Journal of Change Management,

Vol. 4, No. 4, 351– 370, December 2004

Managing CRM implementation

with consultants—CRM or
change management?
CHRISTINA PRIES
& MERLIN STONE






UBS, Zurich, Switzerland, IBM Business Consulting Services, Manchester, UK

ABSTRACT CRM programs are implemented to improve a company’s relations with its customers.
But many problems can arise during implementation—financial, technological or cultural.
Most companies use consultant to help with CRM implementation, This article investigates
how consultants view CRM, change management and their CRM projects. This research
shows that despite awareness of the need for change management, many consultancies pay lip
service to it.

KEY WORDS : CRM implementation, consultants’ role, information systems, project planning,
project failure

Customer relationship management

There are many definitions of CRM, for example:

. A business strategy that maximises shareholder value through winning,

growing and keeping the right customers. (Hewson Group, 2001)
. The integration of customer service quality and marketing, which has as its
concern the dual focus of getting and keeping customers. (Christopher, Payne
and Ballantyne, 1991)
. Activities a business performs to identify, qualify, acquire, develop and retain
increasingly loyal and profitable customers by delivering the right product
or service, to the right customer, through the right channel, at the right time
and the right cost. CRM integrates sales, marketing, service, enterprise
resource planning and supply chain functions through business process auto-
mation, technology solutions and information resources to maximise each
customer contact. CRM facilitates relationships among enterprises, their

Correspondence Address: Merlin Stone, IBM Business Consulting Services, IBM UK Ltd., Imperial Court,
Building No. 2, Exchange Quay, Manchester, M5 3ED. Email: [email protected]

1469-7017 Print/1479-1811 Online/04/040351–20 # 2004 Taylor & Francis Ltd.

DOI: 10.1080/1469701042000328445
C. Pries & M. Stone 352

customers, business partners, suppliers and employees. (Jeremy Galbreath

and Tom Rogers in TQM magazine, 1999)
. A management discipline—a philosophy even—that requires businesses
to recognise and nurture their relationship with customers. With CRM,
an individual customer’s needs and preferences are available to anyone in
the business working at the customer interface, regardless of channel.
Each customer is treated as an individual in a relationship that feels like
one-to-one. (Gartner Group, 1999)

Companies implement CRM systems for various reasons. According to the

Mercer Marketplace 2000 Survey, the results of an effective CRM programme
are improved customer satisfaction, greater revenue growth, and increased
competitive advantage as a result of long-term customer retention. CRM often
refocuses a company from making efforts to win new customers to retaining
existing ones There are sound financial reasons, backed by extensive research,
for increasing customer retention and thus customer loyalty—higher cash
flow, increased profitability and reduced operating costs. Fred Reichheld and
W Earl Sasser (1990) in a Harvard Business Review article said: “In some
industries cutting the customer defection rate from 15– 10 per cent can double
profits.”
CRM also helps a company focus on the customer as an asset. Many companies
spend a lot of money acquiring new customers and then waste it by failing to get
to know and understand their customers, keep in touch with them, and retain
them. CRM should also allow customers to manage their relationship with
suppliers rather than the other way round, though this may make it even harder to
keep customers.

Problems with CRM implementation

The Aberdeen Group CRM Spending and Satisfaction Report (February, 2003)
investigated CRM programme buyers. It asked them about their satisfaction with
current implementations, dividing CRM into three different areas: Marketing,
Sales and Customer Service; with a fourth possible choice being “all areas”. The
survey was on-line and completed by company representatives from senior
management to management level, with the companies ranging from small to
more than 1 billion $ in revenues. The results derived are the areas survey
demographics, spending outlook, spending priorities, timing spending, satisfaction
and popularity by product area, CRM expectations and benefits gap, hosted
solutions, and CRM areas for improvement. The satisfaction of CRM users ranged
between “satisfied” and “somewhat satisfied”, on a range from one (not satisfied)
to five (completely satisfied), a value of 2.5 to 3.0, depending on the area.
Aberdeen Group draws from this that users are quite satisfied, but really expected
and wanted something more. Users of sales applications were the most satisfied.
The gap between CRM expectations and benefits was large. Aberdeen Group
blames this situation on the statements made by vendors of CRM Sales and
Marketing solutions, clearly stating that CRM will increase revenues. But what
353 Managing CRM implementation with consultants

