CRM for the Construction Industry: Building the Business Case David Howse Professional Services Director SevenThree Limited

Transcription

1 SevenThree White Paper CRM for the Construction Industry: Building the Business Case David Howse Professional Services Director SevenThree Limited

2 Copyright 2006 SevenThree Limited. All rights reserved. SevenThree Limited believes the information in this publication to be accurate as of its publication date. The information is subject to change without notice. The information in this publication is provided as is. SevenThree Limited makes no representations or warranties of any kind with respect to the information in this publication and specifically disclaims implied warranties of merchantability or fitness for a particular purpose. CRM for the Construction Industry: Building the Business Case Page 2

3 CONTENTS 1 Introduction Building a Convincing Case for Senior Executives Reducing Project Risk - Learning from the Mistakes of Others! Why Invest in CRM? Return on Investment Gathering Support Business Case Content Summary and Checklist Conclusion About the Authors...15 CRM for the Construction Industry: Building the Business Case Page 3

4 1 Introduction The latest CRM solutions, applied to the right business challenges in the right way, can deliver huge efficiency and effectiveness improvements to your organisation. How do you justify the initial investment and ensure that the project is properly aligned with the strategic goals of your business? In this paper we will look at the steps and challenges associated with justifying a CRM project in the particular context of the Construction sector. The paper is primarily written from the perspective of the business development and marketing functions, but is also intended to provide an insight for other functions including Financial Management, IT Management and the Executive Management. The paper is intended to assist businesses that are either investing in a CRM solution for the first time or where an existing solution no longer meets business needs and a new solution is being considered. 2 Building a Convincing Case for Senior Executives Few, if any, organisations have the luxury of resources available to pursue all business improvement initiatives concurrently. Senior executives are obliged to choose where to direct available resources to best effect, with rapid payback. What should be the top priorities? Which should be pursued first? What proposals might yield the best short, medium or long term return? Executives will spend most of their valuable time concentrating on two things: business strategy and out-guessing and out-performing competition. They will hopefully realise that competing successfully requires client-facing employees to be equipped with the timely, up to date information needed to make informed decisions, consistent with strategy - whether it be agreeing specifications on a major project, closing a contract with a key client or setting up a new partnership or joint venture. What your business requires is to get that information to where it is needed to enable initiatives, cultivate innovation and deliver results. What will preoccupy your senior executives are revenues, margins and market share. Your business case must hit these hot buttons if it is to gain the support it needs to rise above other proposals in priority and visibility. The major objective of your business case should be to help your senior executives make these sound choices. They need you to convince them that your CRM initiative is worthy of CRM for the Construction Industry: Building the Business Case Page 4

5 the organisation s time, resources and cash. This analysis should be presented as a distilled and summarised business case that supports both planning and decision-making, including decisions about what to buy, when and a timescale for implementation. Remember that as senior executives they need to answer the key questions: What are the likely financial and other business consequences of taking the proposed course of action? and.. What are the likely consequences if we don t? CRM for the Construction Industry: Building the Business Case Page 5

6 3 Reducing Project Risk Learning from the Mistakes of Others! A significant obstacle that has to be overcome early in any solution selection process is a well documented history in the business press of the perceived failure of a large proportion of CRM projects - up to 70%! You should anticipate that this unhelpful statistic will most likely have come to the attention of those members of senior management whose support and approval will be required for your own project. It is helpful to dwell upon the common, core reasons for such failures before making your own proposal. In this way you make certain that your own project avoids the pitfalls and the areas of risk are confronted in your own proposal. We will consider the need for proper objectives and measures later, but if we look specifically at the core selection of an appropriate CRM package as a platform for your project, fortunately more recent software packages have been designed in specific response to these challenges. A reasonable shopping list for a package for a new project might now include the following key criteria, i.e. those items in the right-hand column. Typical Reasons for Failure Resulting Key Software Selection Criteria 1. Low or no user adoption Software should be easy to use 2. Long development/deployment cycles 3. Inflexible software 4. Complex reporting tools that frustrated rather than supported users Software should be pre-configured to your industry and highly flexible Software should have tight integration to Microsoft Outlook, Word and Excel 5. Complex IT deployments Software should be easy to deploy and low ongoing IT support 6. Lack of management vision for end objectives 7. No clear deliverables or measurable objectives CRM for the Construction Industry: Building the Business Case Page 6

