CFOs Open to Softer Benefits on IT Projects

Computerworld - Chief financial officers usually focus on hard numbers, but they're willing to be more flexible about the softer returns that customer-centric technology investments are able to deliver, according to the results of a new study.
To some extent, CFOs are forced to take softer benefits into account because it can be hard to measure whether investments in technologies such as customer relationship management (CRM) systems have increased customer satisfaction, said Dave Martin, senior vice president of finance and treasurer at Charles Schwab & Co. in San Francisco.
To make some of those determinations, "we'd have to hire a team of Ph.D.s to analyze whether they'd been achieved," Martin said. He was one of 231 CFOs and 73 CIOs who participated in a survey about customer-oriented technology spending released this month by Westport, Conn.-based Saugatuck Technology LLC and Boston-based CFO Research Services Group.
Gauging Success
Dick Warren, CFO at Olympic Health Management Systems and Services Inc. in Bellingham, Wash., noted that putting too much emphasis on getting hard-dollar returns from CRM applications and other customer-focused technologies may be misguided.
"If you're looking at a CRM system to reduce customer service staff, that may show huge returns financially, but your customers may be horribly disappointed," Warren said. Olympic Health Management is a subsidiary of insurer Aon Corp. that develops and administers Medicare health plans for senior citizens.
Olympic installed call center technology two years ago and has also invested in sales force automation tools. Although the direct payback has been tough to quantify, Warren said the call center system has helped reduce head count in for those operations by 11%. But Olympic has also been able to increase customer service levels over the past 18 months, he added, citing that as a softer benefit.
"We've seen a shift away from accounting-driven cost-management bias to a more balanced approach that looks at both financial and nonfinancial metrics when assessing the value that [customer-centric technologies] can deliver," said Bill McNee, founder and managing director of Saugatuck Technology.
There's a good reason for that shift, he added: Investments in technologies such as customer self-service software or sales force automation tools don't necessarily translate into direct financial returns.
The survey results also suggest that many CFOs are becoming more open to the idea of considering the nonfinancial benefits of all types of IT investments, a point that hit home with Carl Ascenzo, CIO at Blue Cross and Blue Shield of Massachusetts Inc. in Boston.
"I think our financial [department] is very good at finding the balancebetween the hard benefits of cost expenditures and nonfinancial, or soft, benefits," Ascenzo said. He listed improvements in strategic positioning and in relationships with customers as examples of softer paybacks.
Ascenzo and the other executives interviewed last week also said they agree with McNee's assessment that the integration of customer databases could unlock the greatest value for companies in the future.
"One of the challenges we're continuing to grapple with is having a 360-degree view of the client," Martin said.

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