"Our Take" - Why CRM Fails

(Past Editions by: Date, Title, Topic)

 
About "Our Take" 
"Our Take" is a collection of daily vignettes covering a wide range of CRM topics. It's an attempt to add our own spin to the world of CRM. We will use the column to share our perspectives, opinions, epiphanies, web nuggets, or quite frankly anything that moves us. Get ready to expect the unexpected. And, don't be shy about sharing your thoughts.
 
 
1/8/07 - A New Sense of Optimism?
A few years ago, some of the better known research analysts published reports that 50% or more of all CRM projects could be classified as failures. These reports became quite famous and were often referenced. In retrospect, I think these reports had a significant influence.
 
The biggest impact was an increase in the amount of justification and ROI analysis necessary to get new CRM projects approved. In addition, we saw a reduction in the number of grandiose CRM plans, end users asking for more vendor assurances, more interest in software as a service, and lower prices.
 
So a few years later, have we seen a decrease in the failure rate of CRM projects? I'll share my observations tomorrow. Until then, I'd like to hear from you. Do you think we are seeing an increase, decrease, or no change in CRM failure rates?
 
Gary Lemke, Publisher
(Share your thoughts)
 
1/9/07 - A Matter of Definition
Yesterday, I recalled the now famous analyst reports documenting high levels of failure rates among CRM projects. By your responses so far, this is a very important topic. But before we get too far, we have a bit of definition work.
 
One of my issues with the original reports is the ambiguous nature of what defines a success or failure. What defines CRM success? Is it on-time implementation, user acceptance, cost reduction, or something else? It turns out the definition of success, and conversely failure, can be different for each and every implementation. Each project will have its own return on investment expectations.
 
Success is what you define as success. I do find that most projects have a upfront definition of success. However, many do not have a way of measuring if success is attained. A lack of measuring a baseline (how were you doing before you started) and on-going progress leaves many scratching their heads on the real ROI. Do you agree?
 
Gary Lemke, Publisher
(Share your thoughts)
 
1/10/07 - Reasons CRM Fails
We're going to continue the discussion about CRM failures today with some thoughts from our readers. Why does CRM fail? One reader suggests that people don't understand what they are getting into. He wrote:
 
"From my experience, CRM projects fail because of the hidden costs. The vendor tells us their product can do everything we need, but misleads us on the implementation costs. The integration costs three to five times the original estimate for the same set of requirements. These hidden costs make $500K system cost over $2 million. The CRM is implemented with the available funding, comes no where near the requirements thus failure ensues."
 
This experience is played out over and over again. Sometimes, vendor expectations are inflated because of their desire to close the sale but we often see "scope creep" or a list of expanding requirements. There certainly is enough blame to go around. Two lessons: learn what you are getting into and save additional requirements for phase II.
 
Gary Lemke, Publisher
(Share your thoughts)
 
1/11/07 - A New Sense of Optimism - Part II
Earlier this week, I asked if you thought the failure rate of CRM projects had improved from the 50%+ cited by research analysts a few years ago. Like me, many of you are scratching your head a bit because of the ambiguous and often difficult task of defining success. My unscientific analysis of responses tells us that many of you believe (or at least hope) failure rates have declined but doubt that they have declined by very much.
 
One person responded by saying, "Things are getting better. Not that the undertaking is any easier. We simply have a better understanding of the beast. Experience teaches us to start small, engage the user base, try not to customize unless absolutely necessary, focus on adoption rates, deliver value (internal as well as external), and communicate until your message is seen as a mantra."
 
The message continues, "It's the same set of challenges as experienced in the past! The difference being we resign ourselves to the war and we have gotten better in the context of the individual battles." I agree with this general observation. The world really hasn't changed all that much but we enter these 'gigs' with our eyes open. Do you agree?
 
Gary Lemke, Publisher
(Share your thoughts)
 
1/12/07 - Limiting Failure
Are you creating a formula for success or are you creating a formula for limiting failure? This week, we've been talking about CRM failure rates. Do we have a better understanding of the undertaking and are we more successful by limiting the scope of what we are trying to achieve?
 
One reader thinks "breakthrough success comes from defining customer-centric strategies, redesigning workflow and process to express these strategies, then adapting technology to your specific needs. The only folks out there still talking about limited scope implementations with minimal software customization are software salespeople, and not the reputable ones."
 
