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E-Business: MEETING THE TECHNOLOGY CHALLENGE

Software Not Only Key to Customer-Project Success

CRM programs provide purchase-and-service profiles to enhance sales, but firms need to use them strategically to get the desired results.

April 02, 2001|JASON COMPTON | SPECIAL TO THE CHICAGO TRIBUNE

By providing a comprehensive view of a client's lifetime involvement with a company, customer relationship management software is supposed to be one of the wonders of the electronic age for business.

Theoretically, a complete purchase-and-service history can streamline the sales process, and a careful profile of known preferences and dislikes can enhance marketing and even product design efforts.

However, success is proving to be elusive for many people who have invested heavily in the software.

Gartner Group, a Stamford, Conn.-based technology research and consulting firm, estimates that 55% of all customer relationship management, or CRM, software projects through 2005 will fail to deliver the expected benefits. The reason, said Sheryl Kingstone, program manager with Boston-based Yankee Group, is that a lot of people both inside and outside the company have to be able to access parts of the same information, and the environment is not the same from one month to the next.

"What makes it hard is that there are so many audiences, internal and external," Kingstone said. It is difficult "to make sure that the software works efficiently and effectively. . . . You can be doing everything right, but business changes so quickly."

Adam Klaber, managing partner for the CRM practice of PricewaterhouseCoopers, is not so pessimistic.

"If a 'failure' is one where a company has to write it off their expenditures, then I am not seeing that percentage of write-offs in the industry," he said. "But I do see companies and executives whose expectations have not been met."

Indeed, in August 2000, CRMCommunity.com conducted a survey of 918 of its members, and 72% rated their project as "successful" or better.

Yet the chatter in the industry still suggests that the road is littered with projects that have not lived up to expectations. CRMCommunity.com's glowing findings are tempered by a loose definition of "success." Less than half the respondents said they could point to a quantifiable return on their investment, which is the standard that Gartner uses.

Industry experts suggest that failures are due to an unwillingness to embrace the business processes that are part and parcel of a successful CRM system.

Although CRM software certainly represents a major technology challenge in design, training, roll-out and execution, the bits and bytes are usually not the real problem.

"Most organizations don't have an overall enterprise-wide CRM strategy," said Beth Eisenfeld, senior research analyst at Gartner Group. "What they've got is a bunch of different departments with real business problems, and they go looking for technology to solve that problem."

Often, the result is a shotgun approach, with different departments and business units focusing on a single CRM project that might address their own problems, but does not represent much improvement for the company as a whole. In some cases, the line-of-business mentality that pervades America's top enterprises creates internal antagonism that threatens the success of CRM.

"Internal competition can be good within a company," said Chris Selland, vice president of marketing for ESupportNow of Charlestown, Mass., "unless it creates a disincentive to share information, which means you never see the benefit."

Enthusiasm for the loftier promises of CRM may be overshadowing time-honored practices such as opportunity management and accurate forecasting, and the proof is as close as the latest Wall Street earnings warning.

The failure of several high-profile dot-coms is particularly troubling. Some, such as Garden.com and MotherNature.com, were feted for their ground-up CRM approaches. But analysts generally agreed that the real problem was deeper.

"Dot-coms died for a different reason than whether or not they had good CRM," said Denis Pombriant, senior analyst with Aberdeen Group.

The lesson is that no software or business process can cure a company with no fundamentals, he said.

Fortune 500 firms are not immune to misguided CRM initiatives, either. Gartner's Eisenfeld cites a large telecommunications firm that spent $7 million on a CRM package, then did nothing to integrate the software into its business practices.

"They sat back, relaxed and waited for the benefits to show up," she said.

After added profit failed to magically materialize, the company embarked on a $20-million re-engineering campaign. Only now does the software fit the company.

"The second time, they realized it's more than just technology. It's a strategy, it's processes, it's skill sets and tactics," Eisenfeld said. "They failed the first time, were successful the second time, but look what it cost them."

Success requires direction and enterprise-wide commitment. Citing examples of successful CRM implementation at companies such as Cisco Systems Inc. and Charles Schwab & Co., Eisenfeld conceded "in some ways, they got lucky."

In Eisenfeld's view, the successful firms made the logical leap from point solutions to a holistic customer approach earlier than most.

"They realized before a lot of others that it would take a lot of integration work, and it became a corporate-wide initiative," she said.

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