Customer Relationship Management done right: CRM value case
Justifying and building commitment to CRM business decisions
The greatest challenges to starting and sustaining Customer Relationship Management (CRM) programs are often proving economic viability, showing positive return on investment, and securing sponsorship and agreement.
A CRM value case effort spans the actual written business case and the process for gaining/sustaining acceptance and ultimately funding of the CRM program.
Challenges of getting CRM projects off the ground
CRM initiatives are difficult to start and difficult to sustain. Most pitfalls are based on the attitudes and the economics used by large organizations. These include skepticism toward the success of CRM, difficulty securing and sustaining commitment, and budgetary constraints. On top of this, past failures and the lack of measurability in CRM projects make decisions even harder.
ROI and agreement-building
The value case helps make tough business decisions by providing clear economic justification (ROI analysis) for CRM solutions. More importantly, the value case is a process by which all necessary decision-makers come to agreement on the decision criteria and justification.
The value case defined
A value case, or business case, is the fundamental analysis of the cost of a CRM initiative, CRM cost, feasibility, risks, benefits and economic return. This analysis combines quantitative and qualitative data in a prioritized fashion to render a written, comprehensive, and defensible justification for undertaking a transformation.
It is also the process by which key stakeholders come to agreement on difficult business decisions, and support is gathered from top management.
The value case delivers four important benefits:
• Organizational agreement - The value case, and the value case development process, is a format for the organization to reach agreement on CRM initiatives, goals and financial expectations.
• Economic justification - The value case provides the hard numbers for costs and projected benefits to measure return on investment.
• Documented proof - The value case is a tangible, referenced, written testament for the organization that can be used on an ongoing basis to reaffirm commitments and measure progress.
• Confidence (vs. hope) - The value case replaces intuition, hope, and optimism with confident business decisions made on sound analysis.
Despite their benefits, value cases are often not completed for even large, high-risk projects. There are several reasons, all of which can contribute to the failure of proper business justification. These include skipping the value case because of enthusiastic mandates from management, limits within the budget, or not having the skills or bandwidth to complete one. Managers should look to mitigate these excuses to foster long-term CRM project success.
IBM’s value case approach
Central to IBM’s value case approach is shepherding your organization through the psychological phases of the decision-making process. This process of gaining commitment and justifying decisions helps ensure the project stays on track, even as people’s ideas and attitudes change over time.
The reality check
Our approach begins with a high-level reality check to justify further analysis of the new CRM solution and to build excitement for it.
The case for change
As the organization builds commitment and comes closer to making significant decisions, the analysis becomes more rigorous, more detailed, and specific to the new solution. A case for change is made to rally the organization toward the new solution and finalize the decision to move forward. A comprehensive business case with projected return on investment (ROI) is created.
Project pro forma
The project pro-forma provides ROI analysis for each wave of the solution. Trade-offs for each component are considered, including their risks. Analysis is thorough with actual costs and budgets created for the transformation.
Realization plan
A value realization plan is the effort that tracks actual results relative to the expected results from the value case. This plan is central to making mid-course corrections during implementation of a multigenerational roadmap. At the onset of implementation for each wave of the roadmap, metrics are defined, baseline values are set and periodic reporting and monitoring procedures are formalized.
Getting started
Value cases should be developed at the onset of any new CRM initiative, or at any key transformation point within a CRM program.
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