Critical Success Factors During a CRM Implementation


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A white paper/research project related to management of internal CRM implementations and change management.

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Critical Success Factors During a CRM Implementation

  1. 1. WHITE PAPERCRITICAL SUCCESSFACTORS:Three Market-Centric Change ManagementElements for CRM ImplementationBy Nicole Cathcart (Johns Hopkins University)
  2. 2. 2 CRITICAL SUCCESS FACTORSAccording to, an astounding one in four projects will fail to meet requirements,representing approximately $63 billion spent on failed initiatives annually (McCafferty, 2010).While many types of enterprise-wide software fit within this category, Customer RelationshipManagement (CRM) systems represent one major category with high failure rates. The corevalue of CRM is in the collection of customers’ demographic information and behavior, fromdesired method of outreach to purchasing preferences, to provide analytics that provide insightinto how organizations can build relationships with their customers. This market- and customer-centric view of the world reflects a mindset shift for many organizations that maintain aninternal focus that is based on either product or process. CRM is meant to give organizationsinsight into their most valuable customers and how best they respond in order to increase thelifetime value of each customer, rather than merely focus on each transaction.Although the more technical reasons for failure range innovations in product development, marketing andfrom unclear writing requirements to unrealistic timing customer service. Training is needed not just in use ofand budget expectations, lack of user adoption and the technology, but in the strategic thinking neededmissing leadership support and are listed among the to utilize CRM as a tool for success, a step manytop reasons for IT project failure, both cornerstones organizations miss (Maklin & Knox, 2009). Training is notof an effective change management program. Many an ephemeral occurrence, but rather an organizationalorganizations now recognize the necessity of a change process and long-term commitment. In fact, trainingmanagement program in successfully completing can start before the project starts, in order to beginIT projects but may not craft a program that fully the process of changing employees’ minds towards theencompasses the demands of such transformational strategic benefits of as CRM. While many tenets of organizationalchange management are essential in successfully CRM can be transformational to an organization becauseguiding IT projects to completion, the nature of a CRM of the change in marketing strategy it represents. As aproject presents unusual challenges and opportunities tool that allows for the insights needed for creating ato an organization. The greatest opportunity for market-oriented organization, it provides quantitativeeffective change with CRM is the crux of its purpose. data on customer behavior. Evidence suggests thatBoth successful change management programs and market-orientation can make firms more successful,CRM systems build from a foundation of market-centric but the combination of market-orientation andthinking (D’Aprix, 1996). Rooted in that similarity, innovativeness within an organization can produce eventhe critical factors in designing an effective change greater dynamic capability (Hou, 2008; Menguc & Auh,management program for CRM implementation include 2006). Dynamic capabilities are unique characteristicsdeveloping comprehensive training programs, building of an organization, often intangible and difficult toappropriate organizational structures and identifying determine, that can create help organizations identifytransformational leaders. customer needs, quickly adapt to accommodate needs, therefore becoming more unique and valuable in theWhile training on use of technology is expected and marketplace (Maklin & Knox, 2009; Menguc & Auh,often a standard in implementation of new IT, systems 2006). While innovation cannot be taught, methods tosuch as CRM demand training beyond the correct use encourage innovativeness and techniques to foster anof the software. Successful use of this software means innovative culture can be part of managerial training. Ifusing the data collected by the system to develop identification and development of dynamic capabilities
  3. 3. CRITICAL SUCCESS FACTORS 3represent one path toward greater success and CRM, transformational leaders to guide an organization andemployees must be trained in understanding the key foster an innovative, market-centric culture.strategies behind a market-oriented organization, suchas segmentation and targeting, and managers must be Transformational leadership, and overall leadership buy-constantly identifying dynamic capabilities within the in to change, reflects a key aspect in change management.organization. However, the later cannot be achieved Senior management’s express commitment to theeffectively without employee collaboration and outcomes necessitating change can make or break ateamwork, an essential element of the organizational project, as these leaders are the behavioral examplestructure needed to successfully implement a CRM the rest of the organization follows. Most important insystem (Maklin and Knox, 2009). CRM implementation are the roles of the Chief Executive Officer (CEO), the Chief Marketing Officer (CMO), theEffective teams in change management, especially Chief Operating Officer (COO), and the Chief Informationfor IT implementation, require trust as an essential Officer (CIO). This cross-functional integration is essentialvalue, as “[t]he greater the degree of interpersonal throughout the organization, and it can be facilitatedtrust between organizational members, the more likely through the alignment of these functions at the highestindividuals will be prepared to experience change” level (Shum, Bove, & Auh, 2008). These leaders are the(Lippert & Davis, 2006, p. 442). While trust in one’s team, example for their teams, and their structure is paralleledleader and organization is a natural reducer of fear, the in the execution of CRM-centric initiatives.fundamentally human response tochange, CRM’s success requires thatteam members collaborate to share CRM can be transformational to aninnovations and to identify dynamiccapabilities in order to fully realize organization because of the changesystem values (Patouhoff, 2006).While teamwork can promote in marketing strategy it represents.innovation, an environment thatpromotes internal competition As a tool that allows for the insightscan diminish the employees’commitment to the