People ProblemsPeople Problems

Rosalie Duong, marketing and sales VP for biotechnology company Qiagen Inc., tried for four years to convince CEO Metin Coltan that an enterprise customer-resource-management system would boost sales, but he wouldn't bite. So Duong squeezed enough money out of the company to buy a small sales-force automation application for the U.S. sales team. At company headquarters in Hilden, Germany, an executive did the same thing with a different sales-force automation application. Unfortunately, neither Duong nor her European counterpart could convince salespeople to use the applications. Each salesperson had his or her own way of tracking customers-on paper, in a spreadsheet, using an E-mail program-and viewed the new software simply as another system that required more work to key in data. Both projects failed.

Qiagen's experience is hardly unusual. But how can that be? CRM is supposed to be the next big thing in enterprise software, a tool so critical that it's still being funded, even in these days of shriveling IT budgets. Yet management is increasingly frustrated by the results; a recent Gartner report predicts 60% of managers will view their CRM implementations as failures.

Two key factors contribute to those problems, and neither has to do with making the technology run right. First, many managers ram through their CRM implementations without taking time up front to win companywide support-an old software problem that has returned to plague CRM deployments. Second, they fail to evaluate and change business processes to correspond with the capabilities of the CRM package.

Qiagen's Duong found that the human factors involved in implementing CRM were the most difficult to overcome. "Less than 10% of a CRM project is driven by technology," says Robert Joyce, executive VP of operations for US Filter. The $4.4 billion subsidiary of Vivendi Water North America in Warrendale, Pa., is rolling out an enterprise CRM package from Pivotal Corp.Forrester Research estimates that 45% of companies are considering or piloting CRM, while 37% are implementing it or already have it. However, the research firm says the cost of launching and running a CRM system often soars because of poor planning across operations such as sales, marketing, and call centers and lack of a focused strategy. A company in the implementation stage can expect to spend $60 million to $130 million on CRM by 2003, with large manufacturers and financial-service companies on the high end of the scale. Forrester estimates that 20% of CRM spending is wasted on overlapping software and a lack of coordination across operations.Adding CRM to the call center hasn't gone smoothly for Eagles Flight, Creative Training Excellence Inc., a corporate training company in Guelph, Ontario. It has had a tough time getting employees to use the Siebel Systems Inc. software installed in March, says Dave Root, CFO for Eagles Flight. Looking back, Root sees one big mistake: He didn't get his call-center employees involved in the decision-making process when the company chose the Siebel package, a version customized for midsize companies and resold by Great Plains Software Inc. "We didn't explain the benefits of using Siebel, so the employees just see it as more work-more fields to enter more information," Root says. As a result, the company has yet to see a return on its investment. Now it's trying to convince call-center reps that there's value in the form of more sales opportunities if they enter more information about customers."It's very easy to fall into the trap where you look for silver-bullet solutions to improve customer relations and increase customer retention," says Ray McKenzie, director of management consulting for advisory firm DMR Consulting. "Many businesses implement software and hope everything will go well. Or they come up with a five-year CRM deployment plan and three years from now forget what the goals were."If there's a Ten Commandments of IT projects, getting user commitment is certainly on the list. It's a simple rule that can be tough to stick to. A look at Duong's experience at Qiagen shows just how hard it can be.After the failed sales-force-automation deployment, Duong didn't give up and finally convinced the CEO to give CRM a shot. Before the software was chosen, she hired CRM consulting firm Information Systems Marketing Inc. Together, they created a "Super User Group" composed of business, technology, and top sales personnel. After several meetings, the group devised a list of 30 key requirements for a CRM system. Then they created a survey that queried all 300 of the company's global sales force on their opinions and requirements. How did they respond? "We got every U.S. survey back," Duong gloats, adding that she E-mailed salespeople personally if they hadn't returned their surveys.Through the surveys, she found that sales reps wanted a way to give salespeople in various countries access to account information. That way, they could keep track of what's been purchased and pursue cross-selling opportunities. They also asked for the ability to enter notes into customer files and for multiple language capabilities. Duong and the user group prioritized what they needed and presented those requirements to about six CRM software vendors before selecting Pivotal.Assembling a team of users, managers, and business and IT executives before a CRM implementation is critical to giving users a sense of control-and making the software more likely to be used. That's what's happening at the Regence Group, a holding company for four Blue Cross Blue Shield operations in Idaho, Oregon, Utah, and Washington. The Regence Group, which will complete the first phase of Onyx Software Corp.'s CRM suite this week, brought together underwriters, customer-service personnel, IT staff, and business managers for six months to develop the business requirements for a unified CRM strategy. "We had to have senior management endorsement and user buy-off in order to make this work," says Scott DeNies, manager of interplan market strategy.

