• August 2, 2006
  • By Colin Beasty, (former) Associate Editor, CRM Magazine

Euro CRM Growth Continues At a Reduced Rate

Fueled by renewed business growth and a focus on increasing revenue, total CRM software revenues in Europe totaled $1.9 billion in 2005, according to a new report by Gartner. The total represents a hefty 9.7 percent increase from 2004. While SAP and Oracle, which includes its acquisition Siebel, jointly held more than 50 percent of the total CRM software market, increasing adoption of on-demand solutions produced significant gains for Salesforce.com, which grew 86 percent in 2005. Microsoft experienced the fastest growth in Europe at 88 percent. Overall, CRM market growth in Europe was lower than the 14 percent increase seen worldwide in 2005 and lower than the 15 percent seen in the region in 2004. Despite this, Chris Pang, senior research analyst at Gartner, stressed that despite the lower revenue growth, there is actually more CRM business in the market. "The picture in Europe is highly fragmented. The report showed that growth in spending on CRM software correlates strongly with economic growth measures such as GDP." SAP was the number one CRM vendor in Europe based on total software revenue, with a 32 percent market share in 2005, according to the report. Siebel was the second largest at 16 percent, before being acquired by Oracle in early 2006. That acquisition actually hurt Oracle's CRM sales, according to Pang, because customers put their purchases on hold until they were confident of future product direction following the Siebel acquisition. Pang also says high levels of acquisitions in the CRM applications market, significant price reductions, and exchange rate fluctuations are major contributors to the seemingly more subdued levels of growth in 2005. "The acquisitions of major players such as PeopleSoft and Siebel by Oracle have played a key role in pushing prices down," Pang says. "This encouraged more buyer activity with users 'stocking up' on CRM software. The net result is that we are seeing a return to more realistic and sustainable buying levels." In terms of CRM software, applications for marketing automation saw the most growth, increasing by 19 percent. This was followed by sales automation at 12 percent and customer service and support applications at 4 percent. This is reflective of the drive to increase revenue, Pang says. "Businesses in Europe are focusing on new customer acquisition, expanding wallet share, and business accountability. This is resulting in higher demand for applications that drive revenue generation and enhance the customer experience. The functionality offered by marketing automation and analytics applications complements this renewed focus well." Related articles: Gartner Hears CRM Accents Across the Pond
Siebel and SAP Dominate Western European CRM
CRM Covers
for qualified subscribers
Subscribe Now Current Issue Past Issues