New IDC Study on Implementing Customer Relationship Management Applications Reveals Impressive ROI

FRAMINGHAM, MA – FEBRUARY 2, 2004 – According to a recently completed return on investment (ROI) study from IDC, successful implementations of customer relationship management (CRM) applications have yielded returns ranging from 16% to more than 1,000%. IDC also found that technology-related savings account for only 7% of the average return, while benefits accrued from increased productivity and business process enhancements account for 51% and 42% of the return.

"The net impact on an organization can at times be subtle and distributed throughout the enterprise," said Mary Wardley, vice president for IDC's Customer Relationship Management Applications research. "Cost savings and productivity enhancements can be evidenced in saving a sales person twenty minutes per week in writing activity reports or answering four times the volume of Web-based service requests in the same amount of time."

Other key findings from IDC's ROI study, The Financial Impact of CRM, include:

— 19% of the companies that participated in the study generated an ROI of 50% or less, 52% generated an ROI between 51% and 500%, and 30% reported returns of 501%.

— 58% of participants experienced payback in one year or less, 35% experienced payback between one and three years, and 8% experienced payback in three years or more.

— The median initial investment in a CRM application is approximately $426,000, which includes the accumulation of all costs incurred before the CRM implementation enters production at a site. The median total cost over the first five years is estimated at $1.2 million.

Wardley added, "Companies are seeking to create a transparency that masks internal divisions and complexities, enabling their customers to feel that they are dealing with one organization. The road to transparency begins by attending to the data infrastructure – the rationalizing and centralizing of customer information for use throughout an organization – and extends to integrated customer processes."

"At a time when major IT investments are subject to unprecedented levels of scrutiny, the ROI attained by organizations through CRM implementations is notable," said Henry Morris, group vice president of Applications and Information Access at IDC. "Over and above the numbers, the lessons and best practices highlighted in the study are instructive. Companies evaluating ROI need to look beyond purely technological measures, and achieve the best results when they focus on a pressing business problem."

IDC's special ROI study, The Financial Impact of CRM, examines the financial impact of CRM applications on the core processes that contribute to an organization's success. IDC conducted more than 30 in-person interviews with organizations in North America and Europe that have implemented CRM applications to determine success factors, identify motivations and drivers for CRM, and calculate the financial impact of the implementation on the organization.

The financial impact research methodology developed by IDC has earned the respect of the vendor, end user, and financial communities – withstanding close scrutiny to ensure that it is both accurate and financially conservative. IDC has evolved its methodology over time to reflect the most current practices of the financial community and to meet the requirements of CFOs in organizations making technology decisions. This methodology uses a standard set of financial assumptions across all case studies to ensure comparability. As a result, case studies and analysis reflect the type of real-world scenario that a company would likely face in its own decision-making process.

For more information on this study, or to purchase, please contact Erin Traudt at 508-988-6920 or etraudt@idc.com.

About IDC

IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Additional information can be found at www.idc.com .

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