CRM: In the Eye of the Hurricane

The CRM market has been a bit soft as of late but is expected to gain momentum again soon, according to a new study by AMR Research. Tight IT budgets and economic recession impacted customer management application growth during the past year, according to the report "The Customer Management Applications Report, 2001-2006", released this week by AMR. The CRM market saw only a 6 percent increase for 2001, compared to a 79 percent rise in 2000, the report states. "With plenty of growth potential and the room to expand in all industries, the customer management market is down, but not out," the study states. Because the slow down in growth is attributed to external factors and not market maturation or market saturation, the research firm expects growth to accelerate in 2002, and by 2006 reach $26.3 billion. That would be more than double 2001's $11.6 billion. And for the first time licensing revenue decreased to 4 percent. While licensing is often a key yardstick to measure the maturity of a market, AMR researchers say licensing was also impacted by IT belt tightening and economic issues related to the events of September, 111, 2001. The research states that 36 percent of manufacturing companies and 28 percent of service companies are in the stages of evaluating customer management solutions. However, according to the AMR study, the reasons for wanting to implement customer management solutions has changed from a top line revenue focus to an emphasis on the bottom line where cost savings and improved efficiencies are key. The report also states that tough economic times impacted the vendors and caused much consolidation with the top 10 vendors represent 43 percent of the market. Siebel Software Systems Inc. continued to lead the pack with 18 percent of the total customer management revenues generated in 2001. Siebel's closest competitor was SAP with 5 percent of the total revenue. The leading fastest growing segments within the customer management market are partner relationship management. PRM is the smallest segment but the study says it is the fastest growing at a rate of 61 percent per year. PRM is followed by the customer service segment, which includes contact center, email management, field service and Web self-service functionality. That segment has reach 30 percent or revenue, up 4 percent from 2000. Growth for that segment was 10 percent, according to the study. E-commerce, which had been the fastest growing segment, declined by 9 percent last year. SFA and contact center infrastructure were fairly flat for 2001. In addition, most vendors released Web-based products. Customer management applications running on the Web grew 16 percent, as did hosted applications. However, customer management software running on client/server architecture declined by 14 percent. The report also states that big business are still spending the most of customer management applications, but that small to mid-sized business are also adopting the technology. The SMB market grew 29 percent, the study shows. And there is also room for growth internationally. With 65 percent of revenue for CRM applications coming from North America, Europe (25 percent) and Asia/Pacific (7 percent) along with Central America (2 percent) are still ripe for CRM solutions. The growth industries include manufacturing, which leads the pack with 38 percent of the revenue for the CRM market. However, overall manufacturing declined by 4 percent while the Public Sector grew 32 percent in 2001.