The Top 10 Causes behind CRM Project Failures
With the focus of business turning increasingly towards the customer, Customer Relationship Management (CRM) systems are rapidly
being re-evaluated as a critical corporate priority when it comes to driving effectiveness and efficiency through automation.
Frequently, the size of the concept itself can be overly daunting, and the real measures of ROI so unclear that corporate commitment
can be delayed by a number of years. However, in actuality the measuring of the success of CRM is not overly complex. The more critical
factor is ensuring the right approach is taken in order to achieve success.
It is generally observed that 50%-60% of CRM projects fail. These failure rates reduce business confidence, resulting in further delays in
the wider adoption of CRM. However, whilst most people feel that these customer-focused projects fail due to the software or technology,
it has been found that CRM project failure is largely due to a lack of management discipline and a lack of business process definition
during execution, amongst other factors.
To deliver CRM projects successfully, it is essential that project, business and IT managers have a solid and shared understanding of the
enterprise’s business objectives. With this, they can continually measure their evolving project in terms of delivering these business
objectives.
While there may be multiple reasons for this failure rate, we have found common parameters in failed CRM projects:
The Top 10 causes of failed CRM projects are:
1. Technology-led CRM projects are, by definition, started for the wrong reasons. Some of these key projects are initiated purely
to implement new technology, without ensuring that the technology supports a solid business case. If CRM is considered an
IT project and not a business initiative leveraging technology, then the business is not driving the change of its own business
practices. CRM can only ‘automate’ the business rules, not define them.
2. Project Sponsors are not committed to, or do not fully understand, the project outcome. Often those who own the budget have
the need for the outcome but do not commit to the outcome. They may not understand the project or be actively involved in the
project strategy and direction. Lack of commitment from the executive sponsor usually indicates that key stakeholders need to
be convinced that the initiative will fulfil their business objectives. It is vital that the key stakeholders understand that the real
world value derived from the CRM implementation is worth the change. Communication has to be successful at all levels with a
clear communication process in place.
3. User Adoption is not achieved. This is where the rubber meets the pavement. It is the litmus test that determines whether the
automation tools enable staff to be more efficient and more effective in creating profit with their customers. It is critical that the
project team carefully choose the staff involved in both the design workshops and User Acceptance Testing (UAT). It is vital that
the UAT is completed by users who know the business. For the deployment to be a success, the business users must be involved
at every stage of the CRM design and implementation.
4. Management Discipline is not put in place. Without top-down leadership and employee buy-in for CRM, the focus and necessary
detail to complete the changes to the business will not occur. Every employee in the relevant business and support teams
will be affected by the fundamental changes introduced by CRM. An executive sponsor who communicates both vertically and
horizontally through the organisation is critical. The staff will be excited once they understand both the benefits and how they
will be enabled to improve customer service, making your company more successful. Management discipline needs to create and
maintain momentum toward a competitive customer focus. Adequate training is necessary to ensure employees know their role
and the rationale for change.
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The Top 10 Causes behind CRM Project Failures (cont.)
5. Business Readiness — no data, no system. The business needs to be ready with quality data to load into the system and to start
capturing new data effectively. The system results will only be as good as the data that is loaded and collected. The data is the
gold in the business. The business results are then built around the business rules which need to be defined clearly, ensuring they
create profit which can then be tracked. The greatest success will come from the closely coordinated efforts of the business and
technical staff. Data quality, availability and integration issues all need addressing.
6. Change Management failure is one of the most common reasons for CRM projects to fail. Managing the change associated
with people, processes and systems requires co-ordination, communication and control of the schedule. Without your people
prepared and onboard, the processes and systems will not happen successfully within your timeframe. Different training for
users, technical staff and support staff is important so that they each know their role and the rationale for change.
7. Business Objectives being unclear and ill-defined business processes and rules are another cause of CRM project failure. Two
of the common mistakes for project teams are: to simply automate the current processes, and to make them suit the CRM
product instead of supporting the business. A fundamental understanding of the business model is required to ensure the system
correctly reflects the defined business processes, rather than forcing the CRM product onto users.
8. People Risks are not managed. Changes to existing work practices can create stress and uncertainty in the workplace.
Implementations of new CRM systems may lead to the replacement of old systems, processes and people. This uncertainty can
create fear and lead to resistance or a lack of morale during key initiatives. It is essential to clearly address people issues and
have a strong steering committee in place to manage factors which are largely outside of the project deliverables. In multicultural
deployments, a lack of managing culture can also result in a lack of morale, poor motivation and high attrition. Unrealistic client
expectations, constant requirement changes, long working hours and stringent timelines can also lead to frustration at all
levels.
9. Product/Vendor Risks result in many CRM projects failing due to over-customisation of the CRM product. There has to be a
thorough assessment of various CRM vendors before making a decision on the implementation partner. The scalability of the
product, its impact on performance, upgradeability and cost of upgrade are key parameters to be considered. Engaging an
inexperienced, unstructured system integrator who does not have the requisite business and systems knowledge provides much
uncertainty around project execution.
10. CRM Interfaces to the enterprise and customers are not considered during the design and launch of the system. Ensuring
there is accurate, timely data flow through each step of the customer experience will provide the customer with consistent,
knowledgeable, and high-quality service. Integration of, and interfacing with CRM data will quickly become required so the
customer data can be shared with other systems. Without this consideration, the customer data can become siloed on the CRM
platform and fall out of sync with other key systems such as ERP.
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