Case Study: Failed CRM Implementation

If you’re looking to implement a customer relationship management (CRM) solution in your business, this article will highlight a few key areas you might want to cover to avoid costly mistakes made by other businesses.

A few years ago, a CRM system was integrated into a healthcare organization. It wanted the CRM system to redesign the company’s IT, but within months it was clear the execution was a disaster.

The conversion of it customers to the new CRM system did not go smoothly.

Such was the hiccup in customer service that the company lost 6 percent of its healthcare membership in a year.

The share value also fell by 40 percent.

So what were the reasons for the failure of the CRM implementation in the first place?

In short, there wasn’t enough planning and training to ensure a smooth implementation.

In 2001, the company’s new CIO began work on an ambitious plan to consolidate the company’s legacy IT systems.

The idea was to have an integrated system for enrollment, eligibility and claims processing so customers would receive a single invoice and medical claims would be processed faster and more efficiently. This would also give customer service reps a single unified view of members to achieve this.

That meant there would actually be two integrated systems, one for customers of the company’s managed care offerings and the other for its compensation products.

The purpose was noble, but the implementation failed – why? Let’s examine…

To achieve the transition to the new CRM solution, staff had to build a complete AS400 infrastructure from scratch that could support the major claims processing platforms.

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Most of this architectural work was done in-house, but the company hired a third party to implement the changed management and business processes.

It also worked with the third-party provider to develop and implement the new customer-facing applications that would allow members to log in, check the status of their entitlements and benefits, and choose from various health plan offerings. Siebel software was purchased to handle the call center functions.

Part of the problem was that the company started late. As a result, there was considerable pressure to get the new systems up and running as quickly as possible.

There were several reasons for the urgency.

For starters, the organization has been sued by thousands of doctors nationwide, angered by delays in paying for patient care.

Second, the sales team had promised that the new systems would provide improved customer service and go live in early 2002 to attract large employer accounts.

Third, after reporting disappointing second-quarter results in 2001, management was under pressure to cut costs.

Member migration to the new platform began in 2001, albeit in relatively small numbers. At the same time, the company began laying off customer service representatives.

In January 2002, as new members came on board and existing members were renewed, a large number of customers were simultaneously transitioned to the new system. It was too much to handle and problems erupted immediately.

Members suddenly had trouble getting health insurance. Workers at another company effectively lost insurance coverage when their membership information was not properly loaded into the new systems.

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Membership cards were issued that contained incorrect identifiers and missing recipe icons. People couldn’t get their prescriptions filled at their local drugstore/pharmacy.

Not surprisingly, the company’s customer service center was besieged with calls. But because of the layoffs, there weren’t enough call center reps to handle the load.

People waited in line. And when they did get through, the new hires weren’t trained enough to use the new technology.

The organization struggled.

And it didn’t have to be.

Despite the initial issues highlighted, the CRM solution now allows the company to process medical claims more efficiently and better manage customer needs.

If you want to implement a new CRM system, plan the implementation. Prepare the required training and minimize disruption to your business.

A CRM system would be fine for your business and any business – but only if implemented properly.

Take the time to implement your customer relationship management system properly and avoid the above mistakes.

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