Implementation Problems with Customer Relationship Management Programs: A Case Study

Transcription

1 Page 1 of 14 ANZAM 2010 Implementation Problems with Customer Relationship Management Programs: A Case Study Ulrich Veyhl Ehrenberg-Bass Institute for Marketing Science School of Marketing, University of South Australia, Adelaide, Australia ulrich.veyhl@postgrads.unisa.edu.au Dr John Wilkinson Ehrenberg-Bass Institute for Marketing Science School of Marketing, University of South Australia, Adelaide, Australia john.wilkinson@unisa.edu.au 1

2 ANZAM 2010 Page 2 of 14 ABSTRACT A case study provides an illustration of how implementation issues could limit adoption of even a welldesigned data warehouse system and, in turn, an overall customer relationship management program. Implementation problems with a new data warehouse are identified from the perspective of core users, as well as measures taken to overcome those problems in a recovery implementation program. Perceived problems are consistent with theory regarding employee resistance to change and with findings of prior research regarding causes of failure of customer relationship and data warehouse programs. Some problems relate to cultural issues within the Asian organisation. Recovery measures are consistent with recommendations of prior researchers. Success of the remedial program provides evidence that recovery from an unsatisfactory implementation is possible. Keywords: Customer relationship management, Data warehouse implementation CUSTOMER RELATIONSHIP MANAGEMENT Customer Relationship Management (CRM) involves analysis and use of knowledge about customers in order to sell more goods or services and to do it more efficiently (Bose 2002: 89). Initially, a new CRM system utilises data from various existing systems within the company, the data eventually being stored within a single, new data warehouse. Since data availability and integrity are key requirements of an effective CRM system, the data warehouse is a key component of any CRM system. About per cent of CRM programs are considered to have failed (Payton and Zahay 2003; Wu and Wu 2005). Research findings indicate that most problems occur during the data warehouse implementation phase and often reflect a lack of user acceptance of the data warehouse; therefore, it is important to monitor user acceptance, as well as other components of the CRM system (Kale 2005). This paper focuses on problems experienced with the data warehouse implementation within a division of a global corporation with its head office in Asia. Consistent with prior studies, resistance to change appeared to be a contributor to low levels of user adoption, confirming the need for effective change management during implementation of such programs. 1

3 Page 3 of 14 ANZAM 2010 CUSTOMER RELATIONSHIP MANAGEMENT AND DATA WAREHOUSE IMPLEMENTATION Many firms selling through resellers derive a large proportion of their income from a small number of channel partners (and a small proportion of their product range). Such companies need a clear focus on their key customers and products (Helmke 2003). Appropriate analysis of relevant customer and product data is essential to ensure high levels of CRM, partly explaining why companies implement CRM and data warehouse systems. Prior to a data warehouse being installed, each department typically has its own system to collect and store data. Introduction of a data warehouse enables amalgamation of data from those different sources, including data from overseas subsidiaries. However, the acquisition and editing (cleaning) of existing data requires a major effort and the commitment of all departments (Kale 2005). User acceptance of the data warehouse system is necessary for a successful implementation. However, resistance often develops among users, perhaps even throughout the entire organisation. Companies could avoid such resistance to adopt a change management program to support users and to convince them of the benefits of the new system. One complication is the difficulty in measuring user adoption and usage of the data warehouse, and lack of user familiarity with the new software (ibid). Major reasons for employee resistance to the introduction of CRM and data warehouse systems include the challenge and stress resulting from demanding, different or new system requirements, loss of control, and changes in work practices and inter-personal power relationships (Petouhoff 2006). Potential problems confronting employees include the lack of involvement of users, management support, planning, resources and technical knowledge; unclear goals; unrealistic expectations and timeframes; inadequate internal communication; an existing staff culture that does not have a strong customer focus; operating problems; the necessity to change working routines; and fear of failure (Kale 2005; Pries and Stone 2004). 2

