Report: CRM Is Going Strong

CRM software had a good year in 2013 with the category totaling US$20.4 billion, a 13.7 percent increase from $18 billion the previous year, according to a report released this week by Gartner.

Furthermore, the next few years are likely to be just as positive, if not more, the firm predicted.

“CRM will be at the heart of digital initiatives in coming years,” said Gartner Research Vice President Joanne Correia. “This is one technology area that will get funding because digital business is critical for companies to remain competitive.”

The report teases out other trends that will drive CRM projects going forward, including the long-evolving Software as a Service model, as companies beef up the functionality of their backbone systems or replace them with easier-to-implement applications.

SaaS as a Driver

The growth of SaaS is a key reason for the relative ease in securing funding for CRM projects, Jeff Nicholson, vice president of Provenir, told CRM Buyer.

Cloud-based offerings do not call for the dreaded big installations of the 1990s and 2000s, he noted. Also, pricing is easier for many companies to digest.

“With true SaaS pricing models, there is nothing to buy — you just pay as you go,” he said. “The most effective of these models will not even have a contract term or cancellation penalty, removing all the risk for an organization.”

That said, it would be unwise to dismiss the on-premises and hybrid models, cautioned Wilson Raj, global director of customer intelligence at SAS.

SaaS delivery of CRM apps still has headroom, he told CRM Buyer, but so do hybrid CRM delivery models, with a majority being in the cloud.

“A growing opportunity is in the integration between on-premises and SaaS deployments for CRM,” Raj told CRM Buyer.

50 Percent of the Market Claimed

About five companies accounted for 50 percent of the CRM industry’s software revenue last year. Gartner reported. Salesforce.com continued to be the largest vendor overall in the CRM market with 16.1 percent. SAP remained in the No. 2 position in the overall CRM space, and was the leader in terms of revenue and market share for the customer service and e-commerce subsegments.

Oracle, Microsoft and IBM followed, in that order.

CRM’s growth story is hardly over, observed Jeff Fotta, president of Gryphon Networks.

“There’s been a big shift into the B2C space, [and] more and more companies are looking to do big CRM projects,” he told CRM Buyer.

It has become easier for companies to quantify the results they expect and to chart the real-world benefits they can expect to realize, added Fotta.

“That’s why the next wave of this growth will likely come from tools that help CRM be more accurate,” he said.

There is plenty of room for new vendors that offer functionality similar to that of the big five, noted Alessandra Ceresa, director of marketing at GreenRope.

“No platform is one-size-fits-all,” she told CRM Buyer. “Every business has different needs and wants, and there are a lot of companies out there with different offerings.”

The CRM revolution is hardly over, Saurabh Bhatia, cofounder of Vdopia, told CRM Buyer.

“In the past, CRM was a tool to track and manage customer relations, and touchpoints with the customer were few,” he noted, but it now is morphing into a system that focuses on the customer experience.

“So the industry is ripe for disruption,” said Bhatia, “and traditional CRM systems are built on legacy systems that don’t get it.”