Salesforce.com and RightNow Technologies, both proponents of the software on-demand model, are clawing at the heels of established players like Siebel and SAP.
Peter Dobson, Internet systems design development and integration manager at University of Southern Queensland (USQ), said he expected hosted CRM to continue to grow.
"I think they've [RightNow] got a pretty good market. They can deliver very quickly, and there's not the infrastructure hassles -- you don't have to worry about different operating systems for instance.
"There's a definite move to external hosting of a lot of things," he said.
Dobson was on the selection team which chose RightNow CRM to manage student requests online in 2001. The software manages "basically all communication between the student and the university", he said Dobson, and acts as a knowledge base for 30,000 students.
Being Web-based however was not what sold USQ on the RightNow offering.
"It wasn't a big reason ... we had a short time frame to implement, and it was what we needed. It's basically out of the box software, and you just configure it to suit you.
"[And] there's a lot of scope to use it in more areas in the university," he said.
A trial is currently underway to extend the system to prospective students, as competition for new enrolments in the tertiary sector becomes increasingly fierce.
Alison Higgins-Miller, managing director, Asia Pacific, RightNow Technologies, cited several industries in Australia that were taking to hosted CRM.
Education, telecommunications, consumer packaged goods and the technology sector were the strongest markets, with the finance sector an "emerging" base, she said.
Salesforce.com and RightNow Technologies have been quietly making inroads in the highly competitive CRM market by building a solid client base, and both companies are fresh from hosting their inaugural user conference for Australia and New Zealand this month, respectively.
Around 400 customers and prospects attended Salesforce.com's event in Sydney. Along with the regular showing of systems administrators, it also attracted many sales and marketing representatives, in keeping with the hosted CRM vendor's broad market base. Salesforce.com counts Vodafone, AAPT, Hutchison 3 and Dimension Data as customers.
A similar event in Melbourne the following week drew around 250 attendees, according to Salesforce.com.
Similarly, about 100 customers were on hand to hear from RightNow Technologies. Its customers include the Commonwealth Bank, AMP, TAB, Jetstar, Optus and Avis.
Buoyed by the groundswell in interest and revenue potential, vendors have moved to capitalise in terms of investments.
Salesforce.com this month expanded its Asia-Pacific management team when it appointed a chief executive officer for the region.
"We're confident the expansion of our Asia-Pacific executive team is well-timed to meet the increasing demand from the region," said Salesforce.com president Jim Steele.
The company also plans to build a new regional headquarters in Singapore early next year.
However, growth has yet to reach a level where the company can consider increasing physical resources. At the Salesforce.com Sydney user conference, one customer believed this was necessary.
As a Salesforce.com executive showed off its three datacentres in the US which host the CRM applications and data used by Salesforce.com's customers throughout the world, the user said: "That's all well and good but underneath that bubble there is Australia".
He has experienced "latency issues" when connecting from Australia ... "[or] perhaps I notice it more than most", the user said. However, Kendal Collins, Salesforce.com product marketing vice president, confirmed there were no plans to add a datacentre in Australia.