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CRM Implementation Failures
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Project Failures Analysis When and why do hosted CRM implementations fail?

CRM Implementation Failure Executive Summary

CRM implementations have suffered through a spotty history since the mid 1990s. We've all heard the countless stories of CRM implementation failures - and the unfortunate people that were removed from their organizations as part of the downfall. This most recent survey attempted to discover the frequency and causes of this long-standing issue with regard to the SaaS CRM market.

The CRM implementation failure survey conclusions are as follows:

  1. Presumably due to smaller and/or more phased and piecemeal implementations, the frequency and effects of hosted CRM failures are somewhat less than their client/server CRM predecessors.
  2. A key factor is historical CRM failures - user adoption - seems to be less of a factor with hosted CRM implementations. Nonetheless, change management plays a critical role during any implementation.

  3. Primary factors related to hosted CRM implementation failures included a lack of project management during the implementation, lack of executive sponsorship, resistance to change (including hidden agendas), immature product solutions and a failure to clearly define the project objectives, business requirements and critical success factors.

Possibly the most notable project failure factor and one which represents a change from the prior era of CRM applications is the decreased citing of user adoption as a key challenge during the implementation process. While an initial inference would suggest that the hosted CRM applications have de-emphasized user adoption challenges as they are simpler or easier to use than their client/server predecessors, further analysis also reminds us that the scope and depth of hosted CRM applications often does not yet match that of prior periods. The media attention surrounding user adoption has also brought this issue to the mainstream which has undoubtedly resulted in better implementation planning and execution.

While user adoption may be improving with SaaS solutions, make no mistake that this issue has derailed many CRM implementations. A well cited study by AMR Research found that even among top CRM vendors, 47 percent of companies reported serious challenges with end-user adoption that often put projects in jeopardy. Analysis shows that CRM implementations that do not make daily tasks more productive for individuals will not see corporate benefits. "Our analysis concludes that corporations can only achieve benefits from CRM software if end-users see an application as a blessing rather than a curse," Joanie Rufo, research director of customer management strategies at AMR Research, said in a statement. The most-regularly reported inhibitor occurs when end-users can continue to perform their job and still meet their goals without ever touching the system. From an end-user's perspective, providing knowledge into the system makes them less valuable to the company and augments their fear of being easily replaced in the future. Lack of executive-level commitment and failure to secure end-user buy-in were also key inhibitors to a CRM implementation's success, the AMR report says. AMR Research's study results claim that companies that do not implement CRM strategies by making day-to-day tasks more productive for each individual user are constructing an expensive house of cards that will likely topple.

It seems almost impractical to conclude an implementation research exercise without referring to the Standish Group - an analyst group which exists solely to track IT successes and failures. In reviewing a prior year Chaos Report, The Standish Group surveyed 13,522 projects and reported that unqualified project successes are well under 50 percent - 34 percent to be exact. Complete project failures, defined as projects abandoned midstream, were at 15 percent. Falling in between the two categories are completed but 'challenged' projects which represent 51 percent of all IT projects and are defined as projects with cost overruns, time overruns and projects not delivered with the right functionality to support the business. The report goes on to say that the level of success can be tied to user involvement, executive management support and having an experienced project manager - in that order. Standish Group executive vice president Karen Larkowski said "Probably the news with the most damaging implications for IT projects is not the number of those that were abandoned, rather it's those that were completed but offer fewer features and functions than originally specified." Ms. Larkowski went on to say "Content deficiencies of more than 50 percent would most likely be considered a failure."

The chart below illustrates the inverse relationship between project size and project success.

Project Success By Project Revenue Size
Project Success By Project Revenue Size
Source: Standish Group


CRM Implementation Failure Synopsis
Respondents using CRM solutions in a hosted environment: 92%
Note: Respondents still in implementation were excluded.
Respondents by role: User: 70%
Consultant: 18%
Other: 12%
Hosted CRM solutions identified:
Aplicor, Entellium, NetSuite,, Salesnet, SiebelOnDemand
Implementation results identified: Successful implementation: 71%
Unsuccessful implementation: 16%
Unsure: 13%
Top factors cited with implementation success:
1. A methodical or system project plan and execution
2. Active project management
3. Frequent, visible and verbal executive sponsorship
Top factors cited with implementation failure:

1. Absence of project management
2. Resistance to change / change management
3. Failure to promote executive sponsorship

Top lessons learned with implementation failures:
1. Failed projects don't fail by small amounts
2. Project failures occur along the way, not at the end
3. Don't underestimate resistance to change and hidden agendas

CRM Labs Survey Perspective
Software-as-a-Service (SaaS) CRM surveys are managed by volunteer participants who identify on-demand CRM interest topics, survey users, validate consolidated survey results and publish the on-demand CRM results for the online CRM community benefit. Survey topics, theories, results and conclusions are based upon and limited to the population of respondents that choose to participate and may or may not be representative of a larger marketplace. In order to achieve focus and create depth within a defined market niche, this community Web site and all CRM surveys are limited to Software as a Service (Saas) CRM solutions (also referred to On-Demand CRM, Utility Computing, ASP (application service provider) or Hosted solutions).

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