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David Sims - TMCnet CRM Alert Columnist[April 7, 2005]

On-Demand Software and ROI

By David Sims, TMCnet CRM Alert Columnist

Rebecca Wettemann, VP of research at Nucleus Research has a piece in the recent issue of Information Week addressing on-demand software, and how to approach it. The entire article is worth a read; her main points are as follows.

On-demand solutions have gotten a lot of marketing hype in the past 12 months, Wettemann writes, but “making decisions that maximize ROI requires going beyond marketing, both in the purchase decision and in managing the ongoing use of technology.”

First, she advises, “appreciate what you’re getting.” Free trials, quick deployments, and per-month pricing may make on-demand solutions seem more like a magazine than a business application. As the functionality of on-demand solutions grows, and your users come to rely on them, they become more and more difficult to switch or turn off, even if they’re not delivering positive ROI. Before you move to a “basic” on-demand solution for sales-force automation or another business function, make sure you evaluate your options, do a quick cost-benefit analysis, and get management engaged “otherwise, your cheaper deal may just be a cheaper mistake.

Another fallacy about on-demand is that users don’t need training. One company deployed an on-demand sales-force automation solution because it was “almost free” -- but found that without any clear view on how to use it, users never touched it. Even basic training on a solution can improve adoption, help you to identify barriers to maximizing value, and give you power users that can drive configuration of the solution that will support key business needs you may have missed.

Secondly, “be creative about getting more value.” Grandma always used a tea bag twice and saved those egg cartons -- you never know when you might need them. Wettemann won’t advocate saving egg cartons in your office, but she would suggest “continuing to look at on-demand solutions with a fresh eye for how they can be leveraged for more value.” Remember, just because they seem cheap doesn’t mean you should stop thinking about how to leverage them for greater returns.

Thirdly, “take a sweater.” You never know, it might be chilly later. Or your sales team could downsize, or acquisition could require you to bring 100 new employees on board quickly. Even with an on-demand solution, it helps to be prepared. That simply means knowing where you’re getting value today, where you plan to get value in the future, and being aware of changes in the weather. On-demand gives you greater flexibility to take advantage of new opportunities and weather business challenges, but only if you’re prepared to use it.

David Sims is contributing editor and CRM Alert columnist for TMCnet.

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