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Gartner sees a fragmented CRM market

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25th Mar 2008
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Gartner delivers its verdict on the CRM vendor landscape - and it appears its characterised by gradual consolidation, massive churn and custom-built applications. But what does the analyst think is in store for CRM in 2009?

By Chris Middleton

70% of CRM applications have been custom built, which explains why the CRM market is fragmented, only slowly consolidating and characterised by lots of churn, said Gartner VP Ed Thompson at a 'vendor landscape' presentation at the analyst's 2008 CRM Summit in London.

Gartner tracks some 300 out of an estimated 800 CRM vendors every year, 25-30 of which merge or are acquired during the course of the year, he added. These companies operate in more than 50 submarkets, with major areas including analytics, sales, marketing, field service, information infrastructure, customer service and ecommerce.

Thompson said that SAP and Oracle (Siebel) own about a quarter of the 'off the shelf' market each, but predicted that Microsoft, whose Dynamics CRM offering is growing at 100% a year in terms of customer numbers, will be in the vendor top five when 2007 figures are published shortly.

In terms of the user experience, perhaps only 4% of customers can demonstrate a genuine return on investment from CRM initiatives.

In terms of the user experience, perhaps only 4% of customers can demonstrate a genuine return on investment (ROI) from CRM initiatives, mainly because most companies fail to benchmark projects and real success stories tend to be anecdotal.

Thompson said that hot areas of the main markets over the next three to five years will be:

  • Sales: software as a service (SaaS) salesforce automation (SFA), lead management, Web 2.0, ecommerce, sales performance management, pricing management and social networking.
  • Customer service: collaborative and community intelligence, knowledge-enabled service resolution, feedback management and web self service.
  • Marketing: web analytics and advert management, word of mouth and communications, customer datamining, marketing resource management and marketing performance measurement.

A hot technology ticket

Industries where CRM is a hot technology ticket at present are banking (retail and wholesale), wireless, wireline, high-tech industries, pharmaceuticals, travel and hospitality. 'Warm' (emerging) markets include utilities, insurance, automotive, consumer goods, medical equipment and the media.

Thompson explained that CRM spending correlates “very strongly” with GDP growth. The low ebb for the CRM market was in 2003, he said, when the most popular areas were mainly cost driven, such as self service and business process outsourcing (BPO).

As things stand, Gartner believes that CRM in 2009 will be about analytics, communities and mobile.

Thompson explained that any renewed focus of demand within cost-driven areas such as self-service and BPO would therefore be an indicator of a major economic downturn in the UK. At present those indicators are not strongly suggesting a sustained downturn.

As things stand, Gartner believes that CRM in 2009 will be about analytics, communities and mobile, he said.

Thompson went on to outline the 10 “most critical uncertainties” in the future of software development between now and 2016, and their relevance to the CRM market.

These included SaaS delivery; the shift of economic power and and skills to emerging ecnomies; the operational ability of organisations to absorb new technologies; the control shift from IT experts to users and consumers; the increasing virtualisation of business; new software licensing schemes; realising the promise of service-oriented architectures (SOA); universal fast and simple access to information (eg, the Google model); and open source displacing commercial software (in emerging economies in particular).

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  • Gartner CRM Summit 2008 report
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