A Full Service Global Management Consulting and Executive Training Firm
by Kent F. Moors, Ph.D.
Executive Managing Partner:
Risk Management Associates, International, LLP
This is a story of a botched CRM upgrade that cost thousands of new customers and an estimated $100 million in lost revenue. Following an FCC ruling, customers were finally able to switch cell phone carriers and retain old telephone numbers. Following orders made with a major carrier, customers were greeted when consulting the company Web site with the following message: "We could not find a porting request for this number in the system. Please contact Customer Care." It was the beginning of a multi-month odyssey during which some customers made 15 to 20 calls, sent numerous e-mails and spend countless hours dealing with customer service representatives or waiting on hold-with the line often going dead when the customer service lines became overloaded.
A major CRM system crashed during an upgrade, and customer service representatives could not set up or access new accounts. The system breakdowns gridlocked customer service phone banks and sent furious customers scurrying to other providers. The failure so damaged the companyÕs reputation that many analysts believe it hastened its multi-billion dollar sale for less than half of the share price when the company went public less than four years earlier.
The nightmare offers valuable lessons for Chief Information Officers and related executives. First, it is unwise to freight major system upgrades with external complications. The CRM upgrade was hamstrung from almost the very beginning by rumors of outsourcing deals and future layoffs. These rumors generated pervasive morale problems that hurt the productivity of project staff. Second, complex projects require flexible deadlines. The company undertook a difficult upgrade that affected roughly 15 systems just before it was faced with an immovable deadline--the federally mandated number portability date. Finally, it always pays to have a plan B. Without one, the company was forced to move forward even as it became apparent that its upgrade would not be completed in time.
Though observers could not trace specific causes for the crash, a few factors played a role. As the go-live date neared, project managers relaxed testing requirements for various components of the system. Rather than freeze the code for the system once problems began, teams continued to add new pieces to the project in an attempt to get it all working. But the new pieces simply added more errors to an already bug-ridden system, which complicated the process of finding root problems and fixing them.
Compounding these difficulties was the hit employee morale had recently taken. Corporate executive management had confirmed rumors that 1,900 workers would be laid off. While no information was provided on where the cuts would come or when, IT managers started telling employees that layoffs would begin in a few months. A report compiled by an Indian consulting firm outlining plans for offshoring portions of the companyÕs IT infrastructure and support was obtained and circulated, causing IT employees to wonder why they were working so hard on an upgrade under an oppressive deadline if the whole project was going to be outsourced anyway. IT morale plummeted. Ultimately the concerns proved warranted as more than 3,000 positions in computer operations and customer services were sent abroad. Some of these layoffs even began during the new customer service meltdown. The upgrade actually crashed twice, adding about 50,000 new customers without service each week. Most quickly went elsewhere.
The company significantly tarnished its reputation, lost professional personnel, including more than a dozen top executives who abandoned ship shortly after the IT debacle. It had relied exclusively on a CRM upgrade, from a single vendor, which proved to be incompatible with its existing operating system. The company had no realistic time line for implementation, started the entire process far too late, and had no fallback plan. Most importantly, this major American company had not developed an overall evaluative process for the upgrade, had no idea whether various units involved in the process were operating compatibly with others, and had no clear direction from top management and board members. It also produced significant morale problems among the very specialized personnel needed to accomplish the upgrade when plans to offsource the positions became known during the process of the upgrade itself.