CRM really provides is “the opportunity for enhancing revenues by increasing the
capacity of sales personnel to do more”.
The Gartner Group researched some of the main reasons for CRM failure.
Primarily, CRM is failing according to Gartner because capabilities are not being
co-ordinated and built at the enterprise level. CRM means change in behaviour and
attitude through positive reinforcement; it requires political skills and is not simply
the implementation of technology. CRM succeeds by delivering corporate
benefits, supported by a hierarchy of linked benefits. These need to be worked out,
in order to then be monitored and managed. According to Gartner, the top 10
causes for a failure of CRM at a company are:

1. The board has very little customer/CRM understanding or involvement

2. Rewards and incentives are tied to old, non-customer objectives
3. The staff culture does not have a relentless focus on the customer
4. Limited or no input from the customers’ perspective
5. Thinking software is the solution; architecture and integration are forgotten
6. Lack of specifically designed, mutually reinforcing processes, i.e., strategy
7. Poor quality customer data and information
8. Little coordination of multiple departmental initiatives and projects
9. Creation of the CRM team is left for last; business staff is lacking
10. No measures or monitoring of benefits and no testing

The METAspectrumSM Market Summary report on CRM Consulting Services

centres on practices and successes in CRM Consulting. Meta Group conducted
interviews with clients of 10 of the most important consultancies in CRM. The
study gave credit to the consultancies, saying that they had mostly developed
a mature point of view on CRM, seeing it as “a journey, not a project” and
focusing more on values than on just selling an IT-system. A great challenge was
the immaturity of their clients.
Overall, though every consultancy (even those denominated as “leaders”) had
areas which needed big improvements, from the client perspective, the report
concluded that CRM consulting is competent, and that all components of CRM,
not just IT but also strategy, integration, deployment and value measurement will
be covered in CRM programmes supported by management consultants. However,
Meta Group seems to not have evaluated the results from the projects executed,
just the overall perception companies had of the consultancy. This means, that
there is little hard evidence. No success rates of projects have been mentioned,
nor a statement of what a successfully executed project implies.

Change Management
“Change Management is the process of continuous planning and realisation
of profound changes”, according to Kostka and Mönch (2002). At the centre of this
are always human beings. Strategy and goals always have to be built around
the market (e.g. Customers, Competitors) and client (e.g. shareholder)—see
Figure 1.
C. Pries & M. Stone 354

Figure 1. Factors of change

Change is introduced through a learning process. According to Carnall (1990),

“Effective organisations are those which introduce change quickly and in which
people—employees and managers—learn about the business or organization as
this process proceeds. (. . .) Only if people and organizations change, by learning
from the experience of change, can effectiveness be achieved and sustained”. The
learning process and reaction of those involved in a significant organizational
change can be described by the transition-curve. It is clear that one of the most
important factors in a change situation is time (see Figure 2).
If learning does not form part of change, powerful groups may oppose it, and
negative attitudes towards change may arise for the future. Another very important
element of Change Management is not to forget about the organization’s culture:
“A culture is a set of values, behaviours and norms which tell people what to do,
how to do it and what is acceptable.” (Atkinson, 1990). Burnes (1992) explains the
problem as follows:

“It is argued that socio-structure (organizational structures, practices and procedures) is

supported and legitimised by organizational culture. It follows from this that any change in the
former must be accompanied by a change in the latter, otherwise it risks being rejected.”

Carnall summarises the goal of Change Management as to “create the environment

in which creativity, risk-taking, learning and the rebuilding of self-esteem and
performance can be achieved”.
355 Managing CRM implementation with consultants

Figure 2. Change over time

In a study of IT projects, Projektmanagement von IT-Verträgen (Project

Management of IT Contracts), Christoph Zahrnt showed that the reasons for IT
project failure were:

– Technical reasons:- typically because of the size and/or complexity of the

project, first project of its kind, project falling between two departments,
new technology
– human behaviour—general change management problems.

The Standish Group (1995)identifies reasons for failure in IT projects as:

. Lack of involvement of users

. Incomplete definition of needs
. Change of needs
. Lack of support through management
. Lack of planning
. Lack of resources
. Lack of technical knowledge
. Lack of knowledge on new technologies
. Project no longer needed
. Unrealistic expectations
. Unclear goals
. Unrealistic timeframes
C. Pries & M. Stone 356

Research Methodology
The research was Qualitative. It does not define, for example, success ratios for
particular Change Management practices. Rather, it explores some general and
market leading practices. However, some quantitative details can be included in
order to determine the spread of the use of methods. The research is Comparative,
as comparisons are made between different practices and approaches, to deter-
mine among them those being most valuable. The approach is Inquisitive and
Conclusive—it investigates what works in practice, in Change Management in
CRM. The decision was taken to focus on Financial Services (FS), and here to take
into account especially Banks. This was because of the large investments being
made by financial services companies in CRM.
The research question was:
How can Change Management practices improve the implementation of CRM
projects in the Financial Services sector?
Semi-structured interviews were carried out with consultants from CRM FS
practices. The questionnaire was in five parts:

