• July 21, 2011
  • By David Myron, Editorial Director, CRM and Speech Technology magazines and SmartCustomerService.com

CRM Recovers with Low-Cost Options

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We’re proud to continue our decade-old tradition of providing analysis of the ever-changing CRM landscape with this year’s CRM Market Awards. A lot has happened over the past 10 years—the market has matured, requiring the companies in it to change. Perhaps the biggest change in today’s successful CRM vendors is their focus on agility. Vendors and partners—no matter their size—must be agile enough to keep up with changes in everything from technology to customer behaviors. Those that can are better positioned to benefit from the market’s growth. 

Overall, global CRM sales—which include licenses, maintenance, software as a service, and other subscription revenue—recovered in 2010, growing 6.2 percent year over year to $16.5 billion, according to the International Data Corp. (IDC) Worldwide Semiannual Customer Relationship Management Applications Tracker. IDC expects the CRM applications market to continue on this path, expanding at 7.6 percent year over year through the remainder of 2011 to reach $18 billion in sales.

Supporting this growth are investments in social networking and social analytics, according to Mary Wardley, program vice president for CRM applications at IDC. Our CRM Rising Stars Awards bear this out. After reading this year’s CRM Market Leader Awards, though, it’s hard to deny that low-cost, cloud-based solutions also have contributed to growth.

Like last year, the only three vendors to break $1 billion in CRM revenue were Oracle, SAP, and Salesforce.com. Oracle kept its lead with an 11.8 percent global market share in 2010, but Salesforce.com had the strongest year-over-year growth, with 27.4 percent, according to IDC. While Oracle’s CRM solution is the most functionally rich, according to the analysts we polled, Salesforce.com is gaining favor because its cloud-based model makes it one of the lowest-cost options.

Though the industry is growing, no one is having a money-burning party yet. With the recession in our not-too-distant past, the industry outlook is cautiously optimistic. Companies are loosening their purse strings, but many are not throwing money into large on-premises deployments.

Instead, companies are seeking lower-cost, lower-risk investments, which is why this year we introduced cost as another metric in our overall score for the CRM Market Leader Awards. And it made a big difference in the results. For instance, NetSuite joined the Enterprise Suite CRM leaderboard after our judges gave the company high marks for its low-cost, on-demand solution. In the Midmarket Suite CRM category, SugarCRM landed on the leaderboard for the same reason—cost, albeit through its low-cost, open-source model.

Naturally, the vendors that aren’t as cost-friendly were penalized in their respective categories. But the biggest plunge this year, and possibly in the history of our awards, was recorded by Deloitte—last year’s winner of the Consultancies category. This year, Deloitte vanished from the leaderboard; it’s not even a One to Watch. The former fixture on the Consultancies leaderboard lost ground to younger, more agile consultancies. One such company, Innoveer, made a splash by taking the top spot in its very first appearance on the leaderboard. The move was undoubtedly propelled by the company’s focus on the cloud, offering clients the option to deploy with Salesforce.com or Oracle CRM On Demand.

Clearly, being agile in today’s competitive market enables organizations to better respond to customers’ changing needs. Today, many require low-cost, robust solutions. Fortunately, the companies delivering them can be found in this year’s CRM Market Awards. Congratulations to this year’s award recipients.

Editorial Director David Myron can be reached at dmyron@infotoday.com or @dmyron on Twitter.

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