7 4 Why Invest in CRM? Why do construction-based businesses invest in a CRM system? What problems or opportunities motivate them? The results of exit surveys over a large number of business seminars, run by Construction Industry CRM specialists SevenThree, reveal the following areas were considered most significant by the attendees: Other Bid Tracking Key Account Management Customer Service Communication Cross Sell/Upsell 3rd Party Lead Management Missed Opportunities Quote Conversion Figure 1: CRM Project Priorities in the Construction Industry Percentage of respondents 4.1 Return on Investment An important element of your business case will be to demonstrate financial payback. A comprehensive and defendable Return on Investment (ROI) for a CRM project capable of withstanding close scrutiny by the Finance Director has historically provided challenges. Many of the objectives and deliverables involve soft areas such as improved win rates, better client knowledge, higher levels of client satisfaction and reduced administration. It may be possible to demonstrate and quantify significant cost savings from improved efficiencies attributable to a CRM solution and we will consider some potential areas later. However it must be accepted that some objectives will be measurable in the profit and loss account, whilst others will require judgement and feel good factor. Position this early in your proposal! CRM for the Construction Industry: Building the Business Case Page 7

8 Here are some general and specific areas that might contribute to a ROI for your project illustrated by just some of the benefits achieved by SevenThree clients: Know your market 1. A single source of all information regarding past, current and potential clients so that you can identify your most profitable clients, industry sectors and geographies as well as those that offer the biggest future potential. 2. A single source of all information regarding project specifiers and influencers so that you have the facts regarding their loyalty and effectiveness and can plan future commercial activities accordingly. 3. A single source of all information relating to past, current and future construction projects with the potential for your services so that you can determine which projects are won and lost (and why) and measure your performance against your competitors. It s been of great advantage to have all our client, contact and project lead information all in one place. We can all see exactly what s happening with every contact and project which has enabled a more informed decision making process. With all the information at our fingertips, our new business meetings can focus on the actions we need to take to drive the business forward. Geoffrey Osborne national contractor Efficiency 1. Huge reductions in the time taken to filter, assess and assign third party business leads from providers such as ABI and Glenigan as well as CIC and CIS in Ireland. 2. Manage the fulfilment of information requests in a co-ordinated way, together with efficient follow up and project identification. 3. Improved win rates through better co-ordinated bid teams, greater visibility of upcoming RFIs and tenders and a better understanding of the project influencers, their previous loyalties and sweet spots. CRM for the Construction Industry: Building the Business Case Page 8

9 4. Reduced business development administration and reporting overhead, releasing more valuable time to be spent with potential clients and project influencers as well as working on business-winning initiatives. We have freed up an additional 5 days a month, every month, that can be spent with clients and developing relationships and additional business opportunities EIC Limited mechanical and electrical contractors 5. Easier identification and initiation of cross-selling opportunities, so that projects identified are fully and profitably exploited. 6. Stronger client relationships through co-ordinated contact across different offices and divisions and a single, shared source of client information. 7. Improved new business forecast accuracy with benefits for operational resource planning, risk management and project delivery. 8. Improved marketing efficiency through more targeted marketing campaigns and mailings, together with the tracking of the results to provide the necessary justifications for future marketing initiatives. We know precisely how many people have attended our events and CPD courses and how many have contacted our national helpline. We can measure the totals as well as easily slice and dice the information for more in-depth analysis. The Concrete Centre central development organisation for the UK cement & concrete industry 9. Improved business margins by focusing effort and resource on those projects that offer the greatest potential return and least risk. We can now make business decisions based on fact - not hearsay and personal opinion. It ensures we focus our business development effort on those clients, markets and projects that offer the least risk and greatest opportunity EIC Limited mechanical and electrical contractors CRM for the Construction Industry: Building the Business Case Page 9

10 5 Gathering Support Be certain to gather support for your business case from key management colleagues in other departments who may be directly or indirectly involved in the project. There are few CRM projects that can be regarded as standalone systems. Operations will be in a position to support the project where tangible improvements in forecast accuracy might allow improvements in bid management. Better visibility of upcoming RFIs and tenders can help with resourcing and load levelling, particularly within the estimating teams. Finance will be better able to forecast likely revenues and their implications on cashflow particularly when phased payments have been agreed. Marketing should be able to identify significant savings by being able to use a single database with auto-mailing capability to select, build, target and execute marketing campaigns and mailings. Business Development may have a mixture of strong supporters, neutral thinkers and detractors (the latter often through fear of technology rather than resistance to change per se). Be certain to win over as many potential users as possible before presenting the business case and ensure that those members of the business development group regarded as progressive and dynamic by senior management are not amongst the detractors! IT has a vital role to play in any successful CRM project and must be fully consulted and supportive of the technical elements of any proposal. The IT element of the business case may merit a specific and supplementary submission, if it has been determined that the selected solution requires significant IT Infrastructure investment to implement. Specific areas for attention will most probably include the following: 1. Is the selected solution compatible with the current and future IT strategy? 2. Is the base software solution properly supported by a software company in the market for the long term? 3. What is required in terms of new hardware and other infrastructure to support it? CRM for the Construction Industry: Building the Business Case Page 10

