Gartner: Fifth Consecutive Year of Double Digit CRM Growth

Published: August 3, 2009

by Dan Burger

If your company is not using information technology advancements to aid in customer retention and analytics, you might want to know who is responsible for the 12.5 percent hike in spending within the customer relationship management (CRM) market. It could be your competitors.

According to Gartner analysts, worldwide CRM revenue swelled to $9.15 billion in 2008, a noteworthy surge from the 2007 revenue of $8.13 billion. In a year when IT spending was generally reeled in, a 12.5 percent gain says a lot about CRM.

Companies making the CRM investment are clearly seeing benefits relating to increased revenue, loyalty, and brand recognition. CRM is widely credited with improved integration among marketing, sales, and service departments by virtue of its real-time information exchange.

Sales remains the largest CRM sub-segment. Not only does it represent 42.8 percent of the overall CRM market, it also put up the strongest growth--a 14.7 percent binge compared to a year earlier. Customer service and support represented 36.6 percent of the CRM software market, as this segment grew 11.2 percent in 2008. Marketing automation shows increased usefulness as it grew 10.4 percent in 2008 and now represents 20.6 percent of the CRM market.

SAP retained its seat as the market leader, but executives there should be squirming a bit as the company's worldwide market share slipped from 25.5 percent to 22.5 percent. Oracle follows SAP in the CRM rankings, grabbing 16.1 percent of the market. Then comes Salesforce.com with 10.6 percent, Microsoft with 6.4 percent, and Amdocs with 4.9 percent. Although the top five vendors account for 60 percent of the market, the remaining 40 percent is up for grabs. Take note that Microsoft's growth rate from 2007 to 2008 was a whopping 75 percent.

Vendors remain cautiously optimistic for continued growth for the worldwide CRM market, according to Gartner's view. "Investments in technologies which enhance productivity, provide better visibility and insight into customer behaviors, and grow online commerce, sales and marketing activities are expected to grow through 2010,” said Sharon Mertz, research director at Gartner. "However, while we expect overall CRM growth prospects to remain positive in 2009, we do anticipate them declining to mid single-digits due to continued economic uncertainty."

The 2008 figures were the fifth consecutive year of double-digit CRM revenue growth. "Actual market growth was moderated by a stronger dollar, but reflects higher contributions from emerging markets," Mertz said.

Mertz offered the following advice to vendors regarding strategies that drive customer value:

• Align products, services and contractual agreements to enable customer business imperatives of higher client acquisition, retention, and satisfaction.
• Continue offering creative terms to maximize revenue potential and enable businesses to consumer critical products and services.
• Extend application vertical-market functionality, whether by in-house development, acquisition, or partnership agreements to take advantage of key verticals or government stimulus packages.
• Focus product offerings on applications and technologies that provide customers with tools and capabilities to increase visibility on customer requirements and behaviors.

Additional information is available in the Gartner report Dataquest Insight: CRM Software Market Share Analysis, Worldwide 2008. The report is available on Gartner's Web site at http://www.gartner.com/DisplayDocument?ref=g_search&id=1059116&subref=simplesearch.

RELATED STORIES

iEnterprises CRM Goes On-Demand with Help from IBM

Gartner, Forrester Chop IT Spending Forecasts Again

IT Spending Forecasts Slashed by Gartner, Forrester

Global IT Spending Barely Ahead of 2008; Some Regions Showing Strength

                     Post this story to del.icio.us
               Post this story to Digg
    Post this story to Slashdot