Stopping a CRM Implementation From Going Bad
Booze Allen claims consultants help set focused strategy
For the rest of the May 2002 issue of CRM magazine please click here
How can you decrease CRM implementation failure rates? Embrace a customer management strategy, says strategy consulting firm Booz Allen Hamilton. A recent study by Booz Allen, based in New York, finds that customer relationship management is undermined by the lack of a clear customer-segment-focused strategy. The study states that although corporate spending on CRM has risen rapidly over the past five years, with forecasts for global spending in 2002 ranging from $20 billion to $45 billion, according to Morgan Stanley, many senior executives express frustration about the returns on CRM investments. The study concludes that strategy plays an increasingly critical role "because CRM has evolved...to a broad range of enterprisewide capabilities designed to transform a company's relationship with its customers and their role in the supply chain." CRM initiatives fail because they fall into three basic traps: Using technology as the primary driver of customer strategy and alignment; having only vague aspirations to be customer-focused as a substitute for having a clear road map for customer-segment alignment; and the failure to align key organizational and business elements with the customer strategy, according to the report. "Many business leaders, under pressure for fast results, attempt to use technology as a shortcut to better customer management," says Chris Dallas-Feeney, a vice president at Booz Allen. "We believe that is the wrong approach. The technology is more than adequate. The right question is, how does a company craft a customer strategy that is specific to its situation and one it can grow with?" Dallas added, "Companies are spending a boatload of money on CRM, including the cost of the software, organizational changes, branding, and implementation of technology, but there are fundamental problems and they are not thinking through some of the beliefs of how to service the customer. People were jamming in a solution and began to blame the technology, but the error was that they were in a hurry due to competitive pressure." The Booze Allen study suggests these pitfalls can be overcome using some basic planning steps, and implies that using a consultancy to do that may help expedite that process. Sharon Ward, vice president of enterprise business applications for Newton, Mass.-based researcher the Hurwitz Group, agrees, saying software should not be the driver for a CRM implementation. The findings of Booz Allen can be used for the implementation of any enterprise application and are not necessarily specific to CRM, she says. "But CRM is hot right now and the media is spending a lot of time focusing on CRM failure," Ward says. That issue is overblown, according to Ward. "I don't have specific numbers on CRM failures, because I don't [believe] there are any failures per se," she says. "There are implementations that have been unsuccessful in meeting their objectives. But mostly that is because the objectives are poorly defined or not clearly annunciated to users. An enterprise application is subject to failure if you don't understand what you are hoping to get out of it." "If a company is savvy enough to ensure the CRM implementation supports that objective, then a consultant is not necessary," Ward says. "But most people don't see the big picture in strategic ways, and that is where consultants can be helpful." And that is also why the CRM consultancies like Booz Allen are proliferating. "CRM consultants are likely to grow and then level off--much like what happened with ERP and supply chain," Ward says. "[The growth of consultancies] will level off when companies begin to understand what they can and can't do with the technology."
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