Software

CRM market grew 12.5 % in 2008

Worldwide CRM market revenue totalled $9.15 billion in 2008, a 12.5 % increase from 2007 revenue of $8.13 billion, according to Gartner. Analysts said that market growth was driven by enterprise investments in technologies focused on customer retention, analytics and on-demand solutions.

“Despite financial market volatility, the worldwide CRM market enjoyed its fifth consecutive year of double-digit growth as businesses continued to invest in solutions across all subsegments,” said Sharon Mertz, research director at Gartner. “Actual market growth was moderated by a stronger dollar but reflects higher contributions from emerging markets.”

Software as a Service (SaaS) continued to drive the market forward, representing nearly 20 percent of total CRM software market revenue in 2008, up from just over 15 % in 2007. Interest in social networking and social software also escalated in 2008 as businesses were confronted with the sales, marketing, and serviceability impact of increasing consumer participation in online forums.

SAP continued to be the market leader accounting for 22.5 percent of worldwide CRM software revenue in 2008 (see Table 1), but this is down from a 25.5 % share in 2007. Microsoft experienced the strongest growth rate among the top 5 vendors, as its revenue increased 75 % in 2008.
While the CRM market remains highly concentrated in Western economies, emerging markets are growing rapidly and now account collectively for nearly 16 % of the worldwide market, up from approximately 13.8 % in 2006. Although both North America and Europe underperformed in terms of CRM market growth in 2008, their share of the market remained high at 52.5 % and 31.6 %, respectively.

Overall market share of each CRM subsegment shifted slightly in 2008, with sales remaining as the largest subsegment, representing 42.8 % of the market and enjoying the highest growth of 14.7 %. Marketing automation also continued to grow in 2008, with a 10.4 % increase, representing 20.6 % of the CRM market. Customer service and support represented 36.6 % of the CRM software market, as this segment grew 11.2 % in 2008.

Gartner said that most vendors remain cautiously optimistic for continued growth for the worldwide CRM market. “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 Ms. Mertz. “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.”

Ms. Mertz advised vendors that they can benefit from strategies that drive customer value creation, which include:

–  Aligning products, services and contractual agreements to enable customer business imperatives of higher client acquisition, retention and satisfaction.

–  Continuing to offer creative terms to maximize revenue potential and enable businesses to consumer critical products and services.

–  Extending application vertical-market functionality, whether by in-house development, acquisition or partnership agreements to take advantage of key verticals or government stimulus packages.

–  Focusing product offerings on applications and technologies that provide customers with tools and capabilities to increase visibility on customer requirements and behaviours.

Gartner says growth driven by technology focused on customer retention, analytics and on-demand solutions

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