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Are reports of CRM failure greatly exaggerated?

Analyst scare tactics may be behind inflated reports of CRM implementation failure rates, according to some industry insiders attending DCI's CRM show this week.

BOSTON -- Gurus at DCI's Customer Relationship Conference and Expo repeatedly disputed widely published reports of rampant CRM implementation failures. They also, however, cautioned companies to avoid committing common snafus that could result in their projects being classified among those that bottomed out.

While unsuccessful CRM installation numbers vary, many cite Gartner's most recent failure figure of 55%.

"Analysts like to scare people," said Chris Selland, managing director of Cambridge, Mass.-based Reservoir Partners LP, a CRM marketing and strategy firm, and a former analyst with Yankee Group. Selland prefers to cite a Morgan Stanley survey of 225 CIOs in which just 6% said their CRM initiatives were either highly or somewhat dissatisfying.

Plus, Selland likes to think of the mistakes as part of a necessary learning process. "Sometimes you learn your best lessons by stubbing your toe," he said.

Barton Goldenberg, president of ISM Inc., a Bethesda, Md.-based consultancy that rigorously tests dozens of CRM applications annually, questions the methodology that analysts use in measuring CRM failure. He thinks firms like Gartner take a far too simplistic approach and should ask companies to gauge the improvements that customer-facing projects result in.

Still both CRM insiders say organizations can several steps to minimize risk.

Goldenberg recommends laying out a technical plan, defining specific metrics, detailing the organizational impact that CRM initiatives will result in and going slowly. "Take bite-sized chunks over time," he said.

Selland argues that planning can make or break a CRM project.

"[Companies] are not doing the business analysis," he said. "We just want to get to the cool, sexy [technology]."

He also urged companies embarking on CRM to take an incremental approach and devise an integration strategy from a business perspective first, then a technological one.

For instance, Selland recommends first defining a business process for, say, arming sales people with the necessary information to answer customer questions about orders. After ironing out the business details, he advises them to then begin worrying about the Web services or enterprise application integration technology that would make such data accessible.

Selland also cautions against being swayed by vendors who are "over-selling." Most successful CRM projects, he said, don't rely on software from a single provider.

Ted Silverman, vice president of CRM for the World Wrestling Enterprise (WWE) in Stamford, Conn., has heard the failure figures and wants to make sure his current project doesn't become a statistic.

"Whenever I read those [numbers] I say, 'It's all those other people who got duped and didn't understand what CRM was from a philosophical perspective,'" Silverman said sardonically.

The WWE, which offers merchandise and magazines based on the wrestling matches it stages, currently outsources its contact center operations. But the outsourcer's representatives don't provide the level of service customers require and the WWE expects, Silverman said. They don't up sell, often aren't willing to work to find necessary information and occasionally don't treat the customers right.

Plus, the WWE collects little information from the customers who call in or e-mail. "We're not learning from our customers," Silverman said.

The WWE is now looking to bring contact center operations in house and is evaluating several vendors, including Talisma and Kana Communications. Silverman has learned a few things from others' mistakes.

While his eventual goal is to integrate inbound call center information with marketing initiatives, he is taking a phased approach. The WWE will start small, define specific metrics to measure performance and build from there.


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