CRM Failure: Old Wives' Tale or Success Story?

But if the 2005 International Legal Technology Association (ILTA) Technology Survey was any indication of where law firms stand about CRM, the legal industry may not be part of the CRM success train. The report states that more than half of all CRM implementations failed to go live or had serious adoption problems, and most users were unhappy with their systems' ease of use and return on investment. According to the survey, the adoption of CRM now appears to have come to a standstill, with few or no new CRM projects taking place during the 12 months preceding the survey.

From the buzz of peer discussions, technology roundtables, industry conferences and general market intelligence, it is evident that CRM applications are still not enjoying much success in the law office market.

Reversing the Cycle

While many previous CRM implementations within the legal industry may have fallen short of expectations or simply failed, there is still much to be said about understanding, and at some point, overcoming the challenges most firms experience in this area:

Difficulty defining project scope and boundaries amidst changing needs, firm growth and changes in firm culture;

Lethargic implementations that never seem to get off the ground;

• Fluctuating consensus regarding the value of the solution ' why does only marketing seem to benefit from the investment?;
• No sense of ownership by IT because they are not always primaries involved in the decision-making process (or the integration with existing systems is not considered ahead of time); and
• No realized firm-wide value because not all areas (business development, referrals, client relationship management, and marketing activity, practice area-specific activity) are measured.

We cannot change the past, but we can learn from it. If yours is one of the hundreds of law firms wanting to create a new culture of success in relationship management practices, you are in for a pleasant surprise. There is documented progress to help you change the CRM implementation failure wave.

Thinking 'Outside the Industry'

Recent reports from Forrester Research Inc., a Cambridge, MA-based IT research firm, have shown that companies outside of the legal industry, that follow best practices for high-level sponsorship, end-user adoption and usability, and those that consistently stay the course when it comes to developing and rolling out CRM projects across the organization, are succeeding.

A 2006 Forrester study drew from interviews with executives at 22 large North American companies to learn about their CRM successes. All 22 saw increased revenues, lower costs, higher ROI and improved competitive strength, thanks to following CRM best practices, including:

• Build strong executive sponsorship of the program;
• Have business units lead CRM with support from IT;
• Put in a governance structure that fosters accountability and decision-making;
• Define your objectives and processes first then apply the right technology;
• Follow a realistic pace for the rollout;
• Define data requirements and data quality approaches early;
• Foster user adoption;
• Place a high priority on software usability;
• Simplify the CRM platform; and
• Actively manage the vendor relationship.

As summarized by Bill Band, the Forrester report's project leader, staying the course is one of the most important lessons for CRM success: 'The companies [in the study] all said they developed a long-term vision and did one country at a time, one function at a time. 'CRM in 90 days, implemented and done,' that really is a fallacy. It speaks to the overhype in the early '90s, when people had visions of quick and easy return, and it's not just there.'

Leveraging New Technology

One of the points made by the CHAOS report referenced earlier is that we have learned, through great strides, to be more realistic about our needs for a CRM solution. We are in fact being wiser about our approach to CRM projects; managing technology implementation and acceptance in digestible pieces. The old iterative processes we have been using since the 1990s required firms to throw gigantic CRM projects at the firm. This is largely because the software solutions available to the industry have not allowed for the adequate phased tailoring needed to build a CRM solution that progressively adjusted to the needs of the firm. Firms have had to select CRM solutions that looked good when they started the implementation, but that did not turn out to be a good fit by the time people started using it. Neither the CRM solution that is 'complete' but too rigid to accommodate gradual changes nor the one too small to satisfy the future needs of the firm can deliver on the promise of CRM success.

Fortunately, new application development platforms and Web portal technology (like those available from Microsoft) make it possible for firms to build solutions that fit the needs of the firm today, as it grows and in the future.

Conclusion

We are at the horizon of a new and exciting era for CRM for law firms. Maybe we can turn the wives' tales into happily ever after.

A statement has been circulating around stating that a majority (estimated over 74%) of CRM projects fail. I, personally, have been hearing it for the last 10 years, without knowing much about where it came from. It turns out that this well-publicized statistic came from a 1994 Standish Group study which has served as the foundation for much decision-making about client relationship management issues in and outside of the legal community. The Standish Group, a leader in project and value performance, risk assessment and cost return and value for Information Technology (IT) Investments, indicated that project success rates increased in 2004, to 34% of all projects.

