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CRM Success Is in Strategy and Implementation, Not Software
03 March 2003
Dale Hagemeyer, Scott Nelson

Document Type:  Commentary
Note Number:  COM-19-3290
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A customer relationship management software package doesn't ensure success any more than purchasing athletic shoes guarantees an Olympic medal. Success lies not in software but in sound strategy and precise implementation.

What You Need to Know

Despite the claims of software vendors, the key to customer relationship management (CRM) effectiveness is not the purchase of software. Enterprises that will succeed in CRM initiatives are those that have a well-laid-out CRM strategy and adhere to sound principles of deployment — in addition to well-suited software. Software vendors can play a greater part in helping their clients to succeed by diminishing the "magic software" rhetoric and building on the foundation of strategy and implementation.


The assertion that the secret to customer relationship management (CRM) success lies in software is dangerous for users and vendors alike, because it ignores the critical strategy and implementation elements that truly drive success. When one analyzes the causes of CRM failure, software-related failure is not among the list of usual suspects. Nevertheless, in CRM magazine, a senior executive of a CRM software company recently made the following statement:

"I do think that it is true that most CRM implementations fail and it is true that virtually all [software vendor name withheld] CRM implementations succeed and that kind of works to my advantage."

The implication is that purchasing CRM software from any other vendor than the one quoted will result in failure. The fact is that software and project failure are not strongly linked. This is probably because software vendors are rarely involved in the development of the enterprise's CRM strategy, and only about 25 percent of the time does the software vendor perform the implementation. Regardless of who manages the development of the strategy and implementation, it is critical that they be done both carefully and thoroughly.

In previous research, we outlined the seven key reasons why CRM projects fail (see "Seven Key Reasons Why CRM Fails"). What is striking about the seven key reasons is that none of them is related to software, but instead they are all related to implementation and strategy. The seven reasons are summarized in Table 1.

Table 1

Seven Reasons Why CRM Projects Fail

Reason for Failure Failure Point What Software Can't Solve Remedy
1. Data quality is ignored. Implementation:
• Call center users as well as sales users will walk away from the application if the data is suspect.
Data hygiene software can address some issues but does not address missing data and erroneous data or compensate for a flawed data capture process. Project plan should allow for data cleansing and testing prior to deployment.
2. Organizational politics are driving departmental or totally disconnected initiatives. Strategy:
• Implementation is likely to implode before users ever see the solution.
• If it does survive to implementation phase, the politics will have diluted the customer focus to where sales and customer service users may reject the solution.
There is no software solution for political in-fighting or "not invented here" behaviors. CRM strategy must encompass customer touchpoints across the entire enterprise.
3. IT and business organizations can’t work together. Strategy, Implementation There is software to facilitate collaboration, workflow and virtual teams, but only among organizations that want to work together. Both organizations must be jointly responsible for the strategy and accountable to the project sponsor for every step of the implementation.
4. There is no plan. Strategy, Implementation Project management software can capture a plan and help in managing to it but cannot create a plan. Human input is required. Don't undertake any initiative until an articulated multiyear vision, a business case including baseline metrics, and a project plan are in place.
5. CRM is implemented for the enterprise, not the customer.
6. A flawed process is automated.
• Users in sales and customer service will revert to manual or prior systems unless they perceive incremental benefit.
• The essence of CRM is improving customer-facing processes. Sales as well as service users won't want to learn a new solution that enables the same bad process.
Software cannot provide customer focus or fix a flawed process. It may automate an alternative process, but thought is required to optimize a process. Involve stakeholders from across the enterprise in evaluating which processes must be improved to eliminate the "rubs" that exist between the enterprise and the customer.
7. No attention is paid to skill sets. Implementation:
• Rejection of a CRM solution by sales or service personnel may not be a conscious decision if they simply don't have the skills to operate or understand it.
Software can facilitate distance learning and some interactive training but cannot change management or organizational dynamics. Ensure that employees understand why CRM is being implemented, that CRM tools are aligned with their skill sets, and that adequate training is provided (a final and critical step, where many enterprises attempt to cut corners or save a small amount of money).

Source: Gartner Research

In light of the analysis of why projects fail, it stands to reason that software is not named as one of the key reasons for failure. If a project is undertaken with a flawed or incomplete strategy and implemented with no attention to details, such as data integrity, unity of purpose among IT and business organizations, or user adoption, the project is likely to fail. Ironically, it will have been deemed a failure and probably abandoned long before the software can be adequately tested and proved to be effective, dismally inferior or anywhere in between.

Key Issues
What is CRM, how will it evolve, and what drivers are emerging to force its adoption?
What is a CRM strategy, and how does it relate to and integrate with other enterprise business strategies, processes and operations?