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ROI flows from Waters' CRM project

The pharmaceutical instrument manufacturer has the numbers to back up its CRM success, which it attributes largely to a common architecture for its front and back office.

For all the talk of companies investing heavily in CRM only to find it fail, one pharmaceutical instrument manufacturer has proved it can work -- and has the numbers to back up its success.

According to a case study conducted by ROI Review, a Peppers and Rogers Group publication, Waters Corp. of Milford, Mass., has seen a 35% return on its investment in SAP AG's mySAP CRM during the past four and a half years.

Waters, which manufactures laboratory testing instruments for companies in several industries, including pharmaceuticals, life sciences, health and safety, food and beverage, and personal care, has garnered a profit of $2 million, the report says.

The key decision when formulating the corporate CRM philosophy was aligning the front office, middleware and back office under a common architecture from SAP.

"To us, order management is an integral part of CRM," said Paul Newton, chief information officer at Waters. "We define [CRM] as sales, marketing and support, internal processes, field work, and all touch points with the customer. We were looking for a common global approach to our business. It was clear our IT infrastructure was not aligned with business."

Since 1997, Waters has incrementally invested $5.1 million in SAP's CRM products. The company also has spent roughly $8 million in capital costs relating to SAP's back-office products. While ROI calculation has not been done on the back-office investment, Newton estimates it is in the tens of millions of dollars. Data was the key, he said.

"You have to define the data model," Newton said. "We wanted a unified view of the customer. When we talk about a customer, it means different things in different industries. In the B2B model, like we're in, it's a complex network. We want to know who the scientist is, in what lab, in what building, in what division, with what multinational pharmaceutical company. The thought of trying to synchronize different systems is too much. It's difficult enough trying to clean data."

Previously, Waters' processes across the globe relied on a mÉlange of applications, including Lotus Notes, Salesforce.com and Great Plains, with nearly every country having its own departmental solution.

In 1999, the company had just finished a back-office deployment in Japan, Y2K was coming and, in the words of Newton, "the dot-com hysteria hit." Waters' online competitors were presenting a new challenge. Looking to adapt, the sales department alone made 47 different application recommendations, Newton said. Waters decided the wisest place to spend money was on an e-commerce portal from SAP.

That meant an online solution that was integrated with the back office, providing real-time inventory and global tracking. Plus, quick deployment meant Waters could begin taking in the several million dollars in incremental business that would come through the online portal, Newton said.

The CRM strategy also led to other efficiencies. All the company's data is loaded into one integrated repository. Sales reps can give immediate quotations from the field. Whereas it once took nearly a week for invoices to go out, they are now sent the day after the work is completed. Telesales grew. Service plan sales, previously a "cost of doing business," became a differentiator and a revenue producer. The company sent fewer direct mailings but got a better response. Engineers who once hoarded spare parts for fear that they would run out are now more confident in distribution. Whereas Europe one had 30 distribution centers, there is now one, Newton said.

"More important was the ability to introduce common [SAP] programs [throughout] the world," Newton said. "Service was always a cost of doing business for us, but we wanted to use it as a differentiator. Our service business before we started [with CRM] was basically flat. It's been double-digit growth ever since."

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