CRM Implementation Failure Executive Summary
From mid of 1990's the CRM implementations have suffered through a varied history The most recent survey attempted to discover the frequency and causes of this old issue with regard to the SaaS CRM market. (CRM landmark, 2009)
The CRM implementation failure survey conclusions, according to CRM landmark, 2009 were:
Apparently due to smaller or more phased and gradual implementations, the frequency and effects of hosted CRM failures are somewhat less than their client/server CRM predecessors.
A key factor of historical CRM failures - user adoption - appears to be less of a factor with hosted CRM implementations. The change management play a vital role during any implementation.
The main factors related to hosted CRM implementation failures incorporated a lack of project management during the implementation, lack of executive sponsorship, resistance to change, undeveloped product solutions and a failure to clearly describe the project objectives, business requirements and critical success factors.
Probably the most significant project failure factor and one which represents a change from the prior era of CRM applications is the decreased mentioning of user adoption as a key challenge during the implementation process. While an initial assumption would suggest that the hosted CRM applications have de-emphasized user adoption challenges as they are simpler or easier to use than their client/server forerunners, further analysis also reminds us that the range and depth of hosted CRM applications often does not yet match that of prior periods. The media interest surrounding user adoption has also brought this issue to the majority which has undoubtedly resulted in better implementation planning and execution. (CRM landmark, 2009)
While user adoption may be improving with SaaS solutions, make no mistake that this issue has disrupted a number of CRM implementations. It is mentioned by AMR Research found that even among top CRM vendors, 47% of companies reported serious challenges with end-user implementation that often put projects in risk. Analysis shows that CRM implementations that do not make daily tasks more creative for individuals will not see business benefits. "Our analysis concludes that corporations can only achieve benefits from CRM software if end-users see an application as a blessing rather than a curse," (CRM landmark, 2009)
Joanie Rufo, research director of customer management approaches at AMR Research, said in a statement. The most-regularly reported reduction occurs when end-users can continue to perform their job and still meet their goals without ever touching the system. From an end-user's point of view, providing knowledge into the system makes them less important to the company and increases their fear of being easily replaced in the future (CRM landmark, 2009).
Lack of executive-level assurance and failure to secure end-user buy-in were also key inhibitors to a CRM implementation's success, the AMR report says. AMR Research's study results maintain that companies that do not implement CRM strategies by making daily tasks more creative for each individual user are constructing an expensive house of cards that will likely collapse. (CRM landmark, 2009)
It appears almost unrealistic to terminate an implementation research work out without referring to the Standish Group - an analyst group which exists exclusively to track IT successes and failures. In analyzing a previous year Chaos Report, The Standish Group surveyed 13,522 projects and reported that incompetent project successes are 34%. Complete project failures, defined as projects deserted in progress, were at 15 % (CRM landmark, 2009).
Diminishing in between the two categories are completed but challenged projects which represent 51 % of all IT projects and are distinct as projects with cost flooded, time overruns and projects not delivered with the right efficient to support the business. The report goes on to say that the level of success can be joined to user involvement, executive management support and having an experienced project manager - in that order. (CRM landmark, 2009)
It is said by Standish Group executive vice president Karen Larkowski “Probably the news with the most damaging implications for IT projects is not the number of those that were abandoned, rather it's those that were completed but offer fewer features and functions than originally specified." And Ms. Larkowski went on to say "Content deficiencies of more than 50 percent would most likely be considered a failure." (CRM landmark, 2009)
The chart in Appendix…… explains the opposite relationship between project size and project success. According to CRM landmark, 2009
The summary of CRM Implementation Failure:
Respondents using CRM solutions in a hosted environment:
Respondents by role:
Hosted CRM solutions identified:
Aplicor, Entellium, NetSuite, Salesforce.com, Salesnet, SiebelOnDemand
Results of Implementation identified:
Successful implementation: 71%
Unsuccessful implementation: 16%
The factors mentioned with
A systematic or system project plan and implementation
Project management should be active.
Frequent, visible and verbal executive sponsorship
The factors mentioned with
Absence of project management
Resistance to change or change management
Failure to promote sponsorship
The lessons learned with implementation failures:
Failed projects don't fail by small amounts
Project failures happen along the way, not at the end
Don't misjudge resistance to change and hidden issues
(CRM landmark, 2009)
The Reason for CRM Projects Failure
Since CRM changes the way a company interrelates with customers and the daily jobs of thousands of people throughout the organization, there are many possible failure points for it. These implementations are planned in nature, change policy and businesses practices, and require the entire organization to organize closely toward exact goals. Like all difficult plans, risk exists and must be managed. The following segment describes the most common reasons for failure using generally defined categories by TechTarget, 2008:
Poor Objective Setting
These failures associate to the overall aims of the proposal. In many ways, these are the most common cause of CRM failures, as poorly defined goals make problems downstream efforts and weaken end results.
