Magazine article CRM Magazine

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

Magazine article CRM Magazine

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

Article excerpt

Good 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 on-demand delivery model and functionality set. Fifty-five percent of respondents expressed a preference for on-demand, with a mere 14 percent nominating on-premise and 31 percent undecided. Though 87 percent of survey respondents were either small or midsize businesses (SMBs),Moriarty says that the preference for on-demand extends to the enterprise segment as well. (The research canvassed 437 respondents representing a population of 20,000 companies with a degree of accuracy of plus or minus 5 percent.)

On-demand's benefits include its low cost and its simplicity, Moriarty says: The model can lower the cost of a CRM deployment by as much as 60 percent while also offering an increasingly user-friendly experience.

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While on-demand can be easier to implement than on-premise, adopters of either variety should still be aware of the risks of project failure. Gartner recently predicted that, by the end of 2008, "25 percent of CRM projects will be postponed or canceled because of the CRM skill shortage in consultants and systems integrators. …

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