Positive analyst outlook for CRM in 2007by
With 2006 now a memory, attention is turning to the prospects for the CRM market in 2007 – and the good news is that analyst firms reckon that there’s much to be cheerful about.
According to Forrester Reseasrch, the CRM market is set to hit nearly $74 billion in sales in 2007. CRM applications represent about $21 billion of that market, with services making up the rest.
So where is this spending going to go? During 2007, more than 60% of all new CRM applications deployed within two years of purchase will be from best-of-breed vendors rather than from Oracle or SAP, according to Gartner. This is despite the volatility in a market that has seen so much merger and acquisition activity of late, making vendor viability a major concern.
"Potential customers need to take a 360-degree view when choosing a software vendor," said Sharon Mertz, CRM research director for Gartner. "This is an incredibly volatile arena, with companies being bought and sold all the time. "
Approximately $565 million will be spent in 2007 on e-service, CRM, contact centre and field service technologies by large technology companies with more than $1 billion revenue, according to the Service & Support Professionals Association (SSPA).
A study by the association found that 62 per cent of overall spending will be allocated to contact centre and CRM software. The largest percentage of spend, 36 per cent, is allocated to contact centre applications, with CRM coming in second with 26 per cent of planned spending. Spending by small and medium enterprise (SME) technology companies will be around $884 million, taking the total to $1.4 Billion.
"As companies in more industries recognise that the service experience is a major contributor to long term customer value, spending on customer service and support technologies remains strong," said SSPA vice president of research John Ragsdale.
"With vendors competing head to head for most deals, this continued spending is driving innovation as technology providers develop new approaches to streamlining customer interactions and making each customer contact more effective, whether assisted or unassisted."
"Spending by large technology companies on products that impact the 'soft side' of the customer experience like quality monitoring, skills based routing, and even enhanced voice self-service, is trending up.”
The telecoms sector is set to see strong growth as well according to a study telecom market research and consulting firm Dittberner Associates which sizes the telecom CRM market at $997 million in 2005 and forecasts healthy growth to $1.3 billion in 2010.
"If we've learned anything from the telecom industry's last recession, it's that investing in the latest network innovations is no guarantee of business success," says Dan Baker, director of Dittberner's OSS/BSS KnowledgeBase. "That's why, in today's competitive world, investments in customer-keeping and customer-monetizing technology are as vital as a telco's investments in network infrastructure."
Spending on software as a service (SaaS) implementations will also increase, particularly among small and medium enterprises (SMEs) which are on track to spend US$2.44 billion on hosted/SaaS CRM and ERP/SCM next year, up some 17% over 2006 levels.
Fueling these investments will be strong demand for CRM (customer-relationship management) solutions from the UK, France, the US and Germany, according to Access Markets International (AMI) Partners. These four countries are set to boost their hosted CRM spending to $674 million in 2007, up 23% year on year.
"Hosted/SaaS CRM and ERP/SCM are gaining market share over packaged software as more and more SMEs opt for these hosted services for their mission-critical applications," says Spencer Richardson, New York-based analyst at AMI. "Hosted software solutions already account for 4% of the total global software spend by SMEs. This is set to rise in the coming years."
"SMBs in the US spent more than $1 billion on their hosted/SaaS CRM and ERP/SCM in 2006, accounting for 52% of the overall $2 billion global investment in hosted software. Germany was second with $179 million, or about 9% of the global hosted spend. Japan, Britain and France round out the top five with a combined investment of $318 million in 2006."
Manufacturing and financial services companies will be the big spenders on CRM in the short term. European banks, along with transport, communications and utility companies have the highest CRM penetration but will continue to offer the best opportunities for CRM vendors, according to IDC.