Let’s
discuss a couple of the heavyweight C words in the IT Sector, Cloud and CRM.
What
do they have in common? Well they have both certainly provoked a lot of press
coverage and airtime, both have driven large brand name vendors to jump in with
big investment, acquisitions and marketing hype, they have helped drive each
other’s growth and both certainly have had customers debating what and when
they should elect to use such a solution.
CRM
(Customer Relationship Management) has been a hyped acronym for many years and
can mean many things to many people. Many debates abound in this area from if
it is the correct terminology to describe what its used for, how much does it
really cost, what ROI can really be achieved, how to get users to adopt its
use, routes to market to sell it and what
The
fundamentals are though that a way to manage customer information, share it
securely, track customer interactions and record activities across the business
is required by most business sectors and sizes. Sure there are nuances by
vertical and specific requirements that at times can be better served by
specialised applications, but for the masses the requirements are pretty
similar and easy to achieve, or so you would think!
For
2012 CRM remains an important technology in its own right with recent Gartner
Analysis citing that CRM is
ascending rapidly in the priorities of CIOs in 2012, moving from 18th place to eighth place. It was also cited by
Gartner that that CEOs see CRM as their
number 1 technology-enabled investment in 2012.
Another
shift that has been seen is for this market need to be fulfilled increasingly
by in the cloud solutions, where according to Gartner Software-as-a-Service
(SaaS) delivery of CRM applications represented 34% of total worldwide CRM
application spending in 2011 and more than 50% of all Sales Force Automation
(SFA) spending was on the SaaS platform. So Cloud CRM is at the tipping
point of outweighing on network solutions in the not too distant future and
becoming the defacto form factor of delivery. Many customers of historic
software products are already migrating their data across, seeing the benefits
of putting the heavy lifting of the architecture, backups, resilience and
security into someone else’s hands is now a practicality.
This
doubly resounds as true in the mass market SMB sector where both cloud growth
and CRM adoption can bring strong business benefits and empowerment and the
combination of the two can compound this.
Pierre Audoin Consultants
(PAC) recently reported that SMBs spent almost £1.6bn on business application
software and SaaS in 2011, and that this is set to grow to more than £2.1bn by
2015 – faster than the enterprise segment! The
analyst also revealed that key areas of investment were cited as including CRM,
analytics, mobility and industry-specific software.
So
cloud is becoming the defacto for CRM implementations, the world is good and
there are no issues to be discussed here. Of course what the marketing will
have you perceive is never quite the reality and there are challenges in the
CRM world as in any other.
CRM
projects do not all go to plan and there are many hidden challenges that can
prevent you from having that win. Gartner has reported that as many as 85% of
companies that buy CRM software to automate sales efforts, don't pick the right
tools because they fail to define business objectives or develop processes for
meeting objectives and that as many as 42% of CRM licenses bought go onto be
unused.
If
you look at a variety of customer reports across the years reporting on data
from customers of failed CRM projects there is an average of 46.3% of failures
reported in surveys. The data varies greatly, likely due to different analysis
methodologies.
Many failed CRM projects actually deliver
mixed results and achieve partial objectives, making the definition of
“failure” subjective. However the aggregate weight of this data clearly
suggests strong dissatisfaction with CRM projects;
2001 Gartner
Group: 50%
2002 Butler
Group: 70%
2002 Selling
Power, CSO Forum: 69.3%
2005 AMR
Research: 18%
2006 AMR
Research: 31%
2007 AMR
Research: 29%
2007 Economist
Intelligence Unit: 56%
2009 Forrester
Research: 47%
Many organizations do achieve acceptable ROI from their CRM
rollouts, yet a substantial numbers of CRM customers are dissatisfied with some
significant aspect of their implementations. According to Frederick Newell (Author of Why CRM
Doesn’t Work) “only 25 to 30 per cent of
companies implementing CRM initiatives feel that they are getting the return
they expected!”
As recent as four years ago, a presenter at a
Gartner conference suggested a lengthy list of factors that can
jeopardize CRM initiatives including poor methodology, lack of established
success metrics, and too much involvement from IT.
A study by CRM Forum broke the failures into nine significant
categories;
- 29% - Organisational Change
- 22% - Company Politics and
Inertia
- 20% - Lack of CRM Understanding
- 12% - Poor Planning
- 6% - Lack of CRM Skills
- 4% - Budget Problems
- 2% - Software Problems
- 1% - Bad Advice
- 4% - Other
So
if industry analysts like Gartner, Forrester and Butler suggest that 50% to 70%
of CRM projects are sub-optimal and do not deliver a return on investment or
fail altogether. What are the odds on you achieving a win? Should you even consider playing in the CRM lottery?
So
why haven’t you heard more of this before? Why do you not read about these
failed CRM projects and what is causing these results?
