The other day I was asked by a consultant to give him some hard ROI data on how the Channeltivity PRM impacted revenue. Now, I am a huge believer in breaking everything down to an ROI when it comes to any expenditure. But it dawned on me when asked, that after 20+ years in the software industry, I had generally accepted that I need an ERP or Accounting System and CRM to run my business.
I had completely stopped questioning ROI of these systems. Neither of which, could I attribute a revenue number to. Both of which were questionable as to their time savings, in fact most have created additional process and effort according to my team. Both undeniably, I could not run my business without. So what of ROI? It’s in there somewhere. But where?
ROI is a pretty simple calculation. blah blah revenue increase, blah blah cost decrease blah blah time factor, what you paid…= blah blah ROI plus or minus blah blah…
So lets test something… go ask ten people in your company what caused the uptick in sales (some of you may have to do this hypothetically). Count how may say the CRM system. Go ask your team what caused the uptick in margins. Count how many say the accounting system. If you came up with zero on both counts: I’m not surprised.
My point is, the ROI in all enterprise software lies in the hands of those using it. It’s only a tool. The nature of all tools is to save time. There in lies the issue with calculating ROI for software. We are very obvious in our calculation of time savings when it comes to tools.
No one will argue the time savings created by a carpenters hammer and thus will not even bother calculating an ROI. But if one is not familiar with all that is required to build a solid structure, he might dismiss or disbelieve the ROI of a carpenter’s level. It’s five times more expensive than a hammer and it cannot drive nails. It is not obvious how it saves time at first glance. In fact, it would appear that its use slows the carpenter down.
But without the level, the carpenter and crew will find themselves solving problems they created earlier, correcting for past errors, compensating for weaknesses in the structure, redoing work that could not be compensated for, or worst case having their structure collapse as they were building destroying what value had been created.
No one argues the ROI of the level after catastrophic failure. But this is not the norm. The norm is just less than optimal output, incremental time drains, inefficiencies and rework and it mostly goes unnoticed because rework looks an awful lot like work. It’s hard to measure. So it’s hard to justify the need for the level.
In short, the carpenter’s level increases the value of every swing of every hammer. You can’t measure it but everyone can see how it creates future efficiencies less rework and avoids catastrophes.
Enterprise software whether, ERP, CRM or PRM are similar to the carpenter’s level. They increase the value creation of time spent at certain activities, by guiding decisions and ensuring a stable foundation for continued growth.
If you are building a channel, you need to provide the right tools for success. Your ultimate value creation will be in your team ability to make good decisions in a timely manner. A PRM will keep your channel on the level by facilitating productivity and providing visibility and measurement across all activities.