INTRODUCTION

Over the last four decades, organizational systems have been a source of a great deal of interest and research. At first, these were the enterprise resource planning (ERP) systems whose core was the product and whose aim was to shorten the path of the product to the customer via reduction of time to market (TTM).1, 2 However, the changes in the business world – primarily the conceptual shift from the market share via TTM approach to mass customization of service for profitable customers (share-of-wallet), coupled with the understanding that veteran customers are more profitable and therefore, an integral part of the organization's success, have led to a new brand of organizational systems called CRM systems.3, 4, 5 These systems specialize in multiple tasks aiming to strengthen the bond with the customer in order to highlight his value for the company.

CRM systems took root in the industry faster than their older sister – the ERP system – thanks to the experience of CRM stakeholders: customers who maintain well-developed technological infrastructures, companies that develop these solutions, as well as suppliers and consulting firms that have accumulated experience based on ERP systems.

Notwithstanding the above, the success rates of CRM systems remain low.6, 7, 8 Our goal is to provide holistic insights to companies involved with these systems through a conceptual framework defining the various factors leading to the system's success over its life cycle.

CRM DEFINITION

CRM systems have various definitions owing to their diversity and the different viewpoints of those defining them.9, 10, 11

The most comprehensive definition, also called the holistic approach, makes a connection between customer-oriented strategy, marketing tactics and initiatives, combined with technological aids for the purpose of augmenting shareholder value.11, 12

The path between the strategy and implementation is in fact the organization decision path: the top management echelon needs to create a competitive edge – it decides to implement a customer-centric strategy. The strategy is transformed into actions taken by the operational echelon vis-à-vis the customers. These strategies are implemented via technological systems that facilitate both day-to-day work for the operational echelon and customer analysis solutions for mid- to top management echelons. The culmination of these activities leads to higher retention rates and lower churn, thus creating higher shareholder value over time and hence maintaining a competitive edge.

SUCCESSFUL DEVELOPMENT OF CRM SYSTEMS

In order to define the successful development of CRM systems, a view of the comprising dimensions is required. Orgad provided a graphical two-dimensional view from the information system (IS) perspective and a project perspective in which success of an IS project is the combination of success in both dimensions (Figure 1).13

Figure 1
figure 1

Successful development of IS projects. Source: Orgad13 (p. 6).

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According to research conducted by the Standish Group in 2009, only 32 per cent of the projects are in the first quarter, 44 per cent are in the second and third quarters, and 24 per cent are in the fourth quarter with regard to information technology projects.14 According to above, we can say that a CRM project is a developing project of an IS that would be defined as successful if it followed the criteria of ‘Success of IS’ and ‘Success of developing IS Project’. Thus, it would be in the first quarter of the graph.

DEFINITION OF CRITICAL SUCCESS FACTORS (CSF)

The CSF technique has emanated from the management community as opposed to the IS community, and is hence more business-oriented.15

CSF are regularly used in IS planning and the requirements-determination stage within systems development.15 Leidecker and Bruno define CSF as the characteristics, conditions or variables that can significantly impact a company in a competing industry provided that the variables, conditions or characteristics are well sustained or managed.16

Properties of the CSF

The properties of the CSF as defined by Williams and Ramasprasad are aimed to provide executives with the understating of the criteria related to the success of the project through an examination of different aspects that influence each criterion in terms of time, connection and direction.17 For example, through the time property, the executive can understand whether the CSF can lead directly to the success of the project as a catalyst or whether it is just a background supporting factor that influences success. Table 1 presents the properties of the CSF.

Table 1 CSF properties derived from Williams and Ramasprasad17
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It is important to note that CSF properties are unique to the context in which the CSF is involved.

Another important CSF type is the critical failure factor(s) (CFF). A CSF becomes a CFF if certain criteria that are not involved will increase the probability of failure.17 However, it should be clarified that not every CSF is a CFF, and vice versa.17

RESEARCH METHODOLOGY AND FINDINGS

The research was conducted through a series of qualitative analyses and quantitative methods to provide an in-depth view of the subject18: it consisted of interviews with top CRM professionals and consultants using a case study approach.19 Following the case analysis, a questionnaire consisting of 142 variables was designed and distributed via the Internet. Two thousand two hundred and ten participants responded to the questionnaire; out of these 821 were analyzed, namely, approximately 37 per cent of the total number of questionnaires.