1. General questions—questions on the person (e.g. background) and the

consulting company, including both the person’s and the company’s history
with CRM in FS.
2. CRM projects—the principles, ideas and common procedures this company
has for CRM projects.
3. Planning process—how CRM projects were planned. Interviewees are
implicitly questioned on their use of change management, but the term is not
mentioned.
4. Implementation Process—implementation procedures are discussed. The
term Change Management is openly introduced, together with a list of
instruments found in literature.
5. The results—where all kinds of outcomes are questioned, from financial
results to intractability of problems, from satisfaction of all parties to
changes made to the projects.

The interviews were with consultants for various reasons. Firstly, consultants will
have executed more than one CRM project, while banks normally only have one
project, though it may of course be split into different parts to facilitate
implementation. Consultants are therefore more experienced, and should be able to
give an account of what works and what does not. Also, consultants are used to
explaining their work to clients, and should have developed a way of clearly and
easily communicating their knowledge. It was also assumed that consultants would be
more willing to collaborate in the research because of the value of the results to them.
The consultancies interviewed were located in three countries: the United
Kingdom, Germany and France. Though most of the world’s largest consultancy
companies were included in this research, the results may not be representative or
generalisable. Of course, consultants might be less willing to disclose difficulties
with their own projects. However, the value added per additional interview was
already decreasing each additional interview due to strong commonality of
357 Managing CRM implementation with consultants

practice and consistency of responses. Note too that the factors focussed on were
cultural, but many CRM projects fail for technical reasons e.g. incompatibility of
IT systems or problems transferring data from the old system to the new one.

Results
The interviewees were mostly senior, having spent most of their career in
consulting or some time in financial services before transferring to consulting. Most
were Manager-level, but other positions included also Senior Manager, Senior
Consultant and Consultant. One ran his own business in CRM consulting. All bar
one specialised in Financial Services CRM, though most had also been involved in
CRM projects in other sectors. Most training received by consultants was CRM IT
software training and sales training, often some time ago. Some mentioned
participation in conferences. This was unexpected, as we expected consultants to
receive continuous training, to be always on the leading edge. However, this lack of
recent training might have been because of the intense utilisation pressures most
consultancies face. Not a single interviewee mentioned training in change
management, or in implementation procedures. Only one person said that at his
company, training was also received in project management, client relations and
diagnostic techniques. This shows the strong focus of consultancies on selling
CRM projects rather than on implementation procedures.
All the consultancies interviewed covered the whole consulting value chain
(Figure 3). Those interviewed in general focused more on implementation side.
Some consultancies had very tight relationships with certain CRM software
companies. Collaborating closely with IT vendors should mean that the design of
CRM IT systems takes into account the ideas and experiences of the consultancy.
Collaboration also has financial benefits. However, from the client’s perspective,
this is not necessarily beneficial. Too close a relationship with one or a few IT
vendors may influence the consultancy in its advice on the choice of software for
the client. Sometimes it may not be necessary to buy software at all. If software is
needed, it might be better to build it from basic components or as a toolkit rather
than buy it as a fully-fledged package.
The number of (FS) CRM projects consultants had been involved in varied
largely; with an average of 14, ranging from to and 45, the latter over 7 years. The
large range may be due to different definition of the term “project”, in particular
whether working with the same company is always counted as one project or there
is differentiation between projects carried out for a given company.

Project participation
Nearly all hierarchy levels in the client organisation participate in planning and
executing projects. Many consultancies, in collaboration with the client, put

Figure 3. Value chain of consulting

C. Pries & M. Stone 358

together a Project Team, involving people from many functional areas and with
different interests in the project. All consultancies apart from one insisted on
the participation of client Senior Management in the planning, even if only to give
their blessing. Quite common (3 mentions) was to have a “figurehead” from the board
who would push the project at board level. This is commonly the board member for
Marketing and/or Sales. The purpose is to have a well-known face promoting CRM
across the company. This approach is identical to ideas in Change Management.
Employees from middle management participating would therefore include
VPs for Marketing and Sales, as these are the areas participating the most. Both
senior and middle management are then decreasingly involved in the project when
coming to the implementation stage. They remain though the main drivers
throughout the entire process. The majority agreed that the finance department
should participate in the planning, for financial control purposes. In the imple-
mentation phase, finance loses its participation. Only very large projects might
include a financial controller in charge of the project.
Employees were usually seen just as users and carriers of information. It would
be better to include employees in planning from the earliest stage. This is the best
way to prevent later stage resistance. However, all interviewees stressed the
importance of employee participation at later (implementation) stages, especially
from marketing, sales and IT. Interestingly, the consultancies themselves are not
necessarily included in planning, apart from the time planning. Of course the
consultants interviewed believed that they should be included, to offer guidance.
During implementation everybody agreed on the assistance of a consultancy, as
this is their main area of business.

