Seven tips for phasing CRM projects...

‘Phase your CRM project’ is one of those frequently offered pieces of advice to would-be implementers of CRM technology, but what does this really mean in practice? So, seven quick tips for phasing CRM projects effectively:

Do the minimal amount that gets results – it’s easy to over-engineer CRM systems, but it’s generally better to implement something reasonably simple which generates quick results, and build on it. This approach reduces the risk of spending a lot of time and money creating capabilities that later prove to be white elephants.

The first phase must be value generating – whatever you do in phase one must create compelling value, otherwise you will struggle to get resources for later phases. I see a lot of vendors promoting the ‘suck it and see approach’, where customers are encouraged to buy some CRM software and then experiment. This might be good for short term software revenues, but rarely produces systems that clients want to continue to invest in.

Resources dictate phasing – getting users to use a system in a consistent and structured fashion is one of the key challenges of CRM deployment. User adoption requires people on the ground winning hearts and minds and this tends to be resource hungry, therefore one of the key determinants of phasing is the amount of resources available to do this. Try and do too much in one go and the implementation team can quickly become overwhelmed.

User micro-phasing to maximize adoption – there’s only so much change that users can embrace at one time so breaking down a phase into a series of micro-phases, for example by releasing capabilities over time, can be an effective way of addressing the user adoption bottle-neck.

Schedule subsequent phases in advance – if your CRM project is to be phased it generally makes sense to ensure that the timing, content, benefits and costs of future phases are broadly defined up front. This helps ensure resources are available when you need them and avoids the need to go through a lengthy capital allocation exercise for each subsequent phase.

Reporting must be phase one – for reasons that I explained here previously CRM vendors seem to discourage users from worrying too much about reporting in the early phases of a project. Since reports are the key way for the management team to ensure that the processes that the system supports are being followed, relegating them to the ‘manyana’ file virtually guarantees system obsolescence.

Manage ongoing system enhancement requests carefully – over time users will identify ways in which the system can be improved and enhanced. These requests need to be carefully assessed, managed and prioritized to ensure they will create genuine additional value. It’s easy to load up future phases with features that, while meeting the demands of a few vociferous users, fail to generate any return on investment.

Reflecting on CRM failure....

I was asked to speak on the topic of CRM failure this week. The following summarizes what I covered.

The occurrence of outright failure, where no system ever sees the light of day is exaggerated. I’m only aware of a few instances of outright failure and this normally occurs when the CRM system is being integrated into another system, and usually where there is a mismatch in expectations between client and vendor regarding the complexity of the integration.

The more common manifestation of CRM failure is what we might term ‘the lights are on but no-one’s there’. The system functions, but generates no meaningful value. There might, for example, be a database of sorts, but the data isn’t trusted as being up to date, the occasional salesperson might use it to add a note of schedule a call back, but there’s no meaningful management information.

In our experience about 80% or so of CRM systems fall in this category. Which is fine if that’s what users were expecting, but for most there was a grander vision when the project was started.

For those that get it right though CRM technology can facilitate very high returns on investment. The sales and marketing functions often operate with poorly defined processes with little support from technology. By re-engineering these processes and supporting them with an effective IT infrastructure companies can add substantial bottom line value.

In terms of avoiding CRM failure I picked out the following five themes:

Asking the right question – prospective users tend to ask the ‘what technology is right for me’ question. The question they should be asking is ‘how do I apply CRM technology to my organization in a way that generates results’. Technology selection is important but it’s just a part of what’s involved in successfully implementing a CRM system. Users often fail to appreciate that the technology won’t generate results ‘out of the box’ (however much some of the hosted vendors might like us to believe), and that how it can be beneficially deployed is often far from obvious, and even if the application is clear, there will generally be some measure of customization to support the client’s unique processes.

Finally, on this point there are users that recognize that implementing these systems is far from straightforward, but assume the CRM vendor will help them navigate the challenge. In our experience the good vendors understand the technology but not the front-line application of it. They are likely to adopt a ‘tell me what you want’ position rather than guide the user.

Create a compelling vision – many users of CRM enter a project with an expectation that good things will happen rather than having a clear understand of what problem they are trying to fix. However not only does the objective need to be clear, but it also needs to be compelling otherwise the project won’t acquire the resource and attention bandwidth required for success.

Design in detail up front – most clients purchasing CRM technology have only a high level understanding of what they are looking to achieve when they enter the vendor selection phase. As a result they purchase software at a point that vendors can only estimate implementation costs. This makes them vulnerable to vendors coming back with upwardly revised estimates once the implementation begins, and the lack of a clear understanding of functional needs increases the risk of purchasing a technology that doesn’t meet their real needs.

A better approach is to create a detailed specification of requirements up front which allows vendors to provide accurate pricing in a competitive environment. We would estimate this reduces purchase costs on average by 40%, and also reduces the risk of ‘scope-creep’ in the implementation phase.

The user adoption challenge – it doesn’t matter how well thought out your system, if you can’t get users to use it in a consistent and structured way then it won’t add value. The conventional industry approach to user adoption is primeval and is further evidence of my earlier contention that vendors are fine with technology, but not the application of it to a real world setting. My experience is that users invariably come back from training sessions with scant understanding of how to use the system and for most vendors a half day user training session forms the entirety of their user adoption strategy. While user adoption is a multi-faceted challenge, we would stress the need to carefully monitor and review the progress of each individual user, and provide a tailored programme of support recognizing existing habits are hard to break and new ones difficult to set.

A CRM project is not just for Christmas – which is a play on the advertising campaign that ‘pets are for life not just for Christmas’, the point being that since the value of CRM technology accrues over the life of the system, we shouldn’t treat CRM as a one off project, and recognize we need to support it for the long term. CRM systems are particularly vulnerable to change, for example changes in business strategy which aren’t accommodated, or the arrival of new executives unfamiliar with the system’s capabilities can quickly plunge a system into obsolescence. Maintaining a high performing system over time has cost and resource implications that companies need to budget for up front.

In summary, if we are to escape the 80% failure rate, then we need a business process oriented, rather than a technology focused approach. Successful CRM systems thrive in organizations that are able to adopt a process oriented approach. We need to be aware that that this rigorous approach is not in every organization’s DNA, and for many this structured use of CRM should be a series of small steps, or in some cases should not be undertaken at all – on the basis it’s better to ‘fail’ without trying than after the commitment of a lot of resource and energy in a situation that was never conducive to success. For those that are prepared to go for it, the rewards are there. In a world where it’s increasingly to differentiate on the products and services we offer, when out latest and greatest can be ‘me too-ed’ virtually overnight, the effective use of information technology (not just CRM) is still a rare enough phenomenon as to represent a huge un-mined seem of business efficiency and competitive advantage.