Hosted sector leaps to 10% share of CRM market

Hosted CRM revenues doubled between 2003 and 2004, leaping from 5% to a 10% revenue share of the total CRM software market, according to new research published today by AMR Research. The surge comes against the backdrop of a moribund market for conventional licensed CRM packages, which despite a small rebound still remains below the level of revenues achieved in 2001.

"Two leaders in the hosted CRM market, RightNow Technologies and salesforce.com, enjoyed 97% and 83% growth rates, respectively," AMR reports in its press release. "Salesforce.com rocketed from number 22 to 12 in terms of total  CRM revenue."

Although this stellar growth in part reflects the immaturity of the hosted sector, and will inevitably slow as players consolidate their market presence, the spurt seems likely to continue into the current year. So far, said Rob Bois, senior research analyst at AMR, most of the growth of the on-demand CRM market has been coming from companies or enterprise departments that are new to CRM. But take-up by larger companies is increasing, so the newcomers should soon start eating into the installed base of the incumbent CRM giants such as SAP (which grew its revenues by 30% to become market leader), Siebel, Peoplesoft/Oracle and Amdocs.

The on-demand providers will be aided by a proposition, that, Bois said, "has changed the whole perception of customer management with faster implementations, quicker time to value, and easy customization.”