We were preparing a client presentation this week and one of the slides included a reference to last year’s Forrester report on Dynamics CRM 2011 and quoted a 243% ROI. Now, having a past life as an FD, I was suddenly sceptical that any ROI calculation had to be flawed or at very best subject to scrutiny, so off I went and had a thorough read through the report.

Now, Forrester Research have created an enviable reputation since 1983 in the IT industry for their reports into every aspect of modern IT solutions and go to great length to maintain editorial ownership of their reports so delivering objective and dispassionate results. We at Company Net certainly have used their research to better understand the marketplace for our products and services and have learnt a great deal in the past.

When I read through this report rather than the more usual skim reading, I was taken aback by the sheer force of the message coming from the Dynamics CRM customers interviewed in the process. Feeding my FD instincts, there also is a very detailed breakdown of how the figures are calculated including crucially, a proper risk correction using Forrester’s own Total Economic Impact methodology.

Total Economic Impact™ (TEI) is a standard methodology developed by Forrester Research that captures and quantifies the voice of the customer relative to technology investments. In this study, we interviewed nine Microsoft customers in one-on-one discussions about each organization’s experience in implementing Microsoft Dynamics CRM 2011.
Forrester’s interviews and subsequent financial analysis determined that a composite organization, based on the organizations we interviewed, would expect to experience the risk-adjusted ROI, costs, and benefits summarized in Table 1.

Summary. Overall this study concludes that the composite organization achieved a three-year NPV of U.S. $471,218 (risk-adjusted net benefits) as a result of deploying Microsoft Dynamics CRM 2011 for an initial team of 50 users. The payback period was over four months with an average NPV per user of $9,424 over three years.

Factors Affecting Benefits And Costs
Table 1 illustrates the risk-adjusted financial results that would be expected by the composite organization  The risk-adjusted values take into account potential uncertainty or variance that exists in estimating the costs and benefits, which produces more conservative estimates. The following factors may affect the financial results that an organisation may experience:
 The pre-Microsoft Dynamics CRM 2011 environment (whether there was no pre-existing CRM application or
whether another CRM tool was being used).
 Level of deployment of CRM tools within the organization and integration with other business processes.
 Customization required for CRM deployment and other implementation risks.

OK so having passed a test of financial probity, we can read on. The report has some fascinating insights into the decision making process and evaluation that the respondents shared during the research.

(Interviews conducted with 9 specific)… companies uncovered a number of important insights about customer organizations’ experience with Microsoft Dynamics CRM 2011:

 The majority of the organisations interviewed either did not have a CRM system in place or were using “home-grown” legacy software before turning to Microsoft. A number of the organizations had been using other packaged software CRM solutions in a limited capacity and decided to consolidate around Microsoft Dynamics CRM 2011.

 All the organisations were experiencing rapid growth and had departmental collaboration barriers that were hampering their sales processes. They needed more collaboration among sales, marketing, customer service, and delivery to get to the next level of customer engagement.

 For most of the companies interviewed, familiarity and integration with Microsoft Outlook were fundamental to their choice of a CRM solution. One organization even had representatives from its sales team going into the evaluation process preferring different CRM software, but after the evaluation, the team was unanimous in choosing Microsoft Dynamics CRM 2011.

 These organisations’ deployment choices ranged across all options, including: on-premises, online, and partner hosted. Organizations with 10 to 100 initial users typically had an online implementation while those with 200 users or more implemented an on-premises CRM solution.

 Interviewees also highlighted the cost effectiveness of the Microsoft Dynamics CRM 2011 and the ease of implementation. Rollout to users was also characterized as “smooth” and “seamless,” because users were already familiar with the UI and the CRM solution was integrated with Outlook. Users on average had five hours of training although one organization recommended at least a full day of user training.

 All the companies interviewed worked extensively with Microsoft partners to configure processes and roll out the project. As one customer stated, “A partner’s value shouldn’t be underestimated. They gave us a reality check on what was needed. With our experience, you should trust them [Microsoft certified partners], and you should set up your goals together.”

 The organizations interviewed also noted the cost savings they would experience during each extension or customization. For instance, one organization liked that it could easily change the CRM screens using internal IT resources, avoiding the cost of outside consulting fees. Another company that had integrated Microsoft Dynamics CRM 2011 with its front-end website noted that with its initial investment, it could now scale its business internationally without a commensurate scale in its costs.

 While the integration with Outlook enabled faster user adoption, these organizations also set up policies and other incentives to reinforce use of the solution for customer management with their account teams.

Improved Sales Productivity

The customers interviewed talked about the challenges of implementing any new technology with sales teams who usually do not have a technical background, have multiple demands on their time, and have extensive mobility requirements. They noted that these concerns were less of an issue with Microsoft Dynamics CRM 2011 due to their sales teams’ familiarity with the software, the software’s integration with Outlook, and easy navigation. Users did not have to extensively change their processes as CRM workflows were integrated into the business productivity software (such as Microsoft Outlook and SharePoint) that they were already using. Customers who had implemented other CRM tools before shifting to Microsoft Dynamics CRM 2011 reported higher adoption rates. One customer’s contacts database grew by 733 percent in its first year of adoption of Microsoft Dynamics CRM. Another characterized its user adoption as “phenomenal.” At the same time, these organizations also set up communication and policies with the deployment to incentivize their employees to use the CRM software.

