The customer relationship management (CRM) applications market is slowing down worldwide, and will continue to regroup throughout 2002 in Europe, according to the latest research by industry analysts IDC.
The European CRM market grew by just over 22% during 2001, putting pressure on software vendors who were accustomed to triple-digit growth rates and large deals. The report, Western European CRM Applications Market Forecast & Analysis, 2002�2006, predicts that the market will drop to a growth rate of less than 8% during 2002.
Bill Clough, research manager for IDC's European software group, explained, "CRM solutions have taken a tremendous hit over the last 12 months. But end users still believe there is good reason to invest in them, albeit more cautiously than before".
Future rebound
A rebound is projected during 2003 and 2004, reaching nearly 14.4% growth, showing that even a maturing market like CRM can offer significant opportunities in the future.
And while Southern Europe has not yet proved to be the "promised land" expected in the past few years, the Nordic and Benelux regions continue to be centres of activity for the comparative country size. According to IDC, the most successful vendors in the CRM market are now realising that vertical specialisation is a necessity, coupled with a new focus on alliances and service partners.
Clough points out that, between 1998 and 2000, large companies in Europe showed a great willingness to spend large amounts on IT systems in order to achieve 'customer centricity'. However, in the past year, this willingness reduced to more realistic levels, leaving many companies more cautious about CRM initiatives.
CRM segment still strong
Over the coming years IDC expects the CRM applications market to remain among the stronger growing segments in the software industry. Notable in this trend will be the growing acceptance of CRM as a strategy among the smaller companies, as well as being the consequence of supply chain automation and collaborative commerce systems.
These two areas usually tie into, or at least include, various parts of CRM. Among other market forces that are likely to drive growth in the Western European CRM applications markets over the next five years are the increasingly strategic role of business intelligence (BI) and analytic applications.
Mid-sized companies, for whom CRM is often an abstract and uncertain issue, will be under pressure from partners and parent companies to update their business processes, according to the IDC study.
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