A) Discussion Post. 

Question

Why is estimating the ROI of an CRM project difficult?

What need to be accounted for in  the estimation of the ROI of an CRM project? What are the major stages in such estimation?

B) Answer to 2 posts from classmates.

1)

Why is estimating the ROI of an CRM project difficult?

There are 3 main reasons that estimating the ROI of a CRM project is difficult:

1) Computing the gain associated with a CRM requires all of profit generating activities to stay constant, which is generally impossible.

2) Some costs are necessary to enable the functionality of the CRM

3) Without controls in place it is impossible to tell whether a profit is made because of or despite the use of CRM.

What need to be accounted for in  the estimation of the ROI of an CRM project? What are the major stages in such estimation?

Again there are 3 stages to ROI estimation for a CRM project:

1) Setting the Target: Set a ROI goal based on benchmarking, similar projects, and internal and external knowledge.

2) Reaching the Target: Generating ideas on how to reach this traget through internal brainstorming.

3) Building Concensus and Commitment: Reaching firm wide agreement on what the ROI goals are and how they will be achieved.

2)

Estimating the ROI of a CRM project is difficult because it must be measured over a span of time, making it not readily apparent. Computing the gain associated with a CRM project requires all other variables impacting profit remain constant and understanding what CRM investments are necessary costs to enable the CRM functionality is essential. It is important to determine what can be counted as investment in CRM so that the formula is correct. Additionally, ROI cannot be measured by only using standard cost analysis or mathmatical terms, which increases the difficulty when trying to make an estimate. Appropriate controls must be in place so that management is sure the cause of change is the CRM investment. 

When estimating the ROI of a CRM project, these ares must be accounted for: Consulting Services, Business Processes, Information Technology, Vendor Management, Procurement & Maintenance, Staffing & Training, Implementation, Costing. The major stages of ROI estimation include:

• Setting the target – determine the ROI goal of the CRM project based on historical guidelines, benchmarking, external and internal knowledge.
• Reaching the target – generate ideas of how to reach target through internal bottom-up participation, external views, consultants, benchmarks.
• Building consensus and commitment – is there agreement and ensured commitment from executives and line staff on proposed ROI goals.