Datamonitor Reports Swelling Customer Service Software Market

The service automation software market, worth $2.32 billion worldwide in 2001, will grow to $4.4 billion by the end of 2006, predicted market researcher Datamonitor, in a report released today. North America will lead the industry with an anticipated worth of $2.8 billion by 2006, followed by Western Europe and Asia-Pacific. ector standout Siebel. Conversely, application service provider (ASP) Salesforce.com plans to debut an enterprise product in the next few weeks.

If Siebel is coming under increasing pressure from above and below, the company's new modular architecture is doing well, according to analyst Denis Pombriant of Aberdeen Group. "Siebel 7.0 gives leverage to users who need a suite they can configure at the interface level as opposed to coding," he explains. "It's a real boon to customers. Siebel has the market power and technical clout to drill down into 20 verticals and build real domain expertise into the applications."

Pombriant says Salesforce.com, which is built on Java and employs a modular approach, also has "the right foundations to target verticals ... and establish full-function, full-service CRM on the ASP side. They're working hard on developing new applications." Salesforce.com is also doing a lot of high-profile business given its low-cost approach to CRM. "They're swimming upstream, landing a lot of very large deals," Pombriant says.

Mark Benioff, CEO of Salesforce.com, claims, "Companies don't have the money for [Siebel's] software right now. Our technology provides a viable alternative to the traditional software/hardware combination that companies have been hypnotized into buying."

According to Aberdeen's last CRM spending report, issued in November 2001, Siebel had a 28 percent share of the worldwide CRM market, with Peregrine at 8.5 percent, Oracle at 6.9 percent, PeopleSoft with 4.3 percent, and SAP at 3.8 percent. There may be issues surrounding how Oracle counts its CRM customers, at least according to Salesforce.com's Benioff, who claims to have "seven times as many CRM customers as Oracle." The implication is that Oracle