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Gartner Reports on 2007 CRM Software Market Revenue
July 10, 2008
By David Sims, TMCnet Contributing Editor
Worldwide customer relationship management (CRM) software revenue totaled $8.1 billion in 2007, a 23.1 percent increase from 2006 revenue of $6.6 billion, according to research from Gartner (News - Alert).
"Although currency buoyed growth, this represents the fourth year of solid market performance for CRM," says Sharon Mertz, research director at Gartner, adding that the market was driven by "greater contributions from emerging regions, continued rapid adoption of software as a service and a continued focus on investments."
SAP (News - Alert) was the No. 1 vendor in worldwide CRM software revenue in 2007, accounting for 25.4 percent of the market. Oracle maintained the No.2 spot with 16.3 percent. and Microsoft (News - Alert) registered the highest growth rates of the top vendors with 49.8 percent and 88.6 percent growth respectively.
SaaS (News - Alert) accounted for more than 15 percent of total CRM software market revenue in 2007. Growth in SaaS resulted from gains by SaaS pure plays, traditional on-premises vendors offering on-demand products and vendors transitioning their installed base from on-premise to on-demand, Gartner said.
The CRM market remains highly concentrated in Western economies. In 2007 over 53 percent of the CRM market was concentrated in North America, and Western Europe accounted for 32 percent. Growth rates in emerging markets surged in 2007, though, with the Middle East and Africa region and Eastern Europe both exceeding 40 percent growth.
Growth in Latin America is beginning to accelerate, and Asia/Pacific is providing growth prospects for an increasing number of vendors as the CRM market expands into Singapore, Malaysia, Hong Kong, Vietnam and South Korea. Australia continues to be the largest market in Asia/Pacific.
"Looking forward, social networking, collaborative technologies and social software are producing a major impact on the CRM market," Mertz said.
Customizable applications and software developer kits "allow for better information management and data collection," and organizations are using these technologies to customize and configure their core CRM product to mirror unique business processes.
Such are the findings of a recent study, "Tailor-Made CRM: Best Practices in Customization, Configuration, and Integration," conducted by the Aberdeen (News - Alert) Group, a Harte-Hanks Company.
In a marketplace where companies are challenged to obtain a 360-degree view of the customer, "businesses are customizing CRM products to integrate data from customer-facing groups, as well as increase the level of internal visibility into sales processes," the study found, adding that "Best-in-Class companies are 2.4 times more likely than Laggards to use a data integration product to support CRM customization initiatives."
The study found that the top two objectives of an organization's CRM customization initiative stem from "the most fundamental of business drivers -- to attain and keep customers." The need to improve customer retention (36 percent) and the need to improve customer acquisition (36 percent) were identified by all respondents as the top two objectives of a customization initiative.
David Sims is a contributing editor for TMCnet. To read more of David’s articles, please visit his columnist page. He also blogs for TMCnet here.

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