The customer relationship management (CRM) applications market has returned to positive growth in 2004 due largely to renewed increases in demand by end user organisations, according to a newly released study from IDC.
According to IDC's market valuation, the CRM market grew by 8% in 2004, resulting in total market revenues of some US$8.8 billion. It seems that during the market downturn of the past four years, end user organisations had refined their buying criteria, allowing them to more quickly invest in CRM projects when bigger budgets were found - which is exactly what happened in 2004.
Growth to continue
The study also found that buyers' intentions to implement CRM systems, and to focus on CRM initiatives, remain high for 2005. According to Mary Wardley, vice president of CRM applications research at IDC, "The growth of the relative newcomers [vendor-wise], as well as new functionality and licensing models from established vendors, has rejuvenated the market and turned the spotlight on true customer need. End users are the winners in this shift as the market now focuses on business benefits rather than functionality for the sake of functionality."
Siebel, Oracle, and SAP - all established CRM suppliers - now dominate the top three CRM applications market positions, according to the report. Siebel (the current market leader) captured 10.7% of the market share in 2004, while Oracle (after its PeopleSoft acquisition) narrowly captured second place, being just ahead of SAP.
From a regional view, North America was the largest region within the CRM applications market, accounting for 60.3% of worldwide revenue in 2004, with Western Europe representing 28.8% of the market.
Other key trends and highlights from the study include:
- On-demand products, such as those offered by Salesforce.com and RightNow Technologies, have generated significant revenue and will continue to become a greater factor in the market as time passes.
- CRM implementations now often involve flexible business process flows versus discrete functional implementation - a trend that looks likely to continue for the foreseeable future.
- Analytic capabilities embedded within CRM applications leads the top of the functionality "must have" list.
The study, entitled Worldwide CRM Applications 2004 Vendor Shares: Let the Games Begin, closely examined the CRM applications market for the period from 2002 to 2004, and provides worldwide market sizes for 2004 (with accompanying trends). A competitive analysis of vendors, including revenue and market shares for the leaders, is also presented for 2004, along with profiles of leading vendors. The report is available directly from IDC.