Project timeframes
The periods for planning CRM projects, or strategic period, varied. It depended
very much on the scope of the project: whether it concerned only one or two
subsidiaries, or underpinned a new multichannel-sales strategy. The shortest
period cited for planning was one week, the longest 8 months. Also attention was
drawn to the difference between pre-project planning and project planning.
Pre-project planning, including the business case, can take a long time, for
example when the client cannot decide whether to execute a project. There is
no normal timeframe for these decisions—examples given were of 1.5 years for
pre-project planning, prior to 3 months of project planning.
Implementation took on average 3 –4 months, depending on the project size.
Because of this and problems arising during the process, implementation could
take up to 5 years. In all cases it was the consultancy that put together the
timeframes, usually based on experience and in close cooperation with the client.
The issue of flexibility of timeframe was widely agreed to be problematic. It
is essential to give a project freedom to include changes seen as needed during
the project, but this generates problems. Who pays for the additional time, not
only invested by the consultants, but also by the employees of the company?
One consultancy took the approach to give the client the choice of delaying
the project or reducing the functionality of the tool—the latter usually being the
preferred way out of delays. Similar approaches were shared by three others
359 Managing CRM implementation with consultants

consultancies. Some other consultancies believed that sticking to the timeframe

was a sign of quality, with punctuality one of the main project goals. However,
none of these practices follow best change management practice, which is to
provide a realistic timescale, with the possibility of problems already included.
Only two consultancies stated that they followed a buffer-time approach.

Project rationale
Everybody agreed that the decision too introduce CRM is usually taken by the
CEO or the board. One interviewee believed that this process should be shared
with the consultancy, to improve results by getting their opinion at an early stage.
However, another interviewee said that under no circumstances should the
consultancy participate at this process. Best practice in change management
concurs with the latter. Internal pressure for a change is usually regarded as very
important, and likely at a later stage to translate into a strong interest in the success
of the project.
The particular reasons for implementing CRM were of two main kinds:

i. Increase of profit: This can be achieved through CRM by

. Strengthening and prolonging customer retention
. Increasing satisfaction of customers
. Increasing share-of-wallet
. Increased cross- and up-selling
. Better serve clients according to their profile, anticipating their future
needs
. Systematic sales approach
. Acquisition of new clients
ii. Reduction of expenses: CRM accomplishes this by:
. Efficient database marketing
. Bundling of administrative tasks
. Restructuring of sales
. More efficient internal communication
. Operational efficiency

The strong focus on costs rather than on customers increases the risks that CRM
projects will eventually lead to customers being managed less well. The least
coherent reasons mentioned was: “Because everybody else has it”! Only two persons
mentioned integration of channels, while and only one interviewee portrayed a
comprehensive picture of how the various parts of CRM should link to produce
better customer management and financial results, as summarised in Figure 4.

Project measures
All companies interviewed agreed that project measures were important. Of
course, the most important role in determining which measures to set for the
project was the client’s, but most interviewees said it was done in collaboration
between company and consultancy, usually as a task for the project team.
Measures for CRM projects are of two main types:
C. Pries & M. Stone 360

Figure 4. Operational and analytical CRM

. Quantitative, Financial, including budget, ROI, increased turnover, employee

productivity, customer retention
. Qualitative measures e.g. internal acceptance of CRM, efficient Business
Rule Management (e.g. adherence to rules about frequency of outbound
customer contact, call centre staff taking actions based on screen prompts)

Qualitative measures can also provide general project quality guidelines. One
interviewee brought up a catalogue of duties. The project is divided into three
categories: 1. Must; 2. Can and 3. Must Not. If 1. þ 2. are fulfilled, this is
considered very good. If only 2 is fulfilled, this is still good. Measures for these
categories are time, price and content. With all these figures based on company
data, there is often a problem with measuring improvement, as in many cases no
prior data exists.

