Online learning and e-business integration projects are delivering the strongest returns on investment (ROI) for companies, while customer relationship management (CRM), content management and online marketplace efforts are at the bottom of the list.
Those findings are part of an assessment of thousands of IT ROI studies that Wellesley, Mass.-based Nucleus Research Inc. has done for users such as Aetna Inc., Pfizer Inc., British Telecommunications PLC and Lockheed Martin Corp.
For instance, according to Nucleus, companies that implement online training systems for a “modest” five- or six-figure investment typically generate strong financial returns through cost reductions in areas such as travel, human resources overhead, regulatory compliance and customer support.
Ian Campbell, co-founder and principal analyst at the research firm, said e-business integration software such as Microsoft Corp.’s BizTalk Server and BEA Systems Inc.’s WebLogic Integration have helped companies leverage existing investments in their IT infrastructures through both internal links and business-to-business connections.
Many of the returns from such projects result from a streamlining of data flows between applications and access to a broader set of information for end users, according to the Nucleus assessment.
“I could see where e-business integration would offer strong results, because you’re streamlining operations and taking out redundancies,” said Steve McDowell, information services director at a retirement home operator in the Pacific Northwest. He asked that the company not be identified.
On the other end of the scale, CRM projects typically fall short of ROI projections, Campbell said. Companies often overbuy the amount of CRM applications they need, and business requirements often change by the time multi-year CRM implementations are completed, he added.
The CRM findings jibe with the experiences of Rick Peltz, CIO at Marcus & Millichap Real Estate Investment Brokerage Co. in Encino, Calif., but for different reasons than the ones cited by Campbell. Peltz said he has witnessed the shortcomings of CRM systems at both Marcus & Millichap and Bank of America Corp.
Six years ago, when Peltz was working in IT at Bank of America prior to its merger with NationsBank, the company deployed a CRM system aimed at sharing client information throughout its North American wholesale banking division. However, Peltz said, the system “went belly up” eight months after going live. “No one used it,” he said. “When you’re dealing with salespeople and agents, their client list is their lifeline.”
That also helps explain why Marcus & Millichap’s 650 agents have resisted overtures made by Peltz and his team to install a nationwide CRM system for sharing information about their clients, he said.
Many standalone content management systems also fail to generate strong returns, according to the Nucleus report. Content portals and applications that are narrowly focused and tightly integrated with other systems are more likely to yield returns, Campbell said.
For Jim Albin, CIO at Mercy Health Partners of Western Toldedo in Ohio, any content management project has to be focused on business processes.
“The things that alter workflows and improve the process downstream are the true ROI generators,” not the technology itself, he said.
Figuring a good CRM ROI
Spending on software and consulting: less than 70 per cent of expected annual direct benefits.
Defining requirements and selecting a vendor: fewer than four months.
Deploy and achieve some returns: fewer than six months.
Consulting costs: not more than twice software costs.
Training users: fewer than four hours.
— Rebecca Wettemann, Nucleus Research analyst