Seminar Strategic Planning & Marketing June 14, 2015

Superior Bank
You are the VP, Technology, of a financial services company named Superior Bank. The
company is located in Boston, Massachusetts. You joined the firm seven months ago when your
predecessor, David Sable, opted to pursue other opportunities. The business units feature
complex distributed environments that resulted in soaring technology spending over the past
three years the company had no standard for shared infrastructure and employs a variety of
technology stacks of limited interoperability. The lack of cohesion created an expensive system
that delivers little functionality to the line business units. In addition, the managers attempt to
manage and control resources within their business units in an effort to push along select
projects.
The CEO, John Hammers, hired you to turn around this situation. He recently remarked,
The technology spending have historically spiraled and exceeded budget. In a down market, we
are squeezing costs out of every area of the company, yet technology spending has missed the
mark the last three years. Im confused. He has recognized that, over the past two quarters,
you have assembled a first-rate team, eliminated select under-performers, consolidated some
internal systems, and secured some quick wins with a few of the business units. John has tasked
you with shaping the technology strategy and linking it to the corporate plan.
You are briefing the rest of the executive team next week on the technology budget for
FY 2013. Andrew Ritter, the CFO, is particularly focused on working to drive down the costs in
your group and fails to understand the value that your team delivers to the company. Andrew is
very focused on analysis and in particular, NPV, to drive internal decision-making. He has
questioned you on the current staffing levels in technology and the overall budget on a few
occasions. Andrew utilized a discount rate of 12% based on a WACC calculation. David Sable
mentioned during the transition period that Andrew played a role in his exit from the company.
One concern that you have is that Andrew is driving decisions with John that may impact your
budget and ability to deliver on re-building the internal systems. In particular, Andrew has
expressed an interested in reducing the total headcount in this area. The call centers currently
staff 400 employees globally. The loaded cost per sales person in the call center, inclusive of
base salary, commission and associated benefits, is $50K.
After meeting with Kerry Bangladesh, VP of Sales & Marketing, you realize that the
contact management system, on an ACT platform, is not meeting the needs of the company. She
remarked that the sales, client services, and billing systems are not connected and generate a
great deal of internal and external communication issues. Kerry commented that her $2M
marketing budget of which corporate communications / advertising represents 50%, conferences
and trade shows another 25%, direct mail approximately 15%, and collateral the remaining 10%,
is under scrutiny. The average contract per customer is $100,000.
Importantly, research indicates that productivity per person increases by approximately
15% after deploying a CRM system: each call center employee is able to place more unique calls,
thus casting a wider net of prospects to convert into customers. Therefore, a new system
provides an opportunity to reduce the number of personnel required in the call center as
productivity increases. The same level of support and business can be achieved with fewer
employees due to the improved productivity per person. It is your project to determine whether
the cash flows these productivity gains produce merits the required level of investment for a new
CRM.
Seminar Strategic Planning & Marketing June 14, 2015

As such, you identify the implementation of a more scalable CRM system as a project
that warrants analysis as it provides potential revenue and cost benefits to the company. You are
weighing your options on using either a client-side software tool or selecting to sign a subscription
agreement with a SaaS provider. The software option requires an investment of $750,000 in the
initial application, coupled with a one-time professional services fees of $1,750,000, plus 15% of
the $750,000 investment in an annual maintenance fee. The SaaS approach results in an annual
fee of $2,500 per person in the call center. The ACT system originally cost $200,000 three years
ago and you are in a position to execute a 90-day out on the maintenance portion of the contract.
The maintenance fee on the ACT system is 15% of the initial investment. Each option
furthermore requires training expenses as well as considering the initial impact on production that
occurs when changing systems.
The new CRM system would also reduce routine requests by allowing clients to self-
service by 20% of the annual cost of phone service. The annual budget for phone service is
$225,000. Each system includes functionality to introduce email newsletters and 1:1 touch points
with prospects and clients. This type of activity can typically generate a 10% savings from the
direct mail budget. In addition, the typical conversion rate improves by a factor of three times
relative to direct mail.

Questions:
1. Should you meet with John and / or Andrew prior to the meeting to outline your vision of
how technology fits within the organization? If so, what would you communicate to John
and / or Andrew?
2. Provide an annotated financial analysis to evaluate the merits of the CRM investment for
the executive team,Please select which system you would recommend purchasing and
provide the rational to support your recommendation.?
3. What steps would you implement in order to ensure the project is delivered on time and
on budget? How would you measure the CRM system in terms of metrics post-
implementation?