The CRM Software Failure Rate is 55%

Highlights

  • Before anyone can suggest the CRM software failure rate, they need to advise how they define and calculate that figure.
  • CRM failures may be defined as not achieving objectives, exceeding estimated implementation timeframe or budget, or other factors.
  • For purposes of our research and calculation, we recognize time and budget are important, but exceeding them creates variances that are separate from ultimate success or failure. We assert that implementation success is realized if the application achieves its planned objectives.
Johnny Grow Revenue Growth Consulting

When CRM is properly implemented, the payback is impressive, as evidenced by a CRM ROI study.

However, when it fails, the failure is generally impressive as well.

Most of us have heard the grim statistics. Gartner reported that the CRM failure rate was 50%. Forrester reported it was 47%. Other analyst reports put this figure between 30 and 70%. So, who's right?

I've spoken to analysts at Gartner, Forrester and other firms and quickly recognized a lack of consensus for what defines a CRM software implementation failure.

So, to bring clarity and measurability to this metric, we performed research and published our results in the CRM Failure Report. The research surfaced several related data points, and categorized deployments into the following.

  1. Implementations that achieved their slated objectives
  2. Implementations that achieved their slated time duration
  3. Implementations that achieved their slated budget
  4. Implementations that achieved their slated objectives, time and budget
  5. Implementation projects that were cancelled before their scheduled go-live

Applying data and the above categorizations, readers can assess several factors to self-determine what constitutes success or failure. However, our goal as researchers is to convert complex questions into simple answers, and the question of "What is the CRM failure rate?" needs a single, simple, and complete answer.

At Johnny Grow we assert that the failure rate is equal to the percentage of deployments that did not achieve their planned objectives. The volume of projects that were cancelled prematurely are counted in this figure.

Pursuant to the above definition, the research data for this report found the CRM implementation failure rate is 55 percent.

While important, time and budget overruns are unfavorable variances, and significant challenges to implementations, but do not constitute a project failure if the project ultimately achieved its slated objectives.

CRM Failure Rate

What is the CRM failure rate? Research shows that when failure is measured as the percentage of deployments that did not achieve their planned objectives, the CRM failure rate is 55%.

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Some important implementation performance metrics are shared below.

Objectives Realized

Survey participants were first asked to advise if their CRM implementation achieved its originally slated objectives. The responses are shown in the below left pie chart.

CRM Achieved Planned Objectives

When slated objectives were not achieved, the average variance was 51%, meaning that more than half of originally planned objectives fell by the wayside.

We also reviewed the data by respondent role and found a stark difference in the reporting. 54% of respondents that identified as an IT role advised their original objectives were achieved. However, only 41% of respondents that identified as a business role advised their original objectives were achieved.

We wanted to know when objectives were removed, which types of application users were most impacted.

As show in the above right doughnut chart, users were 4X more likely than managers to have objectives and benefits discarded. This is an order of magnitude statistical variance that suggest user objectives are weighted significantly less important than manager objectives.

When we correlated the achievement of objectives with other factors, the data found that when time and budget were exceeded, the realization of objectives fell precipitously, and user objectives fell disproportionately more than management objectives.

Time Duration Realized

Survey participants were asked if their application implementation project achieved its originally planned time duration. The responses are shown below.

CRM Achieved Timeline

The data demonstrated an inverse relationship between time and objectives. As planned implementation time was exceeded, objectives were reduced. The data suggest that when implementors seek to compensate for time overrun, scope is reduced, and objectives become a casualty.

For respondents that advised their originally planned timeline was exceeded, we asked them to identify the amount of the variance. The responses are shown in the upper right bar chart.

7 in 10 respondents exceeded their planned timeline by 30 percent or more. Almost half of respondents exceeded timeline by 50% or more and one in five materially missed their timeline by 100% or more.

These types of variances exacerbate business interruption during the implementation period and often draw uncomfortable and critical investigations that can negatively alter career paths.

It should not be lost on readers that the greater the implementation timeline variance, the greater the probability of failure.

Budget Realized

Survey participants were asked if their implementation project achieved its originally planned budget, and if not, the amount of the variance. The responses are shown below.

CRM Achieved Budget

Technology budgets are clearly challenged when about two-thirds of implementors exceed their allotted funds.

When reviewing project quality (objectives), time and cost collectively, 25% of implementation projects achieved their slated objectives, timeline and budget.

34% of projects missed their planned objectives but achieved their planned time and budget.

In terms of cost variances, most budget overruns were not insignificant. The median budget overrun was between 30 and 49%.

The data demonstrated a clear pattern among company size and cost overrun. The larger the company the more likely of cost overrun. Companies over $1 billion annual revenues were 1.6X more likely to exceed budget than companies less than $100 million. Companies at $5 billion or more were 2.1X more likely to exceed budget than companies less than $100 million.

Takeaway

55% of survey respondents advised they failed to meet their objectives.

10% of survey respondents advised they cancelled their software deployments before their planned go-live event.

We originally set out to separate and analyze the breakdown of implementations that failed to meet their objectives from those that failed outright. However, we learned it was a difference without distinction.

The only variance between these two consequences was timing. The business result was the same.

Those deployments that failed outright were generally terminated before or shortly after the go-live event. Many of those that failed to meet their objectives limped along until they were eventually abandoned.

Impaired may sound better than imploded but those that failed outright were more likely to regroup and evolve in much shorter time than those who attempted to deny reality and procrastinate the inevitable. Denying a failed CRM project is futile.

For companies planning their implementation, consider these three overarching success factors.

  1. Begin with Design Thinking. Starting with the right objectives is a precursor to creating the right plan.
  2. Adopt best practices. There's no need to reinvent already proven methods.
  3. Include change management. Also recognize that unless the pain of same is greater than the pain of change and staff benefits exceed staff effort, user adoption and software utilization will wane, and eventually the software will be rejected and discarded.