In the last four years, billions of dollars have been spent on CRM technology that doesn’t live up to its promise. A recent Gartner study suggests that nearly 60% of managers will view their CRM initiatives as failures. Organizations are wise to be skeptical of CRM system capabilities, but they are as much to blame as the system vendors. Many of the organizations that have failed with CRM did so because they did not conduct appropriate cost-benefit-analyses, reevaluate processes, procedures, and organizational structure, or fully develop CRM as a business strategy. Instead, they invested only in the technology, because as one manager said to me, “This software will solve all of our problems.” It didn’t, and it won’t. At least not without addressing all of the other issues.
Not surprisingly, some of my friends in the CRM system business tell me that closing sales so far this year has been unusually slow. While undoubtedly, the cause of some of this slow-down is due to reduced Marketing and IT budgets, there is a growing realization among most organizations that CRM is a business strategy supported by technology and not a technology in-and-of-itself. It is likely this realization is playing a significant role in causing the current CRM system space to stumble. So badly, perhaps, that the rash of closures, layoff announcements and revised earnings projections announced daily by the major CRM system vendors, may leave many to wonder if spells doom for the CRM systems space. I would disagree with the doomsayers, as I believe this fall-out is necessary for the space to evolve.
Consider this. Some years ago, Geoffrey Moore (www.thechasmgroup.com) wrote a book called, Crossing the Chasm. In it, he discussed his theories on technology adoption, and how innovators and early adopters (called “Visionaries”) drive the early market acceptance of technology, while the early majority (called “Pragmatists) help drive mainstream acceptance of the technology. The Chasm occurs when the Visionaries don’t see enough of a head-start advantage to adopting the technology, and the Pragmatists don’t see any compelling reason to jump on the bandwagon. This is what I believe is happening in the CRM system space.
Over the past three years, the Visionaries have tried–some successfully–to implement CRM in their organizations because they “see” and “feel” the benefits of the strategy. However, the Pragmatists, while reasonably confident that CRM as a strategy will work, have not been able to see any major success and, therefore won’t help champion the system initiative within their organization. So, organizational investment in CRM initiatives wanes, the sales cycle of CRM systems slow, and everyone selling a product or service in the CRM space begins to get nervous about what’s around the corner.
Of course, those are the very folks that have the crystal ball. All they have to do to build the bridge across The Chasm is to drive the next stage of product evolution that makes CRM systems acceptable to the Pragmatists. Sounds simple, right? We shall see, but as we all know it’s always darkest before dawn.