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Customer Relationship Management
June 2002

How To Avoid The CRM Graveyard

By Richard Earley, Covansys

If you've been paying attention to the business press lately, you probably know that CRM implementation failures are reported to be reaching into the 75 to 85 percent range. Yet, with all the hoopla surrounding CRM technology, your company is still pressuring you to jump on the bandwagon. The pressure builds on all fronts, and the executive team requires a swift implementation, so you look into buying what the Jones' have and pray you're not the next analyst's statistic.

Although CRM implementations do fail, it doesn't necessarily mean you are doomed to become another victim. True, suitable technology product selections cause even seasoned professionals to experience a bona-fide techno-migraine. This can be attributed, in part, to the fact that most CRM implementations are done in haste. Approaching these projects unmethodically can inflict a network of widespread disaster ' organizationally, functionally, technically and financially, to name a few. This is not a task to be undertaken lightly.

The other major factor in the CRM failure epidemic is the substantial innovation and consolidation in the market, which makes for a continually shifting vendor ecosystem. The ability to sustain the current product knowledge necessary to formulate 'smart' selections becomes extremely difficult. In addition, while there are a host of reasons CRM technology malfunctions, two are fairly simple: inadequate planning and/or unreasonable expectations. I will act as advocate here and suggest that the buying community is not wholly liable, as CRM vendors, following suit with other software companies, have an appetite for inflating product abilities and deflating the importance of due diligence.

All that said, the failure rate is one that is, to put it simply, unacceptable. To ensure that this does not happen to you, it helps to take a few precautions.

Functional Focus -- Enterprise Or Divisional
Defining a functional focus will assist in establishing firm groundwork from which to draw. Decidedly, CRM extends to many functional business areas, including contact or call centers, field services, marketing, and sales and help desks, to name a few. While it is difficult to recommend which of these should be on your front burner, the choice is typically driven by the area that can realize the greatest return in the least amount of time. It is feasible to attend to cross-functional units in tandem during your CRM implementation, which, if well organized, is a preferred method. Those areas that are deemed more complex, require greater attention or will inherently take longer can be included in the earlier phases of an implementation methodology (planning and requirements), but they should be designated for deployment in a later phase.

If your scenario calls for cross-functional areas or enterprisewide capabilities to be purchased now and deployed in a later phase (the modular approach), you will want to consider all mitigating factors. Ensure that the product you are selecting has the functional scalability you desire, or at least ensure that the vendor has your desired modules in development. If your focus is on one or two specific areas and you are fairly confident the conditions are not likely to expand, consider going the best-of-breed route.

Bear in mind that managing several distinct area implementations concurrently can lead to serious management challenges. It is recommended that you establish one unifying team (management, integrations, data, workflow, etc.) to oversee several sub-teams, each of which maintains a focus on a particular area.

Know Your Business
It helps to solidify your business operating model (as it relates to the functional area to be addressed), processes, procedures and customer focuses prior to taking on any new CRM technology. This is the cornerstone of your initiative and will contribute to the success of your CRM implementation. This includes reviewing, understanding, modifying (where necessary), documenting and employing desired business processes, procedures, rules and policies prior to making your technology selection. This is how you manage your customer relationships and it needs to be clear. Only then should you draw on CRM applications to drive and enforce your business requirements.

Channel Distribution ' How Many Ways To Communicate?
Channel distribution is rapidly becoming the most talked about, most demanded characteristic of CRM. While just a few years ago the ability to communicate and deliver via anything other than the telephone or fax was simply a product of idealism, it is no longer considered superfluous. Web, e-mail, chat, even remote devices are now firmly entrenched at the discussion table.

Avoid the pitfall of confusing the needs of the concept of CRM (an industry creation) with needs of the consumer. Before you get caught up in the hype, consider the population you are servicing. These customers may not need, nor demand, multiple channel distribution today, and putting it out there does not suggest you are 'automagically' saving big bucks. Consider which channels will give you a true and calculable ROI in the short-term. Consumers insist on a homogeneous information experience regardless of which channel they use. As a result, providing reliable information via one source is notably superior to providing erroneous information via many sources.

