CRM projects have earned a notorious reputation for being difficult and expensive. Despite endless statistics and discussion of the topic, many of these projects come in late or over-budget.
For this reason, I was delighted when Laurence Buchanan sent me an unsolicited article he wrote that dives under the surface to explain why CRM projects fail.
Laurence heads up CRM in the UK for Capgemini (cross industry and vendor agnostic) and has been in that role for the last 12 months. Previously, he spent 10 years at SAP and was VP CRM. As you can see from his background, Laurence certainly has the chops to teach us something new about CRM projects and why they don't always go as planned.
Laurence wrote this guest post and supplied all the images below.
The first generation of CRM saw many failed projects. Some analysts reported failure rates as high as 60%. Since then, as an industry, we have learned much about the causes of CRM failure and while most projects are still tough, success rates have soared.
CRM is tough to get right. I've been involved in around 200 projects and I have never seen a project succeed that has not grappled with difficult issues like cultural change, performance and incentives, or integration. Some of the major reasons for project failure, like lacking executive sponsorship, ignoring change management or failing to deal with basics like data quality have been well documented. I don't aim to repeat what has already been said.
There are some more subtle reasons for CRM project failures that I have come across and the aim of this post is to share those.
"Inside-Out" projects are typically characterized by a failure to adopt a customer-driven culture. Shiny new technology is applied to fix a business problem in the hope that it will somehow make an organization customer-centric. We've all be dazzled by a vendor product-demo, but let's be clear. CRM projects very rarely go wrong because of a lack of functionality and technology alone does not make an organization customer-centric. Most customers buy far more functionality than they will ever use, obsessing with bells, whistles, flashing lights and fancy screens, when they should be thinking "outside-in" about the things that will add measurable improvement to the customer experience.
2. Cart before the horse
I don't mean to bash technology, but my second reason for CRM project failure is "cart before the horse" which also related to technology. Typically, these projects see organizations evaluate technology before they have worked out and explicitly defied the business problem they are trying to solve. Those projects in this category often spend a long time evaluating lots of different vendors. At some point, they risk cancellation when a board member asks, "Remind me why we are doing this?"
3. Glass Ceiling
The Glass Ceiling is an invisible barrier stopping progress. Often the barrier is created by something obvious, that people accept as a given but never challenge - "we've always done it that way" is a phrase that springs to mind; or "we tried that once before but it didn't work". Glass Ceiling projects often occur in a second phase, long after the first benefits have been realized and the initial enthusiasm has worn off. An organization slips back into old habits and refuses to acknowledge the barrier stopping them moving forwards.
4. Once bitten, twice shy
The name speaks for itself. Many organizations were burnt by a first generation failed CRM project. I've been at countless client sites where I've been asked to use anything but the term "CRM" following a bad experience with a previous failed project.
Sometimes I think organizations get wound up with analyzing every aspect of the customer life-cycle, procrastinating about decisions, rather than testing hypotheses, adjusting and improving incrementally. "Analysis Paralysis" refers to those organizations that spend all their time analyzing and preparing, while their competitors are out courting their customers and building relationships.
6. "Hung Jury"
Often a close relation to "Analysis Paralysis", these projects are often characterized by lack of leadership. Political in-fighting, or genuine differences of opinion take the wind out of the project sails, ending in deadlock. Once stagnation sets in, these projects are often hard to get back on track as "one bitten twice shy" may follow. An injection of leadership or a neutral third party can sometimes help get things moving again.
Once again, the aim of this post was not to outline all of the common reasons for CRM project failure. I have just focused on some of the more subtle failures. Often over-looked but equally devastating.
I'd like to thank Laurence Buchanan for writing this guest blog post. Top photo from iStockphoto.