And stuck in the middle of the confusion are CIOs, pressured on one side by CEOs desperate for a quick CRM fix, on another by vendors falsely promising customer service Nirvana and on yet another by cranky users who are often slow to adopt the precepts and technology of CRM.

"It’s pretty endemic out there that there is a lack of satisfaction with the CRM programs to date," says Peter Grambs, principal in the IT group at Booz-Allen & Hamilton in New York City. "People are reticent to say my $100 million project is a failure. But when you’re looking for returns, you can see they’re not there."

Simply put, CRM software is designed to help companies keep track of their customers and boost revenues by increasing customer loyalty (see "Jane’s Adventure in CRM Land," March 15, 2000, and the CIO-100 "Masters of the Customer Connection" issue, Aug. 15, 2000). The customer-facing applications range from sales and field-service automation to call center and customer-database management. Ideally, the new systems work to develop customer loyalty and sales per customer, thus increasing the bottom line.

Unfortunately, that simple goal is proving tricky to accomplish in many cases, in large part because some sales and marketing teams are reluctant to adopt the new, automated CRM systems. The stakes are high, considering that companies are investing up to $70 million in a CRM launch and millions more during a multiyear rollout. In order to avoid career-threatening, million-dollar CRM failures, CIOs need to look back to the bad old days of ERP, when some high-profile disaster stories taught IT leaders to carefully examine vendor hype and work closely with top management to ensure successful implementations.

Crm Hype

Warnings from consulting companies that up to 70 percent of CRM projects don’t produce measurable business benefits--according to Howard Berg, president of Berkeley Enterprise Partners, a Boston-based consultancy--have done little to deter most companies from jumping in. Meta Group, an IT consultancy in Stamford, Conn., predicts that the CRM craze will only intensify, with the market growing from $20.4 billion this year to $46 billion by 2003. One of the chief beneficiaries of this hot market is Siebel Systems, which clearly leads the CRM vendor pack boasting a 121 percent rise in revenue last year to $1.8 billion and profits of $123 million, up from $56.9 million the previous year. And while Siebel dominates the market for software that helps companies manage sales staff, customer service and call centers, competitors including Clarify, Epiphany, Onyx Software and Oracle are also making tidy profits as companies rush to woo customers and boost revenues.