It May Cost More Than You Think

This year CSO Insights started tracking a number of new metrics related to how sales forces are leveraging technology to optimize the performance of their sales teams. The effort is part of our 12th annual Sales Effectiveness Research project, and at this article's deadline we had responses from more than 775 companies. A couple of red flags were raised during a preliminary review of the data that are worth passing on to CRM project teams. The most pressing issue pertains to accepting claims from CRM technology solution providers about how long it will take to get the systems up and running, and how much it will cost. When vendors and solution providers speak about costs and implementation times you should trust, but verify. Let's take a look first at project implementation time. Last year I sat in on a number of CRM project evaluations, and the question of how long it will take to get the system into full production always came up. The answer in most cases, regardless of the vendor making the statement, was "less than 90 days." Everyone in the room, users and vendors alike, would like that number to be true, but the experiences of companies who took part in our study and have implemented CRM applications lead us to believe that 90 days or fewer is the exception rather than the rule. (Figure 1 shows what they have actually experienced.)
More than 63 percent of the companies reported that their implementations took more than three months (and about half of those reported times of more than seven months). Project teams starting new initiatives in 2006 would be well served to inquire into the claims made by vendors to validate that the time line they are given is truly achievable. A second area that requires some homework is validating what the real costs of the CRM initiative will be. Here, again, when we asked companies that had implemented CRM systems how their actual project costs compared to budget, some discrepancies emerged (see Figure 2).
Most firms reported being on or under budget, but we still found that in 41 percent of the cases expenses exceeded expectations, sometimes significantly. In follow-up discussions with a sampling of the firms participating in the study, we found that the areas most often responsible for causing budget overages were customization of the applications, scrubbing of the data imported into the systems, and training and end-user support. It should be pointed out that these are aggregated numbers collected from analyzing several hundred projects, and that the results for individual vendors may vary widely. But the data still supports the notion that before selecting a CRM system, CRM project teams should communicate with other customers using that vendor's system to find out how long their projects took and how much they cost. Ensuring you are starting from a realistic position, with the right level of expectation being set, is the first step toward achieving project success. Jim Dickie is a partner with CSO Insights, a research firm that specializes in benchmarking CRM and sales effectiveness initiatives. He can be reached at www.csoinsights.com