• Introduces the main factors affecting ROI from Cloud Computing, and compares the business development of Cloud Computing with that of other innovative technologie;
• Describes the main approaches to building ROI by taking advantage of the benefits that Cloud Computing provide; and
• Describes approaches to measuring this ROI, absolutely and in comparison with traditional approaches to IT, by giving an overview of Cloud Key Performance Indicators (KPIs) and metrics

In presenting their model, business metrics were used to translate indicators of cloud computing capacity-utilization curves into direct and indirect business benefits. The metrics used include a number of measures, of which I’ve included a few below:

The entire white paper and relevant documents can be found online here. This is an excellent resource for executives and managers to consider when evaluating cloud technology investment.

When given a clean slate, many new companies have chosen a full embrace of the cloud model, figuring the technology industry has matured to the point were these types of services make basic business sense. For example, Arista Networks, a five-year-old company that makes networking equipment, runs its sales software with a cloud software company called NetSuite, its corporate e-mail on Google Apps, and other Web infrastructure with Amazon.com.

“It’s so much easier,” said Andreas von Bechtolsheim, the co-founder Arista and Sun Microsystems and one of earliest investors in Google and VMware. “For a new company like us, you would just never build a traditional data center anymore.”

And this is where the real story lies. You see while larger organizations might be wary of the Cloud, each day they fail to shift their IT infrastructure to the Cloud is a day the competition is gaining a leg. The same is true for all industries including franchising. Ironically, the ROI for larger corporations adopting the cloud is much higher than for smaller ones from a strictly cost benefit standpoint. From a strategic point of view the ROI is even higher.

Yes companies are adopting the Cloud and for the ones doing it slowly or not doing it at all, they best reconsider their long term viability.

At the Flywheel Group this has made us stop and think, given all the potential that the cloud offers clients particularly in franchising, that we need to do a better job of sharing more about what the “Cloud” really is.

Its really important for people in any organization to grasp the concept of the “Cloud” because it is going to touch everything in our lives and organizations, if it hasn’t already started to. Franchise executives and managers should take a moment to catch up on the basics with this quick video which is an excellent and short explanation of how Virtualization, Utility Computing and Software as a Service are converging to make Cloud Computing an important aspect of franchising today. Watch !

Trouble is, if you take a moment to calculate what the cost of all this technology and maintenance is for your company you might be surprised. Upgrades, hardware maintenance, software licenses all add up. Don’t even mention that you are unable to really manage what folks are up to on a day to day basis.

To make this more challenging your people aren’t able to take full advantage of things like their smart phones, mobile internet access while they are on the go or at home, social media, and other advancing technologies. These tools would help them be more productive in serving customers or developing new business.

What is even more troubling is if you are relying on a third party vendor, which might have financial issues you are unaware of given today’s environment, to manage and host your Intranet content or business systems based on a proprietary infrastructure. You may have some real trouble ahead. What happens if they fold ? What upgrades are they making to integrate new tools ? What is your “exit” strategy ?

You have a problem. The good news is there is a solution. You just need to gather the will to understand the tremendous risk and opportunity that  all organizations face today around their information systems.

With all of the advancements in technology available to organizations today, particularly with the cloud, you really really have to sit down and take account of how you are using your IT and strongly consider shifting your strategy to the cloud….Entirely to the cloud. Sooner not later would be a very good idea.

Watch Mark Benioff CEO of salesforce.com explain the cloud, technology and what is happening and why you should jump in. Don’t wait and let your competitors beat you to the punch.

Check out this video for an overview of the benefits of a Google Adwords and Salesforce mashup.

I came across a rather interesting question that was posed on Linkedin yesterday which prompted this post. The question was “Which thesis about IT within emerging franchise networks most appeals to you?” The author, Heath Waldorf, is putting together a thesis paper and was looking for some insight. I obliged….

