CRM Projects: Why Do They Fail?

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It’s easy to measure success of the CRM projects but each failed CRM projects have reasons unique to themselves.
This may be a combination of factors.
Generally it’s observed that ~ 50 to 60% CRM projects fail.
While most people feel that projects fail due to a Software and technology- it’s found that CRM projects fail due to Lack of processes and Lack of management discipline during execution.

While there may be many reasons for the failure rate –there are common parameters in all the failed projects:

• Business readiness and Change management
• Lack of management commitment and executive sponsorship
• User adoption
• Unclear business objectives
• Change management
• People risks
• Product risks



Business readiness and Change management:

The key sponsorship and the stakeholders need to be convinced that the initiative will fulfil their business objectives.

Lack of management commitment and executive sponsorship

Implementations of CRM systems may lead to replacement of old systems and resources.
This may lead of lack of morale during key initiatives.
It’s essential to clearly address such morale and have a strong steering committee in place.

User adoption
It’s important for the System integrator to carefully choose the Super users who may involve in the UAT.
It’s advisable that a complete representation during the User acceptance testing.

Unclear business objectives and business process

Unclear business objectives are one of the reasons of the project failure.
One of the common mistakes the CRM implementers do is to do is to keep the current business process intact and suit the CRM product .

It’s also important that the CRM implementers understand the business model and align or fine tune the existing business process with the CRM business processes rather than sell or force the CRM product on users.



Involving business users at various phase of the CRM implementation is necessary for the success.
A Conference room pilot with the critical functionalities during the Design phase would be a key factor.

Change management

Failure to manage change is one of the common reasons for CRM projects to fail

Projects work when 3 things happen:
• People know what they need to do
• People have the skills and tools to meet expectations
• People are held accountable for change

It’s important that that the key stakeholders understand that value derived from the CRM implementation is worth the change.
This communication has to be percolated at all levels and a clear communication process has to be in place.

People risks

Mistakes on the people front are the most common criteria for failure.
In multi cultural deployments –lack of managing culture can result to lack of morale, poor motivation and heavy attrition.
Unrealistic client expectations, constant requirement changes long working hours and stringent timelines can lead to frustration at all levels.

Product risks



A lot of CRM projects fail due to the Over customization of the CRM product.
There has to be a thorough assessment of various CRM vendors before a decision on the Implementer.
The scalability of the product / impact on performance , upgradeability and cost of upgrade are key parameters.
Lack if inexperienced system integrators who do not have the requiste business knowledge would be another factor for failure.

There may be other tactical and project management parameters which may affect CRM projects.
My aim here is to focus on experiences based on worst practices in the CRM space.

1 COMMENT

  1. Venu

    Practically all large-scale CRM projects are heavily supported by systems integrators, like your employer. Yet, despite the application of all that knowledge, skills & experience, (at enormous expense), a large percentage of the projects still fail. A situation also found in consultant-heavy BPR, ERP & TQM projects.

    Three questions:
    1. How far are the systems integrators themselves culpable in that failure?
    2. Should systems integrators have to carry a far greater share of the risk of project failure?
    3. Do companies need different types of consulting to that traditionally offered by systems integrators?

    Your thought please.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

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