CRM - January 2008 - (Page 19)

Insight CRM Market Set to Double Recent studies predict the global CRM market will double within six years, and suggest explosive growth in CRM adoption across every segment—especially on-demand CRM ood news for CRM vendors: CRM software investment, adoption, and product revenues are all set to rise, according to a recent report from market analysis firm Datamonitor. Though Datamonitor estimates the 2006 global CRM software market was worth just under $3.6 billion in license revenue alone, the research firm’s analysis finds the market hasn’t yet matured. In fact, less than half of U.S. companies—42 percent—are using CRM, according to new research from the consulting firm KensingtonHouse. Datamonitor predicts a compound annual growth rate of approximately 10.5 percent through 2012, nearly doubling in size to $6.6 billion. Datamonitor attributes that predicted growth to increasing deployment of CRM in new vertical sectors, such as healthcare and life sciences, as well as to a high degree of flexibility in deployment that will bring smaller-size end users on board. Even more notable, in terms of current and future growth, is the fact that CRM’s “market fertility”—the percentage of companies deploying, upgrading, or actively considering a CRM purchase— stands at 38 percent, according to the KensingtonHouse report. The market-fertility figure is the metric KensingtonHouse chose to highlight, as it reveals a record number of companies deploying or planning to deploy CRM. “This is significantly above what I’ve seen historically, which has been 18 to 25 percent fertility,” says Thomas Moriarty, the consultancy’s president. According to KensingtonHouse, the main reason for the current wave of CRM popularity is the maturity of the ondemand delivery model and functionality set. Fifty-five percent of respondents expressed a preference for on-demand, with a mere 14 percent nominating onpremise and 31 percent undecided. Though 87 percent of survey respondents www.destinationCRM.com G were either small or midsize businesses increasingly segmented by enterprise size. (SMBs), Moriarty says that the preference Whereas CRM was once primarily for for on-demand extends to the enterprise large companies, Datamonitor estimates segment as well. (The research canvassed that companies with fewer than 1,000 437 respondents representing a popula- employees made up one-third of all CRM tion of 20,000 companies with a degree of licenses sold last year; by 2012, that sector will hold 42 percent of the market. accuracy of plus or minus 5 percent.) But Datamonitor’s analysis found that On-demand’s benefits include its low many end users are cautious cost and its simplicity, Moriwhen considering CRM for fear arty says: The model can lower of facing adoption issues. These the cost of a CRM deployment companies reported several by as much as 60 percent while “adoption inhibitors,” includalso offering an increasingly ing software complexity; high user-friendly experience. total cost of ownership; and While on-demand can be lack of strategic support for easier to implement than onOn-demand CRM CRM installations. premise, adopters of either On-demand software has variety should still be aware of will drive adoption, become a credible alternative, the risks of project failure. Gart- but “CRM but report author Vuk Trifkoner recently predicted that, by on-demand, alone, vic, a technology analyst at the end of 2008, “25 percent Datamonitor, doesn’t expect it of CRM projects will be post- cannot transform will significantly alter the CRM poned or canceled because of the market.” market in coming years. (The the CRM skill shortage in consultants and systems integrators.” Mori- report estimates the present-day global arty suggests that figure be taken in con- on-demand CRM market to be approxitext.“Three years ago, that number would mately $1 billion.) Trifkovic expects to see a substantially more competitive onhave been 75 percent,” he claims. A recent report from the consultancy demand market, with established onBain & Co. revealed that companies that demand vendors facing pressure from put more effort into CRM up front smaller ones—and both competing (including long-term planning, unwaver- against traditional on-premise vendors ing executive sponsorship, and diligent that now offer on-demand editions. The on-demand application model— change management) get more out of the technology. Those companies that put a in which the vendor hosts the CRM soft“major effort” into CRM reported a 4.17 ware on distant servers—removes the end satisfaction score on a five-point scale, user’s headache of daily maintenance and while those putting in a “limited effort” technical operations. Such applications will drive CRM adoption, particularly at were only able to achieve a 3.53 score. More companies now consider CRM small and midsize enterprises that have critical to their enterprise application port- held back due to concerns about implefolio, according to Datamonitor: “As the mentation issues, the report says. “Although [the on-demand] method increasing number of organizations understand the importance of positive does address certain adoption inhibitors, customer experiences and strong cus- CRM on-demand, alone, cannot transtomer relationships, the market for form the market,” Trifkovic writes. —Joshua Weinberger, with reporting by [CRM] applications continues to expand.” Demir Barlas and Jean Thilmany The report found the CRM sector CUSTOMER RELATIONSHIP MANAGEMENT | JANUARY 2008 19 http://www.destinationCRM.com

Table of Contents Feed for the Digital Edition of CRM - January 2008

CRM - January 2008 Contents Front Office Reality Check Customer Centricity The Tipping Point Facebook's About-Face On the Scene: Oracle OpenWorld 2007 CRM Market Set to Double Customers, Meet your Makers Required Reading Oh, Behave! Fine-Tuning the Channel Listen Up! The Master Piece Flying High on Customer Service Let's Get Digital The Big Rigs Get Revved Up Putting Asia in Your Pocket Secret of My Success Connect Re:Tooling Pint of View

CRM - January 2008

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