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Local company turning customer relationship management into a profit-maker

Monday, December 15, 2003

Local company turning customer relationship management into a profit-maker

Howard Wolinsky
Chicago Sun-Times

In the late 1990s, customer relationship management, or CRM, was portrayed as the promised land. Consultants told CEOs they could transform customer call centers that were "costing" them money into revenue centers that were ringing up sales.

Companies threw tens of billions of dollars into CRM, for instance, trying to convert a call center that simply handled billing into a complex organization that also handled sales and contract issues with customers. But Paul Stockford, chief analyst with Saddletree Research Inc. in Scottsdale, Ariz., said CRM largely flopped because companies had no way to determine what changes to make to increase productivity and savings.

"You can't manage what you can't measure." he said.

For these reasons, Mutual of Omaha, the Nebraska-based insurance company, three years ago cautiously began trying to find ways to increase productivity in its call centers and other operations.

John Wells, senior vice president of service on individual policies, who was responsible for call centers, said, "Technology is not the cure for everything. You can spend as much as you wish [on CRM], but you need milestones along the way because CRM can be a big black hole."

While studying his options, Wells got an offer he couldn't refuse from Chicago-based Opus Group Consulting, a consultancy specializing in contact centers.

Michael Callaghan, chief executive of Opus, guaranteed that if Opus were allowed to study Mutual of Omaha's contact centers and set up a program with its Opus Suite software, the insurer would receive a return on its investment of at least three dollars for every dollar spent.

SWells said he checked out Opus and signed on.

"Opus was effective. They achieved the results. It was a win-win," he said. He said there were "substantial" savings -- he wouldn't say exactly how much -- as the company used Opus' software and techniques, such as implementing better scheduling of agents during busy times, to boost productivity in call centers and in its billing department.

Wells said Mutual of Omaha boosted agent productivity to more than 85 percent, noting that productivity is only 60 percent on average in all industries.

Callaghan, 35, launched Opus three years ago, and said that today his firm has worked on about a dozen projects at Mutual of Omaha alone. Other clients include T-Mobile, IBM, Computer Sciences Corp., Discover, SBC, Blue Cross Blue Shield of Michigan, Farmers Insurance Group and Liberty Mutual Insurance.

The Opus Suite software allows top managers to see what impact the changes are having overall as well as enabling individual employees -- and their supervisors -- to check on productivity, such as the number of calls they handled and the average length of those calls, Callaghan said.

Opus typically charges $500,000 to put its software to work in call centers with 200 to 300 agents, he said. He guarantees savings of three to five dollars for every dollar spent on a project.

The Opus Suite can be used with any database a company has, include billing, contracts, payroll and scheduling. The system has an interface that enables agents to help customers with their issues as well as to sell them other products.

Saddletree's Stockford said Opus is one of a dozen companies in the emerging "performance optimization" field that is aimed at helping companies extract benefits from CRM and other systems already in place.

He said performance optimization "cannot be ignored or dismissed as another industry fad." because, unlike faddish CRM, it is linked with measurable return on investment. He said this new PO market "represents the first industry segment growth opportunity of the 21st century following the failure of the dot-com industry and the implosion of the worldwide telecommunications industry."

Opus has steered clear of VCs and has been self-funded. It has doubled revenue each year, Callaghan said. He estimates $10 million in revenue this year and $20 million in 2004. But he said Opus has developed a relationship with Arbor Financial, a Chicago VC, by consulting with some of Arbor's portfolio companies.

Opus, which has 40 employees, including 16 here, plans in the next few weeks to move downtown from Lincoln Park.

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