Information Technology within franchise systems would appear to be a scarcity judging by the lack of conversation on the topic. A few quick searches about franchising and technology will pull up a handful of dated articles on intranets (which are rapidly becoming a thing of the past), there are two LinkedIn groups dedicated to technology in franchising – one has 23 members and the other has 3. There are virtually no conversations taking place about franchise and IT in the cloud… that’s Facebook, Twitter, Google, etc. The technology playing field is being leveled by the emergence of cloud-computing, whereby organizations can utilize and develop sophisticated business apps without a significant investment into hardware or software infrastructure, and access them via any web browser. Inquiring minds are wondering why there is a lack of discussion in the franchising world about this?

Let’s take a look at what we believe to be 5 of the most important aspects of IT for franchisors.

1. Integration with Social Media- Interactions with existing and prospective customers no longer takes place solely via the phone or email or even through corporate websites. Gartner predicts that Facebook membership could hit 600 million by year-end 2010 and it will be the No. 1 social networking site in all but 25 countries. Opportunities to drive new business development and provide customer service will increasingly take place within social networks such as Facebook and Twitter. If your CRM system does not easily integrate with these social networking sites then your opportunities will be limited. Integrating your use of social networking sites into your CRM system also allows you to develop analytics and set measurable KPI’s.

2. Integration with Mobile Devices- With the rapid expansion of mobile devices and virtually everyone in business having either an iPhone or blackberry these days, we have the ability to access information anywhere and at anytime. Having access to all of your new leads for the day, or being able to pull up a complete view of one of your franchisees while on the road, or being able to solve a customer’s problem via Twitter from your iPhone, are all possibilities. And not only are these things possibilities, but they will become necessity and expected in the near future. Having a technology platform that integrates seamlessly with your mobile devices will have great implications for businesses.

3. 360° Views- Building out a 360° view of your franchise system is possible and is necessary to long-term success. Having a single-source, easy-to-access, view of every interaction with your franchisees from lead through the awards process to pre-opening to training to operational information is vital to creating and improving your systems. Knowing where all your touch points are with your franchisees allows you to create analytics and develop KPI’s and measurable benchmarks for improvement. Making decisions based on anecdotal evidence won’t cut it anymore. Read What is a 360° View, Anyway for more information on this topic.

4. Customization- Have you ever needed to further customize your existing platform? Maybe you needed to add a field or change a workflow process or tweak some part of your CRM system so that it fit your business. How long did it take? How much did it cost? Did your technology vendor understand what you were wanting to accomplish? It’s a poor expectation to believe that an off-the-shelf solution will fit your every need without needing some level of customization. This is where many technology vendors make the majority of their revenue because they understand that you’ll need customizations done. But at that point you’re held hostage because it’s a closed platform that only your vendor can modify. You’re stuck with expensive customizations and upgrade fees.

It will be increasingly important for franchisors to use platforms that: 1) give them the ability to customize themselves, 2) allow business users to customize without the need for a computer programmer, and 3) if advanced customization is needed there should be an eco-system of vendors who can perform this customization thereby creating competition and giving the franchisor an opportunity to pick the vendor who provides the most value. Salesforce.com is one example of a company who fits all three of these criteria.

5. Scalability- What I mean by scalability is that the cost structure is set up to pay for what you use. The advantage of cloud-computing platforms is that there is no hardware or software infrastructure to invest in upfront. A per-user fee is paid in a subscription format. If you want more users, you pay more. If you remove users, you pay less. If you sign a 1-year contract and at the end of that year decide that you don’t want to continue then you don’t renew. A strong ROI is much easier to achieve and risk is minimal when compared with platforms that require an upfront investment into hardware and software, whereby scrapping that plan after 1 year would mean a significant loss of investment.

As always, I look forward to any feedback and discussion surrounding this topic.

What do you see in the future of Information Technology for franchisors?

