5. Perform a return-on-investment (ROI) calculation. This type of calculation can go a long way toward convincing a financial advisor about the wisdom of the particular choice being considered. In this calculation, you need to consider all of the costs associated with the purchase. That should include both the hard dollar and the soft dollar costs/benefits. Some of the line items that should be considered in this process include:

Costs
Purchase price (subscription cost)-hard-dollar cost.
Installation cost (some software companies offer data migration services at no cost, others charge fees)-hard-dollar cost.
Customization cost-using a third-party provider to customize the database or build add-ons-hard-dollar cost.
Employee conversion costs (to spend time converting/verifying data to the new software)-hard-dollar cost.
Employee aggravation-soft-dollar cost (hard to measure).

Benefits
Increased Efficiency-expressed in employee hourly costs saved-hard-dollar benefit.
Increased Profits-potentially lowering operational costs can extend net profitability, even in cases where no additional gross revenue is realized-hard-dollar benefit.
Increased Capacity-the ability of the firm to take on more clients without necessarily hiring more employees, increasing office space or purchasing additional equipment-hard-dollar benefit.
Increased Practice Value-extending what a firm can do, expanding its reach, its potential and its services most often results in a higher practice value-hard-dollar benefit.
Creating a more harmonious work environment-soft-dollar benefit.
Another key consideration in purchasing, and especially replacing, CRM software that may have been used for a period of time by employees is the potential for push-back by those same employees. Therefore, a key piece of advice to heed would be to include your staff in the decision-making process. Performing the ROI calculations might be helpful in this process, as you could document the actual benefit to the employees (as well as clients) of utilizing the new CRM solution.

David L. Lawrence, PhD is Founder and President of The Efficient Practice, a consulting firm that provides financial practices, broker-dealers and independent firms with comprehensive, profit-driven efficiency consulting, technology solutions and resources. For details, visit www.efficientpractice.com.

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