Mckinsey-HowToRescueCRM

048-057_CRM_v410/22/0210:59AMPage48rescueCRMHowtosarule,CEOsdon’tworrymuchaboutbusinesssoftwareinitia-tives.Butcustomer-relationship-management(CRM)software—thesystemsthatallowcompaniestoplanandanalyzemarketingcampaigns,toidentifysalesleads,andtomanagetheircustomercontactsandcallcen-ters—maybeadifferentstory.GoodCRMsoftwarecaninfluencehowmuchcustomersspendandhowloyaltheyremain.SomecompaniesusingCRMprogramsreportdouble-digitgainsinrevenues,customersatisfaction,andemployeeproductivity,alongwithdramaticsavingsincustomeracquisi-tioncosts.AcrosstheUnitedStatesandEurope,nearly40percentofthecompaniesinhightechnology,aerospace,retailing,andutilitieshaveinvestedinCRMsystems.Two-thirdsofallUStelecomoperatorsandhalformoreofallUSfinancial-services,pharmaceutical,andtransportationcompaniesareeitherimplementingoralreadyoperatingthem.1CRMhasbecomeasenior-managementissuebecauseitconsumesstagger-ingamountsofmoneyand,notwithstandingthesuccessstories,hasmostlyprovedadisappointment.Companiesaroundtheworldspend$3.5billionayearonCRMsoftware,2andthatisonlyafractionofthetotalexpense;implementation,training,andintegrationoutlayscanbethreetofivetimes49ManuelEbner,ArthurHu,DanielLevitt,andJimMcCroryEvendysfunctionalCRMsystemsmaybewellpositionedforfuturesuccess.Thetrickistostepbackandthinkaboutyourrealgoals.A1AMRResearch,2001.2GigaInformationGroup,MarketOverview:E-Business/EnterpriseSoftwareApplicationsin2001to2005:GigaPlanningAssumption,March5,2002.048-057_CRM_v410/22/0210:59AMPage49higher.Allinall,ahighlycomplexCRMinstallationcancostmorethan$100millionandtakethreeyearstocomplete.YetwhenmanagerswereaskedtoassessthreekeyfunctionsofCRM—marketing-campaignman-agement,call-centermanagement,andmarketinganalytics—nomorethan35percentoftherespondentssaidthattheirexpectationshadbeenmetinanyfunction.3Moreover,whilefinancial-servicesfirmsareamongthebiggestusersofCRM,only20percentoftheUSretailbanksthatimplementedithaveraisedtheirprofitabilityasaresult,andCRMinvestmentsduringthebigpushofthe1990sdidn’tgeneratetheexpectedreturnsforthebanksthatmadethem.4YouknowyouhaveaproblemwithCRMif,afterayear,youarenotseeingatleasthalfofthefinancialbenefityouexpected—andmostmanagersexpectrevenuegrowthofatleast10percentfromtheirCRMinvestments.5Twootherwarningsignsthatmaybeevidentmuchsoonershouldalsobetakenseriously.Thefirstiscostoverrunsormisseddeadlines;itisn’tunusualfortheseprojectstoruntwoorthreetimesoverbudget.Overrunsusuallyresultfromneedlesscomplexity,whosecostcanswampwhateverbenefitsitmightproduce.Thesecondwarningsign—complaintsbyemployeesaboutpoorusabilityorunmetperformancepromises—oftenemergesinthepilotorearly-rolloutphase.Suchcomplaintsmaypointtoseriousunderlyingproblems.Somecompanieslivewiththeperformanceshortfallsofthesesystemsorleavethemlargelyunused.Afewhavescrappedthemaltogether.Butourexperiencewithdozensofcompanies,frombankingandinsurancetotravelandlogistics,showsthatfalteringCRMeffortscanbeturnedaround.Thekeytouncoveringtherootcauseoftheproblemistoreassessthebusinessgoalsofthesystemandtheorganizationalandtechnicalsupportitreceives.EveryCRMbreakdownwehaveseenstemsfromsomecombinationofpoorlydefinedobjectivesandorganizationalandtechnicalweaknesses.Byexaminingeachoftheseareas,youcandiagnosetheproblemeffectivelyanddevelopanappropriateremedy.TroubleshootingthesystemACRMturnaroundteamcomposedofbusinessandtechnicalmanagers,andledbyseniorexecutives,shouldtakechargeoftheeffort.Thecross-50THEMcKINSEYQUARTERLY2002SPECIALEDITION:TECHNOLOGY3InternationalDataCorporation,Demand-SideSurvey:ARealityCheckonCRMSoftware,a2001studyof300companies.4RetailbankingwasoneofeightsectorsstudiedintheMcKinseyGlobalInstitute’sreportUSProductivityGrowth1995–2000,2001.5Accordingtothe1999IDC/CapGeminipublicationCustomerRelationshipManagement:TheChangingEconomicsofCustomerRelationship,asurveyof300largeUSandEuropeancompanies,68percentofallmanagerssurveyedexpectedatleasta10percentincreaseinrevenue.048-057_CRM_v410/22/0210:59AMPage50functionalmixisimportantbecauseattemptstomakeCRMworkencounterhurdlesnotusuallyfoundinothersoftwareinitiatives.Ontheorganizationallevel,forinstance,manyfrontlineserviceemployees,whoarenotalwayshighlyskilled,useCRMapplications.Onthetechnologicallevel,CRMoffersmorechoicesandforcesmoretrade-offsthandomostenterprisesys-tems.Suchproblemsasfrequentcrashesmayhavetheirrootsinsomethingasbasicasbadlywrittencodeorascomplexasoverlyambitiousbusinessgoals.Thediversemembershipoftheteamgivesittheexpertisetoidentifyspecificproblemsandtheauthoritytocorrectthem.BusinessobjectivesAfailuretoestablishclearbusinessgoalsbeforelaunchingaCRMeffortisthemostcommonandimportantsourceoftheseproblems.Withoutclearobjectives,howcanacompanydecideamongthedozensofpossibleCRMinitiatives?Companiesthatfailtochoosemayimplement“big-bang”solu-tionsintendedtocovereveryconceivablebusinesscontingency.Asaprojectgrowsinscope,thesystem’sdevelopmentcantakeonalifeofitsown,incor-poratingnewfeaturesthatdon’tsupportbusinessobjectivesbutdoaddcom-plexityandcost.ITprofessionalswellknowthatthebiggeraproject,theharderitistointegr