Will the Real ROI Please Stand Up?

— May 01, 2006

Bert Burkholder of AGSCO in Grand Forks, N.D., tells a story of how one change in a customer relationship management (CRM) system saved his fertilizer company 26,000 man hours of labor and tens of thousands of dollars each year in lost chemicals inventory.

In the past, the AGSCO sales team of 40 men and women routinely visited customer farms, writing down all chemical sales orders on little slips of paper. The customers were given a carbon copy, and the sales team would assemble back in the office, dialing into the Internet through a Citrix server and typing in the sales activity for the day. The administrative process took three to five hours each day. Moreover, papers kept getting lost, along with the returnable stainless steel chemical containers.

Then AGSCO's IT department implemented a mobile CRM sales solution. Instead of keying in transactions and inventory, the sales force now has an automated process that uploads sales orders in about a minute. The company chose a device-agnostic mobile data management solution, OneBridge from Sybase/iAnywhere, that allows direct integration with the company's Microsoft Dynamic GP accounting and inventory system. OneBridge provides integrated email, contacts, calendars and slimmed-down sales transactions. "The solution allows us to scan the serial numbers of [our] chemical containers," Burkholder says. When it comes to capturing sales information, it makes syncing effortless." Thanks to the solution, AGSCO has seen not only manpower reductions but almost 100 percent decreases in lost inventory.

Is Mobile ROI a Moving Target?
The AGSCO mobile CRM case isn't unique. However, the industry is divided about the numbers and meaning of mobile CRM return on investment (ROI) in a world where hardware, software, networks and company expectations are shifting so rapidly.

"There are really two classes of return on investment for mobile CRM," says William Clark, a VP in research communication at Gartner. "The first is a 'softer,' subjective set of benefits." Soft benefits include things like greater personal satisfaction with work and increased convenience--for example, the ability to populate databases with the results of an email or voice call, or to contact multiple users in a sales team using a mobile CRM e-cast. "These benefits are running at less than 50 percent ROI annualized," Clark asserts. "A second and more interesting [class of ROI] is in mobile field service. Technicians can be traveling out in bands or within the four walls of an institution. Yet depending on a lot of variables, typically what we see exceeds 200 percent ROI annualized, and that makes a very compelling investment."

Increases in operational efficiencies account for much of the benefit. Field technicians whose work processes are automated and synced to backend systems, whether wirelessly or in near real time, can save on paperwork, inventory calls, and routing and dispatch mistakes while adding an extra job or two each day to their assignment lists. The net result is more trouble tickets completed per day or, if necessary, a reduction in costs and time to complete the same number of jobs.

"That translates into ROI, and it's very easy to calculate," says Mark Ferrentino, a VP of engineering at Vettro, a five-year-old company specializing in mobile, on-demand CRM applications for field service and sales force automation. "A few years ago, we were fighting to convince people that mobility was something they needed to invest in; now, people are already convinced."

Addressing Pent-Up Need
Mobility is a hot topic among CTOs and CIOs. In North America, the number of RIM BlackBerry users has quadrupled in the last two years and driven mobile CRM right along with Windows Mobile 5.0, the Pocket PC, the Palm Treo 650 and 700, and J2ME handsets, according to Ferrentino.

Among large mobility vendors such as Panasonic, which sells its Toughbook laptop line to mobile field forces, sales have doubled between 2002 and 2005, says Mike McMahon, director of workforce automation at Panasonic Computer Solutions. "The number one reason [for the sales boom] is the advance of mobility in the workforce management space. Five to seven years ago, ROI typically was a three-year payback process [based on loaded labor rates, i.e., $55 to $95/hour for field service technicians in telecoms]. Now the ROI payback has shrunk to three to five months because the [computer] hardware, software and wireless technologies have become much more dependable and mission critical," McMahon believes.

Field forces demonstrate a pent-up need for mobile data, according to a 2005 study by the Aberdeen Group. Such applications as on-demand access to work order details and scheduling, locating and identifying spare parts and warranties, and quickly obtaining customer histories are main areas for growth. In 2004, no more than 30 percent of the companies Aberdeen surveyed could provide real-time data access to their field forces in any individual data category, while at least half the companies indicated they required it. Among mobile CRM groups already deployed, Aberdeen found a 27 percent average improvement in worker productivity, a 19 percent increase in customer satisfaction and double-digit improvements in overall profitability and service revenues.

