What CRM implementation failure rates teach us about Digital Transformation failure rates.

Years ago, I used some statistics showing the overall CRM implementation failure rate during the years 2001-2009 (year, source, failure rate) :

2001 Gartner Group: 50%

2002 Butler Group: 70%

2002 Selling Power, CSO Forum: 69.3%

2006 AMR Research: 31%

2007 AMR Research: 29%

2007 Economist Intelligence Unit: 56%

2009 Forrester Research: 47%

Failure was not about technical failure, budget overspend, or respecting timing. Failure was about the sales team not achieving the expected sales numbers as a result of the CRM implementation. Impacting not only the sales numbers but also the CRM's ROI, cost savings, the company's competitive position etc. Crucial is however that these statistics are about the failure rate of implementing a single CRM system in a single team; the sales team.

I also used these numbers when answering RFP's. By doing so, I hoped to convince prospects that to be really successful, they needed a transformation on top of the CRM technology project. This would allow them to analyse the current sales process, discover ways to improve the process, make the necessary organisational and cultural changes in the sales team. And not to forget, communicate about the new CRM roll out, the quick wins, and involve and engage sales people and all relevant stakeholders from different silos. Put short: create real and lasting business impact with the CRM.

Alas. CRM was about technology: "Deliver the CRM". Full stop. Budget or time for fluffy stuff such as culture or daring to question the fundamentals of the sales organisation, asking money to communicate and get people engaged was at least "inappropriate".

And yes, there were also these rare moments ... I will always remember the European Sales & Marketing director of a company that implemented a CRM in 7 countries. He acted as a leader and had the courage to dive in, analyse, redefine the fundamentals of his sales organisation, change the culture, communicate heavily, go for the quick wins, train his sales people about the new sales process and their new and different roles, engage people across silos etc. It was a big effort but it resulted in sales increases of often more than 25% in his so called saturated markets. All this within 2 quarters after the implementation.

Times have indeed changed. Luckily we live now in the glorious era of digital transformation. We are leveraging a zillion different types of technologies in our organisations to maximize efficiency and effectiveness, and delight customers. We implement new business models which make our organisations successful in the digital economy and which allow us to compete with disruptive competitors. Right?

Wrong, we don't. About a year ago an article in Forbes claimed that 84% of companies fail at digital transformation. "a large part of that 84 percent that fail it’s because they're not prepared to change behavior". Couchbase ordered an independent survey to discover that "90 percent of digital decision-makers agree that the revolutionary potential of digital projects is often talked about, yet most of the time they are used to only deliver incremental improvements." A McKinsey survey shows that "just 26 percent of respondents say the transformations they’re most familiar with have been very or completely successful at both improving performance and equipping the organization to sustain improvements over time."

If a single type of technology - CRM- does not change organisations if not implemented with care, why then is the general belief that overhauling complete organisations can be done by just implementing a lot of technologies?

Good sales teams, with good leadership, using an excel sheet to follow up on their sales performance, were not beaten by bad sales teams with a sophisticated CRM system. Not even by good sales teams with a CRM system. But times have changed indeed. A disruptive start-up, how fragile it even may be during its start-up phase, is capable of wiping out a well established company. Because leveraging technology well and embedding technology in its culture, makes this start-up a very different kind of company: a disruptive one.

Today, as before, technology is only the enabler for a (digital) transformation*. Traditional companies depend on leadership to start or fine tune their digital transformation the way it should be done.

And it takes courage to do so. Two examples:

• Short term shareholder expectations are often not aligned with the impact a digital transformation may have. How courageous you must be as a CEO to start fighting your own board? It's your job at stake.
• Bonus systems are often not aligned with the need to create the chances to survive in the digital future. Which committee of directors will change its "guaranteed" bonus scheme?

CRM implementation failure rates and Digital Transformation failure rates have a lot in common. You fail if you do not design a transformation layer on top of the technology layer.

But there are also differences: Digital Transformation impacts every single dimension of the organisation. Not just one. And not acting as a leader may well cause your company to disappear.

What's your choice? And, how will you start?

* This will change in the future when AI will be capable of autonomously designing, fine tuning and executing new or existing processes in organisations.