Implications for company’s culture—before and after

Everybody agreed that the company’s culture at the beginning of a CRM project
rarely coincides with the project goal. There is no overall understanding of
customers. So it is the CRM project goal to build this culture, implying many
changes in procedures and in ways of thinking. Employees need to be “reminded” of
the existence of customers, through internal communication. In theory, a successful
project creates a culture where every single person in the company is orientated to
customers’ well-being, and the customer is the central point of the entire company.
This is of course hard, if not impossible, to achieve in practice.

Overall project goal

Most consultants said they usually did not have a project goal defined in one
sentence, though this is good project management practice. Such a goal reminds
those involved why things are done, what the final outcome should be, and so
orientates the project towards the goal. The two consultants able to quote project
361 Managing CRM implementation with consultants

goals (though saying that these were not usually quoted as part of the project)
brought up the following examples:

. Turn the enterprise towards customers

. Definition of a customer segmented marketing strategy
. Increase gross profit by 28% through CRM the first 12 months after closing
the project

One consultant suggested dividing the project goal into one main goal (¼
increase customer retention) and multiple sub-goals that apply to sales and
marketing departments.

Project problems
These can be classified into four categories:

Budget
Budget difficulties are very common during planning. One interviewee suggested
that clients tend to have a “beer-budget and champagne-dreams”. One reason for
this is not including in project costs a calculation for internal cost of labour.
Employees must sacrifice time to the project while continuing their everyday
tasks. If no solution is found for this problem, the project can become unfeasible.

Employee’s Unwillingness to Co-Operate

Many examples were given. It is possibly the greatest problem area. One reason
is that often those selected to participate in the project are not the key players,
but instead just those who are available. Employees also have their own hidden
agenda, influenced by and resulting in political complications between depart-
ments. The use of a consultancy can reduce those tensions.
A very serious problem for employees is that after the implementation of a
CRM system, their work will actually become measurable. For example, their
manager will be able at any time to look up the sales contacts they have had during
the day. No more “secret files” can be kept, because now all the customer data is
entered into the IT system. This also makes people fear that are replaceable, as
they have to share all their personal knowledge on their clients. Consultants from
Germany said that therefore, CRM implementation can generate serious problems
with the “Betriebsrat” (staff association). They sometimes claim data protection
reasons to avoid filling in certain information on clients, e.g. political party
affiliation.

Senior Management’s Unwillingness to Co-Operate

This happens less than unwillingness of employees, but is still a big issue.
Sometimes, senior management adopts an attitude of letting others go ahead with
the project, without real involvement. There can also be a problem of senior
C. Pries & M. Stone 362

management resource, so that they never have time to look after the project. A
very different problem is software companies influencing Senior Managers. They
might then go after a specific tool only because the software company persuaded
them; not because this was the best choice.

Other Problems
Other problems mentioned included systems integration issues and negligence of
people, especially towards the end of longer projects. A final statement from two
consultants was that without sympathy between consultants and the people in the
company, no project is ever going to work.

Is the project being managed in accordance with good practice in

change and project management?
The last question asked during the interviews on the planning process – part of the
questionnaire gave interviewees a choice of two different approaches for Change
Management, as proposed by Doppler and Lauterbach (2002). The first of
the propositions is always the one coherent with Change Management. The
propositions will be referred to as 1 ¼ in favour of first proposition and 2 ¼ in
favour of second proposition.

Goals Transparent With Logical Reasons Visible to All Participants Vs. Each
Participant Has Own View of Goals
There was no real recurrence in answers here. Two answers were for 1 and two for
2; the rest did not give a clear answer, but said that 1 was certainly the ideal case
and 2 is what happens in case of bad project management. A majority also said that
in most projects, 2 is the case initially, even if later on this changes to 1. This is of
course a poor basis for implementing CRM, because of the necessity described
earlier on to have a clearly defined project goal.

Key Personnel Chosen, Put in Charge and Left Unchanged Vs. Project Team
has Sometimes Perceived Lack of Consequence and Consistency
Here, the majority was for 2, which is of course negative. Only two statements
were that it was a mix between the two propositions. Apparently what happens in
reality is that, especially during long projects, there are staff promotions, transfers
or leaving. Interests of project team members may change. It is better to avoid
these changes as: they generate confusion. In the event, some tasks may not be
carried out at all.

Employees Who Will be Concerned With the Outcome of the Project Take
Part in Planning Vs. CRM Based Concept Supplied (by Consultancy,
Role Model. . .)
It was interesting to see that, despite the awareness in the market of the risks of
the second of these, there were still two consultants who gave it as the answer.
All others agreed on 1, saying that employees should participate to the maximum
363 Managing CRM implementation with consultants

possible—there was no definition of “maximum possible” though! Reasons for

giving the second were that the model would be adapted to the specific situation;
and that in very large corporations, 1 would be too complicated.

