Global CRM Market Up 23% in 2007

Worldwide customer relationship management (CRM) software revenue totaled $8.1 billion in 2007, a 23 percent increase from 2006 revenue of $6.6 billion, according to Gartner, Inc. Growth was buoyed, in part, by continuing strong demand for new technologies, reports MarketingCharts.

See table: “Worldwide CRM Software Vendor Revenue Estimates, ‘06-’07.”

SAP was the No. 1 vendor in worldwide CRM software revenue last year, accounting for 25.4 percent of the market, according to Gartner’s report. Oracle maintained the No. 2 spot with a 16.3 percent share.

SalesForce.com and Microsoft had the highest growth rates of the top vendors with 49.8 percent and 88.6 percent, respectively.

The CRM market remains highly concentrated in Western economies, with emerging markets accounting for only about 15 percent of the market. In 2007, more than 53 percent of the CRM market was concentrated in North America. Western Europe garnered 32 percent of the market.

Growth rates in emerging markets surged in 2007 with the Middle East and Africa region and Eastern Europe both exceeding 40 percent growth. Growth in Latin America is beginning to accelerate, and Asia/Pacific is providing growth prospects for an increasing number of vendors as the CRM market expands into Singapore, Malaysia, Hong Kong, Vietnam and South Korea.

Australia remains the largest market in Asia/Pacific, but China and India represent significant longer-term market opportunities.

“This represents the fourth year of solid market performance for CRM,” said Sharon Mertz, research director at Gartner. “The market was driven by greater contributions from emerging regions, continued rapid adoption of software-as-a-service (SaaS), and a continued focus on investments that promote customer retention and enhance the customer experience.”

SaaS continues to drive the market forward, accounting for more than 15 percent of total CRM software market revenue in 2007. Growth in SaaS resulted from gains by SaaS pure plays, traditional on-premises vendors offering on-demand solutions, and vendors transitioning their installed base from on-premise to on-demand.

Though the sales segment still represents the largest contributor to SaaS revenue, demand is increasing for marketing automation and customer service and support solutions. Vendors that offer both on-demand and on-premise solutions are acquiring new customers and shifting their customer bases and revenue models to a greater proportion of SaaS in response to market demand.

“Looking forward, social networking, collaborative technologies and social software are producing a major impact on the CRM market,” said Mertz. “Enterprises face increasing challenges to determine how best to harness these trends and technologies for growth, both internally and in their customer service strategies.”