The Baseline 2005 ROI Leadership Awards

The dot-com bust is officially over and forgotten.

Creative uses of the Internet propelled the winners of the 2005 Baseline ROI Leadership Awards—and the returns are stellar.

American Express had a lot of company in delivering gaudy return figures.

Audiovox Corp., a consumer electronics company, generated an annual return of 2,288% by using a self-service Internet portal to ease the strain on its customer service operations and reduce an onslaught of phone calls and e-mail.

GlaxoSmithKline got a return of 2,212.2% by consolidating its employee training systems and replacing classrooms with an eLearning application that provided online education—a feat that earned the drugmaker top honors in the Performance Management category. The University of Houston garnered a return of 1,184.6% by launching a Web portal to recruit and retain students.

The 2005 Baseline ROI Leadership Awards winners are judged solely on returns, except for the Grand Prize, which also weighs the impact of the project on the company's overall prospects. All entrants submit detailed cost and return information on significant information systems projects that they undertook in the past three years. The results were examined and verified by Consensure, a Stamford. Conn.-based business case analysis company.

Here are the projects that gave their organizations the best returns over the past three years.

Grand Prize Company American Express Annual Return 2,736.1% Five years ago, American Express—winner of the Grand Prize and Innovation awards in the 2005 Baseline ROI Leadership Awards—commanded a "march of a thousand spreadsheets" when it came to allocating money for projects. Each of the 10 business units comprising the $29 billion financial services giant had its own funding projections for technology, sales, operations and marketing projects. Cost estimates for these projects were then compiled by each unit's finance department, which submitted the proposals. The problem? Business units didn't use the same methods to calculate returns. The Global Corporate Services group, which handles corporate card and travel customers, might use a 12% discount rate to calculate net present value on a project, while the Consumer and Small Business Services unit would use 6%. Other complications included unregulated version control, little accountability for financial projections and no easy way to get a corporatewide view of projects and their finances. "It was every group for itself," says Anand Sanwal, director of corporate finance at American Express. "There were guidelines, but it was so easy to change things inadvertently or on purpose." Enter some almost-invisible innovation. Weary from the old system, the International Payment Services group built a prototype for what would eventually become the parent company's Investment Optimization System (IOS). Using Microsoft Excel templates uploaded to an SQL server and then read and analyzed by Microsoft Reporting Services, the system puts Amex' global business units on equal financial footing, with standardized models and assumptions, tighter version control and better analytics. Since it went online four years ago, the system has reallocated tens of millions of dollars between business units for more optimal investments. "It's a real-life problem that besets most corporations," says Sateesh Lele, one of the three judges selecting the grand prize winner. He is chairman of Global Data Systems, a San Jose information-technology services firm, and former CIO of Avon Products, Pepsi and GM Europe. "Numbers in the billions make it almost impossible to dissect where [American Express] is spending money and what it should be spending money on. And [the company] did it in pretty short order. I was impressed." A project's worth is now easily evaluated based on projected profits and fit with the company's overall strategy. Initiatives can also be compared within units and companywide. For instance, the U.S. card group may want to launch a direct mail campaign projected to yield a $1 million profit, while Global Corporate Services may request funding for its own mailing that it predicts will make $5 million. With IOS, American Express can decide whether it should scrap the first project in favor of the second. While that prioritizing can chafe, "People are starting to embrace what is right for the enterprise," Sanwal says. Next up for the system is a Web interface for the several hundred finance workers and project leaders who use the system, guaranteeing a single version of any proposal and integration with the project tracking database, a system that monitors actual performance. Sanwal is eager to link the two databases. "We'll be able to see if people are delivering on their projections," Sanwal points out. "That's a massive win." Productivity and Operations Company SBC Annual Return 1,191.7% Project: At SBC, orders for DSL service were being processed at pokey dial-up speeds. With manual processing and different systems for each region, the company was overwhelmed with phone calls and excessive overtime for customer service staffers. The solution: the Batch Order Relay Integration System (BORIS), which integrates multiple applications to speed DSL ordering. The system submits orders, checks return codes, parses errors, sends updates to the older regional systems and logs order progress in a database. The system also uses a set of tools and hardware that allows technology managers to control support and maintenance for their in-house systems. Benefits: BORIS helped reduce expenses by automating order processing and eliminating several minutes of data entry per request. Agents are now free to spend more time fulfilling customers' needs. Growth Company InterContinental Hotels Group Annual Return 847% Project: As InterContinental Hotels watched its Web site grow and traffic increase, the company realized that it was time for an upgrade. So in 2001, InterContinental launched Project Genesis—a re-engineering of its Direct E-Commerce distribution system. The new system overhauled how transactions were processed, where content was stored and how applications from Web infrastructure vendor Akamai Technologies could be utilized. Project Genesis also increased international business, as the proportion of site traffic outside the U.S. grew from less than 10% in 2001 to nearly 40% in 2004. Revenue from non-English-speakers now contributes nearly $100 million per year to total channel volume. Benefits: Moving some of its content to Akamai's network allowed more than 60% of the extra traffic to be taken off InterContinental's infrastructure. As a result, expenses and investments remained flat while traffic grew. Customer Service Company Audiovox Corp. Annual Return 