Value Assessment

Though IVK’s ROI of 5% makes an investment in Salesforce one that is not necessarily risk-free, IVK would greatly benefit from using Salesforce, with many tangible and intangible benefits alike. Currently, IVK has an outdated infrastructure that is fragmented and incompatible due to the diversity of systems being used by each business unit, and is in need of a system that will not only simplify business processes and workflows, but allow for a smoother and more data-rich experience when working with customers. Below, we will outline the ways in which Salesforce can bring value to IVK, both quantitatively and qualitatively, and compare these benefits to the estimated cost of utilizing Salesforce as outlined in the Cost Analysis section.

Tangible Benefits of Utilizing Salesforce

While utilizing a CRM tool like Salesforce is no doubt a costly investment, the return on investment is large. According to a recent study from Nucleus Research that polled 223 CRM decision makers, companies using a CRM tool see an average return of $5.60 for every $1.00 spent (Diorio 2013). While intangible benefits, though harder to measure, will have a large and positive impact on IVK, there are quite a few tangible benefits that directly affect ROI; it is imperative to choose metrics that are tied to business goals, easy to measure, and important to the customer (Fitzgerald 2011).

First, Salesforce.com can reduce IVK’s operating costs- the technology improvement gained by using a CRM can allow more communication to happen via email, potentially allowing IVK to eliminate completely or reduce its call center; it can also allow employees to work from home, reducing the need for physical offices. Furthermore, when using Salesforce.com IVK would pay per license, so during less busy times of year, could cut down on licenses needed, therefore saving money (Gallaugher 2015). Inventory costs are reduced because less paper and general office supplies are needed since Salesforce.com is so computer-based. IVK’s staff will be more productive because this system offers consistent processes and also gives the company the chance to train their staff from the ground up and cut down on bad habits learned in the past. With Salesforce.com, the leads to sales closure rate is not only a proven benefit, but includes the ability to easily report closure and conversion rates. IVK’s customers are retained and churn rates are reduced because Salesforce.com provide a much smoother and more enjoyable experience for customers. Finally, staff are able to provide improved customer support because all information is in one place, they are able to keep detailed logs of calls and emails, and with the help of pipeline reports, customers are never lost, with all their information being tracked and recorded. So how does it all break down? The benefits of IVK using Salesforce was calculated by looking at the total revenue ($2,400,000) and estimating how much of that revenue would have been due to tangible benefits; we also used IVK's financial statements as a guide- see Cost Analysis section for more information.

Table 5. Quantitative Estimate of Tangible Benefits Over 5 Years (Grattery-Musinsky, 2015)

Intangible Benefits of Utilizing Salesforce

According to WebProNews’ article, CRM ROI: Fact or Fiction?, “most companies say that, when it comes to determining value, intangible benefits are more significant than cost savings. Yet companies often fail to establish key performance indicators for judging these intangible benefits” (2004). The intangible benefits IVK will gain from using Salesforce.com can be defined as the more subjective perceptions of the company by customers and staff alike; these can’t neccessarily be measured on a balance sheet, but they definitely increase IVK’s value.

1. Improvement in Employee Productivity: Employees are able to be more productive because Salesforce.com offers them a structure for their workflow, where they can use the tools provided by the system to work more efficiently and with greater ease. 

2. Consistency Within Employee Processes: Salesforce.com offers workflow tools, like tasks and cases, that cut down on the different processes that may or may not be consistent among staff. Furthermore, when moving to one system from many, processes become more consistent because there is no longer the need to shape workflows around multiple systems.

3. Ease of Working with Customers: If IVK moved to Salesforce.com, their customer-facing loan process system could not only be improved, but the accountability that the system forces would make it a smoother process for customers in general. 

4. Improved Data Metrics and Data Quality: Data is readily available in Salesforce.com, with an almost infinite number of reports that can be run to measure employee productivity, customer conversion rates, gap analyses, etc. Data quality is much better because the system requires clean data and has ways of confirming data with customers.

5. Faster On-boarding for New Employees: Depending on the business unit, IVK uses many different systems, and often times, an employee has certain ways of doing things, certain ways of storing information. With Salesforce.com, the consistency of the system provides an easier way to train new staff and make sure they have documentation to help them get on-boarded more quickly. 

6. Increased Employee Satisfaction and Happiness: When employees know what is expected of them, have structured workflows and ways of work, and generally feel like their job are easier, they are happier and will stay with IVK longer and be more dedicated to their jobs. 

