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input LLC. Blog - Rick Sexton

Why Change....it is old??

Rick Sexton

by Rick Sexton

01 March 2021

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Business Management

It’s amazing how often I have heard this answer. Whether I was talking to an IT manager, partner representative or Cisco salespeople, I often heard it’s old. The question, “why does the customer want to change their contact center or phone system”? That’s not the answer most executives want to hear when you are requesting funding for a new investment.

The answer “it’s old” really meant the customer had a trigger event. Although somewhat tactical, trigger events are real. Trigger events include the following:

  • Your phone system or call center solution is antiquated.
  • A required upgrade is going to very expensive.
  • Your solution has reached end of support.
  • Relocation of existing system is going to be expensive.
  • Adding new locations expansion costs.
  • Existing system has reached capacity.
  • The existing system is not reliable.
  • Difficult to find support options on existing system.
Trigger events create a sense of urgency. Your phone system and call center cannot be down. Do you rush to replace it, or do you find a band aide? The answer will vary depending on the details of your situation. Assuming you had proper warning of the upcoming trigger events or have a band aide in place, you should have time to be more strategic.

However, time is money which means you have to utilize your internal team or hire a sharpshooter to help you. Whether internal, external or combination you will need a plan to guide you to success. Of course, anything new is going to be better than your “old” system.

If your content with anything new is better, you still need a plan that will help you realize the greatest return on your investment. Return on investment analysis will help you validate your requirements and maximize your overall success.

The ROI analysis includes hard dollar ROI, soft dollar (productivity gains) and the strategic ROI. This may sound complex and time consuming. However, input LLC has experience completing 100’s of these engagements over the last 29 years. We have removed the complexity and the engagement can be completed within as little as a week. More comprehensive engagements can require months.

Irrespective of comprehensive or express engagements, we focus on the 3 ROI types. The engagement always begins with a comprehensive discovery with your executives, line of business, agents, IT and other stakeholders. You will want to assign a “change agent” to lead the engagement.

The discovery needs to be very comprehensive focused on people, process and technology. The discovery output will allow us to analyze the data and begin working on your ROI. The hard dollar ROI is normally the easiest.>

Hard dollar ROI is simply a financial view of your current cost structure versus a new proposed cost structure. Sounds, simple but many customers do not have their current costs organized for analysis. input LLC has the tool set available to help you organize all of your current costs. On average, we see a positive ROI 70% of the time, average of 17 months payback period with an average annual savings of $344 per user. Assuming the hard dollar ROI is positive, the soft dollar and strategic value sometimes becomes icing on the cake.

Customers (especially executives) want to understand how their investment is going to impact their business. Often the CFO is focused too much on hard dollar ROI. Yes, every company wants to reduce costs. But if hard dollar is the only focus, just throw away all your productivity tools (MS Office, computers, cell phones, web sites, etc.) and you can save a ton of money.

You see, all companies have invested in productivity tools but perhaps did not receive “input” on the business value. Most CEO’s are trying to increase revenue per employee, that’s called increasing productivity (soft dollar ROI). Often soft dollar ROI can have a short payback period and a high IRR that sometimes is hard to believe. However, input LLC always uses the customer provided data not industry averages.

At a high level, soft dollar savings is based upon the FTE cost per hour (improved productivity) or revenue per hour (increased revenue). However, most companies view savings only if the productivity gains reduce FTE or reduce the need to hire additional staff. Either way, soft dollar ROI normally is greater than the hard dollar ROI.

Soft dollar targets center around business process improvements that may or may not require technology. Nontechnology improvements could be as simple as removing a step from a process, improving quality, outsourcing, staggering invoicing and marketing campaigns and overall optimization of any process. With technology, we are looking to automate processes. Automation examples include providing self-service applications for customers and employees, integration of CRM with inbound/outbound communications, automation of notification events, virtual meeting integration, speech enabled applications, work force optimization integration, mobility, speech and data analytics, voice biometrics and many other solutions. Your discovery results will help us focus on your largest soft ROI targets.

The strategic ROI is top of mind for sales, customer service, marketing, HR, product operations, supply chain and most other lines of business. The strategic ROI is very difficult to measure even with industry averages. As such, your “input” will require validated measurements with a focus on the largest outcomes. The strategic ROI always offers the largest return and is the most exciting. We have many strategic ROI examples to share with you.

I remember working with an engineering firm and their hard dollar was negative. However, their strategic ROI funded the entire project. The engineering firm ultimately needed a platform that could provide modern work from anywhere capabilities (workforce optimization) while offering in office benefits. Their investment with virtual/mobile/visual communications allowed them save over $1M dollars annually on real estate consolidation.

A manufacturing firm seen a positive hard dollar ROI (cash flow positive in 6 months) by moving their PSTN service to SIP, eliminating increased maintenance costs on their aging phone and contact center systems. They also seen a huge productivity gain with routing 32% of their call traffic to self-service (which also improved the customer experience) and they realized over $2M dollars annual strategic savings by deploying speech analytics and advanced quality management.

Other strategic benefits of the investment include disaster recovery architecture. What happens if your data center is hit by a disaster? One customer actually told me their disaster recovery plan was not to have a disaster. What is the cost of being down for an hour, a day, or even longer?

Many customers thought I was out of my mind talking about pandemic readiness architecture several years ago. Back then, I was not talking about COVID but that was always a possibility as we all know now. I was merely talking about what if your people can’t make it to the office. Granted, this is no longer a nice to have “strategic ROI”, work from anywhere is now a mainstay.

Whether you have a trigger event or need help with the discovery/requirement validation, business impact and ROI analysis or simply need to review a vendor’s quote we are here to help you be successful.

Rick Sexton
Business Impact Specialist

(1) Comment

  • Jeff Hursey Reply

    15 days ago

    Your articles are well-written, Rick. Again, you are taking a topic that can cause a lot of confusion and presenting it in easy-to-understand layman's terms. What I like the most about this article is that it demonstrates your contemporary thinking around ROI. It doesn't just focus on hard dollar, but complements the traditional hard dollar perspective by considering soft dollar and strategic impacts on ROI.

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