RESEARCH and advisory firm Gartner last year released the findings of a study showing more than 50 per cent of all customer relationship management (CRM) projects failed to measure up to expectations.
In a similar vein, a recent survey of the top 800 Australian companies by PA Consulting Group found that while 94 per cent had implemented CRM programs, 39 per cent were unable to determine any benefit.
And local CRM auditor The Initiatives Group claims most businesses have enjoyed only "patchy, uncertain and unconvincing" progress from CRM projects, making it unlikely to have a "solid and permanent effect on business performance".
There is no shortage of information on how not to approach CRM.
Yet, the same analysts argue that it is partly this exaggerated take on CRM that has cruelled its success in Australia.
So intense has the interest and investment in CRM been over the past five years that the acronym is now an integral part of business and marketing speak and, according to Gartner, amounted to a software spend of US$175.6 million across the Asia Pacific in 2001.
While this rapid adoption has fuelled some remarkable success stories, analysts argue it has also paved the way forward as companies clamber to simply keep abreast of developments.
One of the greatest hurdles for CRM today has, ironically, been its driving force: technology.
Its birth amid the IT boom meant CRM was quickly labelled an IT application and adopted as a quick-fix solution to overcome customer relationship difficulties.
Chris Ciauri, vice-president and general manager Asia Pacific of CRM software outfit e.phiphany, acknowledges that companies have been blinded by technology.
"A lot of companies took this tool to improve relationships with customers with a lot of naivety," Ciauri says.
"And I guess software providers share some of that guilt.
“I think there were unfortunately a lot of companies who embarked on a journey to improve customer relationships and there is too much thinking that you plug in a piece of technology and you'll have some miracle."
At Peoplesoft—one of the big four CRM software providers alongside Siebel Systems, SAP and Oracle—director of industry and product marketing Asia Pacific, Ray Kloss, believes that rather than failing, CRM is on the brink of delivering some strong results for most early adopters.
"One of the challenges people are having is CRM is really a different way of doing business," Kloss says.
"It requires significant change in how an organisation works.
“I think one of the reasons why the industry is a bit quiet at the moment is there is an issue with some companies taking some time to show the benefits."
Analysts agree that organisations driving CRM from the top down achieve the greatest returns.
This realisation is spreading amongst CRM users. CRM consultant Alex Crossley of Energising Enterprises recently conducted a survey of 40 organisations and found that the marketing department—not IT—was the driver of CRM in most cases.
But Aussie Home Loans marketing director Tony Davis says the change is still not enough.
"I think if CRM is owned by any one department it's doomed to fail really, and that's true whether it's the IT department of marketing department," he says.
"It needs to start at the top—if the CEO is not comfortable and on board and supportive with the customer approach then there's little point in any one division trying to peddle it."
James Brooks, Australasia managing director of Genesys (a software vendor which links product from the likes of Peoplesoft with the front end of a business), believes chief executives need to provide not only support but also a significant investment of time if CRM is to work.
"Personally I think that unless the CEO is driving it, it will never succeed," Brooks says.
“If the CEO is not spending 25% of their time on CRM-related business, I think [the] company's going to run into issues."
Using a tool called The Customer Management Assist Tool (CMAT), The Initiatives Group director Ian Jamieson audits companies' use of CRM and identifies ways to maximise results.
He says users need to realise the application of CRM varies between industries and needs to be tailored to meet specific business and customer needs.
"Where the whole weakness occurs is not in actually managing the customer interface but where they fall down is in their ability to tailor the message to their own customers," Jamieson says.
"Everything is still too mass market, whereas CRM is about one-to-one relationships."
Some companies such as GeoSpend are addressing this through new software such as SelectaMAX, a database tool that helps identify those prospects most likely to become new customers for individual businesses.
Amnesty International Australia recently took up SelectaMAX and found it not only delivered new donors but also built a more detailed profile of existing donors most likely to provide support.
On the technology side, Gartner research has shown that businesses are now more in search of bite-sized solutions rather than entire CRM software suites.
Gartner has also found that demand is high for technology with real and immediate benefits, with a clear, measurable path towards further growth.
"Some solutions are core to certain businesses, such as call centre solutions for fast growing telecommunication and financial services businesses," a Gartner report states.
"Several users implement call centre solutions without regard for future integration needs with other components of CRM systems. Vendors should help users prepare a roadmap in which the first step maybe a call centre, but a definite future step would be implementation of, and integration with, other modules of CRM and back office software."
Indeed, Peoplesoft's Kloss says a trend is already emerging amongst businesses for full integration of their front and back-end functions, enabling customers to source exactly the right service with just one phone call or Internet exchange.
As the craze has eased, Genesys' Brooks says companies are also taking time to focus more intently on the values of CRM.
"There's a lot more focus now on making sure there's more return on investment," Brooks says.
"We spend more time with customers and the sales cycles are twice as long now than they were two years ago. Now software implementation will take anywhere from three months to one year. Previously it was sometimes six weeks, up to six months."
A report sponsored by CMAT called State of the Nation II: 2002 states that a failure to correctly implement CRM can actually harm business.
"At best, companies are wasting the opportunity that is well within their own hands to grasp," the report states.
"At worst, they are destroying value and/or investing in failure.
“Generally, companies are, despite the hype and investment, more likely to be destroying economic value from their customer management effort."
On the flip side however, Gartner research director business applications Kristian Steenstrup argues that the failures of early users promise to open new doors for other operators.
"CRM is coming off the hype but it's also increasing in productivity and value," Steenstrup says.
"People are realising that, as it turns out, CRM will not kill world hunger and make all countries profitable, however it is getting better each time a new product comes out.
"The good thing is people are treating it a little bit more cynically."
Based on overseas models, Steenstrup believes CRM in Australia is working through a "trough of disillusionment" but will soon start rising up the "slope of enlightenment" to a "plateau of productivity".
"What we're seeing is that CRM is evolving to other industries and with the second wave of CRM we're seeing it now in mid-tier industries, service companies, product companies," Steenstrup says.
"Solving the technology problems is sometimes expensive and the people that do it often have a lot of money to spend. With CRM, once you solve the problem it becomes cheaper to use it.
"Only the most desperate expended significant amounts of money on CRM, and once the systems are established and practices in place it will spread more easily through other industries."