11 4. Does the architecture of the new solution lend itself to low risk and low maintenance integration with other solutions? 5. Does the solution have a future proof development path? Will it integrate with emerging technologies including mobile devices? 6. Does your chosen implementation partner have a proven track record implementing CRM solutions in your business sector? Do they understand your needs and talk your language? CRM for the Construction Industry: Building the Business Case Page 11

12 6 Business Case Content Summary and Checklist Your business may have a pre-defined format for the submission of project business cases. If not, then consider the following template as a basis for submission. The Problem Clearly describe the business challenges to be addressed by the proposal. Background Information Describe the commercial opportunities and threats. The Proposed Solution Describe the proposed solution. Objectives for the Project Clearly describe what the solution is intended to achieve. If objectives will be achieved in phases with different timescales, make that clear, together with the reasons why this approach is being adopted. Current Business Processes Impacted There will be internal and external business processes that will be affected to varying degrees by the proposed solution. These processes will most likely span different offices, divisions and clients. Resource Requirements Identify in overview the resources that will be required to complete the project. The list will usually include staff, staff time, hardware, software, external services and expense and capital budgets. Alternative Strategies Identify several alternatives to the proposed solution, with summarised requirements for each, together with business risks, relative timescales and potential for delays. Remember that doing nothing is a potential strategy that always needs considering, if only to identify the true business cost of delay. Compare the Alternatives. State the Advantages of the Proposed Solution Analyse (the best way is by developing a matrix) each alternative strategy compared to your preferred solution. Measures might include relative benefits, risks, timescales and costs. CRM for the Construction Industry: Building the Business Case Page 12

13 Your preferred solution should be summarised in terms of its key advantages including ROI, cost/benefit and expected impacts on revenues, costs and profits. Other Considerations Identify any peripheral considerations other than those specifically discussed in your proposal. Examples are training requirements, business re-engineering and significant changes to some job functions and required skill sets. Plan and Recommendation Identify key steps inherent in your short, medium and long-term plans along with key milestones. Measurements Explain how you will measure the success of your project. These should tie in closely to the previously stated objectives. Where measures are, of necessity subjective, make this clear! Executive Summary This should be a maximum single page summary providing a clear and concise summary of your chosen solution. Identify at high level what research you have undertaken to reach your recommendation. CRM for the Construction Industry: Building the Business Case Page 13

14 7 Conclusion This White Paper has described several different aspects of building a convincing business case for CRM in the Construction Industry. Building a strong business case means justifying the initial investment and aligning CRM with your organisation s own specific business goals. Doing so will help you win the necessary financial and business support of your business unit managers and senior executives. In a recent industry survey of 126 senior executives in the Construction Industry (conducted by SevenThree), almost three-quarters said the industry was more competitive than 3 years ago. No organisation would dream of operating without a business strategy to reflect the ever-changing needs of clients. Maybe now is the time to build a business case for changing your CRM software strategy to reflect the changing competitive environment. CRM for the Construction Industry: Building the Business Case Page 14

15 8 About the Authors SevenThree sells and implements CRM solutions for the Construction and Building Products Industry. We are the recommended implementation partner for Microsoft CRM and Pivotal CRM in the Construction and Building Products Industry. Our combination of construction industry experience and technical expertise means we deliver a solution that fits your business, integrates with your existing applications, is easy to support and has you up and running in just a few weeks. The pre-configured Construction Industry versions of Microsoft CRM and Pivotal CRM enable you to track and manage all your clients, influencers and project leads. As a result, they help you improve win rates, spend more time with clients and project influencers and give you complete visibility of all your business development and marketing activity. Specialist versions are available for architects, consultants, contractors, building products suppliers and plant hire companies. Our clients include Altro, Amey, EIC, Kingspan Insulation, Geoffrey Osborne, Rok Property Solutions, Thomas Vale Construction and The Concrete Centre. For more information, call or visit CRM for the Construction Industry: Building the Business Case Page 15

16 For more information, please contact: SevenThree Limited Business Innovation Centre Binley Business Park Coventry CV3 2TX Tel Fax International Tel Fax CRM for the Construction Industry: Building the Business Case Page 16