Try,Try Again

Many CRM projects fail the first time. Success doesn't come until the second or third attempt.

You've been warned: Putting in a decent customer relationship management (CRM) system is as perilous as installing enterprise resource planning systems used to be.

CRM projects fail more often than not, analysts say. The software is hard to install. It forces a lot of change, quickly, on business units. And even when companies manage to install and link applications that hold client information, they often don't serve customers any better, reports Gartner Inc. in Stamford, Conn. New York-based Mercer Management Consulting Inc. calls CRM a "money pit."

But some companies have gotten CRM to work well, albeit on the second or third try. It's in the repeated attempts that the real lessons are learned.

Some of the disappointment can be chalked up to classic bad habits in IT, such as not listening - sometimes not even talking - to end users about what they want in a new system. Or the CRM team may try to do too much at once, which almost guarantees delays and cost overruns.

But there are lessons particular to CRM that veterans share.

PeopleFirst Finance LLC, an online car loan company in San Diego, dived into CRM in June 2000, when it tried to install a complete suite from a well-known CRM vendor.

It was clear about three months into the installation that things weren't going well, says Sharon Spooler, vice president of business intelligence at PeopleFirst.

Dennis DeGregor, Allstate Insurance Co.
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Dennis DeGregor, Allstate Insurance Co.

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For example, there was no easy, automated way to manage bouncebacks from e-mail sales pitches that didn't reach intended recipients, she says. Also, the software couldn't properly track multiple versions of electronic pitch letters. The result: PeopleFirst couldn't get an accurate view of which campaigns worked.

"We tried problem-solving with the vendor. We tried a lot of different things to make it work. Every time you'd think you had a problem down, another one would pop up," Spooler says. "It was like a game of whack-a-mole."

Spooler declined to name the vendor, citing a deal struck when PeopleFirst killed the project in March 2001.

Now PeopleFirst outsources many problematic CRM tasks to Digital Impact Inc. in San Mateo, Calif. Digital Impact handles the administrative part of e-mail sales efforts, such as making sure messages look good in HTML and rich text, managing bouncebacks and tracking how many messages were undeliverable.

PeopleFirst, meanwhile, handles the content side of campaigns. It keeps databases on things such as which letters produce which results and which customers respond to which pitches.

Of PeopleFirst's initial attempt, Spooler says, "We dreamed a little too big."

Cessna Aircraft Co. had a couple of unsuccessful rollouts of CRM systems before successfully going live recently with Fairfield, N.J.-based StayinFront Inc.'s Visual Elk sales force automation product and Panorama decision-support tool.

Cessna learned some "bitter lessons" during its first two CRM attempts, in 1995 and 1996, says Dave Turner, manager of network systems at the airplane maker in Wichita, Kan.

First, Turner says he learned to choose vendors that will be around a long time. Cessna rolled out the first phase of its CRM system but had to delay the next stage until a revision of the vendor's application shipped. It never did, he says, declining to name the supplier. Cessna killed the project with that vendor.

Turner says he also learned how to write better software contracts. For example, the deal he negotiated with one of his original CRM vendors had no explicit provision for a refund if things soured. But when the software didn't work, Turner was eventually able to get a refund. "They did other business with us, so it was in their best interest to keep us happy," he says.

Still, he advises other users to include such clauses upfront.

Dennis DeGregor, vice president of CRM at Allstate Insurance Co. in Northbrook, Ill., has avoided the full-suite option. All-in-one packages are less expensive to maintain, acknowledges DeGregor, who has also done CRM projects at Merrill Lynch & Co. in New York and US West Inc. But suites can lack key pieces, which means buying a separate package to add on and integrate anyway.

In late 2000, Allstate requested proposals from the major suite vendors. "None of them came remotely close to having the functionality that matched our CRM vision," he says. Siebel Systems Inc. in San Mateo, Calif., for example, doesn't have a sales campaign management module, he says, and SAP AG doesn't offer predictive modeling.

Allstate, therefore, went the best-of-breed route. Its uses at least six packages from five vendors, including analytics and campaign tools from Xchange Inc. in Boston and lead-management software from MarketSoft Corp. in Lexington, Mass. Allstate's internal IT staff is responsible for integration.

Wanted: Ambassador

One key to CRM, say those who have gotten it right, is having a facilitator between IT and marketing, customer service or whatever business unit is supporting the project. This person typically doesn't come from IT but has a good grasp of technology. Ideally, he should report to the CEO or some other manager outside the groups he's trying to unite.

Spooler and DeGregor play that role. So does Stephen Nehring, marketing integration manager at Sprint Corp.

The telecommunications provider built a top-to-bottom CRM system in-house. The system has been running for a year and manages 5TB of data.

When a request comes from marketing to capture more data about customers, Nehring explains to IT why it makes sense to free up storage or servers. "[IT may] say, 'We don't have any space.' I say, 'If we have this type of information and if we could market to this type of individual, it would generate this amount of sales,' " he says.

Nehring also coaxes marketing to examine whether it really needs all the data it wants, citing how expensive it is to store and access that data quickly.

All sides go to all CRM meetings. "By having all those individuals in the same room, we all put in our two cents without months of e-mail back and forth" before a decision is made, he says. "We won't meet unless everyone can be there. There's too much at risk."

It may be the nature of CRM that it takes a few iterations before both business and IT are satisfied.

Every company does business differently, even within the same industry. It's impossible for a single vendor to design a CRM package that includes the business rules of all possible users, says Denis Pombriant, an analyst at Aberdeen Group Inc. in Boston.

What's helping second-time CRM shops, as well as companies only now getting into the technology, is a new modularity to CRM software, he says. Some vendors have separated the rules for how different parts of the CRM system interact from the code that makes the software work. That makes it easier for users to tweak CRM applications to better fit the quirks of how they do business.

Chordiant Software Inc. in Cupertino, Calif., and J.D. Edwards & Co. in Denver offer such a modular architecture based on Java, Pombriant says.

"Inevitably, there's a need to rationalize the way software runs and the way business runs," Pombriant says. "It's a Herculean effort to define an organization's business rules then encode them in software."

Nash is a freelance writer in Yorktown Heights, N.Y. Contact her at kimnash2002@yahoo.com

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