Legal Technology Journal

There are many obstacles along the way to setting up a successful CRM system, and the chances of failure are high. But with careful planning and the correct equipment, it can be done.

The best advice to anyone considering implementing CRM in their firm is: don’t. Or at least, don’t make any kind of commitment until you are absolutely sure what you are letting yourself in for. For there is a paradox in relation to contact relationship management systems (or CRM as it’s usually known). Many professional services firms – probably the majority – fail to gain significant benefit from such systems, and yet the general enthusiasm for CRM appears to be undiminished. The objective of such systems is to ensure the accurate recording and active sharing of business contacts across an organisation so that new business opportunities can be developed. But all too frequently, a lack of interest and unreliable data leads to their effective abandonment.

Every month we read of more firms launching projects, and InterAction’s success in this market has attracted competitors including Microsoft, Sage and Pivotal. According to Legal Technology Insider1 some 60% of the top 100 law firms have already installed such a system, and many others are actively considering such an investment.

Law firms have been the pioneers in adopting CRM, and there is plenty of evidence that they have struggled to make a success of their implementations. Gracechurch Consulting published a report in 2003 that documented their poor adoption by fee-earners. This report showed that only around half of firms had a culture that encouraged sharing of information, and a mere 4% of respondents thought they were reaping all the potential benefits of CRM2. In the same year, Gartner Group estimated that 55% of such initiatives had failed to meet expectations.3 And the anecdotal evidence from many firms suggests that little has changed over the past four years: for every firm that has made a success of CRM (and there are some shining examples) there are several that consider their systems to have been a failure.

The problem is hardly ever one of technology: in general, the software performs well enough. But many firms struggle to gain the acceptance from their partners and other users necessary to ensure that contact information is accurate and complete. In the absence of regular usage, CRM falls into decline, often requiring an expensive data clean-up and relaunch to revive its use. However, these problems are not inevitable. This article identifies the lessons to be learnt from the author’s personal experience with implementations at Herbert Smith, Baker & McKenzie and – most recently – with the accounting firm Grant Thornton. Failure is by no means inevitable, but careful planning is necessary if firms are to avoid the various pitfalls of CRM implementations and gain real value from their investment.

The foundations of success

There are four key elements to a successful CRM project, and all of these must receive equal attention for the project to succeed. These are: business-led project management; a simple and effective design; reliable and accurate data; and acceptance by the business community of the relevance of the system to their daily lives.

It is rare that CRM projects fail because of a lack of effort; most failures are the result of an excessive focus on one or more elements, with others being neglected or entirely ignored. In the following sections each of the four key elements are discussed, together with specific dos and don’ts that will significantly increase the probability of a successful project.

Project management

Many CRM projects are managed by IT departments. At first sight this seems sensible: these are, after all, the departments with the greatest amount of project management experience, and with the expertise to deal directly with the hardware and software vendors. However, CRM projects are not principally about technology: the systems are relatively straightforward to install and maintain, and require little or no customisation. So the technology element of the project – whilst critical to its success – is relatively minor in comparison with all of the business-related issues. The danger is that IT will not have sufficient credibility within the business, and that the project will suffer as a consequence.

It is also potentially damaging to associate a CRM project too closely with the marketing department. Whilst such a system is clearly central to the effective operation of a marketing team, there is a danger that it is viewed simply as ‘a marketing system’ without relevance to partners and others in client-facing roles.

The first priority is for professional staff and their secretaries to use the system; only once the contact data is accurate and complete can marketing make any effective use of this information. There are two ways to avoid this problem. Grant Thornton introduced an external project manager who reported directly to the senior management of the firm. This guaranteed independence from both IT and marketing, and presented the CRM project as business-led rather than as simply another piece of technology. Another effective approach is to create a project team consisting of both IT and marketing staff who can operate independently of their respective departments.

Once clear project management has been established, the next step is to create a realistic budget. CRM software is relatively expensive and there is a temptation to cut corners in other respects. This approach will almost certainly doom the project to failure. As a rule of thumb, the total cost of the
project is likely to be between two and four times the cost of the software alone. The bulk of the cost is accounted for by external consultants, data cleansing and training.

