iBusiness - Shop
Management Summary: CRM Implementation Practices in Europe
1.1 Survey Motivation
This study has been motivated by the frequent reports about Customer Relationship Management (CRM) system implementation failures and speculations of more than 50% failed implementation projects and high cost overruns reported by market analysts. These suggest that a CRM system implementation project is a task that must not be underestimated, with high economic risks. On the other hand a successful CRM system implementation promises huge potential economic benefits. This study assumed, that IT technology is in principle mature enough to fulfil the user requirements, and therefore focussed on the issue of the methodological approach used for implementing CRM systems.
1.2 Intended Audience
This report is intended for project managers and management members of user organisation considering or planning to implement a CRM system in their organisation. It provides figures on required effort, project organisation, implementation strategy and key success factors. Furthermore these findings are of relevance to CRM system providers and consultants to help them in benchmarking their own work and to optimise their activities accordingly. Finally researchers in the field of CRM are provided with an overview on the state of cur-rent practices in the field of CRM system implementation.
1.3 Survey Approach
As the term CRM is used ambiguously, prior to the study design, a definition of CRM was put in place, which is based on the common differentiation between 'operational CRM' and 'analytical CRM'. The study was conducted with a focus on solution vendors for operational CRM systems and users working with such systems.
As a convention for this study and its underlying survey, implementation success is defined to a large extent by the near term success of an implementation project, and only to a lesser extent by the long term success with its influence on the organisation’s business. This approach and findings from other studies, e.g. on key success factors for implementing ERP systems, have been used for deriving research hypotheses, which were used for the survey design.
Standardised online and PDF questionnaires in multiple languages were chosen for the field research approach. Separate questionnaires for users and vendors were designed. The presumption that there is an implicit interest of CRM system vendors to participate in such a survey led to different size restrictions of the user and the vendor questionnaires.
1.4 Survey Results
In summary, answers from 144 CRM system vendors and consultants and 193 user organisations have been received. Of those 193 user organisations, 153 user organisations were considered as having implemented a CRM system in the definition of this survey. Respondents are from across Europe.
The largest proportion of respondents from both the user and the vendor questionnaire is from targeted medium sized enterprises. Whereas the vendor respondents having their target groups in particular in the industry branches of manufacturing industries, business to business services and banking and insurance, the user respondents sample has a strong focus on the business to business service sector.
User answers in the report are categorised according to the enterprise size (micro organisations, small and medium sized enterprises and large organisations), the project size (micro, medium and large) and project success (outperforming and other projects). The vendor answers are categorised solemnly by the project size that the respondents typically conduct.
Most important cited reasons for the implementation of a CRM system are improved internal efficiency, improved internal coordination and higher customer transparency. While CRM as a marketing strategy is aiming to implement a customer oriented organisation, and consequently an improved 'outbound' appearance, the cited reasons are 'inbound' oriented. At least for the majority of users, a CRM system seems to be rather an instrument for improving their cost situation, than an instrument for addressing new markets with new instruments.
The following two hypotheses summarise two core findings of the survey. Hypothesis: Project success is related to the duration until the delivery of first project results.
It was assumed that the provision of first results as quickly as possible is decisive to ensure high user involvement and to have quick feedback cycles from the field to the project team. In general, this goal can be accomplished by two main implementation strategies: Either through very short overall project duration or through a stepwise implementation approach.
The overall picture showed that micro projects mostly took 3 months to complete, mediums sized projects were completed in 5 months and large projects endured 12 months. An analysis of the outperforming projects strongly proved the hypothesis to be true: E.g. 63% of outperforming medium projects used a stepwise approach, compared to only 26% of the other medium sized projects. This resulted in much shorter durations till first functionalities of the system. The alternative strategy of short overall duration was also in use: E.g. the median of the overall project duration for the outperforming large projects was 6 months, compared to 12 months for the other projects. Accordingly a fast track to first results, combined with 'quick wins', has to be considered as a key success factors for implementation success.
Hypothesis: Implementation success is related to training effort.
Previous scientific research has shown that only the intense use of a CRM system induces the desired economic benefits. User training was therefore considered a key measure to enhance system usage and hence implementation success. The majority of the user respondents spent less than 8 hours of external training per user, and to a varying degree between 4 and up to 20 hours of internal training per user. This was almost half the amount that the vendors reported from their experience. A detailed look at the outperforming projects in SME and large organisations showed a 4h higher median for effort spent on internal training than the other projects. Accordingly especially internal training measures appear to be of prime importance for implementation success. The hypothesis is approved.
Further hypothesis discussed and presented in the report address the following topics:
The report closes with a set of recommendations for conducting a CRM system implementation, which aggregates the findings of the study.