AMR Research Says HCM and CRM Markets Are Growing Faster than ERP

Published: August 24, 2006

by Timothy Prickett Morgan

Since the turn of the century, sales of ERP systems have been plodding steadily along, but other software segments, which are not nearly as large, have experienced faster growth. So it is for human capital management (HCM) and customer relationship management (CRM) software, which are adjuncts to ERP systems.

According to a recent report from AMR Research, the CRM software market is expected to grow at 10 percent in 2006. The HCM software segment is also expected to grow at 10 percent this year by AMR's reckoning, and these two segments will be tied as the fastest growing segments of the overall enterprise application market. ERP software sales, by comparison, will grow at a mere 3 percent in 2006.

The CRM report that AMR released showed that SAP was the number one player, with $1.6 billion in sales in 2004, getting a 15 percent share of the $10.7 billion market. In 2005, SAP grew by 18 percent to hit $1.9 billion in CRM sales, and is expected to grow by 18 percent again in 2006 to hit $2.25 billion in sales, giving it a 17 percent stake in the $13.2 billion CRM space. Ironically, Siebel Systems, the former juggernaut in this market that was acquired by Oracle in late 2005, has not been able to keep pace with SAP, and even adding Oracle and Siebel together has not been enough. Together, Oracle and Siebel had sales of $1.87 billion in 2005, and AMR is predicting that Oracle will have CRM sales in the range of $1.79 billion in 2006, giving it 14 percent of the market. Incidentally, AMR says that software as a service (SaaS) implementations of CRM software grew by 60 percent in 2005, and that Salesforce.com will moved from the number 12 position in the market in 2004 to number 6 in 2005. AMR is projecting that Salesforce.com will see 52 percent growth this year.

On the HCM software front, Oracle and SAP are also dominant, followed up by Kronos. Oracle's acquisition of PeopleSoft in January 2005 took it from nowhere to the top of this market segment, where vendors peddle software to manage their employees. Oracle went from $321 million in sales of HCM software in 2004 (a 7 percent share) to $1.4 billion in 2005. AMR is predicting that Oracle will get a 25 percent share of the $6.1 billion worldwide HCM market in 2006, growing 10 percent. SAP is expected to continue to grow at 13 percent (as it did in 2005), hitting $1.4 billion in sales. Kronos, by virtue of many acquisitions as well as organic growth, is expected to grow by 11 percent in 2006 to reach $586 million in HCM software sales. Together, these three vendors comprise almost 60 percent of the HCM software market.