Global CRM market forecast to 2006 from Datamonitor

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By: Wise Marketer Staff |

Posted on May 10, 2002

The global CRM service automation software market is projected to be worth US$4.4 billion by 2006, according to a new Datamonitor report, The Future of Customer Service Software.

The report by market analysts, Datamonitor, predicts that the global service automation software market (which was worth US$2.32 billion in 2001) will grow to reach US$4.4 billion by the end of 2006. Western Europe and Asia Pacific are, by that time, expected to reach US$1.2 billion and US$337 million respectively, following behind North America with an anticipated market value of US$2.8 billion.

Must add value
Datamonitor suggests that if vendors are to remain competitive and achieve viable levels of growth, many will need to rethink their business models, and add value to their existing products. Due to declining revenues and limited access to capital, service automation software vendors do not have the requisite financial and human resources to adequately target new markets and develop new functionality for non-core products. Datamonitor believes that analytical customer relationship management (CRM) and knowledge management features are the most logical additions to any existing operational CRM products. As companies seek to manage large amounts of customer data, the demand for such applications is likely to increase.

The future of eService
With service automation software becoming a commodity, and the blurring of lines between service automation and other software (i.e. sales automation and portals), Datamonitor analysts believe that in the future, the stand-alone eService market will cease to exist. The report suggests that Siebel will lose some of its dominance as ERP vendors (like SAP and JD Edwards), being relatively new to the space, and older participants (like PeopleSoft), increase their share of the service automation software market.

According to the report there will also be an increase in comprehensive eService suite solutions, as end-users demand greater depth, utility and features in their CRM technology. To avoid the risk of being marginalised, vendors also need to forge partnerships with systems integrators (SIs), consulting companies, complementary software vendors and application service providers (ASPs).

The importance of SME
The small-to-medium size enterprise (SME) market is likely to continue to be an important one over the next five years. Historically, vendors have focused almost exclusively on large corporations due to the cost and complexity of their solutions. The current economic climate highlights the need for vendors to target SMEs as well as individual business units within the enterprise; Large enterprises are less inclined to make massive investments in CRM in the face of corporate earning troubles. The ASPs are set to have the greatest success targeting this market by providing SMEs with previously unseen benefits, including:
·  Reduced costs;
·  Ease of integration;
·  Savings on IT labour;
·  Access to new applications.

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