Well
a CRM project team certainly isn’t going to want to admit an unsuccessful
outcome, the business leaders who have invested in the CRM project are often
seen patting the CRM team on the back, for they have rolled it out haven’t they
– its installed and working!
The
true measure is not whether the system is live. It is whether the users
actually adopt it and use it as an inherent part of their role, not in a
lacklustre ‘my manager forces me to ensure its updated before his monthly
meeting’ type of way.
From
your ‘Start state’ what problems and challenges did you have in your
business you foresaw the solution solving? What were the business issues you
were looking to address? Not the screens you wanted or the look of the reports,
but what was the actual ‘end state’ you envisaged - was it an increase
in renewal rates, a reduction in time for processing orders/transactions or
more centralised management visibility of daily sales activity and performance?
The simple truth is that too many organisations buy an
off the shelf CRM solution, without first considering what business issues they
really want to address. The old saying goes that ‘if you don’t know where
you’re going, any road will get you there’, and this is true with CRM. Entering into a CRM project, many customers do not
truly understand their goals and the objectives they are looking to achieve in
order to be able to measure a success or failure against them. These objectives need to be business ones,
not purely technical implementation points.
Implementing
is one component of a successful CRM project and often the core focus of the technical
teams who are often still seen wanting to keep things in house and to manage
and touch the components involved. Even in this day cloud solutions often get
side-lined with little consideration. There still seems a psychological barrier
with many feeling they have more control or security and even a better price
when deploying an on network solution themselves.
In
reality if you consider the options cloud is a very attractive proposition.
Deploying a CRM solution in house involves buying the hardware, operating
system and CRM software. Installing and configuring it onto your network and
resolving any issues along the way. Now think about resilience, what if any
component fails, what do you need to do to mitigate this , have a 2nd
standby box perhaps? If something fails it is upon you to fix, replace any
failed component and deal with the issue. We all know that things break,
phones, TV’s and PC’s so what’s to say a component of your in house CRM
solution won’t fail at an inopportune time and leave you with little or no
access to your valuable data and processes.
How about giving remote access to users, perhaps over VPN, what about
mobile access? Do you already have this in place on your network or will this
be a new requirement imposed on you by users wanting to access the CRM
information on the move (after all making it easy for users encourages adoption
and use!).
How
will you backup your CRM data and how often, daily? and will you ensure this is
done. Best practise for backup is off site with multi-location copies, but this
is hard and costly to attain in simple fashion. With your CRM containing
important valued information to your business, the importance of this
increases.
So
when factoring in a comparison of cloud ensure you truly evaluate the pro’s and
cons of both solutions and price up not only the hardware and software costs,
but the costs of delivering mobile access, resiliency and backup and the
unexpected costs of replacing components or recovering data in case of a
failure. Cloud CRM aligned with a smart plan of achieving the desired business
outcome can enable even the smallest business to have a winning bonus ticket.A Gartner Group report once cited that 65% of those with a CRM
initiative will fail “to align senior executives, IT Management,
functional/departmental management and customer outcomes”.
The findings of a
poll of 100 SME organisations with CRM implementations revealed that while 60%
of sales directors insist that CRM is fundamental to their sales processes, a
quarter have lost customers directly through their businesses ineffective use
of CRM technology. Essentially teams are not using their CRM systems correctly,
44% of sales directors admitting that fewer than 80% of their staff use the
technology in the way they expected. The knock on effect is a loss of potential
revenue and increasing levels of customer dissatisfaction aligned with a lack
of quality data and reporting.
Too
many CRM products are designed for specific use by the sales team, despite customers
interacting with other departments as well, such as Technical Support, finance
and Customer Service. If different
departments can utilise the CRM and share information the knock on effect is
that the value to each person to use the CRM increases.
So what can you do
to ensure that you are a CRM Winner? It
is key to have the requirements of all the departments who might touch the
solution gathered , understood and prioritised and not only as a way of
selecting the technology, but as a foundation of the implementation plans. What
will the users want that will have a positive impact on the outcome? What will
enthuse them to use the system when it’s up and running?
CRM
considerations at high level can be grouped into four segments, form factor (on
network or cloud), vendor selection, requirements/desired end state and
implementation. It is all about the outcome and measurement of success that
will define if you had a winning ticket.
Ensure that you do not fall into
any of these CRM traps;
- No
clarity on the project objectives
- Lack
of Executive Sponsorship
- Lack
of user involvement during planning
- Lack
of User Adoption
- Blindly
recreating existing processes in a new system (without review/appraisal)
- Choosing
the wrong Vendor Partner
Enter any CRM project not looking
at it as a technical implementation, but with clarity on your desired business
outcome and all the factors needed to achieve this and deliver a successful
user experience. Winning the CRM lottery isn’t easy but it’s not out
of your reach if you apply focus and effort along with working with a partner
who focuses on your outcome over their own!
(This article kindly donated by Ian Moyse, Sales Director of Workbooks CRM)
