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Salesforce.com ROI case study - Enterasys
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Salesforce.com ROI case study - Enterasys Salesforce.com ROI case study - Enterasys Document Transcript

  • NucleusResearch.com Phone: +1 617.720.2000 Nucleus Research Inc. 100 State Street Boston, MA 02109 THE BOTTOM LINE Enterasys used Salesforce.com and the Force.com platform to build a global service management application to track products and their related support contracts. The project enabled Enterasys to empower service agents with greater visibility into the overall customer and partner relationship, identify new service revenue opportunities, and reduce service inventory carrying costs. ROI: 257% Payback: 6 months Average annual benefit: $2,052,822 THE COMPANY Enterasys Networks provides wired and wireless network infrastructure and network security and management solutions. Originally founded in 1983 as Cabletron Systems, the company was listed on the NYSE in 2001 and then was taken private in 2006. One of Enterasys’s core differentiators is its award-winning customer service, and the company’s tagline is “nothing is more important than our customers.” Enterasys began development of its state of the art Service Cloud with Salesforce.com in 2004. This case study explores the company’s most recent Service Cloud investment project to support service entitlement tracking and management. THE CHALLENGE Enterasys had already leveraged the Service Cloud to support its customer support and service efforts and adopted both Chatter and Radian6 to deliver more service innovations for customers. However, to deliver even better service to customers, Enterasys knew it needed to provide agents with a more streamlined way to understand customers’ technology footprint, service history, and maintenance contracts. This was a challenge for a number of reasons: ROI CASE STUDY SALESFORCE.COM ENTERASYS February 2013 Document N29
  • Page 2 © 2013 Nucleus Research, Inc. Reproduction in whole or part without written permission is prohibited. Nucleus Research is the leading provider of value-focused technology research and advice. NucleusResearch.com February 2013 Document N29 Enterasys had more than 18,000 customers in 70 countries, and customers had a number of service contract options, and the processes and policies for support varied by region and system. Enterasys has a 3-tiered distribution model and in some markets their partners are responsible for tier 1 support, so not all records of purchases, service entitlements, and end user information were in Enterasys’s SAP financial application, but in various partners’ applications and systems that were beyond Enterasys’s control. There is a considerable aftermarket for Enterasys products, but service contracts and product warranties are nontransferable. It was difficult for Enterasys to quickly identify if a customer legitimately had the right to service when they opened a service request. Given the business-critical nature of enterprise networks, Enterasys’s focus on service and service logistics meant in some cases customers were entitled to have a new network device on site within days or hours, so the company was carrying a significant amount of service inventory around the globe to deliver on SLAs. The company also knew that lack of visibility into the complete service supply chain meant often agents would deliver support to customers that didn’t have a legitimate service contract. Enterasys knew that it needed to empower agents to provide first-class customer service while limiting its exposure to service costs incurred by underentitled or unentitled customers and partners. THE STRATEGY In 2010, Enterasys began building an internal team to understand the overall service entitlement process, existing data and systems, and stakeholders that would be impacted. The team knew that the project would require a significant investment and would also have an impact on many customers and partners, and planned a phased discovery and development process. “We had invested in the Service Cloud, but agents had to look in a number of different areas and talk to different departments to have a complete picture of the customer’s service entitlements. Now they can see it all within the Service Cloud.” - Dan Petlon, CIO, Enterasys
  • Page 3 © 2013 Nucleus Research, Inc. Reproduction in whole or part without written permission is prohibited. Nucleus Research is the leading provider of value-focused technology research and advice. NucleusResearch.com February 2013 Document N29 Enterasys mapped out the major data elements, direct orders, indirect orders, product returns, and service contracts, and began building the data feeds, interfaces, and custom objects. After the initial development phase, Enterasys engaged with Appirio, a Salesforce.com implementation partner, to accelerate the design, development, and testing process. The first components deployed included an interface for service agents to look up service contracts and order data directly from the Service Cloud and credit card payment processing capabilities so agents could initiate payment for any entitlement gaps during their contact with the customer. KEY BENEFIT AREAS Using the Salesforce.com Service Cloud to support end-to-end visibility into its service contracts and entitlements enabled Enterasys to continue to improve its customer service while capturing potential lost revenue opportunities. Key benefits of the project include: Increased agent productivity. Bringing all the service contract and order information into one user interface in the Service Cloud reduces the need for workarounds and enables agents to have a more complete understanding of a customer relationship while maintaining or reducing call resolution times. Increased revenue capture. Because agents can now rapidly identify the level of service customers and partners are entitled to when they call with a service request, they can take advantage of the contact to sell them the appropriate level of service. Reduced service logistics costs. Greater visibility across the service supply chain will enable Enterasys to reduce service inventory carrying costs as well as shipping and other logistics costs over time, enabling the company to maintain or improve service margins.
