| Stock Ticker |
| ICT | 8.28 |  | 0.2 |
| Tekelc | 16.28 | | 0.38 |
| Convergys | 16.03 | | 0.31 |
| SPSS | 31.93 | | 0.56 |
| NetSuite | 17.13 | | 0.3 |
| APAC | 2.33 | | 0.04 |
| SAP | 55.93 | | 0.6 |
| SupportSoft | 3.42 | | 0.03 |
| Selectica | 1.15 | | 0.01 |
| Teletech | 16.15 | | 0.11 |
| Chordiant | 6.03 | | 0.02 |
| Rainmaker | 2.99 | | 0.01 |
| Astea | 3.11 | | 0.01 |
| Intervoice | 8.24 | | 0.02 |
| Epicor | 8.5 | | 0.02 |
| ATG | 4.08 | | 0 |
| Nortel | 5.9 | | 0 |
| NICE | 30.24 |  | -0.01 |
| Interactive | 10.07 | | -0.02 |
| LivePerson | 3.2 | | -0.01 |
| Unica | 8.67 | | -0.03 |
| CDC | 2.61 | | -0.01 |
| Vignette | 13.44 | | -0.06 |
| Sykes | 20.47 | | -0.11 |
| eLoyalty | 4.85 | | -0.04 |
| Pegasystems | 14.62 | | -0.13 |
| Amdocs | 29.79 | | -0.4 |
| Oracle | 21.19 | | -0.36 |
| NCR | 25.54 | | -0.48 |
| RightNow | 14.18 | | -0.27 |
| HP | 45.09 | | -0.91 |
| Salesforce | 53.98 | | -1.17 |
| ClickSoftware | 2.33 | | -0.06 |
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As of 3:59 p.m. on 9/4/08 |
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Jest Practices!
Selling Skeptics on the Value of Customer-centric Master Data Management
Skeptics are defined as individuals who question the validity or truth of things that most people accept, and when it comes to technology advancement, skeptics are truly the most challenging of audiences to convince. While every company seems to have some business and/or IT manager who may be quick to shrug off customer-centric Master Data Management (MDM) as a feel-good initiative lacking quantifiable business benefits, it’s really just a matter of validating the advantages to convert these skeptics into champions. When faced with internal MDM disbelievers, the best approach is to provide tangible metrics or business scenarios that make it difficult for even the most skeptical critic to doubt the significant business value of customer-centric MDM. In fact, almost all business functions can benefit from the collective customer insight an MDM solution can provide either in terms of operational efficiencies or better customer-facing business processes. Despite these benefits, companies need to take the time to build consensus among both business and IT decision makers before attempting to embark on, or secure funding for a customer-centric MDM initiative.
Today, business managers are more aware of the positive impact that reliable customer data can have on critical business functions such as Customer Service. They also tend to have a clear understanding of the value this data can have on complementary customer-facing functions such as Marketing and Sales. Also, with federal compliance regulations taking center stage - particularly in the Financial Services and Pharmaceutical sectors - having a single view of clients and health care providers has become a major requirement in meeting regulations. Yet, despite the acceptance amongst the varying lines of business users, an organization still needs to present a viable business case if it hopes to convince both IT and Executive management of the over-arching benefits of MDM. One of the major challenges is in placing accurate values on such abstract pursuits as improved customer service, brand, and regulatory compliance. Another unavoidable challenge is that many CIO’s are understandably risk-averse and may be reluctant to embark on any technology investment that is unable to quantify a return on investment (ROI). This is largely because many have found top line revenue growth from Customer Relationship Management (CRM) and Business Intelligence (BI) investments to be difficult or impossible to quantify.
In order to convince skeptics and empower MDM champions, businesses should apply the following three principles to build a winning business case:
1. Quantify cost savings before tackling revenue impact.
2. Use logic and arithmetic to derive revenue impact.
3. Link customer-centric MDM to a bigger strategic initiative or business driver.
#1: Quantify Cost Savings before Tackling Revenue Impact
Most companies who look to drive top line revenue growth from a customer-centric MDM initiative tend to rely on forecasted revenue impact exclusively for project approval. Unfortunately, this approach rarely provides the level of detail required to sell the initiative. Consequently, a successful MDM business case must be built based on a foundation of quantifiable cost savings.
For instance, many companies look for cost savings within their IT department which is a great place to start. After all, a customer-centric MDM implementation is designed to replace the cumbersome point-to-point solution interfaces which many companies have in place in their current data integration environment. Improved and more consistent customer data also reduces the developer and data analyst costs often required for the analysis and redesign of management reporting. Further, MDM allows for the standardization of common data cleansing and extract-transfer-load (ETL) software and third party data providers, thereby reducing software maintenance fees and data licensing costs. So, before attempting to sell the MDM solution using unreliable and forecasted revenue impact, it is recommended that business users work together with IT managers to explore areas that can have a profound impact on the bottom line and find hard numbers to quantify the cost savings.
