Software ROI: Praise for CRM, Raves for Analytics

Recent research into the return on investment of various business software purchases offers eyebrow-raising results for customer relations management products: a stellar $5.60 for each dollar invested. But the ROI for software that helps companies understand business analytics – in such areas as business intelligence, performance management and predictive analytics – scores even higher: $10:66.

The ROI figures are included in analyses done by the Boston-based IT advisory concern Nucleus Research, and being released in two bursts, this week and next. [See the reports appended at the end of this article.]

The evidence of such high returns from analytics software – in the report being readied for next week -- leads to two conclusions, David O'Connell, principal analyst for the research firm, tells CFOworld.com. “First, vendors have delivered on the promises of better visibility and more informed decision-making,” he says. “Second, companies increase their bottom line when employees have access to more data and make better decisions.”

‘Balk at Your Peril’

Nucleus notes that, once deployed, analytics tools can lead to changes in decision-making that result in “unexpected improvements in profitability, leading to higher ROI,” and establishing competitive advantage. It adds that “organizations that balk at this opportunity do so at their own peril,” says O’Connell. “With so many organizations opting not to invest in analytics, those companies that leverage this technology to learn more about their customers, products, and costs will be in a strong position to cost effectively grow their business at the expense of rivals.”

In the view of Nucleus,analytics create higher visibility for revenue, margins, and expenses. In addition to lifting profit, it says, it can create “the ability to eliminate manual processes for report builders and accelerate analytical processes for decision-makers in a variety of roles across the organization.”

Nucleus draws its conclusions from the study of 59 case studies in the BI realm, and 71 for CRM, according to Rebecca Wetteman, Nucleus vice president of research. About 60% of the companies in the BI cases are U.S.-based, with around 80% of the CRM cases being U.S. 

The report gives the example of Concept One Accessories, which adopted IBM Cognos Express and achieved “granular cost analyses of the company’s licensing agreements [that] enabled the organization to become more selective about license renewals and increase its gross margin.”  In another case, after an SAS system was deployed at Daiichi Sankyo, it helped make more clinical research data available internally so that third-party research costs were cut sharply.

In both its analytics-software and CRM-software studies, non-U.S. deployments were expressed in dollars for comparison purposes, Nucleus says.

The Productivity Edge

The heightened CRM values reflect the software’s ability “to deliver significant ROI throughout its lifecycle, often enhanced by further investment,” according to Nucleus, which notes that other some software areas have smaller incremental returns after their initial deployments. Those secondary CRM applications include mobile, social, marketing optimization and sales-related ones, and they can lead to improved business forecasting and higher revenues, as well.