4 ANZAM 2010 Page 4 of 14 The implementation process is illustrated in Figure 1, which indicates the need for staff to be supported and encouraged throughout the whole process, and to fully understand the new system. It is necessary to have broad commitment for, and user understanding of, the changes that would confront users following introduction of CRM and data warehouse systems. It also seems unlikely that users could cope without guidance (Kale 2005). Therefore, it seems necessary to have a project plan that enables users to orientate themselves regarding their own knowledge and the potential problems within the implementation process. The project plan also should provide indicators or milestones for project performance measurement purposes (Rogers, Stone and Foss 2008). Importantly, the project plan should incorporate a change management process (Kale 2005; Pries and Stone 2004). That process could comprise the following components (Kale 2005). Firstly, through a series of information sessions (or road shows), users should be informed of what is expected from Figure 1: The customer relationship management implementation process Source: Pries and Stone, 2004: 355 3

5 Page 5 of 14 ANZAM 2010 them regarding the new systems, future data analysis work and overall CRM issues. It also is important to inform users how the new technology would affect their work and to inform them of potential problems within the implementation phase. Secondly, adequate training should be provided to ensure users fully understand system applications and benefits. Thirdly, motivation should be attempted through the use of agreed targets and milestones, including appropriate reviews of achievement of those milestones. Potential benefits should be identified, such as users being able to more readily identify the most profitable customers and products. Fourthly, effective communication also should be used to motivate and inform users. Finally, adequate strategic planning for the entire CRM and data warehouse implementation should be undertaken before commencement of the implementation process. The strategy should consider any realignment of the company, such as greater customer focus, which would benefit from an improved understanding of customers due to enhanced data and data analysis facilities. The strategy also should take account of necessary changes affecting the user s work patterns. It also has been suggested that change management should be supported by an internal marketing program, aimed at convincing employees especially data warehouse users of the benefits of the new systems (Eckerson 2002). While various studies of CRM or data warehouse implementation projects have been undertaken, no major studies have investigated the implementation of data warehouses for the purposes of supporting marketing applications, such as CRM focusing on the needs of marketing managers (Payton and Zahay 2005: 238). This study has focused on such users. CASE STUDY BACKGROUND In 2007, a division of a major Asian corporation with global operations installed a data warehouse for its International After-Sales Department within its international head office. The Department markets a wide range of replacement parts and other after-sales products to overseas owners of vehicles manufactured and marketed by the Division. It has distributors in many countries throughout the world. (Operations within the firm s home country are handled by a separate department.) 4

6 ANZAM 2010 Page 6 of 14 It is important for the Department s marketing executives to be able to analyse various sales-related data at country and regional levels to facilitate marketing and logistical decision-making. To meet this requirement, it was decided to establish a data warehouse to acquire data from several existing systems and to provide effective analytical tools for users. The data warehouse comprised a key component of a new CRM system designed to link the division and its distributors within various countries. The implementation phase of the data warehouse ended with user training in January Management initially expected users to commence utilising the data warehouse following that training. These approaches are typical of those reported in the literature. However, it became apparent that user adoption was very low. Further ad hoc training was conducted during 2008, but without much improvement in user adoption. In hindsight, this lack of improvement is not surprising since the training did not address the issue of user resistance, considered important by prior researchers. Each of the five Market Managers within the Department is responsible for a specific region. These executives and their reporting staff comprised the potential users of the new system. They were advised of the planned CRM and data warehouse systems in early Development and construction of the data warehouse started in the middle of 2007 and the implementation process ended after the final user training in January Core users, the Market Managers and their reporting staff, were expected to use the data warehouse as part of their daily work with their overseas distributors following the final training phase in January However, most users were unable to use the data warehouse and, therefore, additional workshops were arranged during Most were not sufficiently motivated to attend the workshops, despite requiring further training to understand how to use the data warehouse. By early 2009, it was decided to establish a project to assess the situation and to develop recommendations aimed at increasing user acceptance and adoption of the data warehouse. 5