Potential reasons why basic internal processes are not adopted include the following:

1. Lack of understanding of what the process should be.
2. Lack of discipline to consistently execute.
3. An inadequate workforce.
4. No priority given to developing processes.
5. Lack of tools to properly manage processes.
6. Lack of defined KPI’s and ability to measure them.

The first four reasons listed above could each be examined in excruciating detail, but let’s focus on the last two.  Building an effective and profitable system of managing a franchise organization means that the people in the organization need access to a lot of data.  And they need it fast.  You’ve heard the saying, “don’t take a knife to a gunfight”, right?  Well, continuing to operate from Outlook and spreadsheets makes you a knife-wielding fighter (and it’s a rusty pocket-knife, at that).  With the emergence of cloud-computing technologies and sophisticated yet user-friendly CRM solutions, you can now afford that gun.

The 360° View

There’s no doubt that by the time one of your franchisees opens the doors of their business they have been through a great deal of interaction with the people in your organization.  They interacted with your sales department, they spent time with your pre-opening staff, training department, and operations team.  They were also on the admin/legal department’s radar.

A  360° view would give you the ability to look back over the course of this life-cycle and view all interactions with the franchisee from the day they first entered your sales team’s pipeline and extending forward up until the day they exit your system. Having key information available in a single view such as: how and when they entered your pipeline; all communication with the sales team; records of all signed contracts; real estate leases, site developement projects, training records, support issues and communications, unit performance history; and so forth is an invaluable tool in developing a high-performing franchise organization.

Understanding when and where the organization has touch points with prospective franchisees and existing franchisees allows the franchisor’s leadership team to develop measurable goals, objectives, and strategies for each point of contact that you have.  Once these goals are in place an organization can begin to measure, benchmark, and improve.  Continuous improvement is a core philosophical belief of The Flywheel Group, as the silver bullet doesn’t exist.  And without a system, a set of measurable KPI’s, a way to measure them, and a competent team of people to execute, well, then improvement is really just anecdotal.

Learn more about a solution that may be right for your organization:

Having worked in IT and franchising for over 25 years, I only wish the “Cloud” was around a few decades ago like it is today. I remember it well, dealing with IT people, and hardware and software infrastructure that required many resources and delivered little in the way of quality solutions in a reasonable time frame. Mobility – wishful thinking or perhaps impossible unless you had a budget the size of the national debt. Does anyone recall IBM’s RPG code ?

Amid rapid technological change, investments in hardware and software development left executives like dogs chasing their tails: as soon as you thought you had the answer, a new technology brought into question the investment. As a result, quality IT solutions didn’t receive a lot of attention in franchising. Many that did failed. This was particularly true for small to mid sized companies with limited resources.

As an early adopter of the “Franchise Intranet”, I’ve always had a great appreciation for what technology’s promise offered the franchising world. But alas, providing field consultants with a detailed 360 degree view on a smart phone was not an option in that past. Monitoring social media chatter or using it to handle franchise or customer support was even more of a fantasy. Thankfully there is a whole new world and a better opportunity to deliver solutions that can make a difference in today’s world.

When you think about what IT should be for franchisors, a way to make a REAL impact to how the business functions by lowering costs, and improving efficiency, you’re thinking of the Cloud. The Cloud helps deliver this with little consideration for the software and hardware investment obstacles that use to impede progress. It also does this in record time, with little need for overly technical developers and at an unbelievably inexpensive cost. Locking in with a third party proprietary solution that holds you over a barrel for the rest of your organization’s days – forget about it. Yes its that good.

In this day of limited resources, the need to use technologies to generate REAL business results is essential to successful franchise companies. Ironically, many franchisors aren’t using open system cloud solutions like they could. They are over paying for software or worse off in the hands of a closed proprietary system that keeps them from realizing huge benefits. This is where salesforce.com can and franchise flywheel can deliver tremendous options to revolutionize a franchise business model.

Watch this video (see below) about the power of the Cloud and salesforce.com here and learn how the Franchise Flywheel could make a big difference for your franchise system.