Planning for CRM success.

• Author: Kavanagh, Shayne
• Position: Customer relationship management - Related article: New York City's 311 Project - Related article: Philadelphia's Inside-Out Approach to CRM

Customer (constituent) relationship management, or CRM, is an enterprise software system designed to automate customer-facing processes. Examples of applications commonly associated with CRM include call centers and citizen Web portals. CRM is also associated with applications such as field service, business intelligence, and time management. Successful CRM demands that organizations adopt a customer-centered business philosophy, so that human resources and business processes make the best use of CRM technology.

Those following the market for CRM software are doubtlessly aware of the spectacular implementation failure rates that have recently been cited by technology analysts. Understandably, these failure rates have given some organizations pause when it comes to pursuing their own CRM projects. The purpose of this article is to critically examine claims of CRM doom and to explore how governments that have realized CRM success have done so through careful planning and forethought. (1)

THE CRM DEBACLE: FACT OR FICTION?

Quite a buzz has been created in the CRM industry recently by reports issued by industry analysts claiming that CRM implementation projects are experiencing high rates of failure. The Butler Group, for example, cited a 70 percent failure rate for CRM, while other reports from the Gartner Group and the Meta Group have suggested failure rates of 55 to 70 percent. (2) In yet another example, a Merrill Lynch survey of chief information officers at large companies reported that 45 percent of those surveyed were not satisfied with CRM installations. (3) Certainly, these statistics could cause even the most ardent supporters of CRM to reconsider their position. However, the question persists: Could the darling technology of the last couple of years really be such a disappointment?

Further investigation into these numbers suggests that the rumors of CRM's demise have been at least somewhat exaggerated. One of the above studies was based on a relatively small set of clients of a single vendor, (4) so the results may not be representative of CRM as a whole. Another common indictment of these studies is that the definitions of "success" and "failure" are misleading. For example, a study that defines success as meeting all of the goals originally set for the project is likely to find relatively low success rates, since a project as complicated as CRM will likely experience at least some change in goals over its lifetime. Also, many of these studies used management impressions of success rather than more quantifiable measures such as return on investment.

Although these studies can be questioned for their lack of scientific rigor, it is difficult to dismiss them completely. Even qualitative studies of a smaller sample can provide an indication, however rough, of the realities of CRM. So while it may be an overreaction to declare CRM an unworkable technology, organizations considering CRM would be wise to carefully consider the prerequisites for a successful implementation before moving forward. Perhaps the most important prerequisite for CRM implementation success is careful planning. (5)

THE CASE FOR PLANNING

While any large-scale technology project requires planning, a CRM project can particularly benefit. This is true for a number of reasons. First, although CRM-like technologies have been around for a number of years, CRM as we know it today is a relatively recent phenomenon. Therefore, there is simply not the level of implementation experience in the CRM market as there is for more established technologies like ERP. Consider the fact that when ERP was regarded as "bleeding edge" technology not so long ago, and qualified implementation consultants were a relatively rare commodity, stories of spectacular ERP failure were not uncommon. Similarly, the novelty of CRM increases the potential for catastrophic errors, as the experience base does not yet exist to warn would-be implementers against such errors.

The second and more compelling reason is the unique combination of change CRM imposes on an organization's human resources, business processes, and technology. To again draw the comparison between CRM and ERP consider that an ERP implementation affects people (back-office workers) and processes (financials and human resources) that likely used some form of technology to facilitate their work prior to ERP. Further, these processes are relatively consistent across industries. For example, the existence of GAAP means there are at least basic similarities in accounting practices among organizations, and government regulations (e.g., FLSA, Social Security, COBRA, etc.) provide a basis for personnel practices across organizations.

Conversely, the front-office procedures affected by CRM may have made minimal or no use of technology previously. The archetypical example comes from the private sector, where many companies have experienced great difficulty introducing technology to field representatives who have not used technology previously. An example more relevant to the public sector are CRM's Web capabilities, which may introduce an entire channel of communication that may have been significantly underutilized in some organizations, forcing a fundamental rethinking of business processes (e.g., which services are most cost effectively handled via the Web, how to move requests for service from the Web through the back office to actually deliver the service).

Front-office procedures can be quite different from organization to organization because the nature of the services offered is often very different. And unlike financials and personnel administration, there is no underlying force to standardize processes across industries and organizations. This means that implementing a commercially available CRM software package, without extensively customizing the software, can necessitate significant, and even radical, process changes. CRM planning can help ease the introduction of this significant technology and facilitate the change in people and processes that must occur for implementation success.

A final imperative for CRM planning is that unlike most other enterprise applications, the subject of CRM is people (i.e., constituents). This has two implications, the first of which is predictability. The dollars and units of material that are tracked by an ERP system behave in a predictable manner. Constituents can behave in a manner that present an...