7 Page 7 of 14 ANZAM 2010 METHODS Semi-structured interviews with users appeared to be the most appropriate means to gain an insight into reasons for low acceptance of the data warehouse, partly because the approach avoids negative effects of group-think (Moorhead and Montanari 1986). Informal questions were prepared to initiate discussion, based on issues identified within the literature. Detailed notes were taken during the interviews but voice recordings were not made. It was assumed that the five Market Managers would have had the greatest exposure to the new system, since they would have undertaken the prior training and received feedback from their subordinates. Also, there was some indication that the Market Managers reporting staff would be somewhat unwilling to discuss their problems with the new system in-depth with either systems support staff or a researcher from outside their immediate working group. Therefore, interviews were conducted only with the Market Managers. Each interview was expected to take about an hour but actually took much longer (up to three hours) due to high levels of interest in the project. Confidentiality appeared not to be a concern among the Market Managers since the interviewer came from outside the company (so that potential inter-personal power relationships were not an issue). PARTICIPANT FEEDBACK All five Market Managers expressed keen interest in the data available from the data warehouse and indicated a willingness to use the system eventually. All Managers recognised that the data analyses available through the data warehouse could enhance their marketing activities. For example, they recognised that the system could provide them, their staff and distributors with a deeper understanding of their markets. The participants indicated that different management levels within the firm and its channel partners would require different levels of data knowledge and understanding. However, they believed that all users should be trained to a standard level for basic, daily data warehouse usage. It was clear from the personal experiences of, and subordinate feedback received by, these participants that different levels of data warehouse knowledge existed within the core user group and, more 6

8 ANZAM 2010 Page 8 of 14 importantly, that the majority of core users had never attempted to work with the data warehouse. Some participants admitted that they had never even opened the software even though the software had been installed on their personal computers. Generally, it seemed that very few core users (the Market Managers and their reporting staff) made use of the data warehouse, and that those users made only occasional and limited use of the new system. Overall, reasons for not using the data warehouse varied among the participants. All participants (and, apparently, all of their reporting staff) preferred to continue to use the older, established systems with which they were completely familiar. They considered learning to use the new data warehouse system to be a burden that they preferred to postpone until the old systems were closed down. This situation existed despite occasional reminders from senior management about the need to change to the new data warehouse system. Time pressures were mentioned as one reason for not yet taking time to learn how to use the new system. Clearly, all core users seemed to lack motivation to make the change as long as the old systems still were available. Most of these issues reflect findings of prior researchers. Surprisingly, some participants (and, apparently, their staff) still were awaiting an official launch or Kick off for the new data warehouse system, not realising that the commencement was meant to have occurred immediately following the final formal training session in January 2008 (about 18 months before the interviews). Apparently, the group suffered from a lack of clear communication about the implementation of the data warehouse. When asked how soon they and their staff were likely to switch to the data warehouse system to undertake comprehensive sales-related analyses, some participants still could not provide an estimate of the timeframe. The following specific barriers to conversion to the data warehouse system were the most commonly mentioned by the participants. Firstly, the participants believed that the implementation had been affected by language-related issues. All presentations, training sessions and workshops had been delivered in English rather than the home language. Systems documentation also was in English, requiring significant time for users to translate into their home language. Secondly, some participants claimed not to have the necessary software to undertake data interrogation. Thirdly, most users were 7

9 Page 9 of 14 ANZAM 2010 challenged or confused by the wide range of available data and reporting options. This situation had been exacerbated by program changes during 2008, so that some report formats had become obsolete after initial use, requiring users to re-learn the reporting options. (It seems that the system was still under construction when officially launched in early 2008.) Understandably, this experience had caused frustration among participants (and their staff). Fourthly, as mentioned above, participants still had gaps in their knowledge of the data warehouse system and its features. Participants believed that this was partly because all training had been group-based, not allowing users to learn at their own pace or to have their particular difficulties dealt with properly. Finally, manuals to support users when attempting to first use the data warehouse system (following formal training) were incomplete, with only some system features being covered. Participants also suggested there was a need for exercises, cases or tests which would enable individual user knowledge of the system to be checked and, as required, further one-to-one training needs to be identified. Improvements in subsequent exercise or test results also could provide some motivation and an improvement in self-confidence among users. Importantly, such an approach would require users to engage with the new system, especially if combined with one-to-one coaching. In addition, analysis of test results would enable an assessment of the overall level of user knowledge and identification of any aspects of the system causing problems in a general sense. These suggestions reflect approaches undertaken within successful implementations (for example, Thorne 2000). The significance of potential problems resulting from lack of user adoption of the data warehouse system is illustrated by the data displayed in Figure 2. There were no purchases of a particular spare part by a distributor in a particular country for more than 12 months (roughly, from mid-2008 to mid- 2009), without the relevant marketing staff being aware of this situation despite detailed reporting such as that illustrated in Figure 2 being available from January 2008 within the new data warehouse system. Early identification could have enabled marketing staff to discuss the situation with the distributor and to have had some prospect of a successful intervention. Importantly, similar situations existed for various spare parts within the Department s product range. 8

