CABINET 18 th May Report of the Director of Partnerships and Customer Services

Transcription

1 CABINET 18 th May 2006 Report of the Director of Partnerships and Customer Services ITEM 12 CRM Development Purpose of the Report To present the business case for replacement of the Council s Customer Relationship Management System. Recommendation 1. That the sum of 250,000 allocated in the IEG capital programme is released to support this project. Reason 1. To confirm funding to enable this project to proceed. Policy Context The Council is committed to improving services to customers using new and innovative technologies where supported by a business case and having regard to the requirements of central government. Background At its meeting on 9 th February, the Cabinet resolved: 1. that the procurement of a replacement Customer Relationship Management system, with delivery of this initiative overseen by a Project Board be approved in principle; 2. that a sum of 250,000 be earmarked in the IEG provision in the Capital Programme 2006/07 to support the project. Approval is now sought to release the funding to enable the procurement process to proceed based on the business case summarised below and presented in more detail in the Business Case Report. That report considers the strategic, economic, and technical implications of the CRM proposed project. In particular, the main benefits, costs involved, associated risks, and alternative options are considered. CRM is about managing customer's interaction with the Council - using a database, which holds customer's records, to deliver services across different access channels, and enabling joined-up and automated service delivery. CRM is at core of the future of the Council s operations. The technology will underpin face-to-face,

2 telephone/sms and /web transactions (as well as enabling mobile working). While this is not simply about the technology, the right technology is key to delivering a vision of improved customer service across the organisation. When service users contact the Council, they expect staff to have access to comprehensive, accurate and up to date information about them and their interactions with the Council (and potentially with associated agencies). Without integrated customer services supported by an effective CRM, the Council will be perceived as a number of different services and not as a whole organisation; with customers having to drill down into the Council s structure and divisional operations to get information or service required. For example, one of the concerns in the Housing Inspection Report was customers having several telephone contact numbers depending on the nature of the enquiry. This segmentation of customer service is not considered a best value approach by the customers as it is both confusing and time-consuming. Central to the future use of CRM within the Council is its ability to: accept enquiries from the widest range of access channels, match and authenticate customer details provide a single view of case histories so that all those involved in a process have the same up to date information on the status of each transaction; and dynamically integrates with the key back office systems. provide intelligence of customer preferences and support personalisation of services to meet better the needs of individuals. enable the progress of customer enquiries to be monitored effectively, ensuring that the correct procedures are acted upon quickly and in the right order, and so improving service responsiveness and quality. to give consistently good levels of service in ways designed to meet customer needs no matter how customers choose to access the Council. to support improvement in processes so they are designed around customer requirements and offer value for money. The pilot deployment of CRM for housing services and its subsequent extension to cleansing services demonstrated the value and potential of CRM technology in improving services to the public. In 2005/6, the Customer Contact Centre handled 108,409 calls for housing and cleansing services alone, representing 80% of calls offered for those services. The Customer Service Centre is handling on average just over 5,000 enquiries each month (60,000 per annum), resolution of most of which are reliant on Advisors using a variety of computerised systems. Performance of these customer-facing services is heavily dependent on the information held about customers and the speed and ease of access to back office systems. Steps are being actively taken to develop performance of services to customers and key to that is an effective CRM that will enable routine enquiry volumes to be handled more effectively ( across the range of customer access channels) and ensure responsiveness to peaks in customer enquiries. While the original CRM system has proved the case for use of this type of technology, it is now the view that replacement is now required to meet the

3 challenges facing the Council to deliver modern customer focussed services as described above. That evaluation has been informed by the following IEG Priority Outcomes that the Council needs to meet: R27 - Systems in place to ensure effective and consistent customer relationship management across access channels and to provide a 'first time fix' for citizen and business enquiries, i.e. using a common database, which holds customer's records, to deliver services across different channels, and enabling joined-up and automated service delivery. R28 - All and web form acknowledgements to include unique reference number allocated to allow tracking of enquiry and service response R29-100% of enquiries from the public responded to within one working day, with documented corporate performance standards for both acknowledgements and service replies G8 - Establishment of a single business account (i.e. a cross-departmental account run by the local authority whereby businesses are allocated a unique identifier that can be stored and managed via a corporate CRM account facility supporting faceto-face, website and contact centre transactions). G24 - Integration of customer relationship management systems with back office activity through use of enabling technology such as Workflow to create complete automation of business process management. Note has also been taken of the Key Lines of Enquiry used by the Audit Commission when inspecting Councils on Customer Access a themed inspection that is planned to be carried out in Charnwood in early The Inspection focus goes on to say An accessible and user focused organisation places the customer at the heart of service delivery. It knows what local people want and has organised itself to deliver this. Developing a more user-focused approach is a legislative obligation, in terms of its links into equality, diversity and human rights, it is also part of good management and of providing high-quality services to meet user needs. An effective CRM system is at the heart of delivering this standard of customer service. One of the Audit Commission criterion defining a high performing council is: The council systematically shares information held by service units on specific customer needs across the organisation. This is likely to be through an effective customer relationship management (CRM) system and Staff and councillors are knowledgeable and supportive of the use of CRM. The following recommendations from the recent Housing Inspection Report are also relevant: R1: Improve access to services and standards of customer care An effective CRM is crucial to successful implementation of this recommendation through developing an effective front office system in which customers will receive the same standard of service across multiple access channels, the front office staff will have the whole picture of the customers

