Feature

Technology ROI Awards Shine Spotlight on Diverse Group of Winners

10 companies that made IT investments pay off
The spreadsheet was known around Palmetto Health's IT department as "the big ugly."

And ugly it was. This weighty, detailed tracking of 1,690 different reports that the Columbia, S.C.-based health care provider cranks out contained all manner of hospital financials and operations and patient information. It included everything from admissions, discharges and billing to insurance claims and census data.

"Our IT data center was printing 3.5 cases of paper per day, and paying out about $35,000 in overtime annually," says Mike Rushing, manager of IT administrative applications at Palmetto, a $1.3 billion trio of community hospitals. Every day a van would pull up to the offsite data center, load up cartons of paperwork and haul them off for delivery to as many as 400 employees.

But no more. This month marks the wrap-up of its two-year project to install an automated report distribution system (Report2Web from Redwood Software Inc.) that provides secure online access to every one of those reports. And Palmetto Health is reeling in the ROI. Its return on investment for this $206,790 project includes substantial reductions in paper expenses, a 61% drop in overtime labor costs and the hard-to-quantify but notable rise in user productivity and satisfaction.

Palmetto Health's successful project lands it squarely among the 10 winners of this year's Nucleus Research/CIO Decisions Technology ROI Awards.

The award winners are as diverse a group of companies as their reasons for launching these technology and business initiatives. Some focused on customer relationship management (CRM) implementations, while others turned to supply chain and logistics improvements, email system upgrades or project portfolio management.

Audiovox Electronics Corp., for example, spent about $160,000 to roll out a Web-based customer self-service application (from RightNow Technologies Inc.) that has saved an estimated $2.7 million in costs over the past three years while improving its customer response rates.

On the high end, and the high seas, the U.S. Coast Guard invested more than $18 million to revamp its supply chain and logistics management with business intelligence (BI) software from Cognos Inc. Having one cohesive data view led to $500,000 in cost avoidance in the first year alone, mainly due to improved visibility into the status of parts orders.

What our winners have in common is a proven track record -- the ROIs they show today are the product of multiyear efforts, in most cases -- and a focus on delivering tangible, measurable benefits that ultimately justified their companies' expenditures.

"Doing an ROI analysis is part of alignment," says Kavin Moody, an awards judge and executive director of the Center for Information Management Studies at Babson College. "ROI is part of that process of speaking 'business' to business people."

But an ROI number alone can be misleading, he adds. "The ROI might be high, but the investment might have been only a dollar. It's just a part of the story, not the story." As important as cost savings and a good ROI, Moody says, are process or productivity innovations that advance the business.

James Woolwine, CIO of Majestic Insurance in San Francisco, agrees. He evaluates IT project success by several variables: ROI, payback time, degree of difficulty, and overall impact on the company. "I'm a firm believer in governance, and that means IT and big projects are aligned, with everyone going after one goal," says Woolwine, another awards judge. "ROI is one component -- not the Holy Grail."

In fact, the human component and how well it's handled in the course of a project rollout can be just as important as an impressive bottom line, adds Ian Campbell, CEO of Nucleus Research Inc. in Wellesley, Mass. "You can put any application in, but if people don't use it, the ROI is negative. What's important is the recognition by the team early on that getting buy-in from the people using it has to happen."

What follows are profiles of three of our winners -- BridgeStreet Worldwide, the U.S. Coast Guard and Audiovox Electronics Corp. -- each of which exemplifies the project leadership and business alignment we honor with these awards.

-- Maryfran Johnson

The 2005 Winners List

Palmetto Health
Location: Columbia, S.C. Industry: Health care Business Drivers: Costly, resource-intensive document management; HIPAA compliance requirements. Project Type and Total Cost: Automated report distribution; $206,790. Application: Redwood Software Inc.'s Report2Web Annual ROI: 256% Benefits: Enabled significant savings in paper and printer expenses; reduced employee overtime; delivered high user satisfaction with secure online information access.

