CRM market up 23 percent in '07: Gartner

SAP biggest player, Salesforce and Microsoft biggest growers

Global spending on CRM (customer relationship management) software surged in 2007 to roughly US$8.1 billion (NZ$10.7 billion), a 23.1% jump over 2006's total of about US$6.6 billion, according to research firm Gartner.

Some of the increase can be attributed to currency fluctuations, notes Gartner analyst Sharon Mertz. The weak US dollar has resulted in software companies reporting higher totals from sales made abroad.

"Although our estimates for 2007 accurately reflect dollar-valued market growth, they overstate market growth from the perspective of most other currencies. Accordingly, great care should be exercised in their interpretation," Mertz says.

SAP held the top spot, with 25.4% market share, followed by Oracle with 16.3%. Salesforce placed third with 8.4%, followed by Amdocs at 5.2% and Microsoft with 4.1%.

Salesforce and Microsoft registered the highest growth rates of the top vendors, with 49.8% and 88.6%, respectively.

Most CRM spending is still happening in Western markets, with 53.4% in North America and 31.8% in Western Europe. But while sales in emerging markets only account for 15% of the overall tally, both the Middle East/Africa and Eastern European regions saw growth rates in 2007 of more than 40%, according to Gartner.

The CRM category encompasses a number of sub-segments, including sales, marketing and customer service, the report notes.

During 2007, the sales sub-segment grew 27.6%, a figure that represents 40.5% of the overall market, compared to 39% in 2006. Marketing automation products had a 15.4% growth rate, for 20.3% of the overall market, a slight drop from their 21.6% take in 2006. The customer service segment rose 22.7%, for roughly 39% market share.

Trends driving the CRM market include social networking and related technologies, the report notes.

"Businesses face increasing challenges identifying customers, determining which behaviours they should be monitoring and subsequently responding to, and which types of social media are appropriate to support their particular business and industry," Mertz writes. "Customers will look to vendors to provide innovative technologies and services that assist them in proactively channelling the power of social nets into successful CRM strategies."

Oracle, for example, is beginning to roll out a series of "social CRM" applications. The first is Sales Prospector, which is meant to help salespeople find viable leads by analysing the buying histories of companies. Users add data from their sales transactions; over time, the additional information improves the database and provides better recommendations, thereby giving users an impetus to participate, according to Oracle.

Another industry analyst, China Martens of the 451 Group, describes the CRM space as a "moveable feast".

"It's a category that's continually expanding its reach. I guess the key question is whether the CRM vendors like Salesforce, Oracle, Microsoft, SAP, et al, will expand into areas which are being developed nicely by niche players or whether they'll continue to be content to partner," Martens says.

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