Can You Prevent CRM Failures?

Would you buy a certain model car if Consumer Reports said that half of them were lemons? How often do you pick the restaurant that earned only two out of four stars in the city guide? For VARs in the CRM (customer relationship management) space, that is exactly the kind of press they're getting on a daily basis. According to Gartner, Inc., end users will continue to label more than 50% of all CRM implementations failures through 2006. Ray Lui, CRM business unit leader for KPMG Consulting, Inc. (McLean, VA), confirms that this trend has had an impact on his business. "Enterprises are dissatisfied with existing CRM solutions. Many of our recent engagements have been rescue and cleanup.

"The problem is not the technology," says Lui. "The technology's great, but if your end users don't use it, then consider the project a failure. Then it's just expensive shelfware. Lots of VPs out there are scratching their heads and blaming the vendor. Failure isn't the fault of vendors or implementors; it's a combination of factors." According to Lui, KPMG Consulting's CRM implementation success is the result of using technology to address business, operation, and human issues in an organization. "It doesn't just have to be CRM," says Lui, who was an ERP (enterprise resource planning) integrator before moving into the CRM unit. "Whether it's ERP, EAI [enterprise application integration], or any other technology, integrators have to take a long-term strategic view, define small meaningful phases, and focus on delivering value rapidly."

Don't Ask Customers To Change Too Much
Lui says that the first question a VAR has to ask is whether the solution fits the business. This sounds deceptively easy, but it is important to know what a company's current business processes are and which product will best suit those needs as well as existing resources. One of Lui's most recent success stories is an installation for Bell Mobility. The Canadian wireless giant was looking for a solution that would help avoid "churn" in their market. In other words, they wanted to get new customers, keep them from being lured away by a competitor's ads, and upsell/cross-sell them when possible. Just as in any solution, the first step was an analysis of the customer's needs, which required an assessment of existing resources (such as infrastructure and personnel) and how the company does business.

Bell Mobility already had a significant investment in accumulated business intelligence, and it wanted to incorporate that knowledge in an overall solution that would drive revenue, beginning in the company's inbound call center. Bringing CRM into the call center meant incorporating the business practices and goals of that environment into a workable solution. By developing a solution that integrated the existing call center infrastructure investment with the business intelligence investment, Bell Mobility was able to increase call center effectiveness without replacing existing hardware and software. A solution that doesn't require huge cultural change or entirely new hardware and software is not only easier to sell; it also reduces training time and is more easily accepted by the end users.

Too Much Success Can Become A Failure
Like nearly all organizations adopting CRM, Bell Mobility was looking for a solution to increase revenue. In many cases, the inability of some CRM implementations to deliver on that promise is one reason end users cite when labeling a CRM project as a failure. Ironically, sometimes too much success can cause a solution to be labeled a failure. If the response to a marketing campaign exceeds a company's ability to handle customer orders efficiently, the effect on customer relationships can be negative. For example, the Bell Mobility project showed promising returns very quickly, but that might not have been the case if operational issues hadn't been addressed from the outset.

"When I talk about a success story like the Bell Mobility account, the client starts dreaming," says Lui. "Before he gets too far, I have to bring him back to reality and make him think about the broader impact - beyond just the technology." For example, if another wireless company wants to cross-sell other products or services, it's important to know how well CSRs (customer service representatives) are trained to handle sales as opposed to answering questions about billing. Lui points out that extensive training to low-wage workers in an environment where turnover is high isn't a good investment. "Then there's the fulfillment issue. After the employees have been trained and can sell, what then? What happens when the customer says 'yes'? How will you take orders? Can the call center in the wireless division take cross-sell orders for another division such as Internet service? How will they get those orders to that division? Will they be able to schedule and monitor field service?"

Lui points out that a comprehensive, enterprise-wide CRM implementation is an ideal, but it's very complex and probably can't be realized all at once. If an end user rushes into this kind of implementation and can't deliver the products and services, it may lose customers in the long run. The ill will created when the CSR can't answer a question about cable modems or doesn't know when the installer is available can cost a company its most valuable customers.

Knowing when a product or service can be delivered is an increasingly important aspect of CRM implementations, requiring integration with other enterprise applications. "The demand chain and supply chain are merging," observes Lui. "CRM focuses on marketing and sales. Going out and selling effectively requires integration for a view of the supply chain. What is in inventory? What are the supply cycle constraints? More than just filling orders, an increasing number of customers are looking at integrating everything associated with procurement and manufacturing. If you can't provision, no matter what you offer, a customer will walk out the door anyway."

Combat The "What's In It For Me?" Factor
One of the ironies of CRM is that the end users who benefit the most from an implementation are not the ones on the front lines. Sales executives who make the buying decision see the value of a CRM tool like sales force automation, because it allows them to monitor calendars and sales activities. "Put yourself in a salesperson's shoes," advises Lui. "He has a quota; he has to go sell. Spending extra administrative time to input data so that management has an enterprise view doesn't add value to that salesperson." When the salespeople don't input data about customers or activities, the VP of sales doesn't realize the value he was promised, and the project fails.

To encourage employees to take part in the project, management may need to offer an incentive. For example, if an individual or group completes the necessary information, they get a cash bonus. Another approach would be that salespeople who don't keep their records updated don't get a commission. Recommending ways to gain end user acceptance should be part of the consultation an integrator provides in order to promote the success of the project.

Despite the fact that Lui attempts to make CRM implementations as unobtrusive as possible to end users, it often requires a change in longtime habits. Because of this, Lui is a proponent of gradual implementations, but not too gradual. "We always target 90 to 180 days for an implementation, never over six months. If an implementation drags on too long, it will be outdated or require changes by the end. We prioritize which phases are implemented first by value that can be delivered quickly, say within four to six months. Even in a bad economy, companies are not afraid of spending money, but they want to see payback, and they want to see it sooner rather than later."

Executives Are Still Willing To Pay For CRM
Meta Group seems to agree with Lui's assessment. According to a report released in early 2002, corporate IT spending is down overall, but CRM is not being cut at the same rate as other applications. Meta Group's research also indicated that CRM has jumped from being number 15 on executives' lists of priorities to a respectable number 2. As a result, integrators still have the opportunity to prove Gartner wrong by improving CRM implementation strategies and linking that technology with success rather than failure.