The questionnaires tested the degree of success of the CRM system according to the parameters proposed by Orgad – that is, the project dimension of the CRM system and the implementation dimension. However, we have added an extra parameter that makes a connection between the two previous parameters, namely, the success of the CRM system.13

Correlation tests and three series of multiple regressions were conducted for each of the dependent variables: (1) on groups of independent variables cited in the professional literature; (2) on 15 criteria tested by means of a factor analysis, as well as stand-alone variables cited in the literature; and (3) multiple regressions on the groups that included all the independent variables and criteria variables that passed the second regression group.

Table 2 displays the results of the third round of regressions.

Table 2 Quantitative analysis of the CSF model
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The last stage consisted of identifying and gaining more in-depth knowledge of the success and failure factors by means of a qualitative analysis through interviews with CRM stakeholders. Some of the interviews were structured and formal whereas others were not, owing to the sensitivity and variability surrounding the issue of failure.

In order to analyze the connections between the methodically derived CSF, we used an approach devised by Williams and Ramasprasad to determine CSF attributes. The resulting product of the model is presented in Figure 2.

Figure 2
figure 2

A graphical view of the CSF model for CRM implementation.

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The vertical axis is divided into organizational and technical characteristics, whereas the horizontal axis depicts the key stages in a CRM implementation or dimensions we examined. There are another two parameters that appear in the chart: the direction of each CSF – if the arrow is pointing to the right, the CSF is conducive to success, that is, it increases the probability of success. If the arrow is pointing to the left, the CSF will increase the probability of success if it is implemented; however, it will decrease the probability of success if it is not implemented, meaning CFF, as defined by Williams and Ramasprasad.17

The last parameter is color – the CSF shown in color also appears in the success of the CRM system dimension.

A CUSTOMER-ORIENTED ORGANIZATION

This factor consists of several characteristics derived from the factor analysis:

  • an organization that is customer oriented before the system's integration;

  • an organizational culture that promoted the development of a CRM system;

  • work processes vis-à-vis the customer were well defined.

These three characteristics jointly form a picture of the ‘human’ organization functioning as a single unit for the customer's benefit. We decided to classify such organizations as organically customer oriented (OCO) – namely, the organization as a human being with a customer-oriented strategy translated into regulations that are enforced during contact with the customer. The organization, as a human being, is aware of its technological strength as a tool for enhancing these results and as such uses the technology as a means toward achieving that goal.

There are few organizations equipped with a similar awareness and ‘consciousness’. Moreover, in the organizations we studied, the organizational segmentation generates a great deal of pandemonium and internal resistance; thus, this description of OCO also depends on the communication between the departments for the realization of the organizational goals. In our case, the communication between the departments serves to provide a complete picture of customer needs and habits. Where non-OCO organizations are concerned, there are partial communications between the departments for various organizational and/or environmental reasons, referring to the first mentioned: organizational culture, political friction, prestige and so forth. On the macro view, there might be government regulations, legislation and so forth. A good example of a communication problem came from a sales department manager: ‘What can a customer service department do for me? My people are on site and know what the real situation is first hand. For the isolated cases involving sales, they are forwarded directly to our extension’.

This company actually did adopt a customer-oriented approach, but there was a great deal of competition between the departments and each manager wanted to boost his employees’ motivation by stressing their importance in their eyes and in the eyes of others.

Hence, OCO must meet the four previously mentioned criteria.

In light of these circumstances, this factor is classified as a CFF, as any deviation from these four criteria significantly diminishes the success of the IS.

MANAGEMENT SUPPORT AND IMPLEMENTED MODULES

This attribute belongs partly to the organizational attributes and partly to the technological attributes of the implementation stage. The reason for this lies in the fact that it encompasses management support and, specifically, the support of sales and marketing managers. The modules during the implementation stage that are considered to be crucial are those suited to them, namely, sales and marketing modules.

