Solid CRM is difficult, but not impossible

by Mario Apicella

April 16, 2001 —

Managing customer relationships has always been complicated and unpredictable, but the popularity of the Internet and the explosive growth of wireless technologies make it even more so -- and more expensive. But relief is finally possible. A robust CRM (customer relationship management) solution -- from one vendor or a mix from many -- can make your sales efforts more incisive, your marketing campaigns more effective, and your customer service more efficient.

But proceed with caution: Many early adopters have reported lengthy, expensive CRM implementation cycles and failure to achieve demonstrable results. Even the boldest CTOs tremble at industry scuttlebutt which says that as many as 77 percent of CRM projects fail to some extent.

Each company requires a unique mix of resources and information to best respond to customer issues. Although technology helps, a packaged solution, no matter how well-established and rich in features it may be, will not alone take care of your customers. Even a perfectly designed solution can fail to produce results if you haven't tuned it to the specific requirements of your company.

Such requirements are often difficult to identify because different departments have different notions of what's good for the customer. To consolidate those views into a coherent image, your company may have to reassess the way it does business. Without this essential first step, your CRM implementation will have no clear target and will fail to produce significant results.

Rethinking customer relations is just the starting point. Implementing a CRM solution, which must be integrated with existing applications and infrastructure, is a monster project with a gargantuan appetite for resources. Learning from other IT leaders' experiences can help you identify the most critical parts of your CRM project and avoid common mistakes.

How tough is CRM, really?

In February, InfoWorld surveyed 500 readers who are involved with acquiring CRM software and services and who work with 100 or more other employees. The InfoWorld CRM Survey has a sample tolerance variance of plus or minus 4.4 percent at a 95 percent confidence level.

This survey offers insights into the dynamics of implementing a CRM solution. We asked our readers to share their experiences, their expectations, and their plans for CRM. To clarify our questions about CRM, an all-encompassing, confusing term, our extensive questionnaire focused on specific aspects such as sales-force, marketing, and service automation, and links to other systems including back-office and supply-chain management applications.

The InfoWorld CRM Survey revealed a telling contradiction: Although the vast majority of respondents -- 78 percent -- consider CRM critical, just 35 percent have actually implemented it. This confirms the complexity and difficulty that IT leaders face when tackling their CRM implementations. No matter how important it is for a company, the obstacles to implementing the solution are such that they can actually delay or sink the project.

The readers we interviewed pinpointed those obstacles with relentless accuracy. Not surprisingly, budget constraints are the most important barrier for the majority of the respondents. In fact, depending on the complexity and the level of integration required, implementing CRM can cost a company hundreds or thousands of dollars per seat. And that's just the beginning; respondents also warned about the costs of integrating existing applications, consulting fees, training, and potential upgrades to their hardware infrastructure.

Trying to get approval for an astronomical budget entry can be the worst possible approach. Try breaking a CRM project into more manageable and less expensive subprojects. Take a phased approach; first deploy what's most appropriate and easiest to achieve in your company's environment.

In our survey, 49 percent of readers first deployed a call center or customer service solution, 21 percent started with SFA (sales-force automation), and a significant 10 percent began by implementing MA (marketing automation).

Total buy-in or bust

One of the greatest challenges you face when implementing a CRM solution is coordinating the requirements of multiple departments. If you ask who is responsible for the customer in your company, the answer will vary depending on whom you ask. Your company's sales, marketing, accounting, and service personnel will all claim ownership, and they are all correct.

The truth is that each department has a precise but partial image of your customers, and the difficult task of combining those segmented views into a coherent, companywide picture is crucial for a successful CRM implementation. For 49 percent of InfoWorld CRM Survey respondents, obtaining widespread cooperation from all levels inside the company is a major bump in the road to CRM. Also, 24 percent of our readers indicate that a lack of commitment by their management staffs can be a serious handicap, and 29 percent point the finger to an unsupportive cultural climate inside the company.

Although technology in itself will not solve your customer relationship problems, technology is one of the major reasons for failure or success on any CRM deployment. The existing infrastructure of hardware, operating systems, and applications is the foundation on which to build customer-focused applications.

