According to a new report from Research and Markets, “Customer Relationship Management Market Assessment 2008,” there has been much consolidation in the customer relationship management (CRM) industry during the past 3 years. A few large CRM players were acquired by even larger software development companies.

 

Today, there is no divide between enterprise resource planning (ERP) software developers and CRM software developers and all software developers have begun to provide total business-management solutions for their customers, the report said.

 

As predicted by industry experts, CRM is no passing fad, but has become an essential way for organizations to understand their customers. Leveraging technological advances, organizations have begun to link their `front-office' functions to their `back-office' enterprise solutions. CRM products themselves, the technology involved, and knowledge about how to use these solutions, have all improved, allowing vendors to begin marketing their products to small and medium businesses (SMBs).

 

The report indicated that the capabilities of Web 2.0-based solutions has given rise to a new generation of Internet users, both developers and consumers, who use open-source technology and the Internet to collaborate and network online.

 

Because CRM systems had already developed Web-based accessibility, it has been a small step for vendors to make the entire system available to the whole organization this way but by hosting it themselves. Hosted solutions provide a relatively low-cost entry for SMBs and almost all of the major CRM (and ERP) vendors now offer hosted solutions.

 

Competition is tough in this market and several software companies have entered the hosted CRM market, designing their products largely around sales and marketing processes. According to the research firm, the vendors offering basic CRM functionality to SMBs will enjoy some growth up to 2010 or 2011.

 

It is still not clear whether the hosted CRM providers will ultimately survive or not, Research and Markets said. With the change in customer needs, and boom in economy, SMBs may look for deeper functionality. Established software providers such as Oracle and SAP (News - Alert) will emerge as winners in this scenario. The start-ups will have to offer something new or they will not survive in the long term.

 

The report also indicated that the major software vendors are extremely acquisitive. But they have already bought the CRM software leaders, and their acquisitions now are all in the area of technological development, where the R&D has been done by the target acquisition company, such as in mobile functionality.

 

CRM vendors want to extend their geographical reach, into Eastern Europe, China, India and South America. Research and Markets said that other targets for acquisition are organizations that are strong in particular vertical markets. Companies that already have a strong presence in emerging markets will also be targeted for acquisitions.

 

The CRM industry is growing and the report suggests that the economic decline will fuel the continued growth of the CRM industry because CRM can help achieve cost savings and increase productivity.