CRM Is on a Roll, Analysts Agree

Ann All

It appears to be unanimous. Just about every tech analyst out there is predicting a banner year for CRM spending.


Back in late 2007, I interviewed AMR Research analyst Robert Bois, who told me that 2007-2008 would likely show the biggest increase in CRM spending since the dot-com bust in the early part of this decade. He said:

We're seeing a 16.3 percent increase this year, vs. just 9.2 percent the year prior. To really put this in perspective, this is up from a meager increase of just 2.3 percent from 2004-2005. We're seeing a general trend across the industry to rethink the notion of the customer experience, particularly as global sourcing and labor distribution are making it harder and harder to compete on price. In many cases, the customer experience is the only sustainable competitive advantage, and therefore technology to support that has risen in the priority stack.

In January, I wrote about optimistic forecasts from Datamonitor and KensingtonHouse, both of which mentioned the growing popularity of a software-as-a-service delivery model as a key driver for CRM.


In April, CSO Insights published research showing that lots of non-CRM users planned to install a CRM system this year, while many CRM users intended to add new functionality to existing systems. In one of its most interesting findings, CSO Insights noted that 13 percent of CRM users want to swap out existing systems for new solutions in 2008.


Gartner just chimed in, noting that spending on CRM software reached $8.1 billion in 2007, a 23 percent jump from the $6.6 billion spent in 2006. (Gartner analyst Sharon Mertz was careful to note that a declining U.S. dollar accounts in part for the size of the increase, with U.S. companies reporting higher sales abroad.)


The biggest share of CRM spending is still happening in North America and Western Europe, which account for 53.4 percent and 31.8 percent of global market share, respectively. But emerging markets showed the strongest growth in spending, with both Middle East/Africa and Eastern Europe increasing more than 40 percent.


According to a Network World story about the research, top CRM vendors in 2007 were SAP with a 25.4 percent market share, followed by Oracle (16.3 percent), Salesforce (8.4 percent), Amdocs (5.2 percent) and Microsoft (4.1 percent).


The Gartner report gives a shout-out to the idea of "innovative technologies and services that assist (companies) in proactively channeling the power of social nets into successful CRM strategies," which it says is becoming increasingly important with customers now communicating via a variety of social media. Network World mentions Oracle's Social CRM services, which I wrote about last month.

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