Aligning its sales teams was an important CRM goal for the Regence Group, DeNies says. Regence deployed Onyx to 550 employees in a three-month period, which ended this week. DeNies put top priority on aligning the sales teams and providing better sales-forecasting capabilities and will add modules such as customer and partner portals only after users identify and work through any bugs or process modifications. "We need to turn it on internally, live it, work with it, and understand the software," DeNies says.DeNies estimates that about 85% of users find the system valuable, far more than he expected. "I thought it'd be about a 50/50 split that would improve over time," he says. But the user group's work isn't done. DeNies still keeps a group of nine people from all four operations meeting to discuss the software, and the group's already found areas for improvement. The Onyx software is set to remind sales personnel to call independent sales brokers when a policy is up for renewal-too late to give them the best chance of keeping their more than 20,000 small-business insurance accounts. "The mistake some companies make is they deploy the software and expect it to take care of itself," DeNies says.But there's still that 15% that aren't using the software to its full benefit, which hurts its effectiveness. DeNies says he leans on those employees' managers to make sure they adopt the system. "If I didn't have senior management support, we'd be dead in the water," he says.Ultimately, the only way to really convince salespeople that CRM is worth their time is to show how it makes them money. That's the strategy Dain Rauscher Wessels Inc., a New York financial-services company, used. Four months ago, the company deployed Pivotal's CRM suite with wireless capabilities that let Dain Rauscher's 40 institutional salespeople quickly respond to the company's 400 institutional clients.Every morning, the sales reps discuss stock performance and ideas for selling, then call their most profitable customers to pitch investment ideas. Often, the customer asks to speak directly with a research analyst. Before implementing Pivotal's software, sales reps would send E-mails and leave voice-mail messages for the research analysts. The analysts are often on the road, so those messages would pile up while the sales pitches got colder.Dain Rauscher is testing Pivotal's new Instant Access software to send customer data to a BlackBerry wireless E-mail pager. The salespeople saw the advantage right away. Sales associates now instantly send customer questions, a synopsis of the situation, and customer purchasing history to research analysts. That gives analysts all the information they need to quickly respond to potential buyers. Sales for the first quarter increased 29% compared with the same period last year.The benefits were clear for Dain Rauscher, but to be sure everyone saw them, the company tied compensation to CRM use. First, it trained sales representatives and research analysts to change their behavior, making it clear a quick voice mail no longer would suffice; sales reps were expected to enter data through the CRM system and send messages and customer data to the BlackBerry. Then, the company strictly enforced use of the new system. Ted Mortonson, senior managing director, monitors employee use of the applications via Pivotal's administration tools. The company also changed compensation plans so reps don't receive commissions for sales that aren't entered into the CRM system. "We're a technology-driven company," Mortonson says, "and we have a management team that reinforces how technology needs to be a part of the employees' daily business."Paul Dell of BPDirect also didn't wait to see if employees and customers would use a Web site instead of the phone for customer interaction. While he couldn't offer cash, he had the next best thing-free gasoline. Dell is business information manager for BPDirect, a private trading exchange for the commercial fuel business of BP. The company-which does $148 billion in annual sales under the brands British Petroleum, Amoco, Atlantic Richfield, and Burmah Castrol-was hoping to cut costs and improve sales and customer service by deploying Asera Inc.'s Sell-Side applications on its BPDirect.com site.Dell took several steps to make sure customers and salespeople used the site. The sales department got involved early to customize online business processes. To encourage participation, BPDirect also offered free fuel cards for customers and sales staff for Amoco and BP stations. "Salespeople had to get customers onto the site in order to get the cards," Dell says.Assessing what business processes and practices need to change along with getting employee support is the crucial second step in implementing an effective CRM strategy. Before deploying CRM, executives need to think about processes-ranging from commission structures to how salespeople gather information to whom customers call for help-and make sure they work. "If you don't have a good customer-facing process and you automate it, then you've just automated the problem," says Barton Goldenberg, author of The Guide To CRM Automation and founder of the consulting firm Information Systems Marketing.Sales commissions and incentives are the first place