CRM boom sparked by digital marketing, customer experience projects

CRM boom sparked by digital marketing, customer experience projects

Summary: The market for CRM software continues power ahead thanks to a shift to software-as-a-service (SaaS) which now represents almost half of CRM revenue, say the analysts.

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Customer Relationship Management (CRM) software is going through something of a boom and, if the analysts at Gartner are right, it is a boom that shows no sign of ending anytime soon.

The analyst firm said that investment in digital marketing and customer experience initiatives were the primary growth drivers last year.

From a technical point of view, growth is being fuelled by the increasing demand for software-as-a-service (SaaS) applications which represented "more than 41 per cent of CRM total software revenue in 2013", according to Gartner.

This was driven by "organisations of all sizes seeking easier-to-deploy alternatives to replace [their] legacy systems, implement net-new applications or provide alternative complementary functionality".

The market for CRM software continues to be dominated by the larger players, with the top five CRM vendors accounted for 50 per cent of CRM software revenue last year.

Salesforce.com continued to be the largest vendor overall in the CRM market, with 16.1 per cent of the market.

SAP remained in the number two position for overall CRM space, but is still the leader in terms of revenue and market share for what Gartner calls the" subsegments" of customer service and e-commerce. 

 CRM Software Spending by Vendor, Total Software Revenue Worldwide,

2013 (Millions of Dollars)

Company

              2013

             Revenue

     2013 Market          

     Share (%)    

2012

2012-2013

   Growth (%)

Salesforce.com

             3,290.3

     16.1

2,525.6

   30.3

SAP

             2,621.5

     12.8

2,327.1

   12.7

Oracle

             2,096.5

     10.2

2,015.2

   4.0

Microsoft

             1,392.4

       6.8

1,134.0

   22.8

IBM

                792.1

       3.9

649.1

   22.0

Others

           10,283.5

     50.2

9,351.2

   9.9

Total

          20,476.3

     100

18,002.2

   13.7

Source: Gartner (May 2014)

Looking at the regions, Western Europe had strong growth of 15.2 per cent in 2013, and North America continued to drive the bulk of the revenue share (52.9 per cent) for the overall CRM market. These two regions represent almost 80 per cent of all software spending on CRM technologies.

The way Gartner sees it, customer acquisition and retention continue to be the main drivers behind the continued success of CRM and are the key drivers for cloud/SaaS deployments.

"CRM will be at the heart of digital initiatives in coming years," said Joanne Correia, research vice president at Gartner. "This is one technology area that will get funding because digital business is critical for companies to remain competitive."

While seeing some growth, the emerging Asia/Pacific and Greater China regions did not experience the same levels of growth as other regions, according to Gartner, but they still reached double-digit growth rates.

Their numbers were also affected by other factors such as "a slowing macro-economy, influenced by notable depreciation of some local currencies such as the Indian rupee and the Indonesian rupiah", Gartner said.

The communications, media and IT services vertical industries are still the largest spenders on CRM because of their focus "on large groups using call centre technologies". 

Detailed analysis is available in the report Market Share Analysis: Customer Relationship Management Software, Worldwide, 2013.

Read more on CRM

Topics: CXO, Enterprise Software, Mobile OS, Salesforce.com

About

Colin Barker is based in London and is Senior Reporter for ZDNet. He has been writing about the IT business for some 30-plus years. He still enjoys it.

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3 comments
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  • Cloud CRM marginalises legacy on network systems

    Cloud CRM continues to be a golden child of the cloud world and it will now not be long before the market share surpasses that of legacy on network CRM solutions that continue to be marginalised and fall behind in features and functions. We are already seeing independent analysis sites such as G2 Crowd showing customer favour to cloud solutions and those such as Goldmine and ACT finding it harder to acquire new customer growth to the same pace as SaaS in their legacy model.
    ianm32@...
  • Integration is the key to the new CRM

    As CRM technology gets better, so will the expectations of its users. By its nature, CRM is a complex problem. The larger the business, the harder it will be to effectively use a CRM. According to multiple studies, over 60% of CRM implementations are judged "failures" by the companies that use them. Over 80% if there's sales automation in the system.

    New cloud-based CRM systems that focus on a holistic view of running business - integrating marketing, sales, and operations - will start to play a larger role in this market. There are a few players in this market, MotherNode, EngagedCRM, and GreenRope being some of the notable integrated solutions available.

    This built-in integration creates efficiency and insight at affordable pricing, and without the need for external development resources to tie different software together. Over the next several years, you will see a shift in the market toward this integrated, simpler solutions.
    greenrope
  • Simplicity is making a break for the lead

    The reason cloud CRM is moving up in usage and adoption is because it's flat-out easier than an installed solution. Easier to manage, easier to upgrade, easier to use, easier to get things done on a much wider scale.

    Especially with a new crop of CRM, including Insightly, Nimble, and JobNimbus (http://www.jobnimbus.com) that are making it their sole goal to build simpler solutions. This push will only get stronger as big CRM try to respond, creating more innovation and advancement.
    bradhodson