It is recommended that you seek out a solution that has scalability as it relates to channel distribution, but again that does not suggest that it all needs to be in production today. Regardless of your population demands and channel needs, a phased release approach will more likely ensure that each channel is deployed properly and consistent with others.

As you are selecting a product, consider its delivery abilities. What distribution channels are available within the product, and does it have what you need to be scalable? How do these channels comply with your existing structure (i.e., e-mail integration with Lotus, Outlook, Groupwise, etc.)? Can you procure modules and add-ons as you release new channels and what impact does it have on others? Are these presented in the contact management modules as unified, and if not, what is the workaround to have this occur? Note that many CRM vendors do not maintain their own capabilities, but rather employ those of third parties in order to deliver multiple channels. This creates a greater degree of dependency on numerous organizations being consistently in development alignment and, equally as important, in business alignment. Unified (one company) channel mechanisms are preferred products.

Data Integration Is King
To provide your customer with accurate, consistent and updated information, data and integration are vital attributes of a successful CRM implementation regardless of business or functional focus. Most enterprises maintain an assortment of disparate data sources, housed in an array of platforms and databases, all of which are often maintained and supported with unequal methods.

CRM systems (unless connected to a data warehouse) are rarely the 'system of record.' In short, depending on the data element, they usually view or make use of information from other systems in order to operate. That is not to say that information is not created in these systems, but rather that core customer data are typically not exclusive to the application. As such, it is critical that the data that are to be used from other systems first be identified, scrubbed and converted. In many cases, this includes the purging of particular information, removal of duplicates, etc.

Seek products that attempt to make this process of conversion easier, or at least less painful. This may include the ability to connect to systems that inherently perform these functions prior to importing information into the applications database.

Integration ' Be Connected
Define an integration approach prior to your product decision-making. This may encompass integration at the GUI, application or data layers depending on your needs such as workflow, computer-telephony, interactive voice response, etc. Consider that you are not likely to discontinue the use of the legacy, stand-alone or even telecommunications systems. This should include business needs and existing system capabilities as they relate to batch or real-time processes for updated information. The consequences of not contemplating these tasks is disastrous.

Seek packaged products that provide out-of-the-box connectors or application programming interfaces (API) as a component of the packaged product that align with the technologies and programming languages you currently employ. For example, in the event that you employ a particular ERP or financial package, look around to see which products on the market have appropriate connectors. Better yet, due to the previously described industry consolidation, your existing enterprise package may have CRM capabilities or add-on modules. Last, several products use internal integration management facilities, much like a proprietary HUB that can eliminate the need to create an interim repository.

The Perpetual Upgrade Path
Inevitably, before you have completed your first implementation, you are going to feel as though you are behind the times. The chosen product vendor will have upgrades to your release, or may even have released a new version. Consider these points up front and talk to product vendors about future releases and target dates. Inquire what new capabilities will be released and understand that a 'new' release may be a vendor disguise for fixing bugs.

The vendor will undoubtedly describe an upgrade path that sounds effortless; however, make sure you ask questions. You will want to know whether it is a core or full upgrade and how it will affect your customization.

Intelligence ' Abundant And Misleading
What a cumbersome, frustrating and sometimes manipulative process it can be to acquire accurate information from a CRM vendor. While it is true there are resources from which to gather information and guide you through the vendor selection process, this, too, can lead you to wading through needless and irrelevant information. Books, magazines, trade and vendor Web sites, discussion forums, salespeople and white papers are abundant in the CRM community. Depending on where you go or with whom you talk, you will likely encounter innumerable views and answers to your questions. Discover these sources well in advance and adequately educate yourself on all elements of the CRM market.

The RFI and RFP processes are by far (if organized and conducted appropriately) the most powerful means of acquiring information without salespeople breathing down your neck. Performing the previously described functional and technology analyses will permit you to come up with a short-list of CRM vendors. Distribute an RFP targeted directly to your desired vendors, receive comprehensive information, schedule demonstrations and continue this process until you are satisfied you have what you need to move on to the CRM 'decision matrix.'

The CRM Decision Matrix
Building a CRM decision matrix allows you to accurately quantify your needs both in practice and visually. This method comprises a series of qualifying factors that will help you make an appropriate selection.