4 interactions with the Council and can therefore communicate the necessary information to the customer. R8: Strengthen the approach to efficiency and value for money by developing systems for analysis of unit costs and external benchmarking against external organisations for all services and R7: Strengthen the approach to performance monitoring and management A significant contribution can be made to achieving these by automating the performance measurement function into a new CRM system. In particular, the system will enable performance information about customer access to services to be routinely collected and reported to senior offices and councillors. To support delivery of the customer-focused approach described above the requirements for an effective CRM have been established in a functional and technical specification. The existing CRM system has been compared against that specification. The existing system does not meet the Council s development needs in the following vital areas: (a) future integration potential; (b) user capacity; (c) R&D investment by the current supplier (updates, user support etc); (d) general competitiveness of the supplier (value for money). It is concluded, therefore, that the existing system needs to be replaced. Initial estimates for a new CRM solution, based on assumed capacity of 50 front office and 100 back office users, are around 250,000, of which software is estimated to cost in the region 150,000 and services - 100,000. Annual revenue costs are expected to be around 40,000. The detailed cost breakdown is not available at this stage of the project implementation cycle. The costs of replacement were also compared with the costs of extending the existing CRM system. The current system has annual revenue costs of 23,600, which will rise to 51,370, if the user base is increased to 150. The Council will also need to incur additional capital costs of around 160,000, including additional software costs of 90,000. The risk that such upgraded system will not meet the Council s functional requirements and will simply duplicate and magnify the problems inherent to the old system, is estimated as high probability and high impact. Therefore, this option is considered not strategically or economically viable. The comparative costs of the existing CRM system and the proposed replacement CRM are: Costs by category Option 1 Option 2 A Proposed Extended Existing* Replacement CRM

5 Marginal Capital costs 161, ,000 of which: Software 96, ,000 Services 14, ,000 Integration & BPR 50,000 Revenue costs Maintenance 51,370 40,000 of which: Marginal maintenance (increased capacity) 27,770 40,000 Current maintenance 23,600 * Notes: Capital costs and maintenance costs estimates are based on the quotes obtained from the current CRM provider. Capital costs include additional licences expenditure, hardware costs, and installation. There is also an additional cost of integration and business process re-engineering exercises (either outsourced to an external consultant or performed in-house). The project life cycle is assumed three years. Anticipated benefits can be divided into quantifiable benefits, which are mainly of financial nature in the form of cost savings, and qualitative improvements in service delivery, which contribute to the overall strategic objectives of the Council. A more effective CRM will also support the intention of encouraging those customers who are able to make use internet and telephone services, which are less costly per transaction than face-to-face. Introduction of a new CRM will be supported by reviews of all key processes. That should lead to the reduction in the unit costs through elimination, automation, improvement and combination of inefficient processes. An analysis of cost savings based on a national research and projected call volumes of timesavings in effective deployment of CRM suggest a payback period of about 4 years: Investment (250,000) 2006/ / / / / /12 Savings 54,955 59,065 63,489 68,252 73,380 Balance (195,045) (135,980) (72,491) (4,236) 69,144 Notes: The analysis is performed under assumption of 70% CRM coverage of two services: Housing and Cleansing, where the annual growth in the volume of calls is projected 5% and 8% correspondingly. Time savings per enquiry due to improved processes efficiency are estimated 2.51min per enquiry for Cleansing and 6.07min per enquiry for Housing (Source: CRM academy website case studies); financial savings are based on payroll estimates of 0.13 per min and translate into 0.23 per enquiry handled for Cleansing and 0.55 per enquiry handled for Housing. It is expected that the annual call volume will increase due to both improved efficiency and more processes/services added to CRM. There are additional time (and financial) savings resulting from transferring new processes from manual handling to CRM. However, these are difficult to quantify at this stage and therefore are ignored in this analysis. See the business case for more details of the analysis. To achieve a successful CRM implementation with satisfactory integration across channels and between back and front office, an agreed architectural approach is needed. An overview of the proposed CRM architecture is presented in Appendix A.

6 Over time, the CRM system will be deployed across the range of services provided by the Council. A strategy of narrow service coverage with deep integration is planned for implementation rollout. Within this approach, the Council will integrated one or more services from back to front, gradually adding more services and more access channels. Several procurement options have been considered. The option of a single managed integrator is recommended as the most suitable. The analysis of suppliers market has identified several market leaders. After additional investigations into industry s recent trends and developments, it is concluded that the current market leaders are likely to maintain strong market share in the future and, therefore, do not represent the procurement risk from the project s point of view. Other key risks of the CRM project have been identified and grouped into the following categories: Organisational risks; Technical risks; Business risks; Procurement risks; Implementation risks; Security risks. The analyses of strategic, economic and technical cases of the proposed CRM deployment, together with the identified risks and their preventive and counter actions, conclude that the prospects of successful project completion remain realistic and favourable. Key Decision: Background Papers: No Business Case Report Officer(s) to Contact: Galiya Benson galiya.benson@charnwood.gov.uk Steve Phipps steve.phipps@charnwood.gov.uk

7 Appendix A: Proposed CRM System Architecture Customer Multiple Access Channels Face to Face Telephone Web Mobile Other Customer Database Customer Management Function Property Database Workflow Functionality Integration layer External links: CBC partners; NHS direct, Gov. connect Revenue & Benefits Housing Cleansing Environmental health Planning Building control Other applications Licensing Leisure Business Council rates tax