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The Dynamic Duo: SAP and Oracle Still Lead, But Oracle Offers More
Yet another market-share report tags the two vendors as the market's only leaders--but this one gives Oracle the edge in product quality. Overall, the CRM arena remains competitive.
Posted Sep 12, 2007
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Global enterprises will spend a total of nearly $6.6 billion on CRM application licenses by the end of 2012, according to a new report released by Datamonitor. Assessing the strengths and weaknesses of leading CRM vendors, the report suggests that, despite numerous other vendors vying for attention, Oracle and SAP remain firmly atop the CRM field. In fact, unlike recent reports from other industry research firms, Datamonitor's report, focusing on CRM product quality, gives Oracle the edge over its German rival. "Although the CRM applications market is very competitive and there are plenty of players who can challenge the current leaders in specific circumstances, only two vendors, Oracle and SAP, can be considered as market leaders," says Vuk Trifkovi, technology analyst at Datamonitor and author of the Decision Matrix report, "Selecting a CRM Vendor." The report's quantitative assessment of end-user sentiment, technology features, and business intelligence capabilities found Oracle and SAP to be, by far, the leading solution providers. According to Trifkovi, both vendors provide complete solutions replete with functionality, integrate CRM with new communication technologies, and offer full flexibility of deployment options--conventional on-premise as well as variations of hosted and on-demand solutions. But the two companies are far from identical, Trifkovi says. Having augmented its CRM product line through the acquisitions of Siebel Systems and PeopleSoft, Oracle now commands an incredible portfolio of CRM solutions, he says. Despite the report's contention that Oracle's Siebel CRM product sets quality standards in terms of technology and execution, Datamonitor concludes that Oracle E-Business Suite CRM and Oracle PeopleSoft Enterprise CRM may be more suitable for CRM buyers, depending on the specific functional requirements, sector demands, and deployment environment required. Oracle's ambitious maintenance and development roadmap, called Fusion, should ensure a market leadership position -- if executed well, the report warns. "Oracle's CRM offering will be improved both through incremental best-of-breed feature cross-fertilization and its ambitious project of re-engineering [a] completely new solution based on its Fusion platform," Trifkovi says.
Although trailing its rival in Datamonitor's findings, SAP maintains a strong position in the market--and a CRM strategy that's closely linked to the success of its enterprise applications portfolio. "SAP's CRM solution is scalable, flexible, and replete with features," Trifkovi says, adding that the offering also benefits from an "enormous depth of industry expertise accumulated within the SAP group." Trifkovi says he expects to see continued evolution of the product, both internally and through SAP's strategic approach to acquisitions, adding that the forthcoming SAP A1S enterprise application suite aimed at SMBs will also help sustain SAP's position as a CRM market leader. The principal challengers to Oracle and SAP--including Chordiant, Infor, and Salesforce.com--all offer very good solutions but lack certain elements to compete consistently with the leading duo, Datamonitor reports. Nevertheless, the challengers are likely to gain a higher profile if Microsoft's forthcoming Microsoft Dynamics CRM 4.0 release is a success or if vendors such as RightNow Technologies and Consona improve their standings. And yet, while the rest of the field may produce some good alternatives, a new market leader is highly unlikely, Trifkovi says. "Given the increasing competitiveness in the second tier of the market and the advances of the market leaders, it is safe to assume that market leadership will continue with Oracle, and probably SAP," he says. The industry's evolving standards now demand CRM application solutions that can provide well-rounded suites covering all CRM functionality; present a single analytical view of customers across multiple customer interaction channels; and be rapidly deployed in a variety of deployment methods, Trifkovi says. "CRM vendors whose solutions can support a long-term strategic approach to customer relationship strategies--based on nurturing relationships with the customer instead on focusing on the transaction itself--will be in a strong position," he concludes. Related articles: CRM's Expanding Horizon Gartner predicts CRM software revenue will grow 14 percent this year to exceed $7.4 billion, as SaaS, sales, and foreign markets continue to drive the market. The CRM Market Is Still Strong The market continues to expand, albeit at a moderate pace, as vendors achieve strong growth in SaaS applications and vertically focused solutions. CRM Expansion Continues Worldwide, CRM software realized about 14 percent growth in 2005; drivers include consolidation, vertical market solutions growth, and midmarket growth. Sizing Up the CRM Situation Software-as-a-service, focus on customer retention and acquisition, and verticalization are factors enabling the market's healthy growth. Oracle's Smaller Slice of CRM's Bigger Pie The worldwide CRM market grew 11.5 percent in 2006 to just under $6.5 billion in revenue; while SAP continues to dominate, Oracle Corp. sees both its revenue and its market share slip.
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