InformationWeek

September 18, 2000

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CRM Under Scrutiny

Lots of companies are thinking about customer-relationship management, but progress can be very slow

By Jeff Sweat

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Because so many IT organizations are looking at options other than integrated suites for their CRM requirements, it should come as no surprise that the top barriers slowing CRM deployments are integration with legacy systems (65%) and pulling together scattered legacy data sources (62%). Most companies have stored customer data for some time, but, like Kansas Farm Bureau, that data is in databases scattered throughout the company. The insurer is looking to create a central data repository, pulling together data from databases in places like its life and casualty businesses and its membership organization. When a number of customer databases exist, a company may need to sort through multiple identities of the same customer, which gives rise to another barrier: data quality, cited by 57% of CRM users.

Another major issue is the cost of CRM and the consultants necessary to deploy it, despite respondents' overall willingness to spend; 59% say they're worried about software cost, and 55% say they're worried about consulting costs. Cost is the biggest issue for Kansas Farm Bureau, as well as for PCH.com. As a dot-com company with a limited budget and tremendous startup costs, PCH.com has to ration its CRM upgrades as it needs them--and as it can afford them. "We're looking at our CRM needs and asking if we can afford the price tag," Cumming says. The company would like a new data warehouse or a full end-to-end CRM system, but it's holding off until it can justify such implementations.

What does it all cost? A package that handles just one element of CRM--say, marketing automation or E-mail response management--can run anywhere from $100,000 to $500,000. The price tag for a full CRM package from a vendor such as Clarify, Siebel, or Vantive can easily surpass $1 million, and consulting can double the price. Homegrown systems may be less expensive initially, if a company has a well-trained development organization that can draw from prior projects, but subsequent integration and upgrades are painfully complicated and costly.

Others are worried about issues that damned early sales-force automation implementations: cultural ignorance and employee resistance to the applications. They're right to be concerned, says PricewaterhouseCoopers' Klaber. CRM implementations can be even more painful than the enterprise resource planning implementations of the '90s because they often have a wider scope, and because they deal with customers, who increasingly are CRM users. "CRM implementations are more complex than mega-ERP jobs, because the users--the customers--are kind of hard to manage. They manage you; you don't manage them," Klaber says.

Almost half of the companies surveyed that are actively involved in CRM deployments are worried about employee resistance, and roughly that many voice concern about a lack of management foresight and cultural barriers against sharing information. OpenText's Clinton says that it's particularly difficult to move users to new applications. "You dumb it down so it suits everybody," he says, "but then there are features missing you've come to depend on." He says, for example, that he would miss more complex troubleshooting tools that other employees may not want or need.

IT executives say that some of those issues can be circumvented by bringing in business people to aid in the selection and deployment of CRM software. "People need to realize that business is first, and technology is meant to enhance the business process," says Officefurniture.com's Wilson. "Don't make the technology the most important focus."

If the cooperation of business and IT is important, then many of the companies surveyed are on the right track. Of CRM implementors, 37% say CRM is a joint business and IT decision, and 30% say business executives drive it. Just 21% say that IT executives act alone when it comes to buying CRM applications. The systems also need to be championed by high-ranking executives. The CEO, CFO, or president sign off on 45% of CRM purchases; senior business executives sign off on 15% of them; and senior IT executives sign off on just 10% of them.

Is CRM working so far? Most of the CRM users surveyed think so, although that comes with qualifications. The majority have been measuring customer satisfaction both before and after the implementation, and while 35% note significant improvement, 46% report only slight improvement, and 15% can't tell the difference.

Businesses aren't paying millions of dollars for imperceptible differences in customer satisfaction. But the 35% that see significant improvement in satisfaction, with its corresponding customer retention and revenue, may convince the silent majority that CRM is worth a look.