The reason that these factors are in the implementation stage is because the integration of these modules requires greater investment during the implementation than during the project stage. For example, in many cases, the sales department was not required to document the sales procedure in a strictly procedural fashion, but rather to document the order. In certain cases, the order particulars are kept in the organization and the customer preferences are stored on a personal or departmental level by the salesperson through a customer portfolio. In extreme cases, not even a customer portfolio was kept – the sales system was based on the bond formed between the salesperson and the customer. Therefore, it is obvious that in such situations integrating a CRM module in this department was tantamount to a type of organizational change, and – in some cases – was even perceived as such by the employees and sometimes by management as well. On the other hand, call center implementations were not conceived as bearing organizational change, as call center operators have little choice but to use the system, as it records and supports their daily work.

In most cases that were observed, management support for these modules was sufficient at the sales or marketing department level for small to large companies. This support was reflected in the active role department managers played in the integration process or through the steering committee in which they took part. Nonetheless, it is worth noting that there was relevance to the CEO's role in some cases in which the department managers had restricted or limited power, for example multinational companies that have regional sales managers, and, accordingly, a source of power was required to launch the processes for the other department managers in other countries. Top management has an additional important role in deciding about the customer management strategy of the organization, which determines the type of CRM system, business process change, system and processes priority,11, 20, 21, 22 the commitment the organization is taking in implementing the solution, the resources allocated to the solution and so on.

Another finding regarding management support was the duality between declarations and actions. If we go back to the case we presented in the ‘Customer-oriented Organization’ section, wherein the manager made a resounding declaration regarding the superfluousness of inter-departmental communication, the path to failure is clear: in this case employees understood that the ‘punishment’ for failing to support the system was tantamount to a headshake, and hence many of them disregarded their manager's directives.

The last issue is the enforcement of management authority – when authority was ‘imposed’ on the employees aggressively, the employees chose to express their protest quietly. We found this type of protest to be the most destructive, as, in this case, the true value of the CRM system lies in merely partially documenting the ongoing information, whereas the added value of the system cannot be utilized to its full, as will be demonstrated in the following sections.

Management support is composed of many facets. These facets combined have enormous impact on other factors in the model and surely decrease the probability of success, and as such this factor was deemed to be a CFF.

EMPLOYEE RESISTANCE

During the initial stages of the IS project, employees tend to be apprehensive about how the it will affect their work, their position and their status in the organization.23 Organizational systems also generate transparency in the work processes and the employee's functioning in the organization. The combination of all these factors produces a natural resistance to change. Resistance – as evidenced in the qualitative research – can range from an unwillingness to help with the system's design, latent rebellion among the employees and a negative perception of the system in the eyes of the employees during the system selection stage, to uncertainty setting in just before the system is launched. We discovered that if this resistance is not addressed in the early stages, it could affect the following parameters:

  1. a)

    Partial participation in the system design stage and presentation of an incomplete picture regarding the system processes – this also applies to when the company uses the qualifier ‘expert’, who could be a company employee with a technological orientation or an external expert coming to collect data about these processes.

  2. b)

    In later stages, it was found that resistance leads to the partial data entry; thus some of the data were saved outside of the system through auxiliary files. This case applies in particular if there is a technological failure at the system function level.

  3. c)

    In most cases, the employees entered data into the system that, from their point of view, required the least effort. It should be pointed out that this factor can also stem from the employees’ lack of awareness regarding the value of information they are entering coupled with work pressure, and so forth – however, in several cases, we found that the employees associate this action with requirements dictated by management and – as far as they are concerned – ‘disconnected from everyday reality’.

In each of the aforementioned cases, the CRM system will not be a successful one – be it because of the partial data that affect the work process on an ongoing basis or because the system cannot generate information it was intended to, as the analytic models provide irrelevant information owing to a lack of data regarding the customer and his consumption habits.

It is important to restate that resistance levels are different from one department to another, as mentioned in the ‘Management Support and Integration Modules’ section. Another issue affecting resistance is the employees’ experience with preceding systems, their implementations, and management support towards utilization of such systems.23

In light of the above, we defined this variable as a CFF.

