The Technology

The Technology

The labels are fuzzy—and so, usually, are the requirements.

"Customer relationship management" may be the most monumentally inaccurate software label the tech industry has yet conceived. CRM initiatives often don't have much to do with customer relationships, and they're certainly not always about management. Are they at least about the customer, then? As it turns out, even that's not always true.

The litany of CRM applications cited by different vendors runs the gamut from business intelligence to online customer self-service, and more offerings are piling into the category by the month. Because nearly every vendor seems to be climbing onto the CRM bandwagon, some analysts try to unify these products by calling them "customer-centric technologies," or CCT. But the last thing the arena needs is yet another acronym.

The result of this confusion is a classic "blind men and elephant" problem: "CRM has often meant something different to everyone—the vendor, the technology buyer, the business buyer," says Sam Kapreilian, partner for CRM solutions at IBM Business Consulting Services. Some companies want nothing more than to improve their internal processes by making their sales processes more efficient. Other companies are looking for better information that can help maximize revenue from customers, and they don't care whether that data will ever mean better value for customers. And for some companies, a CRM initiative might actually mean a customer could get better service.

Because perceptions about CRM are all over the map, users are finding they can't even agree on the goals of their CRM efforts in the first place, much less on how the success of such projects should be measured. That lack of alignment, in turn, leads to a raft of implementation problems, such as cost overruns and applications that don't live up to expectations. In fact, Gartner Inc. claims that up to 50 percent of all CRM implementations in the next three years will be failures.

It's easy to point the finger at the technology—and, in fact, vendors need to shoulder some of the responsibility. Analysts and users claim that vendors have hyped CRM's capabilities far beyond what's being delivered, and that since so many customers didn't know what they wanted in the first place, many CRM implementations should never have been sold.

But it seems that a lack of clarity plagues all but the most tightly defined CRM initiatives. "It is the user's own fault for not being aware enough and not doing enough to know how to succeed," says Bruce Guptill, senior program director at Westport, Conn.-based Saugatuck Technology.

Yet does that lack of definition inevitably lead to failure? Although every user's definition probably varies, analysts point to three typical characteristics of "failure," any one of which can lead to problems with CRM systems: The implementation didn't provide any clear benefits, either to the company or to the customer; it didn't resolve the problem it was designed to resolve; or there were no clear metrics in place to determine what success might have looked like if it had been attained.

It shouldn't be this hard. Every function of a CRM system is trying to accomplish one or more of three things: reduce customer- related costs, maximize customer revenue and increase customer satisfaction. If users make sure they have a laser-sharp focus on the specific value to the business or to the customer they're trying to create, it should be a fairly straightforward task to focus CRM efforts on driving at least one of these results. "At the end of the day," says Scott Nelson, vice president and research area director for CRM at Gartner Inc., "CRM is a business strategy, not a technology strategy."

Ask Your Business Managers:

What is the most critical customer-related capability that the organization needs today?

Ask Your Vendors:

Which applications that you offer can deliver what my business managers are looking for?

Tell Your CEO:

We have to get our act together to decide what we want to accomplish before we can hope to choose where to apply CRM software.

This article was originally published on 11-02-2002
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