Report Dispels Some CRM Beliefs

By Heather Baldwin

Talk to anyone with even a modicum of knowledge about customer relationship management and you’ll hear some examples of widely held beliefs about enterprise CRM – implementation failure rates are around 80%; cost cutting is a primary benefit of CRM; most users can identify their most profitable customers. In fact, none of these beliefs is true according to a new report by Peerstone Research. The report, Assessing the Current State of Enterprise CRM Projects, compiles data from Peerstone’s fourth-quarter 2002 enterprise CRM survey, a survey of 139 multi-thousand employee organizations using enterprise CRM packages from Siebel, Onyx and 13 other vendors. Here are some of Peerstone’s findings.

First, the success rates of enterprise CRM software projects are higher than commonly believed. Across all major vendors about 60% of customers report high user adoption of the software, and slightly more than that – two out of three respondents – report real improvement in sales productivity. While those numbers indicate that a remarkable 30% to 40% of implementations therefore are not successful, the percentage of unsuccessful projects seems to be sharply less than commonly thought. Most failures, not surprisingly, are due to conflicts over project goals within the organization, not the failure of the software. Few customers reported technical failure of the software itself, although many Siebel users said the software was too complex.

Another noteworthy finding is that fewer than one in five organizations use CRM software to cut costs or headcount. Most often CRM purchases are driven by a desire to gain control of sales processes after a period of growth. Two thirds of organizations implementing CRM projects report success in this area, with 68% saying CRM significantly improves sales force productivity and 58% saying it improves sales forecasting. On a chart of 14 impact areas, these two areas ranked highest. Roughly half of the respondents say CRM software significantly improved lead conversion, marketing campaign effectiveness and their ability to identify their most profitable customers – a surprisingly low number considering most vendors tout these capabilities as key benefits of their applications.

The bottom line, the report finds, is that the majority of organizations that buy packaged CRM software say they achieved a significant degree of success, with more than 50% of respondents reporting they achieved planned business process changes. But it’s a majority by only a few percentage points, which clearly leaves a lot of room for improvement.

For a complete copy of the report, visit www.peerstone.com.