FLEXIBILITY IN ADAPTING WORK PROCESSES AND MANAGEMENT METHODS

This factor belongs to both the organizational and the technological parameter, and includes the following components:

  • Work-related processes vis-à-vis the customer changed following the implementation of the CRM system;

  • The CRM system-influenced management methods; and

  • The main benefits the company enjoyed following the CRM implementation.

During the implementation stage, the CRM system has an impact on the way the company handles the customer, as follows:

  1. a)

    A change in work patterns in the wake of technology – system utilization requires employees to invest more in their interaction with the system while working with the customers;

  2. b)

    Changes owing to best practices – the term best practices describes ‘processes and activities that have been shown in practice to be the most effective’.24 It is not usually possible or advisable to modify such processes. Accordingly, some of the changes are ‘imposed’ as a result of this feature that changes the company's old business processes and sometimes also modifies procedural flexibility vis-à-vis the customer; and

  3. c)

    Enforcing quotas and performance indices – this made the customer service process much more monitored and changed the operational transparency – for example in the customer service department, a limit of X number of minutes per customer call, after which the system reports a customer call deviation to the shift manager. More advanced systems have factored in customer intonation as a warning indicator for the shift manager or sales department manager – a limit of X number of lead sales/customers per day/week/month, after which the system reports a deviation to the manager, depending on the dictations set by the manager.

These changes clearly require flexibility on behalf of the organization in accordance with the CRM system. Moreover, the management's ongoing support is required at each and every stage in order to prevent hindrance in the system's implementation and integration.21

In non-OCO organizations, sections (a)–(c) created a partial-to-full failure that prevented the system's continued implementation in the organization. Accordingly, section (c) was not implemented at all, or was only partially implemented, thereby not binding the employees in its regard.

It should be noted that most CRM systems replace earlier salesforce or call center systems. In such instances, the magnitude of change depends on the difference between the new working methods and the preceding system's methods.

In OCO organizations, the management changes were at several levels – at the supervisory echelon, it facilitated the proper enforcement of company regulations and a greater transparency in the operational echelon. In non-OCO organizations, the mid-management level sometimes failed to use these tools because of a lack of knowledge or motivation or as a result of the organizational culture.

The results of properly introducing the system were evident during the factor analysis stage for these factors, and show the connection between the ‘bonuses’ that the organization and the customer are privy to if the organization is indeed flexible from a procedural viewpoint and customer oriented. These bonuses include an improvement in sales processes, a decrease in sales costs, enhanced service, greater customer satisfaction, effective marketing, customer retention and reduced service costs.

In light of the above, an OCO organization clearly needs to be flexible from a procedural point of view and optimally customer oriented in order to benefit from the system's advantages. This factor was entered as a CFF, as if in each section we indicated it will not pass, the CRM system will not be successfully integrated. Moreover, it is important to point out the relationships among this factor, the organizational culture and management support.

This section concludes the organizational dimension. We have found and defined an organization type called OCO, namely, an organization with a customer-oriented organizational culture that maintains defined work processes and has the ‘desire’ – reflected from the management to the employees at the planning and implementation level – for customer-oriented holistic endeavor and procedural flexibility supporting the introduction of the foreign mediator – namely, the CRM system – to the organization. The following section will present the technological factors in the model.

SCOPE

The scope describes what the system needs to provide at a functional level. Many CRM projects do not meet the requirements of the originally defined scope. The scope has a tremendous impact on the project, through the project's design, development, implementation and integration efforts.

The scope is not included as a factor in the system's success in the quantitative section, but it is a crucial factor in the project stage. This phenomenon has several explanations that followed the quantitative study. The main explanation pertains to the system's diversity. The CRM system can be integrated as a departmental, multi-departmental or organizational system – as a result, there is great disproportion in the scope's role.12 Another explanation involves the development design – in light of the experience with ERP systems, the implementers/IT managers made sure to inform the management in advance that the scope was flexible, utilizing iterative development approach. Nonetheless, there are cases in which the scope is binding and the connection to the request for proposal (RFP) document is contractual. Another interesting finding, binding together scope, flexibility in work processes and management support, occurred in cases in which management wanted to reduce in-house resistance to the system. In such cases, an incremental iterative approach was chosen coupled with minimal adaptation, if any, to new business processes. In these instances, management expectations from the system were quite trivial, displaying the CRM system as merely a tool to document and gather customer information.