Wide Timescale Set Easy to Follow Through Vs. Delays in Timescale

The answers to this question were devastating from the change management
point of view. Only one person chose 1, the rest clearly chose 2, pointing to the
human nature as a excuse.

Long Period of Planning Beforehand and During Kick-off Vs. Cold Start
Three interviewees were in favour of 1, one for 2 and the rest proposed a mix
by saying that 1 was for large companies and 2 for smaller companies; or saying
that they did a detailed planning in very short time.

Favourite Ideas Communicated Upfront Vs. Favourite Ideas as

a Hidden Agenda
Answers were evenly balanced for this question; one proposition was that about
20% of ideas were on the hidden agenda-side. Those choosing 2 added to their
choice that this was unfortunate, but happened in projects because of people’s
desire to build up a certain reputation throughout the project and the company,
helping their career. This shows that it is considered important to have good
communication, as one consultant put it: this is the main reason for employing a
consultancy. However, the answers do not fit very well with the result on the first
question (about sharing goals), where the majority said that at least at a later stage
of the project this was the case. This suggests that communication is poor.

Processes of Implementation Flexible and Reactive Vs. Guidelines

for Implementation
Results on this question were mixed. There should be guidelines, i.e. planning of
tasks to carry out, because otherwise the implementation cannot take place. Many
consultants referred here to software implementation, where procedures are
necessary. Flexibility may be easier to achieve when the tool is also developed by
the company itself and not bought. So it is hard to follow change management
principles here. Not every company is in a position to develop its own IT tool.

Resistance Changes the Project Vs. Resistance has to be Broken

All chose the first, which is in accord with good change management. Resistance is
positive energy, because the people do care about “their” company. It is essential
to listen to it, because half of the success of a project is acceptance among users.
However, too much resistance may change the project too much so no goals are
reached, or even cause the project to fail completely.
C. Pries & M. Stone 364

Conflicts are Looked for and Tried to Solve Vs. Conflicts are Avoided
Most responses were for the first, suggesting a positive approach to management
and resolution of conflict.

Communication open to every participant Vs. communication open to those

concerned only
The last question resulted in an even. There does seem to be a problem with project
communication.

Process of implementation
Each consultancy had a slightly different way of proceeding, but they were all
variants on the following:

1. Identify the target—what the business wants to achieve

2. Analysis of the current situation of the company
3. Comparison of the current to the target—how customer-focused are the
company’s processes
4. Definition of procedures—specification
5. Conception of procedures
6. Realisation of procedures—includes work-shops and sometimes prototyping
7. Roll-out

Though this could actually be seen a rigid model—not good from a change
management perspective, in fact this was just a framework which allows
consultancies to take into account the characteristics of each client. Consultancies
admitted to not using a standard model, but did make use of best practices and
what has worked well for other companies.

Responsibility for Implementation

Opinions varied as to who is responsible for the implementation. Some suggested
one internal person, others one internal and the other external. Most suggested
senior management, possibly together with the consultant. The predominant
opinion was that Senior Management would delegate responsibility to Middle
Management and to a small part also to the employees. The best approach would
be to have shared responsibility between the participants of the project, as this
would increase everybody’s interest in the project, but interviewees did not
mention this.

Questions on Change Management

One question was “Do you apply any methods of Change Management during
implementation?”, with a list of specific measures:

(a) Plan continuously

365 Managing CRM implementation with consultants

(b) Strategy and goals built around the market and client
(c) Executives lead and direct the process
(d) Change introduced through a learning process
(e) People (employees and managers) learn about the business, with the
implementation proceeding
(f) Learning forms an important part of the change
(g) Leave people plenty of time to adapt
(h) Take into account the specific organization’s culture
(i) Change the culture so as to change socio-structure (organizational struc-
tures, practices, procedures)
(j) (Successfully?) choose and create a culture

This was a consistency check. Nearly every question in the whole questionnaire
related to change management. It was interesting to see that, although many
answers so far had not been consistent with good change management, especially
not in project planning, here every consultant claimed to use change management
disciplines. Some even just answered with a general “Yes” to the whole question,
without looking at every subdivision of it. They tended to blame clients for
weaknesses in change management. Nevertheless, some sub-questions were
answered negatively. Three interviewees found that people were not given enough
time to adapt; but again, this was mainly considered the client’s fault, and their
responsibility, due to the pressure to make money. The only person clearly saying
that he did not work with Change Management was a consultant who had mainly
been working on the technical side of projects.

