More Related Content Similar to Salesforce.com ROI case study - Enterasys Similar to Salesforce.com ROI case study - Enterasys (20) 1. NucleusResearch.com
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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
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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
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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.
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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
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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.
6. 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%
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All calculations are based on Nucleus Research's independent analysis of the expected costs and benefits associated with the solution.
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