Owing to the relevance of this factor and its impact on the dependent factors, we have deemed this factor to be a CFF for the project phase and a CSF for the implementation and success of the IS.

BUDGET OVERRUN

Budget overrun – as opposed to the scope – appears in the success of the system dimension. The reasons for this might be attributed to fixed price contracts or RFPs, while in other cases, the budget for the CRM project was allocated from a departmental or special corporate account. In all of the above cases, any deviation from the initial or predefined price required an additional management discussion and decisions, which automatically made this factor more rigid in comparison to scope and timetable. In light of the above, this factor was classified as a CFF.

TIMETABLE DEVIATION

This factor is considered crucial at the project level only, and not at the system level. Organizations we reviewed claim that as long as the project is ‘out of the box’, there should not be any exception owing to adjustments, especially if they were requested in advance. Other organizations were trying to meet a launch date that was often set by management or subject to the replacement of an existing system. On the other hand, at the implementation stage, which was the longest stage, timetable deviations were considered common owing to the human factor.

When we asked managers in organizations what their attitude was to a timetable deviation in relation to budget, we got an almost unequivocal answer wherein a timetable deviation is ‘less crucial’ than a budget deviation.

In light of the above, we believe that this factor contributes to the system's success; however, any deviation in its regard – primarily during the integration stages – does not diminish its chances of success. Accordingly, this factor is a CFF in the project dimension and a CSF in the implementation and CRM success dimensions.

MODULES CRUCIAL TO THE SYSTEM’S IMPLEMENTATION

This factor stems from the factor analysis, and comprises the integration of a telephony system for internal and external users.

Organizations interested in providing a service-marketing element must use a medium that facilitates a positive channel of communication with the customer. These organizations selected this module as a basis for building a CRM system during the project stage rather than during implementation. This is a result of the fact that this factor is more technological and has a greater impact on the success of the system at later stages. This is in fact the foundation for the bond with the customer; the CRM system has no meaning in the absence of communication with the customer. The organizations that were reviewed in the qualitative section integrated various interactive voice response (IVR) systems in order to optimally channel communication with the customer, and saw this module as an essential basis for their CRM system.

It also should be noted the emergence of e-CRM solutions will, in the nearby future, replace this factor, as it provides multichannel aggregation, thus affording an in-depth view of corporate customers, and a real-time view of market trends, and achieves better margins through increased efficiency owing to reduced staffing in sales and call center departments.23, 25

In light of the above, we believe that using communication systems is a crucial factor liable to delay success if it is not optimally implemented; accordingly, this factor is a CFF.

USER-FRIENDLY SYSTEM

This element is composed of several factors: (a) the extent of the system interfaces’ complexity; (b) the complexity of the business process and its integrity as compared to the process preceding the system's introduction; and (c) the system's performance during the course of the integration.

The literature binds usability with ease of use, which can be achieved, according to Fjermestad and Romano quoting Gould and Lewis, through ‘early focus on users and tasks, empirical measurement and iterative design’.23 The above quote was highly accepted by many implementers of CRM systems; many of them noted that the iterative development approach was their preferred implementation, highlighting its benefits, including shorter cycles between design and its implementation, enhanced feedback and better user acceptance.

Nonetheless, according to Foss et al, ‘big bang’ developments that are more complex and lengthy could be de-risked by reducing the coupling between elements of the system.12

This factor is also dependent on most of the factors mentioned above and subsequently. Our research, on the other hand, revealed some interesting findings regarding the application expert's role, which was looked upon from numerous viewpoints.

As mentioned previously, a great many organizations and integrators use an application expert either from within or outside of the company. In all cases, we found a correlation between the application expert and the problem of ranking business processes, and the extent of the system's complexity. Many application experts wanted to express and include as many comprehensive scenarios as possible at earlier stages of the system development. This was sometimes attributable to the motivation these people had to launch the project to its fullest. In some other cases in which implementation strategy was loose, application experts felt that as these were positive procedural changes, it was best to ‘strike while the iron was hot’ and introduce as many procedural changes or crucial improvements as possible to these processes. This stemmed from the notion that once the implementation phase is completed, users will cease to adopt further changes, management will lessen support, and new or enhanced business processes will be disregarded.

