The customer relationship management (CRM) market is well-established, mature and growing at a healthy clip. That's Gartner's headline finding in its latest global analysis of this software category.

Specifically, it found that worldwide CRM software investments grew to $23.2 billion in 2014, up 13.3 percent from 20.4 billion in 2013.

And it was the best kind of growth of all: organic expansion into new markets. "Large vendors leveraged their acquisitions to extend their position in new markets and to enrich the depth of their current feature sets in 2014," said Joanne Correia, research vice president at Gartner. 

Market Leaders

In 2014, the top 10 CRM vendors accounted for more than a 60 percent — or $14 billion — of total CRM spending, Gartner reported. The biggest of the big are Salesforce, SAP, Oracle, Microsoft and IBM, which hold the top five positions.

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However, there is increasing competition, both among the large vendors and from the endless supply of start ups focusing on niche CRM areas. "We saw market consolidation continue," Correia added, "and price wars started quickly as large vendors fought to keep their installed base from moving to other vendors and to stop the descent of their maintenance revenue."

Despite that, it appears that CRM's overall course will remain set for the foreseeable future. In other words, any disruption in terms of a new technology or a new player will be sudden and unexpected. Growth will continue, but along the trends already in place.

But there's one big caveat: As R Ray Wang, the principal analyst, founder, and chairman of Silicon Valley-based Constellation Research, astutely noted in a blog post two years ago, estimates of CRM software market share are only educated guesses

"In reality, the market sizing game for enterprise software is both an art with some science. Having played this role as a vendor in an Analyst Relations capacity in a past life, one knows that executives can not disclose such financial information directly to a research or market sizing firm," he wrote.

The research analysts must play a guessing game with the software executive and ask 100 questions to zero in on a number. Unlike hardware, where individual counts are more obvious, software revenue sizing requires analysts to dig deep into financial statements and any conversation where growth rates have been discussed. Revenues are hidden in bundling, suite sales, discounting schemes, channel revenue deals, OEM arrangements, and inter-company transfers. To complicate matters, SaaS revenue calculations can differ from how on-premises revenues are calculated. Analysts must also determine the truthfulness of vendors who are trying to indirectly guide analysts to the “right” numbers. In short, this is hard work."

Driving Forces

Suffice to say there is some subjectivity involved when it comes to the market leaders. However, there is more alignment about bigger issues, including overall market trends. In this report, Gartner identified several of interest. For example:

SaaS reigns: Software-as-a-Service is a big reason why companies embrace these CRM applications and will continue to be so in the near term. Gartner reported that SaaS accounted for almost 47 percent of total CRM software revenue in 2014.

"This is driven by organizations of all sizes seeking easier-to-deploy and faster-ROI alternatives to modernizing legacy systems, implementing new applications or providing alternative complementary functionality," Correia said.

Pure-play functionality is in demand: Companies are still interested in pure play functionality, at least where it lines up with the own needs. SaaS makes adding on such features and applications easy and relatively cheap. That trend as well was reflected in these numbers, as pure-play vendors generally saw strong revenue growth.

CRM is global: Emerging markets have been a source of growth of in the CRM market for some time and 2014 proved no exception. Gartner found that emerging Asia Pacific countries formed the fastest-growing region with 18.7 percent of spending in 2014. Europe and the rest of Asia, greater China and Latin America also experienced good growth, albeit in the low double digits. Here, Gartner noted that growth was slower than in 2013 due to economic issues. The Middle East and North Africa and mature Asia Pacific markets had the healthiest growth, Gartner found, while Sub-Saharan Africa posted the lowest growth.

Mature markets are the foundation of CRM: Despite growth in emerging countries, CRM remains rooted in North America and Western European markets. Spending in these areas totaled 78.6 percent of all CRM software spending, with North America generating the bulk of revenue at 52.3 percent.

Customer-centric industries dominate: Gartner found more than 23 percent of 2014 CRM spending was in the communications, media and IT services industries. Why? These sectors tend to use call center technologies to service their customers. They also are heavy users of mobile field service and sales organizations and hence have a greater need for enterprise software to organize and track these activities.

However, manufacturing, including consumer-packaged goods, has gained considerable ground. Companies in this sector have found that their product and channel management activities are well suited for CRM technologies.

Banking and securities companies follow in third place. These sectors have found that the customer experience can make or break a sale. Also, upselling has become an important part of their growth case.

The report "Market Share Analysis: Customer Relationship Management Software, Worldwide, 2014," is available on Gartner's website (fee charged).