As one of the people who constantly said that 50% of CRM implementations fail (although I believe that the number is higher) in the early 2000 while at Gartner, I see that the number is holding.
To me then, and still now, the main problems stems from two different things:
1. there is a lack of understanding of how to calculate ROI for CRM (actually, for most things. but we are talking about CRM) and thus when the results come in they don't match the expectations. I see this very often.
2. I would add that since close to 70% of implementations don't have a strategy (no, I mean a real one - specific numeric goals and objectives tied to the corporate strategy, list of steps to take to get there, set expectations) they don't know what to compare their results against. thus, they compare to the ROI model that was provided by the vendor and find out (surprise, surprise) that it does not match. then label it a failure. those projects were doomed to fail before they started.
you cannot measure the success or failure of ANY project unless you have specific metrics and values for them, timeframe and steps to achieve them, and what are you going to do with those results.
I am surprised that it is still 50% (as in, they never learn), but also that is not higher (I guess luck continues to affect about 1/2 of the success stories).
Discussions about failed CRM projects often begin with statistics describing failure rates. To facilitate those conversations, here’s a summary of CRM failure stats for the period 2001-2009.
This is the basic list; see down below for more detail:
- 2001 Gartner Group: 50%
- 2002 Butler Group: 70%
- 2002 Selling Power, CSO Forum: 69.3%
- 2005 AMR Research: 18%
- 2006 AMR Research: 31%
- 2007 AMR Research: 29%
- 2007 Economist Intelligence Unit: 56%
- 2009 Forrester Research: 47%
This table lists the year, organization conducting the research, and reported failure rate. As described below, measurement differences make comparing rate changes across years difficult at best.
RESEARCH DESCRIPTIONS
2001 Gartner Group: 50%. Gartner released numerous CRM-related reports during the 2001-2002 period. Significant among these was research (September 2001) claiming that:
Through 2006, more than 50 percent of all CRM implementations will be viewed as failures from a customer’s point of view….
Several years later, in a 2004 interview with CustomerThink, Gartner’s Vice President and CRM Research Director, Ed Thompson, qualified this statistic by saying:
We were asking, ‘Did it meet expectations?’ That was the question. And, the answer we picked up fairly consistently, was that a lot of organizations failed to meet expectations.
As I describe below in the analysis section of this post, the definition of CRM failure in not always clear, making it difficult to compare studies accurately across years.
2002 Butler Group: 70%. This dramatic number is perhaps the single most quoted statistic on CRM failure.
Despite a lengthy search, however, I could not find the source document. Butler Group’s Senior Research Manager, Maxine Holt, kindly attempted, unsuccessfully, to find the document for me. In an email, she suggested that perhaps the number “was quoted by one of our analysts in discussions with the press and that’s how it has been circulated.”
Butler did release a report, in July, 2001, describing conditions that cause high rates of CRM failure, however it did not include this statistic. That report, Real CRM: Pitfalls and Potential, begins:
[T]he massive potential for conflicts of interest between the business world, the CRM vendor community, and ultimately the customer needs to be acknowledged.
Although the source statistic is not readily available, I accept the number for four reasons:
- Butler did substantial work on this issue during the 2001 period.
- It closely matches the Selling Power number described below.
- Microsoft marketing materials specifically quote Butler as saying: “70% of CRM implementations simply fail.” It’s unlikely Microsoft would make a direct quote without verifying genuine source data.
- Top CRM author and analyst, Paul Greenberg, includes this number in the third edition of his generally acknowledged industry Bible, CRM at the Speed of Light (page 3). Given Paul’s stature and my own personal respect for his work, I accept his numbers as fact.
2002 Selling Power, CSO Forum: 69.3%. Paul Greenberg also reported this number and I could not find additional references. I accept this number based on Paul’s credibility as described above.
2005 AMR Research: 18%
2006 AMR Research: 31%
2007 AMR Research: 29%. In 2007, AMR reported these numbers for the period 2005-2007 in an document titled, Ending CRM Failures: Get in the Loop. The figures describe the “percent [of] respondents that have experienced any implementation failures that kept them from ‘going live’….” The followed graph shows the data:
2007 Economist Intelligence Unit: 56%. The Economist Intelligence Unit also released a report in 2007 stating that:
CRM success continues to elude most companies. Eighty-six percent of survey respondents say that CRM will be important to their companies over the next three years. Despite this, more than 40% of respondents do not have a formal CRM strategy in place. Of those who do, 44% say that they have seen only “acceptable” results from their efforts, and another 22% say that it has been a disappointment.
2009 Forrester Research: 47%. In a report titled, Answers To Five Frequently Asked Questions About CRM Projects, Forrester Vice President and Principal Analyst, Bill Band, presents evidence that under 50% of CRM projects fully meet expectations. The following table summarizes:
THE PROJECT FAILURES ANALYSIS
Although not an exhaustive list of studies, this collection provides a useful indicator of CRM failure during 2001-2009.
When examining the data, be aware that dramatic year-to-year changes probably result from research differences rather than market shifts. Multiple organizations produced this data over time relying on different methodologies, assumptions, respondent company size, CRM project size, and research goals. In addition, most (but not all) failed CRM projects actually deliver mixed results and achieve partial objectives, making the definition of “failure” quite subjective.
I asked IDC Group Vice President for Software Business Solutions, Michael Fauscette, to reconcile these differences:
Despite potential weaknesses, the data remains extremely useful for two reasons:
1. Each data point alone tells us something about the state of CRM at that time of the study
2. The aggregate weight of this data clearly suggests strong dissatisfaction with CRM projectsDifferent organizations collected this data over a period of almost ten years. Without examining the research methodology for each study closely, we don’t know what they actually measured. For example, their definitions of failure and success may not be the same, let alone how they characterize CRM.
My take. In the spirit of not throwing babies out with bath water, please be aware that many organizations do achieve acceptable ROI from their CRM implementations. Still, the data clearly states that substantial numbers of CRM customers are dissatisfied with some significant aspect of their implementations. CRM technology vendors and consulting companies should take this message seriously,
