No growth for CRM vendors this year?

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By: Wise Marketer Staff |

Posted on January 3, 2002

Two new reports agree that the next couple of years are not going to be easy for CRM vendors. The strong will survive and the weak will fall. 

The worldwide revenue for CRM software is expected to be 8% down in 2001, compared with 89% up in 2000. It is expected to total some US$3.6 billion in 2001, and remain the same in 2002. The market is forecast to grow by 10% to US$4 billion during 2003. These figures were published by Gartner Dataquest earlier this month.

Tom Topolinski, vice president of Gartner Dataquest's Application Software Industry Research group, warns that the downturn will intensify the weeding out of the weaker companies and that those that have large cash reserves, little reliance on investment and a good ROI will fare best. He forecasts that the trend for mergers, acquisitions and divestitures will intensify and that this movement in the market, in the short term, may cause companies to hold back, waiting for more stability. The loyalty of existing customers will become even more important as the emphasis shifts from new business to maintaining and optimising current business.

Meanwhile, a report from Meridien Research predicts that, in 2002, global retail spending on CRM technology (based on 55,000 institutions and covering external IT spending for hardware and software as well as related development, consulting and implementation services for all financial industry segments) will stay the same as it was in 2001 (some US$6.7 billion), with no significant expansion until 2004. Corporate CRM spending, influenced mainly by commercial banks, will remain at US$3 billion in 2002. It is also not expected to grow significantly until 2004, as many institutions examine the return on their investment in less-than-successful CRM projects.

According to Tom Richards, Meridien's research director for CRM: "We foresee that top management at financial institutions that 'get CRM' will carefully seize upon the market confusion to quietly strengthen their arsenal of capabilities, often at bargain terms. In particular, we expect leading institutions will dig into business processes, probing for both cost savings and better service levels for customers."

An executive summary of CRM Spending Update: Hitting the Wall or Taking a Time-Out?, and information on how to buy it, is available at Meridien's website.

For more information on the Gartner Dataquest Perspective CRM Software Market Growth Down Sharply (which looks at how the recession and recent events are affecting the CRM software market) see Gartner's website.