Why CRM Packages Fail
Before implementing a CRM package, its necessary to understand why nearly half of U.S. implementations and more than 80 percent of European implementations are considered failures (see www.crm-forum.com/cgi-bin/item.cgi?id=50092&d=101& muscat). Its difficult to fathom failures of such monstrous proportions, especially when complete CRM installations can cost millions of dollars and then hundreds of thousands of dollars more per annum.
Why was all this money wasted? In fact, it probably was not wasted. The problem is that there has been a notorious failure to define the term failure. Many analyst companies, for example, assume that failure is an incompletion of a projects goals.
CRM implementations, however, consist of dozens of interrelated goals and projects under a single umbrella term. A CRM implementations failure to achieve a few goals may constitute an overall failure in some of the estimates when, as a whole, the implementation works as planned.
The lesson here is clear: When outlining the goals of a CRM package, companies need to be realistic. Companies also need to prioritize their CRM goals so that the most important actually get accomplished.
Of course, thats not to say there arent CRM failures. Whenever companies start to rethink how they do business, many CEOs attempt to imprint their strategies for increased efficiencies without considering customer needs. CRM vendors, meanwhile, attempt to speak directly to the CEOs, claiming they understand their predicament and offering a technological solution as their main tool.
Again, these solutions are aimed at increasing efficiencies without the key knowledge of whether these efficiencies benefit the customer. But the damage is done: Any problem with the CRM implementation can now be blamed on technology rather than management and personnel issues.
It often goes like this: The CEO, perhaps working together with the CIO, purchases a CRM solution for millions of dollars and sets down the corporate goals. Because CRM solutions are usually sold with service agreements, an outsourced temporary staff is brought in and starts work. Unfortunately, some of the existing IT corporate workers have not bought off on the package and naturally resist the efforts. They simply dont understand the corporate goals because they were never included in the earlier discussions.
Lack of internal buy-in is one of the main causes of CRM implementation delays but not necessarily failures. According to Gartner Inc. (www.gartner.com), one major cause of failure is a weakness in the program management required to rally the troops and to shift personnel in strategic ways.
CRM Forum Ltd. (www.crm-forum.com), meanwhile, lists three key reasons—in descending order—for CRM failure: organizational change and politics, a lack of the right skills and enterprisewide understanding of the initiatives, and poor initiative planning.
A Peppers and Rogers Group study cited by Gartner says that to combat these problems, upward of 40 percent of the entire cost of an enterprise- level CRM investment should be spent exclusively on the time and effort it will take to manage these issues.