10 ANZAM 2010 Page 10 of 14 Figure 2: Sales trends for spare part in one overseas market (country) Source: Standard analysis from company Data Warehouse in July 2009 FOLLOW-UP IMPLEMENTATION PLAN After analysis of the feedback from the Market Managers, the following actions were recommended. Firstly, it was essential that the action plan should have clear commencement and completion dates, with the overall time period long enough to allow for adequate learning and short enough to provide some sense of priority or urgency. Given the clear need for incremental targets, it was proposed to name the project, Second phase milestone plan, with a duration of just five months (July to November, 2009). Besides initial group training workshops, individual quizzes were introduced, focusing on the most common features of the data warehouse system. Quizzes were delivered to users via . Users were able to compare their own solutions with those of colleagues before submitting screenshots of their final solutions for feedback purposes. This enabled tracking of the progress of individual users, identification of additional training needs, and evaluation of the effectiveness of training workshops. An internal marketing program also was commenced, aimed at explaining the value of the data and reporting available from the data warehouse system in an interesting, persuasive manner. Components included a quiz based on the television show, Who wants to be a millionaire?, with questions based on analyses available within the data warehouse; and a reminder campaign which identified the benefits, scope and value of the data warehouse system, comprising the regular distribution of leaflets containing chocolate. 9

11 Page 11 of 14 ANZAM 2010 Representative meetings with systems support staff also were commenced, so that user feedback could be provided without individual users having to discuss their problems directly with the systems support staff and, therefore, enabling those users to save face. Having just one representative of each user group meet with systems support staff also minimised time pressures. The plan was initiated in July Feedback from departmental management in June 2010 indicated that user acceptance was considered to be completely satisfactory following the follow-up or recovery implementation program. This success appears to reflect the emphasis on both user knowledge and change management, consistent with theory regarding resistance to change and considered important by prior researchers (for example, Man and Leung 2008; Thorne 2000). CONCLUSIONS This case study illustrates the typical problems identified in the literature and remedial actions recommended to address those problems. As confirmed in this case study, an effective data warehouse implementation requires coordinated and thorough communication and training programs to ensure users are sufficiently motivated and trained to be able and willing to adopt the new system. Findings confirm the need to take account of people as well as technology (Chen and Popovich 2003; Thorne 2000; Wixom and Todd 2005). An internal marketing approach treating users as customers and promoting the system benefits to them in creative ways appears appropriate given the potential barriers to adoption of the new system. This case study indicates that remedial approaches can be successfully undertaken in the event of an initial implementation being sub-optimal. However, initial failure in implementation is clearly likely to delay the benefits derived from the new system (such as early identification of adverse market trends). While relating to just one particular organisation, evidence of the ability to remedy an unsatisfactory situation is an important finding for senior marketing management. Of course, each implementation is unique and, therefore, different methods should be considered to increase the acceptance of new systems during the implementation phase. However, methods should 10

12 ANZAM 2010 Page 12 of 14 focus on motivating users (perhaps through internal marketing approaches) and ensuring those users are sufficiently well trained to be able to use the new system with confidence. Monitoring user behaviour especially system adoption and usage levels is also important, so that remedial action may be taken as soon as possible should problems be identified. In some cases, language problems also need to be given adequate attention, as indicated in the current situation. LIMITATIONS AND RECOMMENDATIONS Findings of this study relate to just one (small) set of users within one Asian organisation and, therefore, should not be generalised. Not surprisingly, the findings differ from those of a study of users within a totally different setting, namely, a health care organisation in a major western economy (Payton and Zahay 2005). The major issues identified in that study related to users perceptions (1) of poor data integrity and (2) that their needs had not been taken into account in the design of the system interface. Those were not major issues in the current study. Prior recommendations for further research in this area (ibid) seem most appropriate. Research relating to the re-launching of failed implementations seems especially important. Findings covering a wide range of situations would enable some general issues to be identified. REFERENCES Bose R (2002) Customer relationship management: Key components for IT success, Industrial Management & Data Systems 102 (2) Chen IJ and Popovich K (2003) Understanding customer relationship management (CRM): People, process and technology, Business Process Management Journal 9 (5) Eckerson W (2002) Marketing the data warehouse. Retrieved on 23 June 2009 from 11

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