Multiple m-CRM Models
Does one model fit all? Obviously not. Key mobile/CRM enterprise suppliers, among them Siebel/Oracle, SAP, Sybase/iAnywhere, Salesforce.com, Nokia and even smaller mobile players such as Dexterra and Vettro, each have distinct approaches to ROI. No one interviewed for this article--not even analyst groups--would commit to any comparative ROI figures for specific vendor product or mobile CRM service offerings. Instead, the claims are summarized as variable, user-based, circumstantial and based on parameters unique to particular companies or industries.
One common factor among many mobile CRM offerings today is that they are based on something known as "service-oriented architecture," i.e., a centralized distribution model from a server that can deliver applications to devices over the air. In other words, solutions are no longer device-centric or jury-rigged for individual wireless applications, contends Tien Tzuo, the senior VP of product management at Salesforce.com.

"If you look back at the software infrastructures of 1999 and 2000, each company had to be responsible for wirelessly enabling its [mobile data]," he says. "But today with service-oriented architecture, that's not really true. You can build your applications and customize them on an applications exchange platform (he cites the Salesforce.com www.appexchange.com Web site, which uses service-oriented architecture). Once loaded, those applications will automatically appear on your [mobile] device."

By transitioning to service-oriented architecture, Salesforce.com and other CRM suppliers have been able to get more companies up and running quickly.

Variable Solutions
Large-scale, embedded CRM infrastructures present unique challenges for vendors seeking a mobile component. For example, CRM giant Siebel (now part of Oracle), while fully invested in more than 3.5 million users, now offers three different CRM integration solutions to satisfy more than 30 percent of its customers requiring mobile data access. The solutions touch customers using remote laptop clients, handheld PDAs and wireless clients, says Guy Waterman, senior director of product strategy for mobile solutions at Oracle, which handles Siebel operations. Siebel handheld solutions are also packaged by individual industries and by application. Moreover, the Siebel CRM model does not require an always-on connection. Many of the solutions are occasionally connected, meaning the databases of field workers are synchronized or updated in the background only at certain times and intervals.

Siebel does offer a browser-based mobile CRM solution known as Siebel Wireless, which provides real-time wireless access to inventory connected to back-office systems. The solution offers "a zero footprint on a mobile device," Waterman says.

Less Is More?
Not everyone deploys mobile CRM with several layers of complexity. To Mike Ikotin, a VP of products marketing at Dexterra, a company specializing in mobile CRM solutions, the key to worker acceptance is a less-is-more approach. "The field worker works differently from a person in the office, and that's the key difference to success in mobile CRM," he claims. Mobile workers need a skinnied-down interface that's easy to read and integrates with critical apps in the field. Ikotin calls this "the outside-in approach." The approach accents an opportunistic connection rather than a persistently connected mobile CRM model. By opportunistic, Ikotin means that workers are only connected when they need to be, and the system automatically pushes information to them. Updates can be obtained either wirelessly or in a cradle connection. In this way, the system avoids information overload or the temptation to replicate too much information in the same form as the monster backend CRM system.

Ikotin points out that mobile CRM is becoming less expensive and more personalized. Dexterra, for example, offers a category of mobile application that lets users take modules or components of functionality and put them together to build a mobile solution. For greeting card company John Sands, Dexterra's order and fulfillment solution has produced a 15 percent decrease in ordering time along with an 85 percent user adoption rate among its sales force.

Despite generally moving targets for ROI, many believe the tipping point for mobile CRM is at hand. Organizations are increasingly recognizing ROI benefits--quantified, qualitative or both. And, says Chris Leffel, a senior product manager with iAnywhere, customers are asking for more than mobile email or Internet access; many want vertical applications and extended databases.

"Productivity as a factor in ROI is always hardest to compute," Leffel says. "What you can measure is the quality of information in the field that's delivered to the back end. While no size fits all, customer perceptions of ROI continue to drive the marketplace. Leffel concludes, "It's really about finding what makes sense for each customer and building your ROI case around that." //

Arielle Emmett is a freelance writer in Pennsylvania.

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