BridgeStreet Worldwide
Location: Arlington, Va.
Industry: Hospitality/Corporate Housing
Business Drivers: Strong need for cross-market selling and for information-sharing among highly territorial salesforce that was using outmoded, homegrown Microsoft Access databases.
Project Type and Total Cost: Web-based CRM; $412,720.
Application: Salesforce.com's CRM suite
Annual ROI: 153%
Benefits: Fundamentally changed sales culture and collaboration; enabled a 10% increase in annual sales growth and a 42% growth in individual sales per person since 2003.

Big River Telephone Co.
Location: Cape Girardeau, Mo.
Industry: Telecommunications
Business Drivers: Acquisitions; rapid growth.
Project Type and Total Cost: Integration of CRM and customer support; $179,200.
Application: Sage Software's SalesLogix CRM Suite
Annual ROI: 1,139%
Benefits: Enabled high customer satisfaction ratings; better positioned company for future expansion in rapidly changing VoIP market.

Audiovox Electronics Corp.
Location: Hauppauge, N.Y.
Industry: Consumer electronics
Business Drivers: Customer service department overwhelmed by e-mail and phone inquiries after corporate Web site launch.
Project Type and Total Cost: On-demand CRM (Web-based customer self-service); $162,392.
Application: RightNow
Technologies Inc.'s RightNow Service applications
Annual ROI: 1,989%
Benefits: Increased staff productivity (more than $50,000 in savings over three years); reduced customer response costs; resulted in fewer abandoned online purchases.

Compugen Inc.
Location: Ontario, Canada
Industry: IT Professional Services
Business Drivers: Lost consulting opportunities; poor resource utilization during business shift from technical infrastructure services provider to project-based consulting.
Project Type and Total Cost: Hosted project portfolio
management; $222,928.
Application: Project Arena's PPM tools
Annual ROI: 641%
Benefits: Increased profitability by 500% while growing business by 400%; provided greater visibility into project pricing; improved professional services delivery.

Lifetime Products Inc.
Locations: Clearfield, Utah and China
Industry: Manufacturing (outdoor furniture, playground equipment)
Business Drivers: Lack of remote e-mail access left sales people and executives out of touch while traveling in China.
Project Type and Total Cost:
E-mail system upgrade; $97,430.
Application: Microsoft Corp.'s Exchange 2003
Annual ROI: 2,206%
Benefits: Improved employee productivity by 40% through remote connectivity and spam filtering; avoided hiring additional IT staff for e-mail support.

National Institutes of Health
Location: Washington, D.C.
Industry: Government
Business Drivers: Ensuring the security and performance of a network used by internal and external scientists to rapidly share and analyze information about infectious diseases.
Project Type and Total Cost: Active Directory analytical, monitoring and troubleshooting tools; $114,960.
Application: NetPro Computing Inc.'s Directory Analyzer,
Directory Lockdown and DNS Analyzer.
Annual ROI: 492%
Benefits: Improved performance while reducing IT troubleshooting and security monitoring costs; increased productivity of 5,000 scientists across a distributed network of research institutions.

International Truck and Engine Corp.
Location: Warrenville, Ill.
Industry: Automotive/manufacturing
Business Drivers: Need to reduce the 10 days required to close the books at month's end, to provide financial data to executives more quickly and improve decision-making.
Project Type and Total Cost: Enterprise data warehouse and Web-based KBI (Key Business Indicator) portal; $4,270,960.
Application: Ascential Software Corp.'s DataStage (since acquired by IBM), ETL products
Annual ROI: 371%
Benefits: Saved 26,700 work hours in 2004 (avoiding costs of $1.5 million annually) from business process improvements; enabled executives to act more quickly by delivering timely, accurate information; provided analytics to more than 1,100 decisions makers through the KBI portal.

Shands HealthCare
Location: Gainesville, Fla.
Industry: Health care
Business Drivers: Limited, time-consuming process for decision-making based on data analysis wasted executive time, slowed planning efforts and caused financial problems.
Project Type and Total Cost:
BI system; $1,160,000.
Application: Business Objects SA's Enterprise XI
Annual ROI: 1,300%
Benefits: Improved staff ability to track and manage financial, operational and patient information courtesy of sophisticated BI dashboards; saved $9 million annually by reducing average length of hospital stays and accelerating patient-care delivery.

