CRM Is More than Cool Its Profitable

Last month, Gartner said it right out loud: "Customer Relationship Management is Cool." This month it's following that up with data that shows the global CRM market is worth $20.4 billion.

The research also shows Salesforce is the single biggest player in the space.

However, there is also good news for SAP -- which remains the second biggest player, as well as Microsoft. While Microsoft only accounts for around 7 percent of the market, it grew a staggering 22.8 percent year-over-year and is heading toward a much, much bigger piece of the pie.

CRM Drivers

There are a number of things that have precipitated growth in the CRM sector, difficult economic conditions notwithstanding. 

According to Joanne Correria, one of the authors of the Market Share Analysis: Customer Relationship Management Software, Worldwide, 2013 [fee charged] report, the fundamental driver is that CRM is, and will be, at the heart of digital initiatives in the enterprise in the coming years.

This is coupled with the fact that SaaS deployments have made CRM easier and more accessible across the enterprise with the result that it, unlike some other technologies, has high user adoption levels.

A final driver is the fact that CRM is seen as a key element in developing effective customer experience strategies and, as result, will be one of the principal IT investment areas in the enterprise as companies battle to remain competitive.

The top five vendors in the market account for around 50 percent of revenues, while the other 50 percent is accounted for by a category that Gartner simply describes as "Others."

Collectively, the market share of the top five grew by 9.9 percent year-over-year with revenues of $10.2 billion. This group is particularly interesting in that there are a number of new, smaller companies that are providing agile CRM through the cloud.

In last month’s ‘Cool’ CRM vendor list, Gartner pointed to five companies that are providing applications for robust asset management, marketing resource management (MRM) in a business process outsourcing model, integrated marketing solutions for small and midsize (SMB) businesses and cross channel engagement platforms.

In fact, such is the demand for CRM delivered as SaaS that 41 percent of total CRM software last year was driven by organizations that were looking to replace legacy systems or provide alternative, complementary functionality.

Leaders of the Pack

This appears to point to ongoing acquisition activity as the top five continue to battle for market dominance, although with the lead Salesforce has established, it seems unassailable for the time being.

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From a regional perspective there were no real surprises, with North America continuing to account for the majority of the investments (52.9 percent). There were, however, encouraging signs from Europe where growth of 15.2 percent was recorded.

Europe and North America accounted for almost 80 percent of all software spending on CRM technologies, while customer retention and acquisition continue to be main drivers of the focused build out for the major vendors and on premises software that is being upgraded.

Even in China and the Asia/Pacific region where growth has been “less aggressive,” according to Gartner, growth has been in the double digits. The communications, media and IT services vertical industries are the largest spenders on CRM because they focus on large groups using call center technologies.

Title image by ChameleonsEye / Shutterstock.