An assessment of these situations from the integrator's viewpoint revealed that experts tended to be more ‘disappointed’ with the system's performance, and that there is more of a need to explain and coordinate the expectations between what the system can effectively provide and what the expert wants or envisions.

Another viewpoint can be gleaned from the scope, budget and time parameters of the project. There are differences in resolution between the planned scope and the actual scope. Application experts have higher resolution requirements pertaining to the system's bits and bytes. As such, they can demand that the integrators focus more on features that do not provide the optimal return on investment and are likely to add to the system's complexity. A highly experienced integrator provided us with an example in which an application expert wanted a feature that is present in systems abroad and is not built into local systems. The application expert insisted on this feature despite the fact that it was clear that this feature did not justify the company's investment and that its importance to the end-user was marginal.

Employee resistance has an impact on and is impacted by this factor – if the system is difficult to operate, or slow or complex, it creates a delay in the employee's daily tasks. In such cases, employee resistance will be exacerbated all the more if it was already present to begin with.23

Any functional or planning problems pertaining to the business processes provided by the expert are lessened if expectations are coordinated, through a steering committee or project manager:

  1. a)

    Scope implementation issues are discussed and decided in that forum.

  2. b)

    Presentations are made to demonstrate what the system is capable of offering the user at the beginning of the implementation stage and throughout the system's integration, and

  3. c)

    Planning transparency – veteran company employees participate in the requirement and implementation phases. These employees are sometimes considered ‘layman’ with regard to computer and technology, but on the other hand they know best how the system works and which business processes are crucial for that matter.

In light of its importance and the various strong correlations between this factor and other crucial factors, we have ranked this factor as a CFF.

THE SYSTEM’S EASE OF MANAGEMENT

This factor is commensurate with the degree of the system's flexibility and the extent to which the implementer/in-house IS managers tailors it to the ever-changing needs of the organization. In fact, this factor sets the degree of freedom the organization's managers have to organize, adapt and adjust long-standing business processes in order to enable the users and the organization to cope with new situations or a new reality, or to support a change in customer management strategy, thus aiding in achieving sustainable competitive advantage.26, 27

Nonetheless, despite the relevance of this factor to business flexibility and ease of use it was classified as a CSF.

CRM SYSTEM IS PERCEIVED AS SUCCESSFUL BY THE SYSTEM’S USERS

This last variable demonstrates the linkage between the technical aspects and the organizational aspects. According to Pinto and Slevin, the fourth facet of successful projects implementation is the client satisfaction criterion.28 At the IS setup phase, this means user acceptance is achieved when users take an active role in defining the scope of the system. At the implementation phase, this is achieved when users get the deliverable – when the system is perceived as easy to use and beneficial from their point of view.23 In the case of an OCO organization, the identities of the end-user goals and the organization itself unite, and thus system utilization is far higher. This factor acts as an envoy that delivers success via most of the factors mentioned above, and is of course affected by all factors mentioned in this model. This factor is a CFF throughout the CRM life cycle.

CONCLUSIONS

Managers in the organizations we have studied hold different views about CRM. Some see it as merely a tool for their organization to automate daily tasks needed to keep pace with technology and competition. Others view it as a sort of strategic endeavor needed to maintain their solutions’ margins, or even increase them. The last and most dominant group resides between these views. These and other factors we have revealed earlier form an intricate set that make CRM ventures a hard and daunting task – there is no magic potion to bring CRM success, and hence organizations have to re-think and re-invent themselves in order to be flexible enough to win in the CRM battle for success, along with the battle for their customers. Some organizations were prudent, entering this venture after a careful inspection of themselves – their inner team and implementers, the fragility and agility of their critical business processes, and their true orientation toward the customer in order to improve themselves, not to mention good technical and project management skills. On the other hand, many organizations mislead themselves with the idea that their CRM venture can turn them into a customer-oriented organization even if to a lesser degree. This task can be achieved, but in most cases the effort required from them is much greater than they will be willing to endure.