Making Dollars and Sense of CRM Revenue

When it comes to determining market leaders, revenue is one of the key yardsticks. In the CRM space, however, revenue is not always easy to measure, given that many major players often lump in sales from other products. Vendors like Oracle, SAP AG, and J.D. Edwards sell not only CRM, but also enterprise business software, such as ERP products, which often gets totaled in with CRM sales. In a recent study market researcher Gartner says that that is not an accurate way to depict true CRM sales. "Siebel differs from ERP vendors in the CRM application market in that these competitors can claim sales of applications for human resources, contracts, entitlements, business intelligence, data warehouses, and content management as CRM revenue," says Michael Maoz, an analyst at Gartner. "We believe that a direct comparison would show that yearly deployment of users of Siebel CRM products is five to eight times larger than that of any of its key competitors." According to recent research from Gartner and Deutsche Bank Securities, Siebel Systems--with more than 1.5 million users and 3,500 customer implementations--is the leader in global CRM software deployments. Gartner Dataquest estimates of new CRM software license sales show Siebel in the number one position. Gartner Dataquest estimates of buyers' intentions to implement within 12 months of purchase show that Siebel is the leader, with 22 percent market share, compared to its closest competitor, which has less than 4 percent. Other industry-watchers agree. "It's easy to calculate Siebel's CRM revenue since it's all CRM, but for others it's more complicated and convoluted," says Mitch Kramer, an analyst with the Patricia Seybold Group, a market researcher in Boston. Kramer claims that CRM revenue reported by others might be out of whack. "I think the numbers for CRM revenue are inflated, but I can't say to what degree," Kramer says. "Some of it is from CRM software given away with ERP packages, some is CRM lumped in with other back-end applications." However, Kramer says he doesn't think any of these companies are trying to mislead or inflate numbers. "It's just hard to say where you make the break," he says. "Let's say a company sells an e-commerce package and a call center solution. Well, those both could be considered CRM. But in some cases vendors might or might not consider e-commerce CRM revenues. Also, vendors are under no obligation to provide the level of granularity that some of us might be interested in." Kramer also notes that often, vendors are held to a bit of a double standard as CRM proponents have made broad claims about how CRM comprises a variety of technologies and processes. Those same proponents often cry foul, however, when competitors lump in revenue from products not specifically labeled CRM.