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The importance of CRM is growing by leaps and bounds; Pareto's principle that 80 percent of profits are generated by 20 percent of customers is gaining widespread acceptance in enterprises. New business models are emerging and the old jaded term — CRM — is being re-coined to spawn new jargon such as customer interaction management or customer experience management. The effective implementation and use of newer CRM products, software, and technologies is enhancing customer lifetime value and, hence, benefiting companies. Moreover, present-day economic realities have clearly highlighted and brought to the center stage the imperatives of customer management and retention for businesses worldwide.

With this upsurge in the CRM market, the CRM industry is witnessing intense competition and consolidation trends on the vendor side; Oracle's acquisition of PeopleSoft and Siebel, and M2MHolding's takeover of Onyx Software are two major examples of consolidation. New technologies such as SaaS and MDM will further fuel the market and increase adoption rates. Players such as SAP, Oracle, and Microsoft continue to lead the market, launching innovative products and business models to maintain their positions in the front. New products such as Microsoft's CRM 4.0 are designed to provide a 360-degree view of the customer and improve enterprise adoption of CRM by providing accelerated scalability and performance. New models such as open source software, on-demand CRM, browser-based on-premise CRM, and CRM-as-a-portal to other applications are picking up slowly and are expected to be beneficial for the SMB sector. A rapidly changing corporate environment and competition has also meant that vendors are trying to be as penetrative as possible. This has led to the pricing of CRM solutions at levels that are viable for entry-level users, making CRM package desirable for all enterprises, irrespective of their size.

However, not all companies find CRM packages effective, largely because of poorly conceived strategies and loopholes in implementation. Since CRM encompasses so many parts of a business, its implementation is the deciding factor for its success to a great extent. For effective CRM implementation and to ensure a successful CRM program, the first and foremost step is to define goals and align those with the goals of the business. Understanding the data, ensuring top-level support, and keeping internal politics out of the process also hold immense importance. There is a need to build a cohesive environment where IT and business users are able to work together and implement a CRM package keeping customers' benefits in mind rather than the company's or a department's objectives. Only then can a CRM implementation reap the maximum benefits and avoid inconsistencies.

Analysts hold that CRM should be an organization-wide initiative with complete support from the management in order to make efficient use of the technology, which, in turn, will facilitate better communications, operations, and strategies vis-a-vis the customer and, hence, create value for the business.

Customer relationship management (CRM) has gained a lot of importance in a business environment of cutthroat competition. Given day economic realities, it is imperative for firms to retain their customer bases to remain profitable in the long run. Effective CRM not only helps in customer retention, but also assists in acquiring new customers by the spread of word-of-mouth by satisfied customers.

Acknowledging the need for CRM, enterprises are increasingly incorporating CRM software in their existing systems. The adoption rate is increasing not only in large enterprises, but also in small businesses because of the emergence of new, cost-effective CRM models. With demand increasing, the number of software vendors is also growing in the CRM market. Players such as SAP, Oracle, and Salesforce.com are facing intense competition in their efforts to reach the customer.

Owing to recessionary pressures and vendor competition, the CRM market looks promising. Integration of CRM with Web 2.0 has spurred community-based interaction that will enrich the customer experience and drive the market further.

Our partners at Analysts Perspectives present an overview of analyst observations on current trends in the CRM market, and their opinions and predictions about its future prospects.

Some key findings include global purchases of CRM software and tools will grow by 8 percent in 2008; North America is the largest market for CRM software at present — however, the strongest growth in CRM spending is expected to come from Asia-Pacific; and Australia, Singapore, Hong Kong, Korea, India, and China are the key SaaS CRM markets in Asia-Pacific. Of these, Australia remains the top market, accounting for 35 percent of all SaaS CRM sales generated in the region.