“Salespeople and account managers want to do things as rapidly and as flexibly as they can. Adopting [Microsoft Dynamics CRM 2011] was easy from their perspective — they embraced it because of their familiarity with Outlook.” (Operations director, IT solutions service provider)

“The key on the sales team side was integration with Outlook. It was why we got such high user adoption. It’s easy. There’s integration and there’s integration, and this is really integrated.” (CEO, financial and accounting solutions firm)

Customers also noted that the benefit of the “true integration” of Microsoft Dynamics CRM functionality with their Outlook and Microsoft Office software on the desktop and on mobile devices enabled their sales teams to be more productive. Data entered in Outlook and Office was automatically captured in the CRM system, making it very easy to use. “Even if they didn’t try to use it, it would still go,” one customer observed. “The single most important feature for us was integration with Outlook,” another confirmed. One customer with a mobile workforce based on customer sites outside the company’s firewall said the ability to update data directly into Outlook improved their organization’s sales efficiency. The interviewed companies estimated sales productivity improvements from 5 percent to 20 percent.

This productivity improvement was experienced by the sales teams of the interviewed companies through improved sales reporting and better management of their customer database leading to faster and more efficient processes for sales forecasting. These companies now had a more accurate picture of their sales pipeline. With all the data in Microsoft Dynamics CRM, their sales teams could now, as one customer said, “walk in the door with real-time information on clients and better manage the relationship.” Customers also noted that their sales teams were spending less time in internal meetings and more time with their customers in the field.

Benefits.

In interviews with Microsoft customers, Forrester also identified several benefits of implementing Microsoft Dynamics
CRM 2011 in the areas of personal and process productivity. These quantified benefits include:

1) improved sales productivity because of the ease of use of the CRM software and improved opportunity/deal tracking and routing through integration with Outlook;

2) customer service productivity savings from a better UI, documented processes, a holistic view of the customer, and faster case resolution;

3) streamlined processes and operations leading to lower cost of sales;

4) shortened sales and conversion cycle and corresponding revenue gain as teams improved their collaboration
and were better connected across systems;

5) marketing cost savings due to more real-time insights from better analytics; and 6) productivity savings due to better reporting tools.

“If you can scale a company up to 35% year over year and utilize Microsoft Dynamics CRM 2011 to provide a common thread between your company and your customer, it truly is priceless.” (VP of marketing, healthcare IT company)

Other benefits noted by the customers but not quantified in the study include:

1) improved collaboration;

2) lower cost and effort to customize the solution for unique requirements, including extended CRM scenarios; and 3) compatibility and ease of integrations with other systems improving process efficiencies.

Forester also reported the following benefits that represent those experienced by the interviewed companies:

o Increased sales productivity of 5 percent with the ease of use of Microsoft Dynamics CRM software and integration with Outlook leading to higher adoption, improved opportunity and lead tracking and routing, and a more accurate picture of its sales pipeline. The interviewed companies improved their sales reporting and better managed their customer database and achieved faster and more efficient processes for sales forecasting.

o Customer service productivity savings from a better UI and documented processes. The composite organization avoided hiring 1.5 full time equivalents (FTE) for its 10-person customer service team even as its division grew. Customer service agents improved issue resolution as new processes were implemented, and agents had access to all the customer information they needed to resolve cases quickly and with precision.

o Streamlined processes and operations leading to lower cost of sales as Microsoft Dynamics CRM enabled the composite organization’s technical consultants to shorten time spent on the proposal process by 10 percent. The interviewed organizations saw process improvements for their account management, engineering, order taking, and project delivery teams, which led to lower operational costs and improved customer responsiveness.

o Acceleration of sales conversion cycle by 50 percent and corresponding revenue gain as teams worked better together across different business systems, processes, and geographies.

o Marketing cost savings of more than $200,000 (risk-adjusted over three years) due to more real-time insights and improved campaign management from better analytics.

o Productivity savings of 16 man-hours per month due to the better reporting tools in Microsoft Dynamics CRM with data consolidation, reporting automation, and richer dashboard capabilities. o Improved customer service delivery with quicker response times, dialog boxes, and segmented levels of customer service through insights from Microsoft Dynamics CRM.

o Improved cross-sell collaboration within sales and customer service teams by providing access to reporting tools and other collaboration software such as Microsoft SharePoint® Server 2010.

o Lower costs and effort to customize the solution to unique requirements, including extended CRM scenarios. o Ease of integration with other business technology systems, improving process efficiencies.

Costs.

The organisations we interviewed incurred the following costs

o Vendor software license fees or subscription fees.

o Professional fees paid to a Microsoft partner for implementation.

o Internal labour costs for planning, design, and implementation. o User training costs.

o On-going administrative support costs.

Summary

We can always be sceptical about statistics, especially proposed financial returns, but I would suggest that this feedback from actual customers using and benefiting from the high impact of Dynamics CRM adds a worthwhile insight, which supports and reinforces the financial analysis that Forrester have discovered.

The full report is attached for free download below and I would thoroughly recommend reading it in full if you are contemplating a new CRM system and would like clear insight into how others have successfully adopted and benefited from Dynamics CRM.

source : Forrester Consulting The Total Economic Impact Of Microsoft Dynamics CRM 2011 Published May 2011

We at Company Net are regularly deploying Dynamics CRM and SharePoint business solutions and .net applications  for a wide range of customers and would be delighted to hear from you contactus@company-net.com if we can help you in any way.

Andy Hamilton

MD Company Net February 2012