CRM Implementation Issues

CRM Implementation Issues 

According to several publications, there are three major group issues that are commonly suggested by various consultation firms in the CRM implementation (Anonym 2000; Kalakota et.al 2001, p.197; Newell 2000, pp. 85-90; Ramdas 2000): 

• Human resource issue regarding the change management 

• Project management issue regarding the nine-knowledge area in all project management phases i.e. initiating, planning, executing, controlling, and closing. 

• Customer issue regarding the profitable customer segmentation 

1. Human Resource Issues 

Change is the common issue that must be faced by every today’s organizations. However, usually organizations face the planned change that is defined as change activities that are intentional and goal oriented (Robbins 2001, p.542). Robbins added that there are two different kinds of change from magnitude perspective. The first is the first order change that is defined as linear and continuous. The other type is the second order change that is defined as multidimensional, multilevel, discontinuous, and radical (Robbins 2001, p.543). 

Change agent holds significant role in the change and it is defined as persons who act as catalysts and assume the responsibility for managing change activities. Robbins suggested that change agent could be the managers or non-managers, employees of the organization, or outside consultants. However, usually the senior executives will be the change agents. 

There are four change options that change agent can manage (Robbins 2001, p.543): 

• Changing the organization structure 

• Changing the organization technology 

• Changing the organization physical setting 

• Changing the people within the organization 

Major issue that must be considered in the change management is about the resistance. Robbins (2001, p.545) had suggested two different types of resistance to simplify the analysis. In practice, however, they are commonly overlapping: 

• Individual resistance that is caused by the habit, security about the future, the economic factors, fear of unknown, and the selective information processing phenomena. 

• Organizational resistance that is caused by the structural inertia, the limited focus of change, the group inertia, threat to expertise, threat to establish power relationship, and the threat of established resource allocations. 

There are at least four tactics that have been suggested to minimize the resistance to change (Robbins 2001, p.548): 

• Education and Communication. Resistance can be reduced through communicating with the employees to help them understanding the logic of a change. 

• Participation. Resistance can be reduced through participation. It is difficult for individuals to resist a change decision in which they participate. 

• Facilitation and Support. Change agents can offer a range of supportive efforts to reduce resistance. 

• Negotiation. This activity is to exchange something of value for a lessening of the resistance. 

Furthermore, there are several important things to be considered in change management (Soepomo 2002, p.44): 

• Create a steering committee that represents the stakeholders 

• All the member team must be always supplied with complete information. 

Provide them a continuous training 

• A communication process is the most important thing 

• Always advocate the truth about the change 

• Determine and maintain the stakeholders’ expectation against the change 

• Treat the training as an asset not cost. 

• To change human behavior usually takes longer time than the estimation 

One issue that forces the organization to change is innovation. As mentioned before, to survive in today’s competition, company must make innovation. Robbins (2001, p.558) described the company’s culture: 

Innovative organizations usually encourage experimentation. They reward both success and failures. The influence consequently comes to the human resource. The innovative organizations actively promote the training and development of their members in order to encourage the members not to be afraid of making mistakes. 

2. Project Management Issues 

A project is an endeavor undertaken to accomplish a unique purpose that normally involve several people performing interrelated activities, and the main sponsor for the project is often interested in the effective use of resources to complete the project in an efficient and timely manner (Schwalbe 2000, p.4). As a result, there are several project attributes such as its unique purpose; it’s temporary, its need of resources, its sponsor and its uncertainty. 

There are also another attributes, which also important to be considered (Schwalbe 2000, p.5): 

• Scope constraint. What is the project trying to accomplish? What unique product or service does the customer or sponsor expect from the project? 

• Time constraint. How long should it take to complete the project? What is the project’s schedule? 

• Budget constraint. What should it cost to complete the project? 

Therefore, a project management can be defined as “the application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholders needs and expectations from a project” (Schwalbe 2000, p.7). 

Project management includes various key elements i.e. project stakeholders, project management knowledge areas and project management tools and technique. The knowledge areas describe the key competencies that project managers must develop (Schwalbe 2000, p.8): 

• Project scope management that involves defining and managing all the work required to successfully complete the project. 

• Project time management that includes estimating how long it will take to complete the work, developing an acceptable project schedule, and ensuring timely completion of the project. 

• Project cost management that consists of preparing and managing the budget for the project. 

• Project quality management that ensures the project will satisfy the stated or implied needs for which it was undertaken. 

• Project human resource management that concerns with making effective use of the people involved with the project. 

• Project communication management that involves generating, collecting, disseminating, and storing project information. 

• Project risk management that includes identifying, analyzing, and responding to risks related to the project. 

• Project procurement management that involves acquiring or procuring goods and services that are needed for a project from outside the performing organization. 

• Project integration management that coordinates other knowledge areas throughout the project’s lifecycle. 

The first four is categorized as the core function because they lead to specific project objectives. Then, the next four is categorized as the facilitating function because they are the means through which the project objectives are achieved (Schwalbe 2000, p.8). 

The processes in project management can be grouped into five processes group (Schwalbe 2000, p.39): 

• Initiating processes that include actions to commit to begin or end projects and project phases. 

• Planning processes that include devising and maintaining a workable scheme to accomplish the business need for the project was undertaken to address. 

• Executing processes that include coordinating people and other resources to carry out the project plans and produce the products or deliverables of the project or phase. 

• Controlling processes that ensure that project objectives are met. 

• Closing processes that include formalizing acceptance of the project or phase and bringing it to an orderly end. 

3. Customer Segmentation Issue 

There are always customers that do not want to have a relationship with the company. Therefore, they are easily moving to other company for a lower price, for example. But there are also another type of customers, that “care enough about quality and value and service and time saved and recognition to rank price low on their priority scale and in some cases they are even willing to pay a bit more to avoid the hassle of shopping around” (Newell 2000, p.38). As a result, it is wise not to manage CRM with every customer. 

The information technology that is available to distinguish the customers is the data warehouse. Using the data mining activities, company can track the customer’s contribution record to the company. In short, data mining is a process of knowledge discovery from the data warehouse (Newell 2000, pp.138-144). 

From the recent studies, there is a tendency that 1% or less of total customers, actually contribute 10% of total profit (Newell 2000, p.72). Therefore, the objective of CRM is likely to cover those customer segments. Fortunately, those kinds of companies could also implement the CRM to make one-to-one relationship. The keyword is being specific, not being unique. By being specific, the company can distinguish “the customer file to separate transaction customers from relationship customers and high profit customers from underperforming customers” (Newell 2000, p.44). Finally, Newell (2000, p.45) suggested: 

Not every one of your customers wants to have a relationship with your company, and there are many who will never develop any degree of loyalty. It is simply not worth the time and effort to try to manage relationships with these folks. Don’t waste the money. Take the time to find the customers who have given some indication that they are looking for more than price (a company they can trust, a friendly company with reliable products, people who recognized them, remember them, and do special things for them). This will be your winners who will deliver the biggest return on your CRM investment. 

Regarding the customer type, at least there are four basic situations in a customer relationship (Anderson & Jacobsen 2000, p. 64): 

· The customer is loyal and profitable – the company focuses on deepening the relationship, strengthening loyalty and optimizing profitability through cross and up selling. 

· The customer is loyal but unprofitable – the company should maintain the relationship and secure loyalty because the customer may still become profitable through cross and up selling. 

· The customer is profitable but not loyal – in this case the company should focus completely on strengthening the relationship and building loyalty. 

· The customer is not loyal and unprofitable – it is probably worth considering giving the customer to the competitor.

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