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Recent Crm Articles7 Fatal Flaws of CRM (Customer Relations management technology)
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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.
This paper covers the seven key areas of The Seven Fatal flaws of CRM
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 customisation 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.
5. Poor adoption rates
Even the best enterprise system in the world can’t help a company if no one uses it. CRM suites aren’t designed to support the way a company currently does business. Instead, they make the company handle processes the system’s way or else pay up for a time-consuming custom coding process. (If business dynamics call for a change in processes, you’ll have to call on the custom coders yet again).
Because they’re designed to support an overarching business philosophy rather than individual productivity, the suite’s applications can be a tough sell among intended users such as salespeople, who will resent any new burdens that take away from their profitable selling time without offering useful functionality in return. Their reluctance to comply with the system’s requirements, and that of other users at touch points throughout the company, will quickly cripple its effectiveness. Unless and until everyone is on board, it’s impossible for management to reap the benefits of increased productivity and better,
more timely information. Otherwise, the investment becomes worthless.
6. Weak links in the solution set
Every CRM suite vendor claims best-of-breed performance across its entire application set, but the reality is far different. In truth, each suite consists of one reasonably good application, like SFA, support, email management, or data mining; and a number of less solid components added solely to create the illusion of a complete CRM suite.
Whether deployed simultaneously as a suite or incrementally as a set of point solutions, a CRM system is only as strong as its weakest component. The industry would be better served if each developer focused on the functionality it’s best able to deliver rather than trying to be all things to all customers.
Assuming, of course, that they have the foresight and the skill to enable seamless, painless integration with other point solutions. Then each customer would be free to define what “best-of-breed” really means to them, and assemble CRM systems where each component meets their needs as closely and successfully as possible.
7. Elusive ROI
Enterprise software can be one of the wisest investments a company can make but only if it can deliver results at a reasonable cost of ownership. Meanwhile, the cost of a full-fledged CRM implementation rises quickly into the millions long before the long-term effectiveness of the project can be known. The leap of faith this requires has struck fear in the heart of many IT executives, and rightly so.
Unfortunately, the ROI equation can be difficult to apply to a high-end CRM suite. CRM systems must be customised so extensively for each company that it’s almost impossible to know in advance how high costs will escalate before the system is complete. At the same time, changes in business performance can be difficult to measure with a system that doesn’t support existing processes. Even when you’re done, you’ll never be sure whether it was worth all the pain.
At the other end of the market, bargain-basement CRM suites present a different but equally vexing problem. Offering functionality a mile wide but only an inch deep, they are “jack of all trades, master of none.” At the same time, designed with a one-size-fits all mentality, they lack the configurability necessary to adapt to and address individual companies’ business process needs. The price may be attractive, but it’s still too high for a solution that can’t get the job done.
Fortunately, there’s a better way.
A less fatal way to get results
It’s hard to blame companies for making themselves vulnerable to the CRM sins listed above. They want what everyone wants: increased revenue, streamlined processes, and reduced internal costs for a real top-line and bottom-line impact. But a “big bang” implementation of a full CRM suite is hardly the only—or even the best—way to achieve
these results.
Online sales management holds many virtues for those seeking the benefits of customer relationship management without putting their companies’ souls in peril.
1. Low cost
Online sales management is available at a small fraction of the cost of a full-fledged CRM project. Because the service is browser-based, there is no software to install or maintain at the client site. Deployable in a matter of weeks, not years, online sales management causes minimal disruption of work. Fully outsourced, the solution frees companies from the need to employ IT personnel, support staff, and outside consultants. At the same time, the solution provider’s ability to amortise costs across its entire customer base results in a more cost-effective sales management solution than a full-fledged CRM project could ever be.
Built to support commonly accepted sales methods, the solution can be simple and intuitive to use with minimal training time and expense. Total cost of ownership is limited to a small monthly subscription fee that is easily recouped many times over by real-time gains in sales productivity.
2. Saved time
With none of the extensive planning, installation, customisation and training requirements of a CRM system, an online sales management solution can be up and running in as little as fifteen days. Rather than waiting until the end of the year for productivity to improve, the company sees higher revenues almost immediately. Compared with the £100 million company with the three million dollar increase in the
example above, a similarly sized online sales management customer can see more than £14 million in new revenues that compounds in perpetuity.
3. Technologically straightforward deployment
Online sales management keeps it simple. Deployed as a standalone solution, the system can begin to deliver ROI almost immediately, while allowing for an evolutionary, phased-in integration process that minimises risk and complexity.
Increasingly rich interoperability standards such as XML, UDDI, and SOAP, already adopted by EAI vendors, and Microsoft’s .NET strategy for the creation of Web services, enable an online sales management solution to leverage the latest Internet trends and technologies for simple yet powerful integration with existing corporate systems—both best-of-breed and custom-built.
4. Organisational simplicity
As a self-contained sales department initiative, online sales management keeps the number of cooks in the kitchen to a minimum. The service can be designed to support existing sales resources and processes for a much smoother transition; coordination with other groups is streamlined by simple best practices guidelines.
5. Enthusiastic user adoption
Salespeople can be the toughest software customers around, reluctant to change the practices that have brought them success in the past unless they can see immediate benefits in a new way of doing business.
Online sales management is designed with salespeople in mind, giving them simple, intuitive functionality for automatic lead delivery and management, calendaring, channel communication, partner coordination, and other sales-oriented functions that will improve their sales productivity from day one. By inviting rapid and enthusiastic adoption, online sales management ensures that companies get the results they’re looking for.
6. A targeted, best-of-breed solution
Online sales management does one thing, and it does it well: improve sales productivity. Unlike CRM suite vendors who must try to please every department in their customers’ companies by being all things to all people, an online sales management provider can make the sales department the first priority. At the same time, simple integration based on open standards, as described above, enables companies to link the solution with other applications to form a truly best-of-breed solution set.
7. Proven ROI
Calculating the return on an online sales management solution is refreshingly straightforward. With organisational costs minimised, the size of the investment is little more than the initial setup fee and monthly price—typically £46,000 to £96,000 for a 50-seat subscription.
The payoff is similarly easy to see. As mentioned above, Giga Information Group reports than companies deploying SFA can expect, on average, a 15% increase in sales. For a £100,000,000 company that deploys an online sales management solution in fifteen days, this amounts to approximately £14,000,000 in additional revenue the first year alone, for a return on investment ranging from 14500% to more than 30000%. Given the small costs and high returns involved, the only difficulty may be in believing that the decimal is in the right place.
Don’t let the promises of high-end enterprise suite vendors land you in CRM purgatory. Online sales management provides a fast, low-risk alternative that will have you counting your blessings, your ROI—and a lot more customers.
3SLive – Empowering Your Business today and tomorrow…
Author:
Vicky BennettAbout the Author:consultant for 3Sixty Systems Ltd a UK based international CRM provider.
December 19, 2007 02:25:47 AM
