Over the next five years, European companies’ expenditure on enterprise applications will shift from its current focus on enterprise resource planning (ERP) towards CRM, according to AMR Research.
In 2001, sales of ERP packages represented 53 per cent of all enterprise application purchases, said the market research firm, but by 2006, this figure will halve to a mere 26 per cent.
CRM spending, on the other hand, will jump from 22 per cent in 2001 to 40 per cent in four years’ time.
Expenditure on supply chain management (SCM) packages is likely to command 15 per cent of the market by 2006 compared to 13 per cent in 2001, but sales of procurement and sourcing packages are expected to grow at a compound annual rate of 16 per cent over the next five years. The market share of such applications will remain flat, however, at about four per cent.
Meanwhile, the nascent sector for product lifecycle management applications, which was worth only $25 million last year, is set to grow at a compound annual rate of 27 per cent over the next five years.
In contrast to other sectors, however, where only a small number of large vendors are likely to control the market, smaller suppliers fare relatively well in the CRM space.
The top two vendors, Siebel Systems and SAP, account for one third of sales in the space, while the top 10 generate about 50 per cent of total revenues, with the rest distributed fairly evenly.
This contrasts with the ERP arena, for example, where in 2001, the top 10 vendors controlled 79 per cent of the market.
But AMR pointed out: “Ownership of the majority [CRM] market share is under contention as SAP battles it out with current market leader, Siebel."
"Siebel clearly led the way in 2001 with a 14 per cent market share lead over SAP. Current forecasts indicate a much closer battle in 2002 as SAP narrows the lead to trail Siebel’s market share of 16 per cent by just one per cent,” it added.