On-demand CRM leadership is polarising, study finds

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By: Wise Marketer Staff |

Posted on September 14, 2005

On-demand CRM leadership is polarising, study finds

The appeal for on-demand CRM applications was strong in 2004, generating some US$300 million in revenue. But IDC has found a particularly high revenue concentration among a very few vendors, with the top five vendors accounting for 81.6% of the total market.

The new IDC report, 'Worldwide On-demand Customer Relationship Management Applications 2004 Vendor Analysis', provides a detailed vendor ranking for on-demand CRM applications providers, and found that currently Salesforce.com holds the leading position with 49.5% market share, followed by RightNow Technologies with a market share of 13.5%.

Surprises Surprises in the leadership table included Siebel Systems - now the subject of a proposed Oracle buy-out (see 13 Sep. 2005) - who entered the on-demand CRM applications market in January 2004 but still managed to reach 5th place in the IDC rankings.

According to Erin Traudt, research analyst for Software as a Service, "The software on-demand delivery model is helping to reinvigorate the software industry, and turns an attentive ear to customer needs and wants. Ultimately, CRM customers want their business problems solved and the on-demand model provides another option to help accomplish that."

Mary Wardley, vice president of CRM applications research at IDC, explained that, although on-demand applications currently represent a small proportion of the overall CRM market, suppliers of such applications are reaching end-user organisations during critical replacement cycles.

Report highlights Other notable highlights from the study included:

  • CRM implementations now often involve flexible business process flows versus discrete functional implementation. IDC sees this trend continuing for the foreseeable future.  
  • IDC believes that on-demand delivery of applications will increasingly appear as part of a hybrid environment of on-premise and on-demand applications, as the broader market gains familiarity and comfort with the product, and if the functionality offered meets or exceeds on-premise products.  
  • IDC's survey results suggest that client companies are more likely to spend more money on software as a result of their software as a service (SaaS) purchase, and are therefore more likely to work with other vendors than in the past, presenting both challenges and opportunities for on-demand providers.

The study is IDC's first report on the worldwide on-demand CRM applications market, and examines the top five on-demand CRM providers in terms of global revenues in 2004. Included are the trends observed by IDC, and a vendor competitive analysis. The report also contains results from IDC's 2005 Software as a Service Adoption Study, and is available directly from IDC.

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