7. Employees Can Focus on Business Instead of Technology: Rather than being bogged down with many different systems and technologies, IVK can focus on business, particularly coming up with new, creative ways of generating new business. More efficiency equals more time for employees to think outside of the box. 

8. Improved Use of Mobile Devices to Access Work: Salesforce.com gives employees access to their work from many different devices. It allows IVK to offer mobile working options to employees, which as described above, leads to greater employee satisfaction and retention.

9. Support for Organizational Change: When turnover happens at IVK, a system like Salesforce.com allows them to onboard new employees more quickly, but also have different employees be cross trained so that they can move among teams as their personal skills change or evolve. 

10. Improved Company Image: Even if the beginning of the switch to Salesforce.com is difficult, with an increase in customer satisfaction, as is inevitable when switching to a CRM system, and a understanding that IVK takes itself seriously enough to stay competitive with other similar companies, the public perception of IVK will improve, which will positively impact its revenue in the long-term. 

Value of Benefits in Relation to Estimated Costs

Though the cost of implementing Salesforce.com to IVK is high, it is imperative to stay competitive with other companies who are using similar IT systems to improve their performance. As Paul Wilmott says in his video for McKinsey & Company, “The second thing that’s changed is that the cost of delivering high-end IT solutions is reducing all the time. Historically, it would have been very expensive, and a lengthy process, to deliver a highly functional technology solution which customers would want to use. That’s no longer the case—it can sometimes be done now in just weeks or months” (2014). For a company like IVK, the benefits, both tangible and intangible, could potentially outweigh the costs. IVK currently uses many systems that do not all work together, and Salesforce.com can offer them a consistency and accountability that will keep their customers satisfied and retained, and grow their loan operations business. As we can see in Figure 3, Salesforce.com is truly a customer relationship management system, and that's what IVK will gain from it. In the past 8 months IVK has suffered with an image perception problem, with a risk of losing their customers' faith in them, potentially causing them to move to a competitor. With Salesforce.com, business profitability is increased, but most importantly- and the reason why the intangible benefits are so vital and intertwined with those that are tangible- customers are able to interact with IVK in a way that is more streamlined. This not only gives customers the short-term satisfaction of receiving their loan in a timely manner, but shifts the perception of what IVK is like as a company in their minds. Again, while the cost of making a large investment like this is high for IVK and perhaps ill timed due to recent security issues, it is an investment that IVK could potentially see the benefits of in the future. 

See: “Analysis of Costs, Benefits and ROI of CRM Implementation” by Lun Hou and Xiaowo Tang for more information:  http://iceb.nccu.edu.tw/proceedings/2004/Paper/CN090-paper.pdf

References

CRM Value Calculator. (n.d.). Retrieved October 27, 2015, from http://www.salesforce.com/crm/roi/

Dick Wooden. (n.d.). Intangible Results Gained with Customer Relationship Management. Retrieved October 27, 2015, from http://www.successwithcrm.com/blog/bid/34615/Intangible-Results-Gained-with-Customer-Relationship-Management

Gallaugher, J. (2015). Setting the Stage: Technology and the Modern Enterprise (Vol. 2.0). Flat World Knowledge. Retrieved from http://catalog.flatworldknowledge.com/bookhub/reader/12375?cid=#fwk-38086-ch12

Gary Diorio. (2013, March 4). CRM Returns $5.60 For Every Dollar Spent. Retrieved October 27, 2015, from https://www.cloudsherpas.com/partner-salesforce/crm-returns-5-60-for-every-dollar-spent/

Jim Fitzgerald. (2011, June 10). Selecting Metrics to Demonstrate IT Value. Retrieved October 27, 2015, from http://www.cio.com/article/2407266/business-analytics/selecting-metrics-to-demonstrate-it-value.html

Lun Hou, & Xiaowo Tang. (2004). Analysis of Costs, Benefits and ROI of CRM Implementation. The Fourth International Conference on Electronic Business. Retrieved from http://iceb.nccu.edu.tw/proceedings/2004/Paper/CN090-paper.pdf

Richard Morochove. (n.d.). The Benefits of Using CRM Software. Retrieved October 27, 2015, from http://www.allbusiness.com/the-benefits-of-using-crm-software-7398840-1.html

WebProNews. (2004, April 27). CRM ROI: Fact or fiction? - WebProNews. Retrieved October 27, 2015, from http://www.webpronews.com/crm-roi-fact-or-fiction-2004-04/

Wilmott, Paul (2014, May) Digital Strategy. McKinsey & Company. Retrieved October 27, 2015 from http://www.mckinsey.com/insights/business_technology/digital_strategy