If that foundation is difficult to integrate with or poorly designed, your CRM project will grow more expensive and implementation will be delayed. A whopping 46 percent of the IT leaders surveyed indicate that integration with existing applications is a major impediment to CRM, and 40 percent put the blame on the lack of skilled IT resources. In addition, 20 percent of respondents point to the lack of IT infrastructure as an obstacle to CRM.

It's hard to disagree with 500 InfoWorld readers. Some aspects of a CRM project will put a huge demand on your IT department and often relate to areas that go beyond their traditional technical skills.

For example, a call center may require integrating telephony resources, such as your PBX, with your CRM applications. The need to coordinate telephone equipment at different locations poses problems more suited to the technical expertise of a telephone company.

Also, implementing the infrastructure to manage wireless applications requires mastering incompatible and unfamiliar standards. If your target market crosses national boundaries, you have the added burden of having to deal with multiple regulations. Managing these issues may require more skill and expertise than is available in-house.

Is CRM really too difficult for the average company to implement? Other companies have solved this overwhelming mountain of problems, so you can, too.

Many respondents report that they've begun implementing CRM with particular applications and plan to deploy more over the next year -- a cautious, smart approach to CRM. But not surprisingly, our readers' answers were diverse, implying that one size does not fit all when it comes to CRM.

Almost 35 percent of survey participants deployed an SFA solution from major vendors such as Oracle, PeopleSoft, or Siebel. Oracle, a company that only a few years ago had no presence in the CRM market, ranks first among our respondents for current and short-term deployments of SFA, marketing, and call/service center applications.

Presumably, the large portfolio of applications these vendors offer is what motivates IT leaders to purchase their solutions; the large selection facilitates a staged implementation that is not limited to CRM. In fact, 73 percent of respondents stated that the availability of a complete solution from a vendor is a very important or critical factor in their choice. In addition, an impressive 27 percent have deployed a CRM solution that is open to integration with e-commerce applications.

The rest of the survey participants have used a variety of CRM-focused vendors including Clarify (now Nortel Networks), FrontRange Solutions (previously Goldmine), Interact Commerce (previously SalesLogix), Nortel Networks, and Onyx. Interestingly, 5 percent of readers developed their own solutions for SFA and call/service center applications, but none plans to build a homemade solution for the future.

Readers' plans for current and future implementations of marketing and customer service applications are even more dispersed, although the leading vendors in the SFA applications market maintain a significant dominance. Not surprisingly, many respondents chose vendors with a telecommunications heritage, such as Cisco, Nortel, and Lucent, for their call center implementations.

Just as each company has a different set of requirements and resources for launching a CRM project, each company will have different goals and measures of success. When asked about the success of their CRM initiatives, our survey participants were somewhat indecisive. For 13 percent of participants, CRM implementations failed to deliver all the expected benefits. On the positive side, 35 percent indicated that their CRM projects met or exceeded expectations, which is good news if you are planning to follow a similar path. Obviously a successful CRM implementation is not an impossible objective.

The remaining participants either lacked information for a conclusive assessment or were at an early phase in their CRM implementation. This indicates that many companies are starting their CRM projects with objectives that are more ambitious than those specific to customer relations, marketing, or service calls and may plan to complete the picture by adding, for example, e-commerce or e-procurement.

CRM is an essential step for making your company flexible enough to do business in the global economy. If your competitors are taking that step, shouldn't you?

The Bottom Line

Implementing CRM

BUSINESS CASE

Effective CRM improves market penetration and strengthens customer loyalty but may require a thorough rethinking of your company's business processes. CRM also calls for unrestricted cooperation among departments.

TECHNOLOGY CASE

The need to coordinate multiple communication channels and integrate with back-office and e-commerce applications puts a heavy demand on IT resources. The management of some specialized technologies can be more cost-effective if handled by the vendor or outside parties.

PROS

+ Improves customer satisfaction

+ Facilitates additional revenues

+ Enhances company's image

CONS

- Expensive to deploy and maintain

- Extensive technology requirements

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