The Truth About CRM

During the Thanksgiving holiday of 1998, took a million-dollar gamble. The Maynard, Mass.-based job listings site, which had roughly 300 employees, rolled out a high-end software package to provide its telephone sales force with instant information on prospective customers, thus boosting the company’s chances for rapid expansion around the world.

Instead of helping the sales force do a brisk business, however, the new system, Siebel Sales Enterprise, was so slow that telephone reps were unable to help customers. Salespeople working on laptops in the field were locked out of the company’s customer database--and remained so for a full year. "The entire sales force--and everyone here--was very upset," says Ned Liddell,’s vice president for business applications development. "Our business was hurt. At the time, no one understood how complex these systems can be."

Liddell, who places much of the blame on the consultancy that installed the initial package, is far from alone. In’s case, the local consultancy was inexperienced, and eventually, developers from San Mateo, Calif.-based Siebel Systems returned to help rebuild the application.

In the end, the initial failure resulted in millions of dollars in added expenses and months of effort to get the application to work. "CRM is not for the weak spirited," says Liddell. "It requires a lot of management and money."

As vendors and consultants selling CRM software rake in growing profits, companies are struggling to implement the complex systems they peddle. Like and other small and midsize startups, most Fortune 500 companies are involved in some sort of CRM project, experts say, and many multimillion dollar initiatives have quietly stalled or failed as executives search for business benefits and salespeople shy away from technology they say won’t help them. In one example, a large telecommunications company rolled out a major CRM application to more than 1,000 sales reps in late 1999, at a cost of $10,000 per user, only to find a year later that fewer than 100 were using the system, according to one CRM consultant. Software vendors aren’t always at fault; in fact, analysts say the software packages are adding more useful features while slowly becoming easier to use. And it’s often true that companies jump into CRM projects without clear strategies or support from top management. But those embarking on CRM projects need to be wary of slick marketing messages because, so far, there is no one end-to-end package that can provide an easy CRM fix.

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.

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