If the majority of the US$ 4.7 billion spent on Sales Force Automation (SFA) software last year was mainly spent on sales applications, the market was characterized by the continued move to SaaS models by enterprises looking for economy and agility. Mobility also played a part, as those working directly with enterprise clients looked for smartphone and tablet support.

This year’s Magic Quadrant for SFA contains the same familiar faces from last year's Leader's Quadrant, with Microsoft Dynamics CRM, Oracle Siebel, Salesforce.com and SAP making return appearances.

This year Gartner includes Microsoft Dynamics CRM Online as a separate entity. Gartner explains that, in this case, there is no notable difference between the online version and on-premises version, except that the release cycle for the online version works on the basis of two per year rather than the one per year for the on-premises version.

SFA Definition

By definition, SFA refers to applications that support the automation of sales activities, processes and administrative responsibilities for B2B organizations’ sales professionals. The core functionality required include account, contact and opportunity management, and any other component that can improve the effectiveness of sales teams.

Among those other functionalities are sales configuration, guided selling, proposal generation and content management as well as sales performance management support and territory management. It also requires mobile support for as many of these elements as possible.

MQ for SFA

This year’s quadrant has 14 vendors, if you count the online version and on-premises version of Dynamics CRM separately. Five vendors make up the Leader's Quadrant: Microsoft Dynamics CRM, Microsoft Dynamics CRM Online, Oracle (Siebel CRM), Salesforce.com and SAP. The MQ names six niche players, places SugarCRM and Oracle Sales Cloud in the Visionaries Quadrant, and NetSuite is the only Challenger.

A number of additions are worth noting. This year Gartner added:

  • CRMnext
  • Oracle (Sales Cloud)
  • Pivotal
  • SAP (Cloud for Sales)
  • Swiftpage

Gartner also points out -- as usual -- that the list of vendors is not exhaustive and that potential buyers should be looking at the market globally. In particular, it notes that it left out a number of vendors that did not meet the criteria for inclusion, that provide specific functionality or cater to a particular region. The criteria, like with other Magic Quadrants, are rigorous and difficult to meet. They include:

  • Proven ability to deliver a sales management system that has been released in the past 18 months.
  • At least five new customers that have deployed opportunity management over the past year
  • Use of B2B opportunity management in at least three different industries
  • At least US$ 15 million in annual revenues
  • Customers in one of the following regions: North America, EMEA, Latin America or Asia/Pacific.

SFA Market Context

There is a wide pattern of delivery models across a large number of verticals in this quadrant. Deployment ranges from on-premises, to hosted, to SaaS with vendors offering one or more of these deployment options.

Vendors also offer a variety of capabilities and functions of differing reach and sophistication, but they all should be able to explain to potential clients how their products are going to help organizations increase sales.

Gartner recommends that potential buyers assess not just the software or functionality that vendors offer, but also the functionality offered by the ecosystem of providers feeding into that product. The bottom line, Gartner says, is that buyers need to know what they are getting and what they can get in terms of functionality. While this may be a consideration when it comes to buying any kind of software, it is particularly important in a quickly developing IT space like SFA.

Market Overview

The SFA market over the past year has been a lucrative one despite increasing global economic problems. In 2012, buyers invested US$ 4.7 billion in SFA applications, focused on the core functionalities of accounts, contacts, opportunities, selling processes and sales operations. Demand in this market depends on the maturity and culture of the organization, and how SFA is used to square-off business goals.

In the future, Gartner says there will be an increased focus on sales performance management capabilities that enhance core SFA initiatives, while there is considerable discussion and debate around the use of smartphone and iPads access for better mobility and the importance of social will grow.

Within that general picture, there are a number of considerations that enterprises need to factor in, particularly as all SFA systems have not been developed with the same goals in mind.

Specific enterprise factors like selling styles, sales processes or integration needs will influence how SFA will be used, as will the number of users and the enterprise organizational structure. In other words, you have to have a deep understanding of your own enterprise before investing in SFA software.

There are other considerations that need to be take on board too according to the kind of sales you are doing, or what vertical you are operating in.

For enterprises that focus on product-driven transactional sales, Gartner recommends that enterprises look at basic lead and opportunity management capabilities that can reduce sales cycles and offer better sales management abilities.

For organizations that have multi-layered, matrixed sales teams, enterprise should be looking for role-specific functionality for strategic account people as well as easy scalability for sudden spikes in data management needs.

Those that are involved in consultative solution selling require rich-content process support to pull proposals together. For this, the development of a vendor selection strategy should assess data support, access modes and functionality for all sales roles.

Tomorrow, we will look at who made it into the Leader's Quadrant as well as the only vendor in the Challenger's Quadrant -- NetSuite.