Failing to Align Initiative with Strategy
CRM plans must be properly associated to firm's approach. Unfortunately, most initiatives tend to be based exclusively on gains in efficiency and do not produce any reasonable advantage. Insignificant consideration is classically given to how the goals of the CRM initiative will help strengthen the firm's exceptional competitive advantages in the marketplace. (TechTarget, 2008)
As a result, difficult and expensive hard work result only in minor efficiency increases that come after the big changes initially slow the company down. The overpowering majority of companies fail to align goals to strategy, so much so that it is a shortage for a CRM initiative to begin with a discussion of the firm's competitive advantages in the marketplace. In one case, a financial products and services company spent over $10 million on efforts to replace its highly complex customer exact contract process. This required significant change to a software package that didn't support such methods out of the box. Ultimately the process was bring to an end as senior management became aware that the program was not helping address its more fundamental issues—the obsolescence of certain product lines and the need to expand into new markets. (TechTarget, 2008)
According to Dovetail (2008)
“What raised the red flag for Burton, however, was that 40% of those polled said their business intelligence projects were owned by lower-level business executives. That isn't ideal, Burton said, because that group tends to have tactical rather than strategic roles—which is what ends up sinking a project” (Dovetail Software Inc, 2008)
Failing to Anchor the Initiative:
Planning and implementing CRM projects is a difficult job requiring knowledgeable program managers able of guiding through policy, processes, people, and technology change while keeping all branches of an organization, several teams, and multiple vendors in performance. It can be observed that successful proposals tend to be fastened firmly in the objectives they follow. It is difficult decision making without alignment and a strong guiding light, only some within the organization agree on the goals. (TechTarget, 2008)
Focusing on Internal rather than Customer Priorities:
Many organizations with CRM focus on existing customer processes rather than building new interactions with those preferable customers. They fail to spend more time critically evaluating their current operations from the customer's perspective, and this different thinking can cause major failures. (TechTarget, 2008)
The CRM systems also have few deficiencies that they need to overcome. This technology is still new and has many areas of improvement.
The major disadvantages CRM systems
Although several businesses have implemented CRM systems to focus on customers, several clients are still dissatisfied with its execution. They term CRM as technology that interrupt or stops service. For request, many of them find automated voice systems as a big problem and look for companies which have helped its use. As said by a recent study conducted by Accenture, getting poor customer service remains the number one reason why consumers leave one service provider and move on to another. Other factors think over in consumer defections include lack of customized products and senseless corporate system of government. (Gollan, 2009)
Authenticity of Remotely Hosted CRM Services
Today many of businesses are tend to contract out CRM. Sometimes, the cost will become the main reason in outsourcing CRM systems and it's not the vendor reputation. In that scenario, it is quite possible that the CRM service provider can disappear overnight, along with all official records as well. And it is also possible that the information kept with the service provider might possible be used for other purposes.
A reputed CRM service provider always allows the company to back up/export data so that the outsourcing company has a power over the information. And the other reason can also be, in some cases corporate and government laws stops the businesses from keeping all client information (such as Social Security Number, Home Number, etc.) at an external location.
The amount of expenditure and difficulty Involved in Setting up Locally Hosted CRM Software Frequent technical expertise required for setups and upgrades of CRM systems, makes the businesses pay for ongoing support of the application.
Security becomes company's liability, which may cause headaches - especially as is the case with many applications, as the security patches are rolled out and one need to install them very quickly.
As every time when business grows, there is a need for CRM package to changes and adding these extra features can be quite expensive. (Gollan, 2009)
Improper Vision For Tomorrow's Needs
The bottom line is that the sales people are only involved in things that help them sell more now.
A sales representative's the only resource is time; that is why their most important goal is meet the quota or budget of that month, quarter, or year.
Yes, and even they are concerned about the long run, but if they don't think and make quota now, then they know that they most likely won't be around to worry about the long-term.
It's not totally fair to say that CRM don't benefit a salesperson in achieving short-range goals because in some respects it does, but most of the sales representatives feel that they are quite similar effective in selling in the short term without it.
In other hand, the benefits of CRM don't seem considerably greater than the investment of time and the effort required using the system each day. (Gollan, 2009)
Training Sales Staff
As the CRM is still growing, businesses are required to assign sufficient time and revenue in training sales employees. The personnel should be able to judge about the data in best possible way can be stored.
If they don't use the data then that can be very less value to the company handle this junk data. The call center employees can further makes the situation worse.
The companies that do not provide service representatives with sufficient training or information, or forms that make people fight their way through support systems are going to lose more customers.
Gollan (2009) said that, bad CRM is sometimes worse than no CRM at all. (Gollan, 2009)
“Burton, who surveyed 350 organizations about their business intelligence projects, found that only 10% reported their projects had a C-level executive sponsor with a direct link to the business. Twenty-five percent said their projects were sponsored by an IT manager, and 25% had no executive sponsor at all” (Dovetail Software Inc, 2008)
Gollan, C., 2009 Problems in CRM [Online] Available
http://ezinearticles.com/?Problems-In-CRM&id=244782 Accessed on 05th Oct 2009
Dovetail Software Inc, 2008 Two Key CRM Problems - Adoption and Expectations [Online] Available http://blogs.dovetailsoftware.com/blogs/main/archive/2007/04/23/two-key-crm-problems-adoption-and-expectations.aspx Accessed on 06th Oct 2009
CRM landmark, 2009 CRM implementation failure excutive summary [Online] Available www.crmlandmark.com/survey_crmfailures.htm Accessed on 06th Oct 2009