"Between 30 to 70 percent of IT projects, including CRM, are having substantial difficulties."
— Michael Krigsman
Key take away points in the discussion with Thought Leader Michael Krigsman:
- It's difficult to discuss how to achieve CRM implementation success without acknowledging the all too frequently cited CRM implementation failure rates. CRM software failure rates have been notably high for a number of years. Analysts that track this type of information and have reported their findings over the last decade, share alarming statistics and patterns, that show CRM failures rates in the range of 20 to 70 percent.
- Notwithstanding varying definitions of CRM failure, the numbers, pattern and relative consistency suggest a very serious problem. Putting CRM technology in the broader context of IT projects, Michael advises that in general 30% and 70% of all IT projects incur substantial difficulties.
- Michael notes that CRM failures tend to initially point fingers toward insufficient project management. However, deeper analysis when looking at the broad category of project management often identifies more precise risk factors such as lack of active and visible executive sponsorship, cross-departmental conflicts, unclear project definition (measurable goals, scope, budget, etc.) or infrequent or insufficient communication.
- Michael notes that examination of most CRM software failures normally shows little correlation with the software technology. CRM technology is simply an enabler of business strategy and process automation and while the technology can contribute to failure if not managed, more often contributing factors include cultural activities such as lack of executive oversight, missing communication, or lack of cross-departmental collaboration.
- When looking at CRM deployment risk by market segment, Michael notes a clear correlation between project size and risk. While larger companies implement larger and often more complex projects which thereby inherit more risk, small businesses don't necessarily have less risk as much as they have different risks. For example, while SMB projects are generally simpler, they incur far more risks associated with resourcing as small businesses normally have less experience in implementing IT projects, fewer IT resources and far fewer IT specialists to call on.
- There is cautious optimism that cloud or SaaS CRM may lower several implementation risk variables and ultimately lessen CRM implementation failure rates. With no hardware or IT infrastructure to build out or software to install, IT projects offer fewer components and thereby less technical risk. Cloud CRM deployments are also more accelerated than their on-premise counter-parts thereby also lowering project risk. Michael also notes that cloud CRM systems offer an advantage of releasing more software capability over more iteration cycles—effectively allowing the new capabilities to be more easily consumed. However, other factors such as business process improvement or transformation have little to do with technology so project and cultural risks continue to exist.
- According to Michael, critical success factors which lead to a rewarding CRM implementation include diligent planning (measurable objectives, clear definition of success, supporting business case or business rationale for needed change, etc.), investing the proper time and diligence in the CRM software selection process (and identifying the fit between CRM software and key business processes), and having a firm grasp over technology and process changes.
- There are merits and risk factors associated with either a waterfall or a agile CRM implementation approach. Waterfall or big bang projects tend to deliver more efficiencies however also inherit more risk. Agile implementations provide more risk diversification. Iterative implementations also permit an opportunity to build momentum, celebrate successes along the way and apply lessons learned to subsequent phases. No single approach is right for all projects, although there is clearly a trend for more iterative and phased CRM projects.
- The question of when and how to use a consultant during the CRM software selection or implementation is largely based on the internal skills and core competencies of the customer. Also, highly technical or even business skills which are infrequently called upon are generally best outsourced. While companies generally incur software selections very infrequently, CRM consultants or advisors generally participate in or lead software selection projects on a frequent basis over many years and therefore can apply specialized and relevant knowledge that accelerates the project while at the same time reducing risk.
- There are different goals to consider when choosing whether to hire software implementation consultants from the software publisher or from third party system integrators such as Accenture, Deloitte or IBM. Contracting with the publisher can provide customers with the proverbial one-throat-to-choke when issues arise or a situation must be made right (at no extra cost). On the other hand, using a system integrator can deliver advantages such as more or local resources, a wider talent pool (i.e., business process consultants, change management consultants, software customization consultants, etc.) and a sense of objectivity that will likely not be found with the software vendor's consultants. Regardless of source, aligning with a consultant that offers a cultural fit with your organization should be considered a critical success factor. Similarly, irrespective of consultant type, it is essential that the customer "own" the software selection or implementation project and leverage the consultants for their expertise along the way. Seeding accountability or responsibility for a successful deployment to the consultants is unrealistic and likely to dramatically increase risk of failure.
- Michael notes that the global recession has shifted IT and CRM project deployments in a way to accelerate time to value. Packaged or bundled implementation programs which leverage templates, accelerate the deployment, reduce risk and lower overall fees have significantly increased—a trend that is likely to continue for some time.
The next podcast discussion is with CRM analyst Denis Pombriant.