Sunday, February 7, 2010

Davis Humanics: Benefits of a Web-based CRMS

Case Study #2 E-Commerce Law

PART I. Benefits according to category.

Benefit/s of a web-based CRMS to DH Account Managers:

1. Keep contact manageable despite the growing number of clients. The system will be web-based, thus, customers that have access to the internet will have no trouble contacting DH Account managers. There will be no geographical barriers between the account managers and their clients. If personal – in this case I would assume this refers to face-to-face – contact is a priority, then video-conferencing may be a solution as this allows people to see who they’re talking with and talk as if they’re in the same room. In addition to this, a positive effect on management can be expected.

Benefit/s of a web-based CRMS to DH Operations Staff:

2. Provide a consistent format for customer input. DH operations staffs handle the inputs so I assume that they play a major role in DH’s payroll processing service. One of the problems cited with customer input is that they vary in format, need to be inputted into DH systems, and may need to be processed again to conform to the standards of insurance companies. A web-based CRMS, when designed properly, can effectively “force” users’ inputs to be submitted in a common format while still making room for flexibility. While mail inputs may not be totally eliminated, these and perhaps a few other exceptions may be the only ones left that need pre-processing before they can be used by DH systems.

Benefit/s of a web-based CRMS to DH systems staff:

3. Make system maintenance a less tedious task. I am saying this now but I think this will be more appreciated in the long run. If the director of Operation’s plan of buying a CRMS package will be pushed through, DH systems staff will be the most involved in customizing and tailoring the package to suit DH’s and its clients’ needs. While the systems staff may be saved from having to build an entire CRMS from scratch, they will still be responsible for maintaining and customizing the system. However, this may just be less expensive than having to build from scratch.

Benefit/s of a web-based CRMS to DH Professional Staff:

4. Provide a new way of consulting with clients. DH professional staff is composed of lawyers, actuaries, human resource professionals, etc. These are busy people, whose work demands much of their time. With a web-based CRMS, these professional staff can instead have online consulting with clients so that transaction is still possible even if they are on the go. Again, video-conferencing can address the need for face-to-face interaction.

Benefit/s of a web-based CRMS to DH in general:

5. Lesser Total Cost of Ownership. From what I understand, TCO is made up of the initial cost and the operating cost. I assume that the CRMS will integrate all of DH’s HR operations and transactions and replace their old system. From this point, I agree with Higbee that the initial cost may be expensive, but that is just that – the initial cost. In the long run, maintenance costs and operating costs will be cheaper since most of the work will be done by DH IT staff. With a WBCRMS, more transactions can be done by fewer people. Rather than increasing their man force, which can put a strain on their budget, they can focus on expanding their technology.

6. Lesser development/maintenance cost. Compared to having to develop the system inhouse, I think that buying a software package and hiring a team to customize it is cheaper than having to use your own staff to build one from scratch. However, to get the most out of your expense, I think it is best if the IT staffs are involved in the customization process of the software package along with the hired team. This way, there will not be a need to hire from the outside just for maintenance or further customization.

7. Improve quality of service. Of course, the very reason for the web-based CRMS proposal is DH’s attention to the quality of service that they deliver. A lot of factors have to be considered to create the system that will allow DH to provide the quality service that their clients need and enjoy benefits for itself on top of that.

8. Establish an online information exchange environment between DH, its clients, and other people/companies. This will give DH the opportunity to expand its horizons and not limit itself within a particular geographical area. Since transactions, marketing, advertising, consultation, and other services will be done online, DH can continue to grow while not buckling under the weight of many clients. Marketing and advertising can be increased greatly.

Benefit/s of a web-based CRMS to DH clients:

9. Provide an easy way of tracking the progress of their transactions. The CRMS will include monitoring features that will aid the clients in tracking the progress of their transactions with DH. If clients always have connection to the internet, then the web-based CRMS will prove to be more effective since they may choose to monitor their transactions real-time.

