“There is a risk to any CRM project,” declares Ashim Pal, Meta Group’s international vice president. “You are dealing with both cultural and technical changes, so it’s going to be risky if it’s undertaken the wrong way. There are CIOs who say that the CRM project is the worst one they’ve ever had to do. That’s partly because they understand about the technology, but not about the ROI and the cultural issues.”
From Pal’s perspective, CRM is still a major issue for most companies. “You see a lot written that CRM is dead,” he argues. “CRM projects are seen as ones that make consultants fat and happy. But the talk about CRM being dead is rhetorical. You can go back ten years and see that people said the same thing about ERP. There was the same disillusionment as there is about CRM, but that didn’t mean that ERP was dead.”
One of the main drivers remains the pressing business case for CRM. “Just look at the last time you had to speak to a bank or an airline,” says Pal. “Was that a satisfactory experience? The chances are there would be some interaction or part of some interaction that was crap. A lot of people haven’t worked out how to do CRM well. We’re around about where the dinosaurs would be in terms of doing CRM. We’re certainly a very long way from the stellar customer experience.”
But surely the main stumbling block remains the difficulty in assessing and predicting ROI? “There can be resistance if you can’t measure the ROI from the start,” Pal admits. “But the ROI can be there. BT got its cost of interaction down from £3.50 to 3.5 pence. There are clearly ROIs to be had from CRM, but you need to be very consistent. Customers unfortunately are just not very rigorous in their measurements sometimes.
“There are a number of mistakes that get made. There’s the ‘just do it’ mentality where the senior executive has seen somehting cool in an airline magazine. These are not decisions grounded in any business requirements or assessed in terms of customer pain.
“It’s particularly the case in the investment banking market. These are the best examples of where things go wrong. These are initiatives that were focused on the wrong segment in the wrong way. In many cases the average wealth customer actually doesn’t want to do things themselves. You see banks blowing 70 million euros and not getting anywhere because they misunderstood what the customer pain was.
“I’ve seen some really awful ROI measurements. People try to map CRM projects to gross change on the top or bottom line. That’s bogus. Any change could be down to a currency fluctuation or down to a product price change. There’s often no re-evaluation of the original business case, no mapping back to value. The business case is often used just as a glossy document to get the cash. It’s a lousy practice.”
With 2002 the worst year on record for many enterprise software firms, will 2003 be any better? Perhaps, suggests Pal, for some companies. “2003 will be a recovery year of sorts,” he argues. “We won’t be seeing the huge spending of 2000, but it should be far from being a dead year. We’re still seeing considerable interest in CRM from our clients. It’s still a high spending priority. The issue is how to turn that interests into something that delivers a return.
“There is a resetting of expectations among clients. There’s a greater awareness of the complexity of CRM, so there are more modular projects. It’s about trying to reuse something you’ve already done in order to address a pain point. And it’s about defining risk andn scope. The business case is still king, but it’s still being fudged. It needs to be a living document, not just a way of getting money. “