Effect on Company Culture

Interesting were also the comments made on questions h, i and j of the above
change management list, concerning the company culture. Opinions varied widely
here, probably because no definition of the term was given. When asked whether a
special company culture was taken into account, this was often considered a
difficult issue, and needed to be reflected in the process. One consultant said that
this could only happen to a certain extent: If the culture was customer-averse, or
extremely negative, then this could not change the project goal of turning the
company towards the client! One consultant even said that the company culture
had never been changed in a project—all that had been done was to build up a
stronger sales and service orientation. This means that it entirely depends on what
exactly is understood by “company culture”.

Problems Encountered
Problems encountered during the implementation varied. For two respondents, the
unwillingness of employees to co-operate was mentioned. For one it was the same
problem as during planning—people still have their everyday business to do at the
same time. One person mentioned the unwillingness of senior management to
cooperate for time reasons as a problem, and twice there were budget-problems.
Interestingly, the same problems are encountered during planning, which suggests
C. Pries & M. Stone 366

that most problems occur first during project planning, and continue in the
implementation stage if they have not been solved. This underlines the necessity to
solve problems as early as possible.

Resistance during Implementation

Resistance appears throughout the whole organisation, but especially with front-
line users of the CRM system and sometimes with middle management. According
to one person it applied a lot to employees in sales, as they do not like the “new
transparency” attached to their work.
Various reasons for resistance were quoted. Fear of change was one—using
good change management practice can reduce this. Many problems that appeared
in “Employee’s unwillingness to co-operate” in the planning stage reappeared
here. The “new transparency” is disliked or feared by many—fear of staff layoff,
finding those private files kept, centralization, and fear that individuals will not
count as much as before, because their knowledge is now shared. Resistance may
also be based on the additional work and double burden carried during the project,
or on the change of routine to carry out new tasks e.g. combining sales with
service. Higher up the hierarchy, political interests can be at the heart of resistance.
Everybody wants to protect his or her own career.

Outcome of projects (results)

Consultants found measurable results a difficult area.

Customer Return Rate/Retention of Customers

Consultants expected the customer retention rate to rise due to the CRM project,
though it could be hard to measure. There were few examples of more or less exact
figures on how it rises after a CRM project. One idea was that it was usually
30– 35% and varied from company and industry. The others approached the
subject from another angle, by quoting the decreasing loss of customers, which
had in particular cases changed from 11% to 7%, versus from 8% to 4%, or in
another case had halved.

Spending per Customer

Spending per customer was also expected to rise. Two interviewees said though
that results on this did not at all concern the consultancy, and they would not know
or be told. Another said that this was an essential part of the business case,
and would rise 25% in two years (another source mentioned a rise of 20—40% in
certain target groups).

Winning New Customers

One interviewee clearly said that this was not the job of CRM, but of the
company’s products. New customers can be 6 to 8 times more expensive than
367 Managing CRM implementation with consultants

“old” ones. CRM is about maintaining customers—most interviewees agreed.

However, it can help to apply knowledge on existing customers and their
behaviour to win new ones. But the project goal does not always include this. The
only number mentioned was an increase of new customers of 10%.

Financial Results
Answers on positive financial results were not too convincing, and varied widely.
Some seemed to suggest that usually, there are no positive financial results
from CRM. Thereafter, smaller tactical projects could generate a positive ROI, but
large CRM implementations had not reached that stage yet. One consultant said that
some companies were employing CRM only for the satisfaction of their customers.
However, one consultant claimed that the ROI after three years was 270%.

Change of Attitude Towards Customers

As one interviewee put it, the attitude towards the company’s clients does not
change in a CRM project where the bank was already service orientated with a
customer culture. For a CRM tool to have the expected benefits; a change in
attitude of employees maybe needed. One possibility proposed for this was
coaching, workshops etc. From the outside, the change can be made visible by, as
in the case of one bank, creating an approach according to target groups (seniors,
investors, etc.). Two consultants were convinced that the attitude of employees
does not have to change; only the sales procedures do, and all the efforts of CRM
go to supporting the sales force to be able to sell more. Another person also did not
suggest changing the attitude, but that one should just ask different questions when
contacting a customer e.g. what are this person’s real needs and desires? The
company has to be no longer product-orientated, but requirement-orientated.

