The reasons to invest in technology can be summed up in one word: leverage. A wise technology investment lets you combine people skills and technological capabilities to produce a powerful financial engine for your company. The focus on leverage does not lend itself well to detailed return-on-investment calculations, contracting your technology future to an offshore operation or handing your technology decisions to your financial department. Combining smart people and new technology to build corporate leverage requires an act of business faith.
For example, Jay Wessel is senior director of technology for the Boston Celtics. He works with Daryl Morey, senior vice president of operations and information for the Celts. I met them recently at their office across from the Fleet Center in Boston. Theyve spent much of the past year working with Ticketmaster to build a strong set of CRM capabilities in the Celtics portion of the Ticketmaster site. “We use the system as an escalator,” Morey said. That escalator aims to move a Celtics fan from newsletter subscription to ticket buying to multiple-game buying to season-ticket buying. The relationship with Ticketmaster is a big change from the prior, one-way process, wherein Ticketmaster acted solely as the financial broker for Celtics tickets.
Consider the leverage that comes into play in the Celtics-Ticketmaster relationship. The uptick in business resulting from increasing ticket demand and upselling better, more expensive seats to ticket holders is not unlike the scenario often seen in the airline and hotel industries. The revenue loss stemming from unsold airline seats and unsold hotel rooms can never be recovered; a great deal of the technology investment in the airline and hotel industries has been in support of building financial analysis systems aimed at filling those airline seats and hotel rooms with the best-paying customers before the opportunity evaporates with the turn of the calendar page.
Those CRM systems, however, have been the province of technology departments with big budgets and considerable expertise. Small airlines, boutique hotels and community theaters, for instance, have not been able to make upfront investments in those management systems. That is changing.
With the Celtics technology teams personnel resources consisting largely of two people (themselves) and an IT budget that has to cover a lot of territory—people, equipment and contracts—for less than $1 million, Wessel and Morey were able to leverage a partnership to create a system that can get more seats filled with a better revenue mix at game time. The trick was to consider Ticketmaster as the basis for a CRM system rather than simply as a financial clearinghouse for ticket transactions.
The concept of technological leverage will be heard a lot more next year. Customers are going to lean on vendors to supply the system management tools that will let them free budget dollars that are now tied up in simply keeping systems running. Wise companies will use those dollars to build new business systems.
Customers are also going to lean on their service providers to think of themselves as more than a cost-efficient way to complete a transaction. Banks, telecommunications providers and transportation companies will be pressed to think of themselves in ways beyond their traditional confines. Banks will have to provide their business partners with a greater range of services than simple financial transactions, and telecom providers will have to start thinking of the applications that ride on top of offerings such as voice over IP.
The technology teams at the customer sites mentioned above will have to start thinking of themselves as teams that can meld their internal operations and service providers to build new business operations for their companies.
The Celtics model is one example of a small group of technologists leveraging their vendor relationships to create a new way of doing business. For the Celtics, it was thinking of CRM as something that could grow out of an existing relationship, rather than as a project that would have to be started from scratch. That type of thinking can give you the leverage you need for your next technology or business project.
Editor in Chief Eric Lundquist can be reached at [email protected].
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