2,288% Project: Consumer electronics maker Audiovox had more phone and e-mail inquiries than it could handle. The number of queries about products strained customer service operations, increased expenses and delayed responses. To ease the pressure, Audiovox used RightNow Technologies' Service software to build help features into its Web site. Customers can now find answers to questions online, using Web forms rather than conventional e-mail. The customer service staff tracks the forms to respond faster to more detailed inquiries. Benefits: With fewer phone inquiries, Audiovox increased staff productivity, improved the quality of service and retained more customers. Supplier Coordination Company GlaxoSmithKline Annual Return 5,451% Project: Drugmaker GlaxoSmithKline was looking to cut costs associated with developing products still in the research and development stage. The aim was to implement a single system to handle spending analysis, negotiation, supplier management, contracts and compliance, and other aspects of its business. The company chose Emptoris' enterprise supply management system to negotiate contracts more quickly with half the resources, thus cutting administrative costs. The money saved on the project was funneled into R&D and marketing. Performance Management Company GlaxoSmithKline Annual Return 2,212.2% Project: The pharmaceutical company had 30 learning management systems and 100 different training groups performing the same tasks. So, GlaxoSmithKline retired older systems and converted classroom training to eLearning software. The company now trains employees on one enterprisewide learning management system to reduce classroom training. Benefits: The company garnered more than $300 million of savings by coordinating suppliers. The implementation of a single online learning system improved efficiency. Data Management Company LyondellChemical Annual Return 193.2% Project: With an increase in stored data of 364% in the last 10 years, Lyondell, which makes chemicals for everything from adhesives to coolants to sealants, had to deal with ever-more-costly maintenance, a need for more servers and storage space, and outage recovery times of up to 36 hours. The company decided on Double-Take from NSI Software—a program that replicates files onto servers over standard network connections—to eliminate local tape backup at its 26 U.S. locations. Double-Take helped the company manage its data centrally with skilled staff. Other gains include reduced storage expenses and improved disaster recovery preparedness. Benefits: Lyondell saved money on hardware, tape transportation and storage, server maintenance and support. Business Intelligence Company Avendra Annual Return 193.2% Project: In late 2001, procurement-services firm Avendra decided to customize software for what the company calls "enterprise relationship management." The software, based on applications from Pivotal Corp., handles supplier data and contracts. The project has made operations more efficient by providing one point of entry for data such as details on customer and supplier accounts. The company eliminated the need to purchase, deploy and integrate separate supplier and contract management systems. It also shed the labor costs needed to maintain customer and supplier data in multiple systems. Benefits: Business processes became more efficient with one point of entry for all supplier and customer data. Public Sector Company University of Houston Annual Return 2,354.3% Project: With annual budget cuts running at 5% to 10%, the University of Houston faced increased pressure to recruit and retain students. The university implemented an automated customer service system to answer students' questions about items such as admissions, financial aid and campus security quickly and accurately via the Web. With RightNow as its core technology, the university can deliver more answers in less time, and save money by cutting phone-call volume. Benefits: Students use the university's Web site to get answers, cutting phone workloads and the labor costs associated with staffing call centers. Decision Support Company State of Missouri, Office of Information Technology Annual Return 546.3% Project: Missouri's goal was to standardize the way it manages technology projects to help keep them running on time and within budget. Enter the Project Oversight Program, which tracks milestones, evaluates plans and prioritizes funding for the state's information-technology initiatives. The program also provides a historical record of important decisions and focuses on early identification of project pitfalls. The goal: Fix projects before problems escalate. The information is centralized and archived monthly to track project management. The state contracted with systems integrator Ciber to implement the program. Benefits: The system provides a view of projects as they progress and gives managers a method of tracking all decisions, changes and requirements. Planning Company SkinCeuticals Annual Return 1,184.6% Project: The maker of skin-care products wanted to revamp its shipping processes and improve "pick accuracy"—the process of picking products off warehouse shelves. SkinCeutical's solution: Install a product-tracking system that includes radio-frequency scanners to speed order picking. ClearOrbit's Gemini Simplified Interface Suite software works with SkinCeutical's Oracle database to provide a single repository for all shipping data. The Garland, Texas, company (soon to be acquired by L'Oreal) was able to double its shipping efficiency while cutting warehouse space needs in half. Benefits: SkinCeuticals doubled its shipping efficiency, reduced required warehouse space by 50% and tripled its order processing capacity. Justification Company Medical Mutual of Ohio Annual Return 230.9% Project: With aging voice systems supporting its call centers, claims department, and sales and marketing divisions, Medical Mutual of Ohio was looking to improve its customer service. The company, along with subsidiary Antares Management Solutions, standardized on Avaya digital and IP telephony systems that included features such as call distribution technology. Medical Mutual could now route incoming calls to the right agent based on that person's field of expertise. The platform also allowed caller information to be passed from one agent to the next, which reduced average call resolution time from five minutes to less than four, and yielded a productivity boost of 6.5% for each call-center seat.

Benefits: Through the implementation of Avaya voice and data systems, Medical Mutual significantly decreased call-handling times, staffing costs and the number of phone systems it manages.

Copyright © 2005 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in Baseline.