to start; companies can guarantee that salespeople won't use CRM to cross-sell products if they're still paid based only on their department's sales. But the reasons for resistance aren't always found on the bottom line. There's also plain old inertia.Shell Energy Co. in Houston, which sells natural gas and electricity, faced this problem when it deployed Siebel's CRM applications and LodeStar Corp.'s billing and back-office software. A team of business and technology executives decided to change 60 business processes. "It's a pretty ambitious endeavor," CIO Tim Byers says. To prevent disaster, Byers identified two main goals that the company could pursue within a year: improve customer service in the call center and improve billing.Improving billing was an important hurdle. In a now deregulated industry, Shell Energy no longer has a set number of customers it serves; it has to go after new business and defend its own, and so it needs excellent billing and customer service. Byers wanted to give customer-service agents access to more accurate billing information and let employees process more bills every day. To improve their speed, he deployed LodeStar's billing and forecasting application for the energy industry last fall. The software promised to bring the billing process-which took six to seven hours a night with manual processes-down to less than two. But when Byers rolled out LodeStar, employees wouldn't use it. "The computer would process the information, and they would still sit there and do it manually," he says. "Everyone had a tendency to go back to what they knew before." After a few months of training, though, the efforts have paid off. Billing now takes less then two hours.It's these kind of benefits that have companies charging ahead with CRM despite the headaches and costs and despite the risk of the slowing economy. The lure of getting closer to customers and the payoff from getting more sales from each one makes the potential hard to resist.Qiagen's Duong realized the potential of CRM based on her own experience starting off in sales. Like others, she kept track of customers with index cards, which led to her experiments with software-management tools when Qiagen hired her as a sales manager. She became convinced the reason those tools failed was that the staff didn't believe in them, and what the company really needed was a full-scale CRM initiative. But selling a major IT investment takes more than faith. It takes the top brass' blessing, and CEO Coltan was skeptical that a high-priced package would yield a real return through better cross-selling and customer relations. "He kept thinking it was so much work and so much money," she says. "Eventually, he started to see that this was more than a sales-force-automation deployment."One of the key selling points became employee turnover. Every two to three years, a sales representative would leave, and the clients' buying history and projected needs would be lost. That made it harder to forecast and to track what discounts buyers qualified for. "Clients could come to us and say they want a discount because they purchase X number of dollars of business on a global scale," Duong says. "Without a unified system, we can't see what's going on and have no way of giving them an answer." After getting the green light, Duong spent more than a year meeting with employees and setting goals. The rollout of the Pivotal software is slated for this fall.In measuring success, Qiagen is looking at both financial metrics and some softer measurements. Financially, the company expects immediate cost savings from having to support fewer marketing campaigns. "In the United States, we have 60,000 names on a mailing list, and every time we mail out, we have to mail to every single one of them," Duong says. She expects a multimillion increase in U.S. sales in the first year because of better opportunities for cross-selling.But she's also looking at softer measurements such as the fact that customers appreciate getting fewer, more-targeted ads, and the workplace benefits if the system makes sales reps' preparation easier. "The reps will be able to finish up earlier than they have been," Duong says.American Guidance Service Inc., a publishing company in Circle Pines, Minn., deployed Saratoga Systems' sales-force-automation software last year and reports a 10% increase in sales, which it attributes to the software. The reason is that leads no longer hang in limbo but are automatically routed to the appropriate sales rep based on geography. Reps also have more information to sort out the leads that are worth focusing on. "It was quite common for two weeks to go by before someone figured out who the appropriate rep was to pass a lead along to," says Linda Hein, director of sales and marketing for AGS.It's that kind of potential that has companies still snapping up expensive CRM software despite the slowing economy and uncertain prospects for success with the projects. For IT managers, the initiatives amount to a corporate show of faith that there are opportunities worth investing in, even in this downturn. But unless managers are prepared to spend even more time selling employees on CRM's benefits than they did selling the CEO, they're likely to find both unhappy with the result.