Outsourcing Boosts Revenues 60 Percent in Six Months | Article

web-based solutionOutsourcing sales force automation (SFA) to a Web-based application service provider (ASP) has produced bountiful rewards for Verifications Inc. In just six months revenues increased by 60 percent since the Minneapolis, Minnesota company signed on with Salesnet headquartered in Boston, Massachusetts.

Verifications Inc., founded in 1987, provides employment screening services to 3,000 clients. Brad Carlson, vice president of sales for Verifications Inc., says the way the sales force reported its activities left much to be desired. “We had been using a contact management program. Even with the new version, it was not doing what we needed, especially at remote locations.” A Web-based sales force automation tool let management monitor sales force activity and enable real time updates from the field with support from the corporate office.

Management decided a Web-based service provider could provide a solution without taxing the in-house IT department. Verifications Inc. looked into other offerings but found only Salesnet was able to customize to fit its precise way of selling. In addition, Carlson was impressed with the application’s ability to do forecasting, which he says was “the most important factor” for his organization. The company wanted the ability to do custom reports and track contact and sales results for its strategic planning. The program’s “ease of use” helped, too.

Verifications signed its outsourcing contract in July, 2002. Salesnet, founded in 1997, offers the Web-based application as a subscription for a monthly fee.

The change-over process was fairly simple. Carlson’s team interfaced with a Salesnet specialist on what type of information the company wanted to extract. “We spent close to 20 hours diving into our process. We told them exactly what we wanted.” Some fields in the contact management program would not transfer. Salesnet had to create customized fields for these.

Outsourcing Provides a Vast Improvement in Sales

Following a test of almost 100 accounts to be certain that there would be no data loss, Verifications sent all its client data to Salesnet. Carlson recalls, “We blasted our data to them with every single detail. Every iota of it was there.” Salesnet completed the data migration within 48 hours.

In the six months since deployment, sales have gone up 60 percent, according to Carlson, adding he is confident the company’s net earnings have exceeded that as well. “We know that the value has been incredible because sales have been going through the roof. Our people are now handling four times as many deals than they were prior to using Salesnet. Our people can now juggle a lot more balls more efficiently,” he reports.

Verifications Inc. uses a dashboard feature that helps its sales force gauge their progress. When users log in, they see a custom graph depicting their productivity. “Every time they log in, they know exactly how they are performing. “There is no dodging the bullet,” Carlson laughs.

The real-time visibility allows Verifications Inc. to leverage all of the processes with nimble agility and speed. “I am able to see exactly what my people are doing,” he explains. This is extremely valuable for Carlson. “Without question, real-time visibility is an asset for us. We have a totally live system of interaction throughout the company,” he explains. In the field, the sales team has the capability of real-time integration with forms, processes of information and account set-up.

Increased Firepower Throughout an Enterprise

Mike Doyle, CEO of Salesnet, explains that the application allows for business intelligence and interfacing. “We have built in a number of Web services that allow the application itself to communicate with other applications including legacy systems.” The application can assimiliate and then merge virtually any source within the enterprise. The architecture of the application can send and receive information to or from any application via extensible mark-up language (XML).

Salespeople can generate reports, ascertain trends and make forecasts, all on the fly. These capabilities lead to increased usage within enterprises. Doyle states, “From the time a company first signs on, the number of users increases 586 percent on average in 12 months.”

Beyond increased business agility, outsourcing to the ASP has been beneficial for Carlson in other ways over buying an application. “What made outsourcing so advantageous is that we did not have to redeploy the resources of our IT team to keep this function running. We just don’t have any infrastructure or IT time to devote to it,” he explains. In addition, the company was able to hold its IT costs down by spreading the expense over many years.

Denis Pombriant, vice president, CRM managing director of the Aberdeen Group of Boston, Massachusetts points to the resurgence of Web-based ASPs.” The emergence of application service providers in recent years has redrawn the SFA vendor landscape. The ASP value proposition is crystal clear: low cost of entry, quick payback, and virtually no risk.”

Pombriant continues, “ASPs in general promise cost reduction on at least two fronts: replacing large, up-front capital expenditures for infrastructure with one predictable, “pay-as-you-go” operational expense and reducing the total cost of ownership — especially in terms of support and maintenance.” The advantages are obvious for outsourcing as illustrated below.

Table 1: Software Licensing Model Versus ASP Model

Characteristic

Software

ASP

Location

Software within the enterprise

Hosted at the ASP’s site

Installation speed

Weeks or months

Days or weeks

Pricing model

Software license fee up-front

Monthly fee

Price range

$500 to $1 million +

$3,000 to $3000,000 per year

Accounting impact

Server is a deprediated asset on the balance sheet

Service fee is booked as an operating expense

Incorporates data from offline channels

Often

Sometimes

Site monitoring

Monitors one to several sites

Monitors one to many sites

Customization capabilities

High

Low to high

Source: Aberdeen Group, June 2002

Pombriant continues, “Speedy time-to-benefit is the second top attractor of organizations to the ASP model. For some companies, it is the ultimate proof-point of the outsourcing proposition. Because the ASP has already invested in, implemented, and supports the required infrastructure, less time is needed to deliver application services and the ensuing benefits to users.”

Carlson now enjoys growing sales without worrying about compliance issues. “Verifications Inc.’s reputation is founded on the quality and timeliness of our services. It’s critical that we have a tight handle on all of our business practices.” Thanks to outsourcing, the biggest problem seems to be a great one to have, according to Carlson. “Just the other day, our number one salesperson, who is now generating around a million dollars a month in sales, came in and said she wanted more to do.”

Lessons from the Outsourcing Journal:

  • Outsourcing the sales force automation function can lead to a significant increase in revenues. Verifications Inc. saw its revenues jump 60 percent in six months
  • Outsourcing sales force automation provides value-added business intelligence, including helping the sales people measure their performance.
  • Outsourcing leads to more rapid deployment with no added internal IT demands.


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