Taking 'Softer' Issues Seriously
Jul 1, 2004 5:24 AM PT
What do the most successful CRM implementations have in common? In a global survey designed to find out, IBM Business Consulting Services (BCS) learned that the factors that most impact a project's success are not necessarily the obvious, big-ticket items.
IBM's Institute for Business Value, a unit of IBM's Business Consulting Services, in partnership with the Economist Intelligence Unit, a publisher of country and regional intelligence, conducted the survey.
The survey identified the 16 most critical drivers of successful CRM implementations. Of the more than 370 respondents, about half were in senior management positions. About one-third of those questioned were from the Americas; with the rest fairly evenly divided among Eastern and Western Europe and the Asian-Pacific markets.
A Rather Bleak Report
While technology systems and data integration are important, key pieces on the softer side of CRM implementations seem to make the most difference.
At a glance, the survey could be viewed as a rather bleak report on CRM: Only 14 percent of companies surveyed said they "fully use" their CRM systems; in over 35 percent of companies, senior management actually impedes the success of CRM because it considers CRM "useful, but not critical" to the company's success; and in nearly 75 percent of companies, ownership of CRM is in the "wrong" place.
IBM BCS says ownership belongs in the corporate tier; whereas in most companies, ownership resides with marketing, sales, customer service or IT.
So what's the good news?
By understanding the key ingredients of good CRM implementations, the authors of the study said companies can significantly improve the likelihood of CRM success.
Keys to Success
What are the key ingredients in the "secret sauce" of successful CRM implementations? In boiled-down form, here's what they start with: Change management is critical; also, decisions throughout the implementation process should be tested against a strong value proposition; and corporate -- not IT, not sales, not marketing nor even customer service -- should own the CRM project.
According to the survey, the 16 drivers that have the most impact on the success of CRM implementations worldwide are:
- CRM strategy and value-proposition development;
- Budget process management;
- Change Management;
- Process Change;
- Customer-data integration and data ownership;
- Senior executive and opinion leader buy-in;
- Prioritization of company initiatives;
- Implementation road map;
- Capabilities and risk assessment;
- Customer-needs analysis;
- Organizational alignment;
- Metric development;
- Technology implementation;
- Stakeholder assessment; and
- Business case and ROI.
That an IBM study on anything finds "technology implementation" so near to the bottom of the list of "critical" factors may surprise some. But Craig Froehle, assistant professor of operations management at the University of Cincinnati isn't one of them. In fact, he said the findings align perfectly with what he tells his students.
"Technology is an enabler, but it rarely makes a sustainable strategic advantage by itself. CRM, as a customer-facing technology, is much more about empowering the organization to adopt a new customer-centric philosophy than merely data-mining its customer transactions," Froehle told CRM Buyer.
Technology is the Least Risky Piece of CRM Puzzle
"Customers don't do business with a company because they have a particular CRM system. They do business with a particular organization because they receive great products and services," LaValle told CRM Buyer.
"Done right, CRM programs enable companies to deliver better offers to their customers and better experience...and in turn, this equals higher profitability."
Froehle said it's clear that the tools firms use to help make decisions on customer segmentation will continue to get more sophisticated. "But, unless that software tool, or its use, is proprietary somehow, it is unlikely that such a tool would give any one firm in an industry a sustainable advantage over its competitors," he said.
Amid Global Differences, One Common Chord
While companies in the American, Asian and European markets varied in how they weighted different factors, "Process Change" was cited as most important by 15-to-20 percent of those surveyed worldwide.
For his part, LaValle said the most important piece of "process change" may be involving employees in the process of designing and changing the way they do their jobs, making sure they are aligned with the company's value proposition.
One of the surprising -- some would say, surprisingly logical -- findings: Companies who aligned their CRM strategies to tune in first to their employees, then to customers, were more successful than those who purely followed the old "customer comes first" axiom.
Kelly Bost, vice president, business development group, Manulife Wood Logan, understands that. Bost described the company's decision in 2001 to replace a legacy system with a new CRM solution featuring IBM On demand or Siebel eFinance 7 Accelerator for Wealth Management, as "more pain-based than need-based."
As happy as some employees were to see the old system go, they didn't automatically love the new system. "We had very high expectations," Bost said in an interview with CRM Buyer, adding that some employees might have been overwhelmed with the new system's robustness.
"It's like driving an old clunker for years and then upgrading to a Maserati," she continued. To learn to handle -- rather than be run over by -- the new system's power, Manulife invested significantly in internal training.
"We knew going in [that internal training was important], but we really felt it as we went through certain stages of the launch," Bost said. That's when Bost, and many others in the company, learned firsthand how important it is to involve employees.
"Five to six months into the life of the system, we put together an advisory committee," Bost said. The committee consists of about 12 employees Bost calls "super users." Most are front-end users who are utilizing the system effectively.
"They get together and talk about the best practices," Bost said. The CRM manager also participates in the committee.
According to Bost, the committee "developed organically...we didn't go into the implementation saying, 'at some point we'll develop a committee.' It just made sense."
Other Survey Results
In general, LaValle said, business-to-business adoption is trailing business-to-consumer adoption.
"Trend-wise, many high-volume [business-to-consumer] companies get CRM -- it's standard fare for them," he said.
Although the survey seemed to indicate patterns of adoption -- or lack of it -- in certain industries, LaValle said there aren't obvious trends that are industry-specific. Rather, companies are adopting as they are ready to adopt. That the aerospace-defense industry seems to be lagging behind other industries in adopting CRM, for example, is more indicative of the industry's financial state than it is of the industry's business model.