to Identify Freed Inmates,” on January 23, 2010.
“The Times article asked correctly how we could run a correctional system and not know the history of who we were releasing and what crimes they committed,” Vinck says. “But it’s actually understandable if you know what IT resources, or lack of them, we had.”
As DOC’s CIO, Herbert Quinde, an IT modernization specialist, was assigned to find a solution, one that would enable the department to manage, track, and identify its offender population.
“The challenge was this: We had a mainframe application that had been deployed back in 1988, we had 41 client-server applications, and we had information that was being aggregated manually (on paper),” he says. “Each database reported separate information; no two client-server applications were integrated. As a result, it was very difficult to get real-time—or even near-real-time—authoritative data about anything.”
Initially, Quinde determined the solution would require a corrections application suite, a substantial operational data warehouse, data marts for subject-specific processes, a business intelligence reporting tool, middleware to coordinate the 41 applications, an ETL process, a document management system, and a Web portal for dynamic reporting. But, according to an earlier estimate, the price for such a solution would be at least $100 million. To put that in context, the annual IT budget for the DOC is $13 million.
Instead, he bought licenses for a CRM software solution that would let the DOC combine data from its databases with paper documents, which is the only way the information is provided by other agencies on which the DOC depends. The result would be an electronic master file that combines data and information from paperwork.
After scouring the possibilities, the DOC went with licensing Microsoft Dynamics CRM business software, which cost a little less than $4 million—a considerable savings over the previously quoted $100 million. One additional benefit is that Dynamics CRM would not require hiring a systems integrator.
“We have been able to use our own subject matter experts, who don’t have to be programmers,” Quinde says. “With Dynamics CRM, we’re working with templates, with processes that are well-defined. You don’t have to build a security model or a data model.”
By having a tool that allows development without having to do a lot of coding, Quinde says he could employ DOC personnel, instead of paying tens of millions for a systems integrator who would have to train for months to understand the environment.
“We project cost savings of $40 million per year in terms of hard-dollar savings and operational efficiencies,” Quinde says.
It Came Time to Standardize
When a global company grows as quickly as TMF Group has, it not only must stay on top of sales data but also employ one database across the entire corporation.
Amsterdam-based TMF is one of the largest independent providers of management and accounting services in the world, employing 3,500 in more than 70 countries. Founded in 1988, the company made 47 acquisitions between 2006 and 2009, mainly in Asia, Latin America, and the Middle East, including departments of Ernst & Young, KPMG, Grant Thornton, and Baker Tilly.
“Basically what we did was to buy an office, put a TMF sticker on the door, implement our quality standards, and worry about the integration of IT later on,” TMF project manager Robin Schumacher says. “As a result, our customer database was scattered over a gazillion applications. When we decided it was time to tap into our potential of cross- and upsell on a global level, we knew the time had come to construct a worldwide customer database. Of course we could have just implemented an SQL database, but, as you might imagine, if you don’t put the functionality on top of it, people are not very willing to maintain it.”
So, with corporate cost-cutting behind it and in the midst of a challenging economy, TMF decided its best strategy was to grow sales and employ a new corporate database to track growth.
“It seemed to us that the platform of choice was Microsoft,” Schumacher says. “We were migrating our e-mail solution from GroupWise to Outlook and our servers from Novell to Microsoft. So what we said was that we would adopt Microsoft Dynamics CRM if it provided us with the functionality we needed.”
TMF compared Dynamics CRM to competitors, and, while all of them seemed to meet TMF’s needs, none integrated as neatly with all of the other Microsoft components as Dynamics CRM did.
The first phase of the transition, which began in February 2010, cost the company about 350,000 Euros to implement last year—or $500,000 in today’s U.S. dollars—but the results were worth it, Schumacher says.
“What we saw instantly was that the lead time for creating RFIs and RFPs for our potential customers decreased by about 75 percent just by the sheer fact that we now have all our customer data available in one global database,” he explains.
TMF also combined Microsoft Dynamics CRM with a selling program, “Selling Success,” that lets employees seamlessly share leads with colleagues, manage customer activities, and identify opportunities for additional services. From the standpoint of customers, they no longer receive duplicate communications or unwanted offers, the TMF staff can better help them identify their needs, and many of the process improvements have led to faster responses. The upshot is improved customer satisfaction.
Now that TMF’s salespeople finally have a single tool for pursuing sales leads, their efficiency has risen sharply, Schumacher adds. Previously, the 80-plus sales offices tracked customers using a variety of applications, including simple ACT databases, Outlook, or in a spreadsheet of their choosing, he recalls. Then, each month, they needed to convert that data and report it using Excel.
“Now, at any moment in time, we can see our actual sales pipeline, which is refreshed every second,” he says. “Not only is our information better, but we are able to better target and identify high-probability segments and have a better understanding of where the company is losing and gaining business.”
At the same time, salespeople can collaborate globally and have gained insight into the sales pipeline to maximize opportunities.
“The software also takes away a lot of the work from the salespeople, who no longer have to prepare the time-consuming reports,” Schumacher says.
Moving forward, TMF is merging with a company that is one-third the size of TMF. The process will mean integrating the companies’ IT systems. “What we saw when we did a presentation to our new partner was that they are extremely pleased with its flexibility and with the functionality the software provides,” he says. “Microsoft Dynamics CRM will undoubtedly be the application for sales in our new global organization.”