The CRM List—CRM Software Failures
The Customer Relationship Management (CRM) software success record is nothing short of depressing. For more than a decade, research studies have shared than anywhere from 20 percent to over two-thirds of all CRM software deployment efforts have either failed to meet expectations or failed outright.
The CRM failure reports are legendary. Analysts such as AMR, Gartner, Forrester Research and IDC have been studying the problem for over a decade and each has broadcast the alarming failure statistics along the way. A few sobering citations follow.
- 2001 Gartner: 50%+ CRM failure rate
- 2002 Butler Group: 70% CRM failure rate
- 2002 Selling Power and CSO Forum: 69.3% CRM failure rate
- 2005 AMR Research: 18% CRM failure rate
- 2006 AMR Research: 31% CRM failure rate
- 2007 AMR Research: 29% CRM failure rate
- 2007 Economist Intelligence Unit: 56% CRM failure rate
- 2009 Forrester Research: 47% CRM failure rate
CRM software failures result in material financial losses, business disruption, months or years of misallocated time, red ink, upset customers and sometimes permanent damage to reputation. Many have been known to include career casualties and some have even been cited as contributing causes to disappointing financial performance results during earnings calls. Yet the well publicized tragedy is magnified as these failures have been reported for over a decade.
So why implement CRM software at all? The short answer is that because its a cost of doing business. Failing to adopt a customer strategy and supporting that strategy with software automation will most certainly leave your business vulnerable to competitors who do align their businesses with their customers and supporting business software. Also, blaming CRM failures on CRM software is a lot like blaming a victim for being murdered. While choosing the wrong CRM application can be a significant contributing factor to CRM failure, a poor software selection decision, and the following software deployment challenges are not software dependent.
Also, many times these business software projects weren't complete failures. They may have produced some benefits, just not all the benefits the stakeholders used to justify approving the project, or sufficient benefits to realize a positive return on investment.
What may be most frustrating is that while the CRM failure rates vary from research study to study, almost all studies show the failure rates haven't tended to materially decrease over time. One of the first highly publicized studies, by analyst firm Gartner back in 2001 disclosed a CRM failure rate of 50 percent. A decade later, a 2009 study by Forrester found a CRM failure rate of 47 percent.
The CRM failure trend is far from hopeful, but the underlying facts and root cause analysis reveal several contributing factors which suggest better preparation and planning can mitigate failure. Most studies over the prior decade share that most CRM failures result from a limited number of causes. All these causes can be prevented if they are prepared for and identified at the earliest occurrence. When you recognize why CRM fails you can take proactive measures to make sure your CRM project succeeds.
Why CRM Software Fails
Here's the top 10 reasons why CRM software projects fail:
Failure to gain visible, vocal and active executive sponsorship—Successful CRM deployments have enthusiastic executive sponsors. Unsuccessful CRM projects often do not. Executive management has to be visibly and vocally committed to CRM success—and the waning or absence of such a commitment is closely associated with CRM failures. Without executive sponsorship, all but the most limited CRM deployments are destined to failure.
Failure to involve users in the CRM software selection process—Many failures show a clear pattern of project managers, IT staff or software selection spearheads making a purchase decision in a vacuum, and without the input or detailed functional requirements important to the staff that will be using the system. This typically results in purchasing a CRM system that meets the executives requirements for information reporting, but not the users requirements for business process enablement, specific feature sets, ease of use, data entry methods, data management utilities and process automation capabilities.
Failing to perform a proper software selection—This is often the result of choosing a software product based on subjective criteria and without fully considering the specific capabilities that will best align the software to the business needs. Many times over, this has been the result of getting enamored with gadgets, bells and whistles during the CRM software selection process—which is a recipe for a challenged deployment and failed ROI. Some CRM software vendors are excellent at the hype and only too proud to boast of their latest marketing award or advertising run. Others may emphasize the hype of their newest software features in a guided effort to change your decision making criteria to align with their latest product capabilities. This dynamic adds even more confusion and complexity to an already arduous task of selecting the best CRM system which best aligns to your most strategic objectives and resolves your biggest business pain points. Even worse, force fitting new, never before considered software features into a deployment effort may unnecessarily add significant cost and risk. Instead focus your software selection on the most salient and concrete criteria gathered during internal information gathering and which most closely correlates with your organizations top strategic business objectives.
Viewing CRM as a technology project—When CRM becomes an IT or technology project, the endeavor is destined to be challenged. One of the most common causes of CRM failure is to view CRM strategy as a software or technology project. Far too many failed deployments begin with the IT department installing a system, getting it operational and then wondering why the users are reluctant and the strategic benefits fail to be realized. Even when the software installation and integration is near flawless, the deployment will fail if the technology fails to deliver for its internal customers or the company culture fails to embrace the customer's viewpoint and perspective.
Selecting a CRM application without regard to prior technology investments—Choices in CRM software can have far reaching implications, which if not considered in advance may not be recognized until a deployment is underway. There are many CRM technology alternatives, such as commercial or open source CRM, horizontal or vertical market CRM, and on-premise or SaaS/cloud CRM. Other technology factors such as analytics, mobile CRM, social CRM, consumer technologies and legacy systems can all impact a new technology investment, for the better or the worse. These choices are best made when they consider existing IT investments and the current IT infrastructure. When business users or rogue departments acquire cloud CRM systems without IT participation and IT infrastructure knowledge, these new systems can incur difficulties during integration, customization or support.
Vague goals—A failure to define a clear set of measurable business objectives or outcomes makes achieving success virtually impossible. This risk also includes trying to manage a software deployment without measures and milestones.
Dirty data—Data quality must exist for information to be believed, trusted and acted upon. This is why data integrity and data quality measures are critical to CRM implementations. Many troubled CRM deployments incur an early project delay because of a failure to survey the data prior to the conversion. This is then followed by the untimely discovery of dirty, duplicate, incomplete and bogus data. This discovery then requires to project to add activities to the project plan for data cleansing and puts the project behind relatively early in the process.
Over-customization of the CRM system—This is often a reaction to selecting the wrong CRM application. No packaged software will meet every functional requirement. More so, it's often the unique feature sets that support the companies competitive advantages and are far more difficult for packaged software to accommodate. That's when software customization can be a viable strategy. But when software customization exceeds the core constructs of the application it inherits major risk of time and budget overruns. And even if and when it is finished its normally difficult to manage, cumbersome to upgrade and expensive to support.
Failing to prepare for user adoption challenges—Ah, the dreaded change management requirements. User adoption fails when users apply a slow and grudging acceptance of what management believes is inevitable change. Even though you might believe you are achieving your goal at first glance, simply because users are using the CRM software, if those users are not doing it enthusiastically, you will likely end up failing, albeit more slowly than if they had rejected it from the very beginning. Staff who are just going through the motions without the intent and motivation to achieve the cited business benefits are simply passing time and delaying the CRM benefits. Force normally doesn't work for the long term and trying to make it work is comparable to death by a thousand small cuts.
Big bang deployments—Implementing every CRM software module at the same time often injects more business process and culture change than most businesses can accommodate. The big bang or watershed practice often leads to cross-functional chaos that can delay or destroy ROI.