CRM failure: An all-star analyst discussion

I assembled three top-notch analysts to discuss, debate, and help us understand why CRM projects fail and how you can assure success. The result is a unique and informative podcast that drills deeply into the most important issues.

The all-star team joining me for the podcast consists of:

• Paul Greenberg, fellow ZDNet blogger and author of the influential book, CRM at the Speed of Light
• William Band, vice president and principal CRM analyst at Forrester Research
• Dr. Natalie Petouhoff, senior CRM and customer service analyst at Forrester Research

Listen closely to the podcast to learn from these experts. Hear us debate and form your own opinions on important issues related to running successful CRM initiatives.

You can also read a few key points I pulled from the discussion. This is my edited interpretation and by no means a transcript or complete summary of the podcast:

WHAT IS CRM FAILURE?

Bill: First, we must consider issues related to typical IT projects, such as going over budget, taking too long to implement, and so on. Second, and more importantly, research says that about 50% of CRM projects do not fully deliver on business expectations. However, this doesn't mean the projects are complete failures; in fact, most of the people I researched plan to expand and improve on existing CRM implementations.

Paul: Organizations sometimes set outrageous and unattainable goals for their projects, which is not the fault of the CRM software or vendor. Consequently, when a project delivers only some goals, some might call it a "failure." In reality, the project achieved whatever goals were realistic and attainable, which I consider success.

In addition, CRM technology implementations and CRM strategy are not the same, so it is deceptive to compare failure rates on typical IT projects with CRM failure rates.

Natalie: Organizations should view CRM projects as a investment backed up by a business cases. These investments typical achieve only 30%-70% of their expected benefit, which is too low. Every participant associated with the business case should be able justify that investment and expect that the benefits will be achieved.

WHY DO CRM PROJECTS FAIL?

Bill: In the past, many projects had no CRM strategy, business case, or metrics. As a result, participants didn't know what they were trying to accomplish before starting the project. This situation has improved in recent years.

Adoption is also a significant issue because CRM projects tend to touch more people (especially in sales, marketing and customer service) than other kinds of back-end technology implementations.

Paul: Adoption has always been the knottiest problem. In the old days, management bought applications, such as sales force automation (SFA), that sales people were not interested in using. It took software vendors several years before to add features that would actually help sales people, which raised adoption levels.

Historically, CRM projects did not involve users from the beginning, which also kept adoption low. Today, iterative development has become an important tool to help engage users earlier in the process. As a result, adoption rates have increased substantially over the last years.

Natalie: CRM changes how people do their jobs on a day-to-day basis, so we must encourage widespread adoption if we are achieve the planned ROI. To increase adoption, bring users into the process from the start of the project.

In addition, executive sponsorship must become an ongoing enrollment and engagement process. Projects with high executive touch are far more successful.

Bill: Success and failure is a multi-dimensional issue involving process, people, technology, and strategy. To achieve success, the software should be easy-to-use, but the project must also align with the business process to help people work better. Many projects don't focus on these four areas and therefore have problems.

Paul: Remember, there are many partial and complete CRM success stories out there. Maybe the project achieved a different business value than planned, but that's still success. If you incorrectly mislabel projects as failure, then people's heads will roll unjustly.

WHAT ABOUT CULTURE, EXPECTATIONS, AND CHANGE MANAGEMENT?

Natalie: Overselling benefits is often a shared responsibility between the vendor, systems integrator, and internal groups. If you eliminate overselling and increase truth in advertising then you remove the problem.

• Related: The ERP Devil's Triangle

Organizational change management facilitates greater economic value by developing, deploying, and aligning the company's assets for a given project. By being realistic and building the budget to meet unexpected changes, we can reduce the gap between expectations and reality.

Bill: You need to consider required organizational changes along with the technology changes you deploy.

Paul: When you buy an application, you are also buying a relationship with the software vendor. Look beyond the vendor's financial stability and software functions to see whether its corporate culture is compatible with yours. This way, when problems arise you can avoid the blame game and just work through issues with fewer problems and more aligned expectations. These things mitigate risk of failure.