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CRM SOFTWARE MARKET LOOK

crm SAP Retains CRM Software Market Share Leader Position
Since the turn of the century, CRM software growth has held steady but slow in the single digit arena. However, according to 2008 reports issued by analyst firm Gartner, in a well received but probably short lived growth perk, the market for CRM software achieved a surprising growth in 2007 of 23.1 percent, rising to a total of $8.1 billion.

Enterprise Resource Planning (ERP) software maker SAP achieved the number one market share leader position with a 25.4 percent share of worldwide CRM revenues in 2007, a slight decline from the prior year's measurement of 25.6 percent. Arch rival Oracle secured the number two CRM software market share position with 16.3 percent share in 2007, up from 15.5 percent in 2006. Also according to Gartner, the Walldorf, Germany–based giant earned additional bragging rights by also achieving the top market share position for enterprise resource planning software with a 27.5 percent share compared to Oracle's distant 13.9 percent.

SAP performed well during two calendar year periods in which Oracle was occupied with high-profile and high dollar acquisitions. According to Sharon Mertz, research director for CRM with Gartner, “Oracle didn’t do so well in 2006, since it closed the Siebel Systems acquisition in January of that year”. CRM software solutions and other product lines often become challenged when acquired by a rival, and the rivalry between Siebel Systems and Oracle was notoriously bitter. By contrast, SAP continued its organic growth in that period as well as the continued integration of Business Objects, a 2007 acquisition that was immediately accretive to SAP’s bottom line. “SAP did well both organically and from the Business Objects line,” Mertz says. “Usually you slow down after an acquisition, but both were strong.”

The global CRM software market has picked up in the two most recent years. “Last year, nearly everyone did very well; it was a matter of a rising tide that floats all boats, and even weaker performers benefited,” Mertz says. “This year, budgets are being managed more closely, and customers can be more discriminating with their spending.”

Overall, Gartner saw CRM software revenue and market share continue to consolidate among the top suppliers. The majority of the top five CRM software vendors outpaced the overall market in terms of revenue growth, with Oracle achieving an increase of 29.8 percent, Salesforce.com gaining a rise of 49.8 percent, and Microsoft earning an 88.6 percent year-over-year increase in revenue. Except for SAP’s slight decline in market share, Amdocs was the only one of the top-five CRM solutions to see a decline in market share, from 5.6 percent in 2006 to 5.2 percent in 2007.

The most noted area where SAP has shown considerable setback is in the high growth CRM software as a service (SaaS) sector. SAP has incurred multiple delays in its development of the Business ByDesign (BBD) hosted or software-as-a-service (SaaS) solution.

Ray Wang, principal analyst at Forrester Research, also notes that SAP's CRM market share often comes as a by-product with its much larger ERP penetration. Wang notes that SAP’s market share leadership in CRM is a measure that Wang says fails to reflect actual software deployment, and the company needs to play catch-up to other CRM industry peers in terms of capability and customer service. It’s rare, he comments, that an SAP client procures SAP CRM as a standalone application.

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crm CRM SOFTWARE MARKET MEASUREMENTS

  • Research firm Gartner forecasted software-as-a-service (SaaS) relative to the industry at large by predicting that by 2011, 25 percent of new business application software will be delivered by SaaS.
  • Research published in CRM magazine in September 2008 showed that in 2007 the CRM software industry achieved its fourth consecutive year of market growth with a 12 percent rise over the prior year. The original research was provided by AMR Research and concluded the 2007 CRM software application market at $14 billion. According to CRM magazine Editorial Director David Myron, "While analysts may differ on the market's exact size and rate of growth, all agree that CRM software-as-a-service (SaaS) is the driving force."
  • According to a market projection by research firm IDC, the SaaS industry reached $3.7 billion in 2006 and is forecast to grow at a cumulative rate of 32 percent per year through 2011, reaching revenues of about $15 billion.
  • Analyst firm Gartner forecasts that the SaaS industry will achieve $5.1 billion in revenues in 2007, a 21 percent increase from 2006, and will grow to $11.5 billion in revenues by 2011. SaaS CRM solutions are forecast to increase 26% annually through 2011. SaaS CRM growth varies for by industry sector (whether marketing, sales force automation or customer support) but fluctuates between 7% and 18% of the overall CRM software market. In 2006, SaaS CRM solutions grew from 8% in 2005 to about 12% of total CRM software market.
  • A McKinsey research study among Service & Support Professionals Association members demonstrated that the number of chief information officers (CIOs) evaluating on-demand CRM systems climbed from 38 percent in 2006 to 61 percent in 2007.
  • A 2008 research report issued by McKinsey & Co and the Sandhill Group found that software-as-a-service and service-oriented architectures (SOA) are the two most significant growth trends in the enterprise software industry. A survey with 850 private sector companies illustrated that 74% of respondents were “favorably disposed” towards purchasing SaaS business systems and companies were investing 19% of their software budgets on subscription-based and hosted solutions. The analysis report also concluded that “nearly every company – as well as divisions of large enterprises – is a customer or a prospect for SaaS platforms”. In an interesting alignment of the industry's top two disruptive platforms, the researchers predicted that while SaaS and SOA were currently on different but parallel evolutions, “we expect them to converge in the future”, laying the ground work for a “tremendous battle between the largest software vendors and the newer SaaS providers”.
  • The CRM SaaS industry in Asia, excluding Japan, is forecasted to grow at a compound annual growth rate of 61 percent between 2006 and 2010, according to research results from Springboard Research. Springboard estimated the Asian CRM SaaS industry at approximately $69 million in 2006, and predicted it to reach $460 million by 2010. Australia, Singapore, Hong Kong, Korea, India and China are will continue to be the fastest growing CRM SaaS markets in Asia. Of these markets, Australia remains the largest market, accounting for 35 percent of all CRM SaaS sales in the Asia region. “SaaS CRM has gained acceptance in Asia’s business mainstream and the coming year will see higher adoption rates as larger enterprises choose SaaS CRM,” said Balaka Baruah Aggarwal, Senior Manager for Emerging Software for Springboard Research. At the same time, the market is set to witness unprecedented growth in the SME (small and midsize enterprise) sector as a spate of new initiatives by vendors such as SAP, Microsoft, and Oracle increase their sales, marketing and business development programs. Springboard currently estimates that CRM SaaS market represents the largest segment of SaaS application expenditures in Asia at 45 percent, followed by collaboration, ERP/PLM/SCM applications, and HR (human resource) systems. “Springboard Research believes that a substantial portion of the growth in Asia Pacific’s SaaS CRM market will come from the SME segment. We expect SMEs in Asia Pacific to go for simpler CRM solutions that are not so complex,” said Aggarwal.


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tags Tags:
erp definition
crm software market share, erp software, enterprise resource planning software, top crm software, sap, oracle, business bydesign, bbd, on-demand, customer relationship management software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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