organization needed for creating a market-orientedand each other (Shum, Bove, &Auh, 2008). This culture of conflict organization, it provides quantitativeor distrust can, if not prohibit thesuccessful implementation of CRM, data on customer behavior.slow the learning process enoughso that the benefits of CRM take longer to achieve. At the highest level of management, the CEO is the most visible figure involved in the project and must remainAuditing an organization’s readiness for major change communicative and knowledgeable about the project.includes evaluating culture and structure. In fact, However, the partnership between the CMO, the CIO,organizations with a structure reflective of a market- and COO represents the most critical leadership dynamic.centric model emphasize organizational commitment The CIO, as the strategic head of IT, is responsible forto CRM by example and subsequently foster greater managing and implementing the software solutioncommitment from employees during change (Shum, matching the business needs of the organization, but theBove, & Auh, 2008). While structure is important, shift to a customer-centric organization must occur withinorganizations that empower and prioritize employees the marketing, customer service, and backend offices,with consistent process improvement, referred to as a as managed by the CMO and COO, to reach both theclan-type culture, often adapt the best to change (Shum, external goals of increasing customer lifetime value andBove, & Auh, 2008). The focus on developing individual internal goals of increasing process efficiency.capacity and accountability in pursuit of organizationalgoals is in alignment with an organization that prioritizes The CIO has additional responsibilities in implementingtrust and facilitates change. Ultimately, it is the role of change management programs by ensuring alignment
  4. 4. 4 CRITICAL SUCCESS FACTORSbetween the IT-led Project Management Office (PMO) and system implementation remains a complex and failure-the Change Management Office—parallel structures with prone IT project. As organizations spend more andcritical responsibilities during CRM implementation. IT more in an increasingly digital world, the risk increases.projects often follow project management methodologies While standard change management programs canfor planning and execution, a practice that includes an help guide employees through some organizationalelement of change management through formalized transformations, the nature of IT, and the specific naturestakeholder identification and communication processes. of CRM, demand greater specificity and attention toHowever, communication is very limited to project status detail in order to avoid failure. Technology is too oftenand does not attempt to change strategies related applied instead of the strategic thinking necessaryto utilizing the technology being implemented. The to improve organizational performance. In fact, CRMcomplexity of large-scale IT projects requires a partnership implementation is unique in that it can be both the reasonbetween the PMO and the Change Management Office for a change management program, and it can be thewhere the major project deliverables, as part of the overall instigator for a needed organizational shift to customer-project plan, are communicated through the Change centric thinking (Shum, Bove, & Auh, 2008; Markus,Management Office to the entire organization. While 2004). This forced application of technology can onlythis communication is meant to keep the stakeholders make risky projects riskier. The decision to implement aapprised of progress, these communications also present CRM system starts with change management and a shiftan opportunity to remind the organization of the ultimate to a market-centric model of thinking. By focusing onapplication and benefits that will affect operations and continuous training, developing the right organizationalthe customer experience. This constant reminder of the structure and culture, and ensuring the right leadership iscustomer experience is essential in reminding all of the in place, CRM implementation has the best opportunityultimate reason for change—identifying and acting on to weather the challenges presented by employees’the needs of the markets servered. aversion to change. If the organization cannot identify the technology solution at that critical point, the odds ofDespite its fundamental focus on an area easily justified changing thinking through forced technology is a riskywith change—the evolving needs of the customer—CRM proposition indeed.About the Author:Nicole Cathcart is Vice President of Online Marketing and Brand Management of Thompson Media GroupLLC. She began managing the web, email, events and creative services departments in 2010 and is focused ongrowing the online and new media channels. From 2005-2010, she served as Vice President of Marketing at ThePerformance Institute where she was responsible for strategic planning, online marketing, branding, productdevelopment, corporate communications, and partnership development. She received a Bachelor of Arts degreein Communications from Loyola University New Orleans and holds certifications in Lean Six Sigma and ProjectManagement. She is currently completing her Masters Degree in Communication with a focus in Digital Technologiesat The Johns Hopkins University.
  5. 5. CRITICAL SUCCESS FACTORS 5ReferencesD’Aprix, R. (1996). Communicating for change (Jossey Bass Business and Management Series). San Francisco: Jossey Bass.Hou, J. (2008). Toward a research model of market orientation and dynamic capabilities. Social Behavior and Responsibility, 36(9), 1251-1268.Lippert, S.K. & Davis, M. (2006). A conceptual model integrating trust into planned change activities to enhance technology adoption behavior. Journal of Information Science,32 (5), 434-228.Maklin, S. & Knox, S. (2009). Dynamic capabilities: The missing link in CRM investments. European Journal of Marketing, 43(11/12), 1392-1410.Markus, L.M. (2004). Technochange management: Using IT to drive organizational change. Journal of Information Technology, 19, 4-20.McCafferty, D. (2010, June 10). IT management slideshow: Why most IT projects fail. Retrieved November 29, 2010 from, B. & Auh, S. (2006). Creating a firm-level dynamic capability through capitalizing on market orientation and innovativeness. Journal of the Academy of Marketing Science, 34(1), 63-73.Petouhoff, N. (2006, March). The scientific reason for CRM failure. Customer Relationship Management,10(3), 48.Shum, P., Bove, L., & Auh, S. (2008). Employees’ affective commitment to change: The key to successful CRM implementation. European Journal of Marketing, 42(11/12), 1346-1371.