  • Page 4 © 2013 Nucleus Research, Inc. Reproduction in whole or part without written permission is prohibited. Nucleus Research is the leading provider of value-focused technology research and advice. NucleusResearch.com February 2013 Document N29 Increased visibility. With greater visibility across systems and processes and the foundation for predictive analytics, Enterasys will be able to identify trends and issues in the service supply chain more quickly and with greater confidence for faster decision making. KEY COST AREAS Costs of the project included consulting and personnel. Because Enterasys was already using Salesforce.com for sales and service and had platform licenses (and Chatter for all employees), the company didn’t need to make an additional software license subscription investment. Additionally, because service agents were already using the Service Cloud and the new interface was designed to be intuitive, training for the entire staff was conducted in one day. BEST PRACTICES Enterasys knew that the service entitlements project would require a significant investment, but would also require significant communication efforts to make sure that holding customers and partners more accountable for their service requirements would not impact the company’s excellent net promoter score. A thoughtful design and development process coupled with a phased deployment to show initial wins (such as the fact that customers would sign up and pay for a service contract if the agent could rapidly determine that they needed one) helped allay fears of disrupting Enterasys’s relationships with customers and partners. CALCULATING THE ROI Nucleus calculated the costs of consulting and personnel over a 3-year period to quantify Enterasys’s investment in the Service Cloud service entitlements management project. Direct benefits quantified included the projected increase in profits from increasing service contract sales, which were conservatively estimated based on the expected ability of Enterasys to recover at least 10 percent of the overall missed revenue today. Indirect benefits quantified included the increase in employee productivity (calculated using a productivity correction factor to account for the inefficient transfer of time between time saved and additional time worked). The other indirect benefit quantified was the reduction in service inventory carrying costs, which was calculated based on a conservatively projected 5 percent reduction in overall service inventory value and an estimated cost of capital of 5 percent. Cost : Benefit Ratio 1 : 4.1
  • Page 5 © 2013 Nucleus Research, Inc. Reproduction in whole or part without written permission is prohibited. Nucleus Research is the leading provider of value-focused technology research and advice. NucleusResearch.com February 2013 Document N29 Not quantified were the broader benefits of increased visibility that Enterasys will achieve over time as it takes advantage of its investment in integration and data consolidation to deliver advanced reporting and predictive analytics capabilities to decision makers.
  • FINANCIAL ANALYSIS Salesforce.com Annual ROI: 257% Payback period: 0.5 years ANNUAL BENEFITS Pre-start Year 1 Year 2 Year 3 Direct 0 610,000 610,000 610,000 Indirect 0 2,095,745 2,095,745 2,095,745 Total per period 0 2,705,745 2,705,745 2,705,745 CAPITALIZED ASSETS Pre-start Year 1 Year 2 Year 3 Software 0 0 0 0 Hardware 0 0 0 0 Project consulting and personnel 0 0 0 0 Total per period 0 0 0 0 DEPRECIATION SCHEDULE Pre-start Year 1 Year 2 Year 3 Software 0 0 0 0 Hardware 0 0 0 0 Project consulting and personnel 0 0 0 0 Total per period 0 0 0 0 EXPENSED COSTS Pre-start Year 1 Year 2 Year 3 Software 0 0 0 0 Hardware 0 0 0 0 Consulting 414,000 414,000 0 0 Personnel 475,000 375,000 125,000 125,000 Training 30,769 0 0 0 Other 0 0 0 0 Total per period 919,769 789,000 125,000 125,000 FINANCIAL ANALYSIS Results Year 1 Year 2 Year 3 Net cash flow before taxes (919,769) 1,916,745 2,580,745 2,580,745 Net cash flow after taxes (505,873) 1,054,210 1,419,410 1,419,410 Annual ROI - direct and indirect benefits 208% 244% 257% Annual ROI - direct benefits only -19% 17% 29% Net Present Value (NPV) (505,873) 479,370 1,719,137 2,877,799 Payback period 0.5 years Average Annual Cost of Ownership 919,769 1,708,769 916,885 652,923 3-Year IRR 222% 222% FINANCIAL ASSUMPTIONS All government taxes 45% Cost of capital 7.0% Page 6 © 2013 Nucleus Research, Inc. Reproduction in whole or part without written permission is prohibited. All calculations are based on Nucleus Research's independent analysis of the expected costs and benefits associated with the solution. NucleusResearch.com
  • By the Numbers  Enterasys's Salesforce.com Service Entitlement Management Project THE PROJECT THE RESULTS Increased productivity by 9% Increased revenue capture by 10%  Cost : Benefit Ratio ‐ Dan Petlon, CIO, Enterasys NucleusResearch.com Copyright 2013 Nucleus Research Inc. Nucleus Research Report N29 ‐ Salesforce.com ROI case study ‐ Enterasys, February 2013 “We had invested in the Service Cloud but agents had to look in a number of different areas and talk to different  departments to have a complete picture.  Now they can see it all within the Service Cloud.” 14 Annual Return  on Investment Months Months Total time for Enterasys to deploy  its project 225Number of users:  6.0 $2,052,822 Average annual benefit 257% 1 : 4.1 The total time to value, or  payback period for the Service  Cloud Enterasys used Salesforce.com and the Force.com platform  to build a global service management application to track  products and their related support contracts.  The project  enabled Enterasys to empower service agents with greater  visibility into the overall customer and partner relationship,  identify new service revenue opportunities, and reduce  service inventory carrying costs.