Consider building an analysis model with criteria such as features and functions, supported platforms, integration, work plan, references, pricing, organization, financials, cost of ownership, resources, etc. These attributes are strictly quantifiable, and interchangeable, if necessary, depending on what type of evaluation you are performing.

Once the criteria have been established, you can apply a scoring method. While this too can be accomplished by a variety of techniques, it is key that categorization of priorities is directly aligned with your priorities. For example, if the functionality and workflow capabilities of the product are more important to your organization than the ability to integrate with disparate systems, then be sure your scoring methods reflect such a need.

Selection Done. Now I Have To Buy It.
Making your final purchase is a whole different ballgame. Contemplate the procurement process only as you are clear as to what product you are ready to go with. Discussion of the procurement prior to this point in the process will only divert your attention from an accurate selection process.

There are several ways to negotiate more cost-effective deals with CRM vendors. Many vendors maintain a variety of sales channels, typically in the form of either distribution partners or resellers. You may find several partners statewide that are eager to resell software to you, and the competition could mean a bargain. In addition, seeking a quote, or distributing a proper RFP, will enable you to drive the most economical agreement.

Implementation Services = Product Cost (x) WHAT!?
Let's get this out of the way from the get-go. You are likely to hear many vendors discuss the words 'ratio' when it comes to implementing your solution, or maybe you won't because they would rather not tell you.

The challenge of selecting an organization to implement your CRM solution can prove to be as painful as choosing the product. In fact, you will want to be careful with your selection process as 'ratio' refers to the amount of dollars you will spend on the implementation of your CRM solution compared to the amount of dollars you spent on the software. This ratio can generally run anywhere from 0.5 to 4.0.

In the event that you have chosen a CRM application service provider (ASP) solution, your ratios are likely to be lower for the simple reason that you cannot make many changes to an ASP solution. However, in the event that you have chosen a packaged solution that requires multiple channel distribution or maintain numerous systems that require integration and are deploying to a 700 agent call center, you might find yourself on the higher end.

Many Are Wading In The Resource Pool
In choosing a CRM services vendor, consider the following resource options: internal, vendor resources, vendor partners, third-party or staff augmentation. Performing the services internally would suggest that you either have, or must hire, the appropriate staff. For this option, consider that while you should have a maintenance and support plan and a post-implementation plan, you are not likely to need the entire team involved. Vendor resources can provide you with well-trained 'inside' resources, although they can be costly. Using a vendor-certified partner can prove valuable, as it is typically less costly and still allows you to maintain the support of your vendor. Third-party vendors can also be very useful, however they are not typically as well supported by vendors. Finally, staff augmentation suggests you will seek certified independent consultants, potentially from a variety of sources, however, in this scenario, you remain accountable for your own implementation.

Whichever path you select, be sure to first certify the companies' and individuals' backgrounds as they relate to similar implementations. Locate organizations that have been involved in a vertically similar implementation. This can help you avoid the pitfalls on the learning curve by learning from the other companies' mistakes.

Negotiating implementation services can prove to be easier than that of product purchases. In today's environment, many organizations are much more willing to be flexible on cost given the abundance of available resources in the market. Apply similar principles and methods to acquiring services as you would for products. In short, never assume the first offer, and be margin-savvy.

CRM Failures Are Usually Self-Inflicted Wounds
It is difficult, if nearly impossible, to outline all factors for CRM implementation. However, it can be argued that the failure rate could unequivocally be considered a 'self-inflicted wound.' Streamlining your internal processes will increase the likelihood that your CRM implementation will draw absolute success. Good luck!

Richard Earley has been developing and delivering integrated solutions for over a decade and has a history of experience in enterprise development, marketing, sales and operations/practice management. Originally operating as a management consultant for large call centers, he was then involved in the early adoption of CRM business applications, developing and operating customized programs for government entities in the health care and call center markets. Earley subsequently joined an international consulting firm where he has filled many roles including director of the National CRM Practice. He is the moderator of the Any Answers discussion forum (www.crm-forum.com/anyanswers), a source of information written by CRM professionals for CRM professionals.

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