Today’s feature on CRM Helpdesk Software .com is Ashley Moss’ article ‘The 7 Fatal Flaws of CRM (Customer Relationship Managment)’.

Introduction

There’s a reason CRM is the fastest-growing category of enterprise applications, with worldwide revenues projected to grow more than 50% annually to reach £77 billion in 2007 (META Group). By automating and integrating a host of customer-related processes, vendors of high-end CRM suites promise enterprises the ability to increase revenues, streamline processes, and reduce costs.

But while CRM vendors wax on about the virtues of their solutions, they neglect to discuss seven less appealing characteristics of these packages:
1. Excessive license and implementation costs
2. Endless implementation timelines
3. Technologically complex deployment
4. Organisational upheaval
5. Poor adoption rates
6. Weak links in the solution set
7. Elusive ROI
Any one of these factors would be enough to trigger second thoughts about investing in an expensive CRM suite. Taken together, they cry out for an alternative. Online sales management is a particularly strong alternative, offering many of the benefits of CRM in a small fraction of the time and expense-and none of the chaos.

“The Seven Fatal Flaws of CRM

1. Excessive license and implementation costs

A full-fledged licensed CRM deployment starts out expensive and stays that way-from the planning stage throughout the lifetime of the system.

The sticker price of the software itself is only the beginning of the implementation costs. Long before the first line of code has been written, the meter’s already running on a small army of deployment and customization consultants. Buying new equipment to host the system and deploying it to the corporate network fattens the budget even further. In-house personnel from customer service, sales, marketing, accounting, operations, and IT must be pulled away from the business at hand to be trained on the applications being introduced. Add to their lost productivity the extensive management overhead demanded by the project over its multi-year course. Meanwhile, it will be a year or more before the system can even begin to recoup these costs through presumed improvements in business performance.

Of course, CRM doesn’t stop costing money once it’s in place. Administrative and technical personnel must be paid year-round to maintain the system and support its users, in addition to the maintenance, license, and upgrade fees you’re still paying the original vendor.

Once you total up the long list of hard and soft costs, it’s no wonder ROI so rarely turns out as high as the software ads suggest.

2. Endless implementation timelines

Companies in competitive markets need to improve their sales productivity now, not at some theoretical point a year or more in the future. The opportunity cost inherent in the multi-year adoption cycle of a typical CRM suite can be calculated easily and dramatically on the back of any envelope.

Giga Information Group has reported that companies implementing CRM can expect to see an average revenue gain of about 15% once the system is in place. Unfortunately, even assuming a highly optimistic deployment time of nine months, the company will only see these gains for a quarter or less of the first year. At the end of the year, annual sales have increased less than four percent. For a £100 million company, just under four million pounds is nice, of course, but when the software and deployment alone cost more than a million, it’s not that much to have waited a whole year for.

In comparison, a company that could be up and running more quickly-say, within fifteen days-would realise increased productivity almost immediately. By year-end, annual sales would have grown to more than £114 million. Year-round, year after year, that £10 million advantage over a traditional CRM suite compounds into an ever-greater lead in ROI. Time is money, indeed.

3. Technologically complex deployment

Deploying CRM means more than just installing a new application suite. It involves sweeping changes to a company’s entire IT landscape, integrating multiple front-end and back-end enterprise systems into a single unified ecosystem in the course of a single project. It’s hard to imagine just how difficult this will be until you’re in the middle of it-and by then, of course, it’s too late.

Facing a unique set of requirements at each customer site, the vendor’s consultants must spend months determining exactly how to stitch together legacy databases, new and existing applications, and interfaces with a dizzying array of internal and external integration middleware, services-based architectures, adaptable foundations, custom coding, and no small amount of luck. At the end of the day-or year, in the case of the vast majority of these deployments-it’s no surprise that getting maximum value out of new CRM systems while fully leveraging past investments may not even be possible.

4. Organisational upheaval

The vendors themselves are the first to admit that CRM is more than just a technology; it calls for a fundamental change in business strategy, aligning operations throughout the company to conform to the principles embodied by the system architecture. In other words, the company ends up working for the software-not the other way around.

Executives launching this ambitious initiative face a daunting task: getting the attention and buy-in from department heads throughout the company, including sales, call center, marketing, and accounting, IT – all with their own agendas, priorities, and sensitivities to consider.

Tight coordination is essential, as ad hoc or piecemeal initiatives can quickly undermine the success of the entire implementation. Keeping the project on track and on schedule is both a challenge and a distraction for managers throughout the company, who must simultaneously grapple with the business process changes mandated by the new system as well as massive disruptions to the ongoing business. And heaven help the company should it need to replace any of these managers mid-stream.

Unsurprisingly, the Meta Group found in June 2005 that 60% of CRM failures were for non-technical reasons such as lack of business alignment and buy-in, a statistic that encompasses an infinite number of sleepless nights and headaches.

Click here for part II of this article.