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Who is telling the truth about CRM?

• Tags:
• Enterprise Resource Planning,
• Return Of Investment,
• ROI,
• ERP

Jim Zimmermann

Published: 02 Apr 2003 10:58 BST

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Anyone who follows the CRM market knows that there have been widely varying reports on the real and potential ROI from CRM. Some studies have reported failure rates of up to 70 percent of all CRM installations. In this week's "Analyst Views" column, I'll examine the results of a comprehensive study of 448 completed CRM implementations.

About the study
The research, "The Blueprint for CRM Success," was sponsored by Caribou Lake Customer-1 and CRMGuru.com and was conducted by a neutral firm, Mangen Research Associates in Minneapolis. TechnologyEvaluation.com provided an overview of the key results in the article "CRM: The Truth, The Whole Truth, And Nothing But The Truth (For A Change)."

This study showed much more positive results, with only 35 percent of the CRM installations surveyed "clearly failing," while 45 percent report that they will show a measurable ROI within two years.
Figure A

CRM Implementation ROI Will show clear ROI within two years 45 percent Are clearly failing and many never provide a ROI 35 percent Will likely show an ROI at some point, but not as soon as their implementer would like 20 percent

As Figure A shows, the remaining 20 percent should still be able to show an ROI -- eventually. So, rather than a 70 percent failure rate, this report indicates that up to 65 percent of CRM implementations will eventually provide an ROI to their owners.

The truth about CRM failures
The study also showed that implementation failures:

• Ignored development of customer-centric strategies.
• Avoided the "people" side of CRM.
• Resisted organizational change.
• Ignored statistical tracking and measurement of outcomes.

According to this analysis, these are all problems that implementers can address. In other words, implementations that fail do so "through their own fault -- whether that fault be ignoring the realities that require CRM implementers to tackle some tough stuff in order to succeed or, no better, not bothering to learn the realities before starting to implement."

Successful CRM implementations
TechnologyEvaluation's assessment also lists the four keys to a successful implementation:

• Develop customer-centric strategies: A $5 expression for figuring out how to add value to customers.
• Make organizational changes when required: Redesigning workflow and information flow in order to implement new strategies usually requires stretching some functional boundaries and contracting others.
• Provide line-level training and support to those experiencing changed workflow and information flow: Not just technology training, but providing a context and rationale for justifying change, often change in career-long work patterns.
• Set measurable goals: Other than labor cost savings.

CRM untruths and misconceptions
The TechnologyEvaluation.com article blames a number of sources and competing interests for CRM untruths and misconceptions (the article was very careful to avoid using the word lies). According to the article, the biggest purveyors of CRM untruths are the CRM vendors. These vendors offer an overly optimistic picture of CRM. The article claims that these vendors "are hearing what they want to hear -- and no body of data, no matter how substantial, will deter some from saying what they're motivated to say in order to sell their wares."

And where does the misinformation about CRM's failings come from? This article blames other IT analyst firms that have an alternate agenda. The article claims that based on this study, some analysts "now have well-earned egg on their faces -- in some cases enough to beg questions about whether they just might have 'research' clients that want technology spending steered towards non-CRM investments -- in ERP or SCM or data warehouses, etc."

The article does not name any names, but I'm sure that some of the other leading IT analyst firms are seething: This kind of public bashing of competitors is rarely seen in the IT analyst community. (Most analyst firms believe that openly accusing other analyst firms of not being objective throws a shadow of suspicion over the entire community.)

How you can benefit from this study
I've only scratched the surface of the information available in TechnologyEvaluation.com's article on this study. Anyone involved in a CRM implementation should read the entire article (free registration on the TechnologyEvaluation Web site is required). The complete 118-page study is also available from HYM Press for $195.

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