U.S. Coast Guard
Location: Washington, D.C.
Industry: Military/Maritime Service
Business Drivers: Logistical and supply chain inefficiencies in tracking parts; lack of Web presence for timely information exchange.
Project Type and Total Cost: BI and Web portal; $18,094,086.
Application: Cognos Inc.'s Upfront, PowerPlay and Impromptu
Annual ROI: 100%
Benefits: Opened door to greater efficiencies; improved visibility into supply chain; enabled major process improvements.

Methodology
ROI calculations are based on Nucleus Research's independent analysis of the expected costs and benefits associated with the application profiled. Total cost includes pre-start plus three years of expensed costs, including software, hardware, consulting, personnel and training. A spreadsheet listing each winner's annual benefits, depreciated assets, depreciation schedule, expensed costs, financial analysis and financial assumptions can be viewed online at www.ciodecisions.com/clickthroughs.

The financial modeling tool, format and methodology are copyright Nucleus Research (www. nucleus-research.com).

BridgeStreet Worldwide
The project: Web-based CRM
The ROI: 153%

The story: When Arlington, Va.-based Bridge-Street Worldwide, a $110 million corporate housing provider, implemented a Web-based tool (from Salesforce.com) for its national sales team to centralize customer information, it achieved striking results. Among them: a 10% increase in overall revenue despite a 50% salesforce reduction; an average increase in sales per person of 42%; and an extreme makeover of the widely dispersed organization's culture.

Prior to this overhaul, BridgeStreet's 60-plus outside sales representatives, who are scattered across the globe, had grown increasingly territorial. Information-sharing was rare because everyone used isolated, homegrown Microsoft Access databases to manage their clients. The reps spent their days calling companies to find the people responsible for temporarily relocating employees and recorded their findings -- but only in the application on their desktops. Having these details trapped on individual computers didn't exactly lend itself to any sharing of best practices, says Jon Wohlfert, senior vice president of sales and marketing.

So in late 2003, BridgeStreet President Lee Curtis approved $220,000 for an application to centralize the data. After evaluating applications from Salesforce.com, Siebel Systems Inc. and one other hosted vendor, BridgeStreet selected Salesforce.com because of its "ability to hard-code our sales process. It also helped to constantly remind the sales team of our sales process," explains Wohlfert, who led the four-month project and is the organization's most senior IT person.

The cutover went fairly smoothly, although the learning curve was steep in places. "Some senior sales people had trouble adopting as quickly as we thought they would, but we're holding bimonthly WebEx conference calls to help," Wohlfert says.

Along with a boost in sales came the ability to better track productivity, which enabled the cuts in headcount. It also helped with recruiting. "Having a sophisticated CRM [system] made BridgeStreet a more attractive employment opportunity, allowing us to hire stronger players," Wohlfert explains.

Most importantly, the software redirected the company culture toward one of information-sharing. "In my experience, sales has a sense of 'This is my account, my client,' but that wall of mistrust is gone. More knowledge is good for everyone," Curtis contends.

Apparently so. Over the past year, the sales team has brought in 22% more new accounts. "Centralizing our data and providing a more open sales environment helped alleviate almost all of the concerns," Wohlfert says.

For other companies investigating a hosted application like Salesforce.com, Wohlfert and Curtis recommend looking very closely at customization needs. "Be careful to stay on course with what your company's mission is and not get caught up in the bells and whistles," Curtis warns. "The beauty of Salesforce.com is the ability to customize to match your sales process. That's the most important thing."
-- Sarah Lourie

Audiovox Electronics Corp.
The project: Web-based customer service
Tthe ROI: 1,989%

The story: Customer service is a huge priority when you're in a highly competitive market like consumer electronics. Customers need immediate help setting up cell phones, playing a DVD in their home theater system or hooking up their PDA to a computer.