There certainly has been a backlash to mega-CRM projects. But has the scope of the project taken the blame when the real culprit has been a lack of customer-centric strategies that really matter? What do you think?
 
Gary Lemke, Publisher
(Share your thoughts)
 
1/16/07 - Limiting Failure - Part II
Isn't it interesting that while we are talking about CRM project failures, my PC would decide to have a "thermal event." Most PC users have a failure story so I know that I'm not alone. I wouldn't put this failure in the catastrophic category - hey, no one died - but the loss of productivity is maddening. Thank you for your empathy.
 
In the last edition of this column, one reader wrote that limiting scope is not a winning strategy to limiting failure. More specifically, limiting scope can eliminate breakthrough thinking which in turn eliminates breakthrough success. In my eyes, limiting scope and breakthrough thinking do not have to be mutually exclusive.
 
You may have heard the advice, "think big, start small." With regard to CRM projects, my general rule of thumb is to nurture breakthrough thinking that may indeed lead to mega-projects. The key is to break the big project into manageable pieces. Specifically, I suggest 90 day or less implementations with breakeven ROIs that can be achieved in 180 days or less. If you can't meet those criteria on the project, break it in to smaller pieces. Do you agree?
 
Gary Lemke, Publisher
(Share your thoughts)
 
1/17/07 - Limiting Failure - Part III
Limiting scope doesn't have to mean limiting dreams. We've been talking this week about how to increase the probability of success for your CRM implementations and it seems that one common way is to narrow the scope of the implementation as to reduce investment and risk.
 
The popular saying "nothing risked, nothing gained" certainly applies. So I want to use this column today to encourage you to embrace those dreams. Think big, act big. But in doing so, you have to have a higher calling to identifying, understanding, and addressing risks.
 
Failure is often nothing more than a lack of understanding of the roadblocks, impediments, and risks. Success is sometimes determined not by managing the things that are getting done but also recognizing the things that are not getting done. "Critical success factors" is one management buzzword that might apply in this case. Do you understand all the critical success factors involved in your current CRM projects?
 
Gary Lemke, Publisher
(Share your thoughts)
 
1/18/07 - Failure is Not an Option
Do you remember the context of this famous quote? It was Gene Krantz, lead flight director for NASA's Mission Control who said these words to the ground crew charged with finding a way to get the crippled Apollo 13 back to earth safely.
 
As we have discussed CRM project failure rates, my mind couldn't help stumble over this "can do" attitude. Is it fair to compare that life and death situation to a CRM project? Maybe, maybe not. But if I was pushed to a yes or no answer, I would firmly land the in "yes" camp.
 
Why? Getting the customer 'thing' right is often a matter of corporate life and death. So here is my question to you today. Is your organization approaching your current CRM projects with a "failure is not an option" attitude? Do you have a Gene Krantz type leader inspiring everyone to accomplish great things? I sure hope so. If not, why?
 
Gary Lemke, Publisher
(Share your thoughts)
 
1/19/07 - Failure is Not an Option - Part II
Yesterday, I used the Apollo 13 example of how the NASA ground crew took a "failure is not an option" approach to find a way to safely bring the crippled spacecraft back to earth. More specifically, I suggested that more of us could benefit from that attitude when it comes to CRM projects in order to decrease failure rates.
 
Today, I'd like to point out another benefit of the "failure is not an option" attitude. In the Apollo 13 situation, the dividend of the heroic effort went beyond an acceptable conclusion to inspire a sense of national pride. Beyond pride, I think it is safe to assume that it bolster confidence and teamwork.
 
Ask any consultant about CRM critical success factors and most will place "executive sponsorship" near or at the top of the list. Do your executive sponsors inspire the pride, confidence and teamwork necessary for a "failure is not an option" attitude?
 
Gary Lemke, Publisher
(Share your thoughts)
 
1/22/07 - The Big Reason CRM Fails
Over the last two weeks, we have been talking about why CRM implementations fail. I have read a wide range of responses from many of you and I really appreciate you sharing your experiences and insights. While it is impossible to pinpoint CRM failure to just one culprit, there is one reason that seems to be mentioned more than most.
 
