The overall CRM market is growing
SAP has lost market share based on revenue
Microsoft is the fastest growing CRM provider based on revenue
Salesforce.com is benefitting from user interest in the SaaS model
Following a recent warning that the CRM market is growing but set for tougher times, Gartner reports that Microsoft is riding the wave of the CRM market's fifth consecutive year of double-digit growth, with more troubled waters for SAP.
SAP continued to be the market leader, accounting for 22.5% of worldwide CRM software revenue in 2008. This does not represent actual use of the software, which in the past has led to criticism from rivals such as Oracle as it claims that measuring success in terms of revenue share is not actually indicative of real world use by customers.
But SAP has come under pressure this year with its share down 3% from a high of 25.5% in 2007. On the other hand, Microsoft soared by a mighty 75%, although much of this may be attributable to a lower base number to begin with. Oracle turned in 11% growth rates.
SaaS continues to gain momentum
Software as a service (SaaS) now makes up nearly 20% of total CRM software market revenue in 2008, up from just over 15% in 2007. This is reflected in Salesforce.com's status as number three in the market – after SAP and Oracle - with an 8.3% share, up 42.7% year-on-year.
“Despite financial market volatility, the worldwide CRM market enjoyed its fifth consecutive year of double-digit growth as businesses continued to invest in solutions across all sub-segments,” said Sharon Mertz, research director at Gartner. “Actual market growth was moderated by a stronger dollar but reflects higher contributions from emerging markets.
“Investments in technologies which enhance productivity, provide better visibility and insight into customer behaviours and grow online commerce, sales and marketing activities are expected to grow through 2010,” she added. “However, while we expect overall CRM growth prospects to remain positive in 2009, we do anticipate them declining to mid-single digits due to continued economic uncertainty.”
Need for alignment
Overall market share of each CRM sub-segment shifted slightly in 2008, with sales remaining as the largest sub-segment, representing 42.8% of the market and enjoying the highest growth of 14.7%. Marketing automation also continued to grow in 2008, with a 10.4% increase, representing 20.6% of the CRM market. Customer service and support represented 36.6% of the CRM software market as this segment grew 11.2% in 2008.
Mertz advised vendors that they need to align products, services and contractual agreements to enable customer business imperatives of higher client acquisition, retention and satisfaction while focusing their product offerings on applications and technologies that provide customers with tools and capabilities to increase visibility on customer requirements and behaviours.
They also need to pay attention to application vertical-market functionality, whether by in-house development, acquisition or partnership agreements to take advantage of key verticals or government stimulus packages.