|
Industry analyst firm AMR Research has released "The Customer Management Market Sizing Report, 2007-2012," its assessment of the current and future state of the CRM market -- and things are looking good. The report estimates that customer management software revenues in 2007 topped $14 billion, a 12 percent jump over 2006 revenues; the growth rate among the top 20 vendors in the space was even higher, at 28 percent. Long-term prospects are just as rosy: AMR projects a market size of more than $22 billion in 2012. The report also clarifies the level of dominance over the CRM market of the five largest firms: - SAP;
- Oracle;
- Salesforce.com;
- Cegedim Dendrite; and
- Amdocs.
Those five now account for 46 percent of worldwide market share, up from 40 percent in 2006 and 30 percent in 2005. The report states that the ongoing consolidation, which restrained growth, has reached a plateau, and predicts the current growth trend will become the state of the industry. "Clearly, the heavyweights set the pace for the market, and with economic uncertainty entering the picture in 2008, the trend will only accelerate," writes Rob Bois, AMR research director and author of the report.
"It turns out that the growth engine for most of the big enterprise suite vendors is CRM," Bois says in a follow-up interview. "It’s a bit tricky -- the big vendors don’t break out their revenue that way, but we do get guidance: SAP, Oracle, and Microsoft all are looking to CRM for business growth." For the first time in the history of AMR's annual reports, software-as-a-service (SaaS) vendors such as Salesforce.com and RightNow Technologies are ranked alongside traditional software vendors. "In fact, SaaS has become so much a part of the fabric of the customer management market, this year we combined delivery models in ranking vendors by license revenue," the report states. "Looking purely at software revenue, Salesforce.com jumps to the third spot on the list because the company attributes a much higher percentage of revenue to software sales. It is important to recognize that while this is not a true apples-to-apples comparison, it does offer reasonable insight into the revenue generated from the software applications themselves." One trend to watch in CRM technology is Web 2.0, as software vendors continue to strive for more value and usability in their products. "User adoption remains a major challenge to customer management success, particularly in sales force automation (SFA)," the report states. "Combined with the fact that most knowledge workers complain they get better information from the Web than [from] their own internal tools, we are seeing a rapid adoption of Web 2.0 capabilities in customer management applications." Collaboration and the power of online communities are also major influencers in the growth of CRM 2.0. "Analytics [is] also increasing in importance as many buyers recognize that actionable information is the elusive but greatest value they gain from customer management tools and technologies," the report states. "Customer segmentation, trend analysis, and even predictive analysis are driving the use of customer analytics to the next level. The continued growth of companies like SAS [Institute] and Teradata in the customer management market clearly reflects this trend." As with all market predictions, the actual results may play out differently depending on the state of the world economy. In the case of CRM though, the effect might not be that bad. "I’ve read articles that mention the idea of an economic downturn leading to an increase in CRM spending, so I compared current figures to what happened around 2000," Bois says, referring to the era just after the dot-com bust that saw a sharp decrease in CRM spending. "There was about a one-year lag between the drop in customer management spending and the drop in customer retention, but it did happen -- and it took much longer for companies to recover those customers after [they resumed] CRM spending. Most of the executives remember that era, so they might behave differently this time."
|