How to run a CRM project during a recession

There are many strikes against customer relationship management (CRM) projects. The economy is rotten. Salespeople dislike automation. It's hard to calculate the return on investment. Many CRM projects fail.

So, with all this gloomy news, Computerworld interviewed three experts about keeping a CRM project going in a tight economy -- and achieving ROI. The pundits are:

  • Michael Gentle, an IT professional in Paris and veteran of many CRM projects at multinational companies. He's writing a book that debunks the CRM hype and focuses on realistic expectations.
  • Bob Haas, a vice president and CRM expert at A.T. Kearney Inc., a management consulting unit of EDS Corp. in Plano, Texas.
  • Adam Honig, president of Akibia Consulting, a CRM consultancy in Westboro, Mass.

What's the biggest myth surrounding CRM?

Thinking that any company can embrace CRM and expect results. Well, that's like thinking anyone can run the New York Marathon. Depending on your physical readiness (in terms of weight, training and endurance), you could be months or even years away from entering. Similarly, a minimum "organizational readiness rating" (in terms of customer, process and systems maturity) must be in place for CRM to happen.

What are the biggest barriers to CRM success?

Most of the barriers are similar to the issues you see with most large IT/business projects, such as [maintaining] management commitment over a number of years, business participation in the process and the other standard obstacles. But then there are a few others unique to CRM.

One is the issue of customer input. It's one thing to get input from your business partners for a supply chain project, but getting input on how the customer wants to be treated is a very different notion. Getting clear direction from an array of different customers is much tougher.

Another one is process change, or behavior change for internal constituencies. It's easier to get your supply chain partners to change processes than it is to tell people like your sales or marketing people that they're going to have to do business in a new way. Salespeople tend to be an independent lot. Marketing people tend to be a creative lot. And both are very resistant to change.

Another barrier is defining what success is. [It's difficult] getting a clear definition -- one that's tangible and quantitative -- of the results you're going to achieve in business terms, not in systems terms.

Why are there so many CRM failures?

The majority of the project failures have to do with people looking at CRM from a technical implementation perspective and not taking a holistic approach. The implementation of technology is probably only 40% of the average [CRM] project. The other 60% is split evenly between organizational challenges and business challenges. We recommend that people spend more time on figuring out what will make end users adopt the system in the best way and what are the business process challenges that need to be addressed.

Any advice on running CRM projects during a recession?

It's very easy to break it up into many smaller components that all fit together to fit a larger CRM strategy. So we recommend that people implement in very small pieces. Do as small a project as possible, make that successful and build off the success.

We've done some economic modeling that shows that if you do three small projects and space them out over time as opposed to doing one big project, the actual return on investment will be stronger.

And 90% of the CRM projects we're involved in today are really cost-saving exercises; and there's a lot of low-hanging fruit, especially reducing duplication of effort among various groups.

Gentle: Personally, I'd run it the same way, recession or no recession. The issue is not the size of your budget but the nature of the business problem to be solved and managing the associated risk. The portrayal of CRM as an instrument for survival, requiring the radical transformation of people and processes at great expense is so much scaremongering -- don't believe it. In the real world, CRM is all about evolution, not revolution, i.e. tactical, not strategic, CRM. So take it one step at a time. By all means think big, but for goodness' sake break it down into manageable chunks which will enable you to show results in less than six months and ensure the credibility and support needed for the long road forward.

How do you sustain the funding for a multiyear CRM initiative?

It's not easy. What we've see time and time again over the past nine months is the CFO comes calling on the CIO to whack the budget. Typically, they look for anything that looks discretionary, any project that isn't seen as 100% mission-critical, and all too often CRM seems to meet that definition.

The problem is they may have dedicated millions of dollars to it last year and made some progress, but this year they cut it. You end up whipsawing a whole program. And then next year when you get some funding again, you end up starting over. Momentum is lost, and the term CRM gets a bad name.

What can you do about it?

  • The CIO shouldn't make the budget-cutting decision alone. Engage the business partner to redefine the objectives of the program.

  • Go back to your business partner and consider creative ways to stay in the game and share risks with vendors and consultants.

  • See if you can consolidate multiple departmental CRM projects or focus on the departments that will deliver the greatest value sooner.

  • Be prepared for budget-cutting with a contingency plan. Know which pieces of the program you can give up.

  • Operationalize what you have. In other words, get the parts of the project you've completed into production and show some value quickly.

  • If your development budget is completely eliminated, now may be the time to tackle those time-consuming internal process problems so you'll be better positioned when you get money in the future.

How do you make sure you get a business ROI from CRM?

Your starting point should be an executive with organizational pain, in the form of processes which need to be improved -- not someone with demo glow on his face from a CRM tool. Current metrics then need to be measured. This crucial step is often skipped, because of deadlines or overconfidence.

Once you have your business case, keep it simple. As much as possible, avoid simultaneous cross-functional deliverables (for example, both sales and order management), which run the risk of process breakdown across functions, with potential bottom-line impact.

Then define a realistic budget. Most CRM projects are hopelessly underfunded because of ignorance about the real costs.

Once you've chosen a solution, do an operational pilot of sufficient duration (two to three months) to be able to validate the business objectives, and identify and correct the real-world problems that only show up when used in a live environment. Pilots also serve as checkpoints for continuing or going back to the drawing board -- a valuable safety factor with CRM failure rates running at 80%.

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