The latest study (known as the CHAOS Chronicles), conducted in 2006, comprises 12 years of research, including focus groups, in-depth surveys and executive interviews, on project performance of over 50,000 completed IT projects that include CRM initiatives. 2006 numbers show that closer to 50% of projects fail. Standish Chairman Jim Johnson attributes the change primarily to the scope of projects getting smaller: 'Doing projects with iterative processing as opposed to the waterfall method, which called for all project requirements to be defined up front,' was a major step forward.

After that many years of research, and through what some may consider slow progress, this is still good news. It means, in part, that many industries are learning to manage CRM as a living entity that changes and grows as an organization does. It also reveals that we are getting wiser about our approach to CRM projects, heeding the advice that the best way to 'eat an elephant' is one piece at a time. Fortunately, simultaneous with this realization, has come the emergence of new CRM technology that further increases project success rates by enabling a more flexible, extensible and modular approach to launching CRM in the law firm.

But if the 2005 International Legal Technology Association (ILTA) Technology Survey was any indication of where law firms stand about CRM, the legal industry may not be part of the CRM success train. The report states that more than half of all CRM implementations failed to go live or had serious adoption problems, and most users were unhappy with their systems' ease of use and return on investment. According to the survey, the adoption of CRM now appears to have come to a standstill, with few or no new CRM projects taking place during the 12 months preceding the survey.

From the buzz of peer discussions, technology roundtables, industry conferences and general market intelligence, it is evident that CRM applications are still not enjoying much success in the law office market.

Reversing the Cycle

While many previous CRM implementations within the legal industry may have fallen short of expectations or simply failed, there is still much to be said about understanding, and at some point, overcoming the challenges most firms experience in this area:

Difficulty defining project scope and boundaries amidst changing needs, firm growth and changes in firm culture;

Lethargic implementations that never seem to get off the ground;

• Fluctuating consensus regarding the value of the solution ' why does only marketing seem to benefit from the investment?;
• No sense of ownership by IT because they are not always primaries involved in the decision-making process (or the integration with existing systems is not considered ahead of time); and
• No realized firm-wide value because not all areas (business development, referrals, client relationship management, and marketing activity, practice area-specific activity) are measured.

We cannot change the past, but we can learn from it. If yours is one of the hundreds of law firms wanting to create a new culture of success in relationship management practices, you are in for a pleasant surprise. There is documented progress to help you change the CRM implementation failure wave.

Thinking 'Outside the Industry'

Recent reports from Forrester Research Inc., a Cambridge, MA-based IT research firm, have shown that companies outside of the legal industry, that follow best practices for high-level sponsorship, end-user adoption and usability, and those that consistently stay the course when it comes to developing and rolling out CRM projects across the organization, are succeeding.

A 2006 Forrester study drew from interviews with executives at 22 large North American companies to learn about their CRM successes. All 22 saw increased revenues, lower costs, higher ROI and improved competitive strength, thanks to following CRM best practices, including:

• Build strong executive sponsorship of the program;
• Have business units lead CRM with support from IT;
• Put in a governance structure that fosters accountability and decision-making;
• Define your objectives and processes first then apply the right technology;
• Follow a realistic pace for the rollout;
• Define data requirements and data quality approaches early;
• Foster user adoption;
• Place a high priority on software usability;
• Simplify the CRM platform; and
• Actively manage the vendor relationship.

As summarized by Bill Band, the Forrester report's project leader, staying the course is one of the most important lessons for CRM success: 'The companies [in the study] all said they developed a long-term vision and did one country at a time, one function at a time. 'CRM in 90 days, implemented and done,' that really is a fallacy. It speaks to the overhype in the early '90s, when people had visions of quick and easy return, and it's not just there.'

Leveraging New Technology

One of the points made by the CHAOS report referenced earlier is that we have learned, through great strides, to be more realistic about our needs for a CRM solution. We are in fact being wiser about our approach to CRM projects; managing technology implementation and acceptance in digestible pieces. The old iterative processes we have been using since the 1990s required firms to throw gigantic CRM projects at the firm. This is largely because the software solutions available to the industry have not allowed for the adequate phased tailoring needed to build a CRM solution that progressively adjusted to the needs of the firm. Firms have had to select CRM solutions that looked good when they started the implementation, but that did not turn out to be a good fit by the time people started using it. Neither the CRM solution that is 'complete' but too rigid to accommodate gradual changes nor the one too small to satisfy the future needs of the firm can deliver on the promise of CRM success.

Fortunately, new application development platforms and Web portal technology (like those available from Microsoft) make it possible for firms to build solutions that fit the needs of the firm today, as it grows and in the future.

Conclusion

We are at the horizon of a new and exciting era for CRM for law firms. Maybe we can turn the wives' tales into happily ever after.