Dealing with such customers was a big problem for Audiovox Electronics Corp., the $567 million Hauppauge, N.Y.-based consumer electronics retailer. And at the heart of that problem was the company's static Web site. Online help consisted of two low-end options. The first was calling a phone number listed on the site. This moved typically landed customers in long queues because of Audiovox's growing call volume. The second was e-mail, which the company's customer service reps didn't have a good system for handling. The result was poor service and unhappy customers.

"We couldn't handle the volume, and we had no historical data. We couldn't judge how good or how bad our customer service reps were," says Carl Peters, assistant vice president in charge of service at Audiovox. "We needed a system that helped us manage the volume and statistics to help us manage our customer service."

So the company turned to RightNow Technologies Inc.'s customer service software. The goal was to transform Audiovox's static Web site into a model of online self-service. The RightNow Service application enables Audiovox customers to get the information they need about their electronic devices on the site or to submit a question via a Web-based form that Audiovox can easily route and track. Features such as the frequently asked questions (FAQ) section offer quick answers to commonly asked product or service questions. Customers can also view owners' manuals and download software upgrades.

The benefits were immediate. "We had received a lot of complaints [from customers], and now it's remarkably lower," says Frank Falco, an Audiovox Web developer and lead on the project.

Company officials estimate that the system, which went live in 2001, saved Audiovox more than $50,000 in employee efficiency over the next three years. That's primarily because the application can handle e-mail requests twice as fast. Other savings have rolled in from avoided costs in additional e-mails and phone calls; this figure is calculated by determining the number of completed sessions on the site.

"The system was a direct savings to our bottom line. It created more proficient customer service reps," Peters says. "It provides me with more intelligence so I can make managerial decisions."

The company plans to expand its implementation and will upgrade to a new version soon. "I want to keep going with it," Peters says. "E-mail is growing -- it's a tool, a 7/16-inch wrench. And you don't want to lose that from your toolbox."
-- Stefanie McCann

U.S. Coast Guard
The project: Business intelligence
The ROI: 100%

The story: The U.S. Coast Guard prides itself on providing life-saving services to those at sea, but until recently the agency was drowning in its own data. Outdated systems and frustrated employees led the agency's Aviation Division on a search-and-rescue mission for technology that would make operations at its 26 air stations run more efficiently.

The tool of choice turned out to be BI software that now provides 6,000 users with the ability to access flight schedules, supply chain information and operational systems via the Web. The project, which uses Cognos Inc.'s Series 7 PowerPlay, saved the unit $500,000 in just the first year by streamlining inventory, reducing redundant processes and improving access to information.

"It's a great tool for making decisions at even a low level, and especially at a high level," says Donna Cottrell, chief of the information systems division at the aviation unit's Aircraft Repair and Supply Center.

Capt. Mark Butt, chief of aeronautical engineering for the Coast Guard, says some realigning of duties may follow as a result of the new data capabilities.

Prior to the BI implementation, the unit's IT capabilities were limited by two legacy systems, which were neither integrated nor Web-enabled. Users had to ask IT to run reports on data such as logistics and maintenance of the division's 200 aircraft. Users also had to contact the help desk when, for example, they couldn't locate purchase orders.

There were also supply chain problems because technicians couldn't track the location of parts. If an essential part didn't arrive promptly, technicians would simply reorder it. When the original part arrived, it would then sit in a warehouse, so Coast Guard Aviation had essentially purchased it twice.

Now, technicians are using Cognos' Impromptu Web Reports, which automated the process and link to FedEx for real-time delivery status information. They can track the part throughout its shipping cycle, knowing exactly when to expect its arrival.

The inefficiencies that were once part of daily life are no longer an issue.

"Looking back, people can't believe that we were using a character-based system, and now they've come to embrace the new tools we have, and have come to expect more," says Steve Shrum, an information systems engineer at RS Information Systems in Mc-Lean, Va., who helped integrate the Cognos technology.
-- Meg Sandman

This was first published in August 2005

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