• Do: ensure the project is sponsored by the business, and not by IT or marketing
• Do: create a realistic budget of between two and four times the cost of the software.

Simple design

The design of the system is important: it must, of course, meet the requirements of the business if it is to be successful. However, there are relatively few differences between law firms, or even between different types of professional services (law, accountancy, consulting, etc). And it is relatively easy to establish best practice by talking to systems integrators and to other firms, and then to adapt this to the specific requirements of your own firm.

Building in too many features at the outset, or straying too far from a standard configuration, is likely to result in an overcomplicated design. This then becomes difficult to support and to train effectively, and soaks up resources that the project team could use more effectively elsewhere. The project team will be tempted to add extra fields and features in response to requests from the business, and to demonstrate the value they have added to the product. This is almost always misguided: unless the design is simple and easy to use, it will be ignored, and all the effort will be wasted.

This is not to say that the design should ignore the business objectives of your firm. Of course it should support these, but only once the core system has been well established and accepted by all of your business users. Keep it as simple as possible initially, and only build in additional features once people are happy using the basics. And often people – even in the marketing department – will not really know what they want from CRM until they have become accustomed to using it.

Finally, there are considerable advantages to integrating CRM with other existing systems, in particular with Outlook (or an equivalent), to synchronise contact data, and with the time and billing system to enable the import of summary financial information. These both have considerable advantages and increase the attractiveness of the system. However, any integration will considerably increase the complexity of the system, both from a technical and a user perspective. Consider  carefully whether such integration is necessary at the outset, or whether it could be added at a later date.

• Don’t: allow the design to become over-complicated (simple is better)
• Do: allow sufficient time and resources to integrate with other systems.

Accurate data

This is not a subject likely to set the pulse racing, but it is probable that more projects have failed through lack of credible data than for any other reason. The most common approach is to take all the easily available sources of data and tip them, metaphorically speaking, into a large bucket. Once there, the task begins of cleansing the data: adding missing information, correcting mistakes and eliminating duplicates. However, this approach is almost guaranteed to result in a mediocre set of data.

The problem with contact data is that there is simply too  much of it. For a contact database to be effective it should contain all the business contacts of all members of the firm. However, even in a mid-sized law firm there could be in excess of 100,000 contacts. The majority of these will be of interest only to the individual concerned, with a small proportion – perhaps 10% or 20% – likely to generate significant business opportunities in the future. So taking on the task of cleansing all the data is not a good use of resources and will not ensure that the firm’s key contacts received sufficient attention.

A far more effective approach is to start by defining which data is important. In the case of Grant Thornton, a ‘core database’ was built consisting of its most important clients, intermediaries and potential sources of business. This was developed from the ground up, to ensure that the information about the organisations it cared most about was accurate and complete. Only then did it start carefully to introduce other sources of data, which were integrated into this core database of reliable information.

Much has been made of the potential of ‘harvesting’ contact information from Outlook (or similar systems). There is certainly a tremendous value in synchronising the contacts information held in Outlook with data held in CRM, and the best systems will facilitate this two-way exchange of information. However, the quality of contact information held in Outlook is typically very poor indeed. One firm reviewed a sample of around 50 contacts folders to gauge their accuracy; fewer than ten of these held anything like complete and accurate data. Furthermore, in many cases people will by-pass their contacts folder entirely, using any number of other methods: Excel spreadsheets, Word tables, Access databases, notebooks, mobile phones and little black books.

The only effective way to deal with data from Outlook and the plethora of other sources is to import the data and cleanse it immediately. This, in turn, means that a team of people must be in place to deal with data as it arrives. Once mediocre data becomes entrenched in the database it is very hard to eliminate it, and people will quickly stop using CRM if they begin to encounter unreliable or incomplete data. As a rule of thumb, one full-time person will be required for every 300-400 users during implementation, with a smaller team needed once the system is fully established.

• Do: consider building a core database of reliable information
• Don’t: import poor-quality data with the intention of cleaning it up later
• Do: allocate sufficient resources to clean up new contact data immediately.