An additional area ripe for cost savings is Sales Operations; a group challenged by lead assignment, commission payments, and administration of channel/distribution programs. Organizations should tap into Sales Operations management and identify the amount of time spent on these efforts and the group’s use of permanent and temporary employees to address related data. MDM can have a tremendous productivity impact on lead assignment and commission payment processes as well. With MDM, account data can be formatted for use with complex named account assignment rules and synchronization across CRM and ERP systems. Other areas to consider include the marketing of third- party services and systems, customer support time spent per call, and order management efficiency. For example, one manufacturer identified over $11 million in cost savings from their sales operations over a five year period, effectively paying for the customer-centric MDM project before revenue impact was even considered.
#2: Use Logic and Arithmetic to Derive Revenue Impact
Another common approach to presenting a customer-centric MDM business case is to simply put forward conservative, but believable, revenue numbers without supporting evidence. Presenting a 1 percent revenue increase is typical; a small percentage resulting in very large top line growth for Global 500 companies. A more reliable method is to extrapolate revenue growth from key business areas such as Marketing and Sales. For example, let’s look at a typical marketing campaign. If Marketing reports an average response rate of 2.9 percent for campaigns and 30 percent of the customer data used for these campaigns is duplicate, invalid, or dated, the effective average response rate is closer to 2 percent. By replacing this inaccurate data with reliable customer data, campaign response rates could improve by as much as 50 percent. Further, by extrapolating the improvement in campaign response rates using the metrics of ‘deal closure rate’ and ‘deal size’, you can derive the revenue impact. For example, one organization calculated an increase in average campaign response rates from 2 percent to 2.9 percent which had a value of $10 million in revenue based on current response rates and average deal size.
In the Wealth Management sector for example, it would be worth communicating the possible revenue impact that could be realized if Financial Analysts were able to spend more time on selling and advising clients rather than on data administration. For instance, one global bank estimated that branch personnel spent up to 70 percent of their time gathering data before meeting with clients to cross-sell and up-sell. By assuming a reduction in the amount of time spent to assemble data and using the current closure rate, the bank determined that an MDM solution would drive over $100 million in top line revenue opportunities. Another source organizations should consider are systems integrators and vendors as they can supply actual customer case studies and benchmarks which can help support actual revenue impact projections.
#3: Link Customer-centric MDM to a Bigger Issue
The final principal dictates that, wherever possible, organizations need to explain how the customer-centric MDM initiative will be of value to addressing strategic top-of-mind issues. Instead of competing for attention and funding, position the MDM business case as part of a larger business solution without oversimplifying or devaluing the initiative. For example, there are several top-of-mind issues which customer-centric MDM can help address including:
In the Financial Services sector-- Basel II has created the need for effective counter-party management.
For Pharmaceutical companies-- current mandates such as the newly established physician ‘gift-law’, and the need to create unified customer views in the face of increased competition, government regulations, and corporate consolidation.
In the Manufacturing sector--there is mounting pressure to correct perceived failures of prior CRM and data warehouse efforts.
In Insurance companies--acquisitions are driving the requirement for improved visibility across the organization.
Selling the Business Case is as Easy as 1-2-3
By doing your homework, gaining the cooperation of colleagues, and applying the three principles discussed earlier you can build an effective business case capable of winning over skeptics. Let’s face it, decision makers need to have a clear and accurate understanding of the impact customer data can have on the entire organization and determine the up-front ROI before embarking on any IT project-- especially when faced with competing priorities. To help synthesize and collate estimated costs savings and revenue impact, companies should consider conducting an ‘MDM ROI Analysis’ to develop a thorough cost-benefit analysis for a customer-centric MDM solution. More specifically, this ROI audit should quantify the value of probable benefits and estimate the initial investments and ongoing cost of managing the MDM solution. The resulting analysis should also be used to help determine the potential cost savings and revenue impact of implementing a customer-centric MDM solution. By first presenting the potential cost savings, then strengthening the business case with revenue impact and finally linking it to a bigger business issue, you just may find that convincing skeptics of the benefits of MDM is much easier than you thought possible.
About the Authors
Joe DosSantos is Practice Manager, Business Integration Services and Anurag Wadehra is Vice President of Marketing and Product Management at Siperian, Inc., developers of an award-winning, adaptive platform for customer-centric master data management. For further information, contact the authors at jdossantos@siperian.com or awadehra@siperian.com or visit the company’s website at http://www.siperian.com.
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