Seven out of 10 CRM projects will fail

Seven out of 10 customer relationship management (CRM) initiatives will fail over the next 18 months, and a combination of unclear business goals and increased project complexity means that most companies will not achieve any return on investment for such projects, warned analyst Giga.

The Giga survey showed that 75 per cent of IT directors have no clear, measurable business objectives for CRM projects. Although 55 per cent have plans to measure CRM benefits, only 33 per cent have the systems in place to do so.

Some 55 per cent of US companies, and 45 per cent of those in Europe, now view CRM as a global initiative rather than a local project.

Not only does this increase the risk of technical problems, it can bury projects in organisational politics, according to Erin Kinikin, a research analyst at Giga. "The risk is that companies will simply go for a lowest common denominator approach, and not make the most of CRM's long-term potential," she said.

Most companies are aware of potential problems with CRM, but are looking for a simple solution. Three quarters of IT directors admit they are looking for 'safer' software products to ease the complexity of CRM.

But this approach fails to address the root of the problem, explained Kinikin. "If you don't measure results and buy an expensive CRM package, you are bound to fail. You won't have evidence that the system returned benefits greater than the cost," she said.

The best insurance against high CRM failure rates is clear goals, well-defined projects, customer focused processes and an upfront agreement on measurement tools.

Giga advised companies to define a vision and then implement CRM in small projects each of which should be carefully monitored.

See also:

BT and Siebel go for the mid-market

Partnership pushes CRM at the small to medium sized enterprise sector  14 Nov 2001

CRM software alone will not bring desired rewards

Businesses investing in Customer Relationship Management (CRM) are unlikely to reap their desired return on investment if they focus too much on the overhyped software.  02 Dec 1999

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