Degrees of Satisfaction
The consultants interviewed do not seem to have any discontent clients. This is
astonishing, given the low general satisfaction after CRM implementations cited
earlier. Apparently, only projects carried out by “others” were not successful.
Unfortunately, none of these consultants studied the results of their own client
companies; nor did they know their own client retention rate. Two interviewees
admitted though that there were some projects which not fully exploited later.
Here, the success criterion was that their efforts were not undone.
Reasons for satisfied clients include:

. That the tools actually work and generates results and efficiency gains
. The professional work of a sympathetic team of consultants
. Individual character of every project and client
. Clients are not abandoned when the project is finished
. Clients always have the “key to the project”, i.e. the power to take decisions
always sticks to them
. Feeling understood by the consultancy, with all processes and needs
C. Pries & M. Stone 368

. Fast reactions
. That the project is finally over!

Return business for the consultancy is generated through a mix of good project
management, advice, counselling and positive financial results; but also:

. Success of project
. Speed of projects
. Long intense relationships with customers
. Special offers for large clients, or small clients
. Increased financial results
. Know-how
. Very frequently: additional purchases during the project
. Recommendations

Interviewees considered that everybody (senior management, middle manage-

ment, employees, marketing, consultancy and the individual) were content with
the project outcome. Who was “happiest” varied. Senior and middle management
were ranked very high, while satisfaction of employees depends mainly on the
situation and how the project went for them. Interviewees considered that most
clients would, if given the choice, carry out the project again. However, they
would carry out the project differently, learning from the mistakes made and from
the problems during implementation.
When asked about reasons for discontent clients, the list of answers was much
shorter. Reasons were nearly all chosen from the list provided, and are quoted here
following their frequency of mention: poor project management (mainly that of
“other” consultancies though), negative financial results, no change visible, poor
advice given (here of “other” consultancies too).

Follow Up of Projects
Most consultants interviewed followed-up finished projects over some time (not
specified). If this is not the professional procedure for their company, they even do
it privately out of interest. The main reason for this is the hope of selling them the
next project.

Failed Projects
Information on failed projects (if this happens; not all companies confessed that
this existed) reaches the consultant fast. Most consultants could not describe a way
out of failure other than the general phrase “go back to the company and work on it
again”. Failure is differently defined from consultancy to consultancy. One is that
the project is not carried out because of changing market conditions. It might
therefore suddenly appear to be too expensive, and be cancelled. Another
definition of failure is to be way over the budget and time. A way of avoiding this
proposed by one interviewee was to use Traffic Light Reports during the project.
Every week, the company has to give feedback on the elements of the project
according to the colours of a traffic light. Through this, the consultancy can detect
369 Managing CRM implementation with consultants

problems at an early stage. With Traffic Lights, they can also prove that they were
not informed about this problem, in case of any claims for compensation. Further
definitions of CRM project failure are a badly designed or not reached goal or an
extended budget. The last definition of a failed project is a discontent client.

Common Project Adjustments and Shortcomings

The last question asked consultants to evaluate the most common failures from a
list. The results (highest frequency first) were:

1. Missing internal communication

2. No interest shown by Senior Management
3. Lack of involvement of project management on company’s side
4. Missing external communication
5. No interest shown by employees

Additional mentions were budget, communication in general, software-issues, and

that the enterprise was not ready yet for the implementation.

Conclusions
Consultancies do not do everything right and according to theory! Projects are not
always carried out the way they should be. Nevertheless, a general understanding
of the importance of change management existed in most cases, although the
practical approaches often did not incorporate this. However, examples of good
practice existed, though it seems clear that many clients would get better results
from CRM consultants if the latter were better schooled in change management.

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Notes on contributors
Christina Pries works at the UBS Bank in Switzerland. She studied at the ESCP-
EAP European School of Management in Oxford, Madrid and Paris, specialising
in Finance and “General Management and Strategy” and graduated in 2003.
The subject of her thesis was “Effectively Managing the Challenges of CRM
Implementation”. One of her internships was at IBM Global Services, where she
carried out much of the research for her thesis, which was the basis of this article.
Professor Merlin Stone is Business Research Leader with IBM and a director
of QCi Ltd, an Ogilvy One company, of The Database Group Ltd and The Halo
Works Ltd. He is the author of many articles and nearly thirty books on marketing
and customer service. He has consulted to companies in many sectors on
marketing and customer service. He is a Founder Fellow of the Institute of Direct
Marketing, a Fellow of the Chartered Institute of Marketing and on the editorial
advisory boards of many journals. He is IBM Professor of Relationship Marketing
at Bristol Business School.