It appears many failed implementations can be traced to customization and integration efforts. For the sake of simplicity, I’ll combine those two because integrations are quite often customized efforts. And why do we customize? Why do we add efforts that cost large sums of money, extend implementation timelines, and introduce higher risk of failure? Because we want to? Absolutely not.
 
We customize because the CRM solutions we buy do not do what we want them to do out of the box. Isn't it interesting that most organizations use less than half of the functions that come with the standard product yet the functions we really want have to be added through customization? What's wrong with picture?
 
Gary Lemke, Publisher
(Share your thoughts)
 
1/23/07 - CRM Success and Failure
Today, we continue talking about the success or failure of CRM implementations because so many of you have written in to share your thoughts. When trying to discern if we are improving our success rate, the first question many of you asked concerns the definitions for success and failure.
 
As we discussed in early editions of this column, definitions can often vary from implementation to implementation. One reader wrote, "Without a clear definition of success, it is all too easy at the end of a grueling project to focus on the one or two items that didn't go perfectly and then label the entire affair a "failure." Just as we almost never define "success," we never, ever define "failure" before we start. We still aren't managing expectations with upfront definitions of either success or failure."
 
The reader concludes, "When we learn to manage our projects and everyone's expectations better from the very beginning, we will improve perceptions of those projects." This perspective shows that even if we define success, it doesn't mean the definition will remain static. Expectations can change and it is important to continually manage those expectations in order to achieve "success." Do you agree?
 
Gary Lemke, Publisher
(Share your thoughts)
 
1/24/07 - Rational Transitions
As we discuss CRM failures and successes, many of you have weighed in on the importance of setting expectations. As we have discussed in previous editions, there is a risk in dumbing down aspirations as to ensure the perception of success. However, dumbed down aspirations equates to dumbed down results.
 
One reader wrote, "When going from the first floor to the second floor, a lot more people can make it by taking the stairs than by jumping up to the landing. CRM implementations that don't focus on rational transition get bogged down. Reality imposes limitations on the speed of deployment. For example, advanced collaboration tools will make more sense to your people if they have already been using simple collaboration tools."
 
This suggestion is right in line with the "think big, start small" approach. Can your organization climb the stairway one, two, or three steps at a time? Can you do it at a slow walk or a brisk pace?
 
Gary Lemke, Publisher
(Share your thoughts)
 
1/25/07 - Defining Success - What's In, What's Out
Yesterday, we talked about the importance of determining how much your organization can change at one time. In addition, we talked about the importance of determining how fast your organization can make change. These two importance success factors can help guide what is in and what is not in - the scope of a particular implementation phase.
 
One reader wrote, "There are different types of scope. Some features streamline things for the user. Auto-filling city and state based on zip code is an example. This takes no learning and can be easily included. Other features give the user a bigger payoff like displaying year-to-date sales taken from the accounting system with no data entry requirement for the user."
 
To complete the thought, "More complete sales forecasts or more detailed data gathering on customer profiles might be deferred to later phases in the interest of first getting full compliance from the users. Once they are comfortable with the system it will be much easier to introduce new things without risking a failed project." This reader knows how to include a mixture of "easy" and "high ROI" efforts. Is that how you scope your projects?
 
Gary Lemke, Publisher
(Share your thoughts)
 
1/26/07 - CRM Success and Failure - Summary
For the past two weeks, we have turned our attention to CRM implementations - are we doing a better job? Specifically, has the benchmark of 50% failure rates as reported by analysts improved over the last few years?
 
Summarizing a wide range of responses is difficult but the general feeling is that we have made improvements. We have a better understanding of the effort (bigger than we originally anticipated), we are doing a better job of scoping efforts, we are doing a better job of securing executive sponsorship, and we are doing a better job of rolling out new functionality to users.
 
In general, things have improved. However, most of you still feel we have a long way to go. So if the teacher was giving us a report card, it might say something like, "shows improvement." However, the industry average grade would still be "incomplete." I hazard to make a guess on current failure rates but industry averages don't matter to you anyway. Your implementations are what matters. So keep up the great work and continue to focus on the critical success factors we have talked about over the last two weeks.
 
Gary Lemke, Publisher
(Share your thoughts)