Europe leads SaaS advance

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Overall growth of on-demand CRM applications is expected to grow by 41 percent over the next three years, with Europe and Asia leading the charge.

According to a new report from Tier1 Research, the on-demand CRM market is expected to grow by a compound annual rate of 41 percent over the next three years, driven primarily by small and midsize businesses (SMBs). Tier1 finds it unlikely that traditional CRM vendors will be able to penetrate the Asian market very quickly.

The on-premise market for CRM applications will grow slowly because large enterprises are already committed to traditional enterprise vendors such as SAP and Oracle who are not geared up to tackle the SME space. But Tier1 is expecting Salesforce.com to face some challenges, particularly from Microsoft.

“The global growth story for the on-demand CRM market is clearly an exciting one,” said Wesley Kennedy, Senior Analyst at Tier1. “While the rising tide will lift all boats, it is evident that some boats will rise higher than others. Those companies that are levered to the fastest-growing sections of the market will clearly be the greatest beneficiaries.

Good news for those SaaS vendors making a push for European business. Salesforce.com's Dreamforce Europe is coming up in May. It will be interesting to guage demand there. I suspect this survey is very much on the right track.

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