• July 14, 2005
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

SFA and Marketing Automation Show Even Growth

The leading marketing- and sales-automation vendors maintained their top spots as both industries saw steady growth from 2003 to 2004, according to IDC's "Worldwide Marketing and Sales Automation Applications 2004 Vendor Shares: A Rising Tide." The marketing automation leaders were SAS Institute, SAP, and automotive dealership specialist Reynolds & Reynolds. The leaders in SFA were Siebel, SAP, and Oracle. The study was released today. "It's not explosive growth, but vendors realized they couldn't just hunker down and be nice to the customers they already had--they needed to go out and acquire new clients, and that's what they did. The markets did pretty well in 2004, considering the economic climate and its effect on corporate spending," says Bob Blumstein, research director of CRM analytics and marketing applications for IDC, and author of the report. One trend Blumstein has seen is the growth of on-demand applications in both the marketing automation and SFA segments, driven in large part by the success of Salesforce.com. "The hosted model was around before Salesforce.com existed, and you can argue about whether they are doing it better. On-demand applications have seen waves of popularity from time to time," Blumstein says. "But Salesforce.com is both a banner waver for the concept and a success story to point to as an example." He adds that hosting is still a high-growth segment and will continue to be so for at least a few years. "The Internet created the computing power and bandwidth to do transactions quickly, and the low barrier to entry [of on-demand] lets companies just starting out with CRM and workforce automation learn how to use its benefits." There is more to CRM and SFA than on-demand versus on-premise, though. Flexibility may be the key to market share for these applications. "In the end these are just delivery models, and each has its strengths and weaknesses," Blumstein says. "The value of having both as options for your customers can't be ignored." Blumstein references cases in which one model is better than another: small or new organizations, including branches of larger companies that use installed software, might choose on-demand to minimize stress on the (possibly nonexistent) IT department, or to explore options before committing. On the other hand, on-premise software remains attractive to companies that consider TCO over longer periods, require greater customization and/or customer care, or need to retain physical ownership of their data structure. One thing that Blumstein believes is clear from any view of the market is that the entire CRM and sales/marketing automation category will continue to expand. "Sales and marketing automation will continue to play a key role in the shift of business to a customer-centric orientation. Systematizing and automating the way your company uses information is no longer cutting-edge business strategy, it's merely smart business behavior. Executives are learning that SFA makes as much sense for five salespeople as it does for 500," Blumstein says. "When you get beyond the number of current and recent deals a sales manager can hold perfect knowledge of in his or her head, it's time for software." Related articles: Emerging On-Demand Players Join Traditional Providers to Lead CRM Innovation
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