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AMR Research examines the CRM market and predicts its future.
For the rest of the September 2000 issue of CRM magazine please click here
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Companies are actually starting to focus on customers, says Peggy Menconi, research director, application strategies at AMR Research. They are still buying point products, but they're thinking about fitting them into a strategy. AMR is way ahead of them, pronouncing the term "CRM" defunct in a market that is producing technology enriched by back-office systems and Internet communications and is designed to serve customers, business partners and employees. In its Enterprise Applications Report, 1999-2004, AMR introduces its own term, "ERM," as a contender in the acronym circus, standing for E-Business Relationship Management.

AMR's research paints a robust picture of the CRM space, growing 46 percent to $4.4 billion in 1999, as most players moved to exploit the Internet channel. The dominant segment of the revenue pie went to contact center applications. The field service share grew slightly, while sales force automation declined. Merely a glint in a software developer's eye in 1998, marketing automation applications sold at a faster rate than other CRM products in 1999, but total sales remained comparatively small. AMR expects the marketing automation segment to grow in importance.

This should be a bumper year for the CRM market, as AMR predicts total revenue to grow 54 percent to $6.8 billion. AMR expects the market to continue to grow prodigiously through 2004, but at a slow rate due to its size. Application hosting and subscription services are expected to fill in a modest 5 percent of the market in 2004, representing $1 billion.

The market is expected to change radically this year as value propositions shift to providing e-business platforms that merge CRM functionality with supply chains, customer communication channels and technology infrastructure. AMR predicts companies presently inconspicuous in the space, such as Lucent and IBM, to be among top contenders in the future. Other trends AMR noted:

• Tier Zero, Web-based self service was added to customer support hierarchies.

• Call centers gave way to contact centers and universal queuing.

• Web communications products carved out market share.

• Channel partners spawned a new crop of vendors.

• Front- and back-office integration became a priority: Back-office vendors attempted to develop and acquire front-office functionality, but no front-office vendors sought back-office vendors. Top-tier ERP vendors struggled to get into the market.

• ASPs became a widely known strategy, but few customers actually bought it. Process ASPs are expected to sell first.

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To contact the editors, please email editor@destinationCRM.com
Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationCRM.com/subscribe/.
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