PART II. Dollar Value Estimate of Benefits

For this section, I will just provide a rough dollar estimate or percentage of what I think will be the value of the benefits.

Among the benefits I listed, I think only numbers 4, 7, and 9 are difficult to quantify, if at all. Of course, it is still difficult to place a dollar value on the other benefits because the company’s future profit is dependent on the decision that is still being weighed.

Benefit 1 is mostly focused on management and I believe the benefit that DH can get from possible improved management can range from 5-15% increase in sales - that’s around an additional $100 million (based on their annual income, $2 billion) to $300 million. This estimate came from my insight that even though a web-based CRMS can improve management, people are still involved and people always have issues or handicaps with them. I am not saying it is a bad thing but it can still affect the management performance of DH so we cannot expect a drastic increase in sales.

Benefit 2 is on operations, which involve machinery or equipment. There will be a considerable benefit here since information is stored on the Internet in a web-based system, therefore reducing the cost for storage and equipment. Accessing, retrieving, and processing data will all be done online so there will be lesser need for paper and other output materials. The savings of the
company can range from a few hundred dollars for paper and a couple thousand of dollars more for larger equipment.

Benefits 3, 5, 6, and 8 are more focused on the financial benefits of a web-based CRMS. 3, 5, and 6 can be thought of as “savings”, while 8 can be thought of as “sales”. Let us assume that the vendor-consultant team bid ended at $2 million and that they can do their job in a period of 10 to 18 months (estimated from the size of DH and the number of transactions they handle). The total cost of ownership is usually considered for three years, but this time, assuming that the vendor-consultant team has already turned over the system to DH, maintenance cost is cheaper than the initial implementation cost. They can save around 50% of the initial cost annually.

Competition on the Internet is tight and since benefit 8 talks about expanding DH’s horizons, some search engine optimization (SEO) may be applied to make sure that DH reaches its target customers and still attract some extra traffic. However, based on what I know, it can take several months or even more than a year for a site to come up in the first three pages of the search results. It may take this long before the site can gain traffic from non-clients or soon-to-be-clients. During this time, I suggest that DH focus on making their old clients familiar with the system and make use of advertising services offered in the Web to help them get more traffic into their system. From this, their sales can increase by as much as 30-50% and their visibility on the Internet can increase by as much as 100%, based on experience.

PART III. Memorandum

TO: DH Board of Directors
FROM: Kate Mariel Dizon
DATE: January 4, 2010
SUBJECT: Web-Based CRMS Project Evaluation Method

A tradition in DH is to evaluate capital projects, including IT projects such as this, using Return on Investment (ROI). Based on data from the past years, DH has been growing rapidly and has currently many divisions. In cases like this, ROI may not yield the best results because it can be calculated and interpreted in different ways to suite the interests of a particular division and may disregard the interests of the company as a whole. Moreover, the proposed project is expected to affect future sales, therefore ROI may not be the best evaluation method as it is based on historic data and cannot provide insights on how to improve business results in the future. ROI also encourages managers to look into the short-term rather than the long-term effects, which may not be good for a growing business like DH.

Please recall that the primary objective of this proposal is to address a foreseen problem in the quality of our service. ROI does nothing to evaluate the design and usability of the proposal and only evaluates things from the company’s financial perspective.

In this light, I would strongly suggest that ROI alone should not be used to evaluate this project. Combining ROI with other evaluation methods, such as net present value (NPV) and payback period (PP), can help us make informed, economic decisions. Evaluation should also be performed to validate that the project conforms to design and usability guidelines and make sure that our clients also get to enjoy their experience with us.

3 comments:

  1. great post. Helps me formulate my version of the assignment. (I promise I won't copy). Thanks

    ReplyDelete
  2. @anonymous

    thanks for informing me. :D

    what school are you from? it seems we have similar assignments...

    ReplyDelete
  3. This post is very useful understand the need and benefits of web based recruitment software in a better way. Thanks

    ReplyDelete