Business acceptance

If the project is well managed, the design is kept simple, and the contact data is accurate, will the system be a success? Probably not, unless all of the system’s intended users want to use it. There has to be – and this is critical – an acceptance of the value of CRM and a desire to use it on a daily basis. If that doesn’t sound like a realistic goal for your firm, then it may be better not to attempt such a project, for the success of CRM depends on a collective desire to contribute contact information as well as a desire to use its output, and this will not happen unless everyone – or at least the great majority – perceives the benefits.

Generating acceptance is perhaps the most difficult task, as it is intangible and thus hard to measure. The best approach is to develop a communications plan that will cover the entire duration of the project, from initial consultation and design through to implementation and beyond. Different methods work for different people: some like detailed explanations of the new system, whilst others will prefer only a very high-level approach.

Practical examples typically work best, either from the firm’s own experience or from case studies of other firms that have implemented CRM successfully. And there is no substitute for personal contact: presenting to small groups, demonstrating the proposed system, or speaking about its benefits.

CRM systems are relatively complex, with a wide range of features designed for use by marketing staff and more technically able staff. However, most people will only use 10% of the available features, and it is important to start by focusing on the basics. If the fundamental contact data held in the system is not correct, then nothing – absolutely nothing – else will work.

A step-by-step approach is therefore essential, with initial training focused on basic data entry and enquiry features, followed by more sophisticated features once there is the correct groundwork in place. During the early stages of implementation, the key is to enlist the support of the secretaries and demonstrate the benefits of CRM to them. Most secretaries will tell you that keeping track of contact information is a nightmare, and a good contact database will solve this problem for them. They may not be the ultimate target of CRM, but ignore secretaries and their potential at your peril.

Last but not least, there may be a need to examine the existing incentives and job descriptions within the firm. This is an area that requires the close co-operation of the HR department if it is to be successful. But if your firm does not actively encourage the gathering of accurate data at all levels of the organisation, it will be essential to ensure that the necessary incentives and sanctions are put in place.

• Do: communicate and actively sell CRM throughout the project
• Do: get the basics right first, before adding more features
• Don’t: forget the secretaries, as their role is crucial.

Next steps

There are no guarantees of success, but if a project follows the dos and don’ts set out in this article, the probability that it will avoid the various pitfalls of CRM and achieve its objectives will be greatly increased.

However, the end of the project only marks the start of the really hard work. The next phase of work, which is likely to require at least a year, is to embed the CRM system fully into the way that the organisation operates. The dramatic leap forward of the implementation phase will be replaced by dozens of much smaller steps, in which the data is refined, usage is increased and valuable additional features are introduced. Only then will the benefits of CRM be fully realised.

During implementation, and beyond, it will be important to establish measures of usage and of success. If you can’t measure something, you can’t manage it – and you certainly can’t tell if it has been successful.

Despite all the best efforts and hard work of the teams involved, some projects will fail. If this has happened to you, don’t despair: you are in good company. Up to half of CRM projects have suffered initial setbacks that have required a relaunch. In this situation it is important not just to tinker around the edges, as this is unlikely to result in any significant improvement.

The most likely causes of failure are poor data quality or a lack of acceptance. Both of these are hard to fix, and will require a full-scale project that tackles all the root causes of the failure and re-establishes credibility.

Conclusion

Professional services firms that have implemented CRM successfully have reaped tremendous benefits. It only takes a very few additional business opportunities to be generated through such a system to repay the entire cost of the project. Such systems can directly contribute to the future revenue and growth of the firm’s business, as well as making everyone’s lives easier and more productive. But CRM is not for the faint-hearted, and anyone who considers such a project should first be sure how they are going to avoid all the potential pitfalls that could derail an otherwise well-planned project.

John Rogers is the former IT director of a large London law firm and now runs his own consultancy Tandem Management.

Notes

1. ‘Top 250 Firms IT Systems’, Legal Technology Insider: http://www.legaltechnology.com/casestudies.htm.
2. ‘Making CRM Work’, Gracechurch Consulting, March 2003.
3. ‘CRM Success is in Strategy and Implementation’, Gartner Group, March 2003.