Features: May 13th, 2003

Learning About Customer Relationship Failure From The Private Sector

By Brian Ellis

In recent years Customer Rrelationship Management (CRM) in the private sector has become synonymous with expensive failure. It has fallen from the dizzy heights of ‘must have’ solution for every business to being branded an expensive flop.

Too costly, doesn’t live up to its promises and doesn’t deliver return on investment – these are just some of the criticisms levelled at CRM.

Now, with the public sector already well down the road to implementing CRM in its drive towards e-services, it is crucial to ensure it doesn’t make the same mistakes as private enterprise.

The best way to do this is to take advantage of hindsight – and how many of us wish we could do that every day!

Right now, the public sector is perfectly placed to learn from the problems that the private sector has had with CRM, but it has to be willing to listen, understand and take action.

By doing so, it can avoid the pitfalls and the pain and make sure it is right on track to deliver against the 2005 deadline to provide a full range of electronic services.

Why the public sector is different

Of course, we all know that the public sector operates in a vastly different way to private business. Where CRM has succeeded in the private sector it has been because companies have displayed a willingness and flexibility to change and evolve – for the public sector this isn’t always so easy.

Culturally, many public bodies are constrained in what they do and may even need legislation to achieve significant changes. In addition, public services often interrelate with various other organisations, so what affects one area will undoubtedly impact on another.

When change happens in private companies, it is often a traumatic time as traditional working methods are re-engineered to put the customer first. Tough management decisions have to be taken as new systems and processes are put in place.

The truth is however, aggressive management policies seldom get the best results and certainly within the public sector it is unlikely to gain many friends.

Where the public sector does benefit however is the fact that it has large numbers of dedicated, citizen-centric staff who are accustomed to political change and who can, over time, be persuaded that new ways of working do deliver results.

Likewise, the way return on investment (ROI) is handled is vastly different in the public sector.

Private companies have clear goals of acquiring and retaining customers and it is usually these that ROI is benchmarked against financially – but clearly this is inappropriate when justifying CRM in the public sector.

Instead, local authorities and others are increasingly being judged on demanding mechanisms such as comprehensive performance assessment and best value reviews. It is yardsticks such as these that CRM in this sector has to succeed against.

Learning the lessons

Having looked at the differences that clearly exist between two sectors, we then have to focus on the key areas for debate which need to be considered if CRM is to work in the public sector.

Delivery channels – we must understand that delivery channels are a means, not an end, to getting CRM right.

There is no doubt that the Government has a genuine passion for opening up new (electronic) channels for citizens to access public services, but of course this does not mean they will be utilised.

Experience in the private sector shows that anticipating what the public like to use is a lottery – contrast how slow the take-up of WAP phones has been with the vast popularity of text messaging.

Most people see interactive digital TV, internet portals and other mobile devices as being important channels in the next five years, but the real secret will be to design services that are delivery channel independent and can migrate seamlessly to allow for changing public tastes and priorities.

Knowledge management – many private sector organisations missed out on the benefits of CRM because they didn’t take advantage of the ‘bigger picture’ and the ability to share the huge amount of knowledge that they already had. Instead, they were trapped into a ‘data silo’ mentality which meant they missed the boat on some of the cross-departmental benefits available.

The key is to build a culture of knowledge sharing – designing new service delivery processes which will make best use of available information right from day one. Using today’s modern document management and content management tools we already have the technology to revolutionise what is possible for both managers and citizens.

Project management – another reason for CRM failure has been the lack of project ownership. Reducing the risks means proper planning and execution under the watchful eye of highly-skilled IT project teams who can share best practice and responsibility.

In the public sector, although constraints are different, this is more important than ever. The growth of joint delivery bodies and the need to deliver projects to a hybrid financial environment, such as Private Finance Initiatives, call for a very disciplined approach.

It is essential therefore that risk management programmes, such as the assure toolkit developed by ourselves, are in place to keep a close watch on developments.

What next?

Encouragingly, good progress has been made towards establishing infrastructure and standards, while financial incentives such as the Pathfinder programme have encouraged an impressive culture of experimentation and innovation.

Inevitably however, not all projects have fulfilled their early promise and some are still a long way from their goals.

That’s why now is the right time to take stock of the early investment decisions and look again at what they are trying to achieve, so they can be sure the promised benefits will be delivered.

Some problems may be technology based, while in others an inadequate emphasis on organisational and cultural issues may be holding back progress. By studying the problems in partnership with experienced CRM specialists, the public sector will be able to identify the problem areas and avoid throwing good money after bad.

Bringing in dedicated experts also helps provide new thinking that steers projects towards success and ensure that if realignment is necessary, it can be done with minimum fuss.

Getting the right results

Crucial to the success of CRM in the public sector is the ability to deliver the right results at the right price and at the right time.

If it goes wrong, the public will feel let down and disillusioned, and potentially thousands of pounds will have been wasted in systems and services that don’t work.

Today’s citizens will only be happy when they see real improvements in public services but this can only be achieved through major investment in both front-end (customer facing) and back-end processes.

Making sure this happens is key. Good planning, detection of early warning signs of failure and paying attention to the lessons learnt by the private sector are all stepping stones on that road to success.

The big question is whether the public sector is ready to listen – or is it determined to go its own way?

Brian Ellis is chairman and founder of Interchange Group which specialises in Information and Communications Technology services. He is co-author of a white paper: ‘The Hidden Secrets of Successful Customer Management (Private Lessons for the Public Sector)’ available from http://www.interchangegroup.com