Gartner: CRM market to grow 14 per cent in 2008

The worldwide market for CRM (customer relationship management) software will grow 14.2 per cent to US$8.9 billion in 2008, according to a Gartner estimate.

The prediction is based on preliminary sales figures for 2007, which total US$7.8 billion. That compares to roughly US$6.5 billion in 2006, according to a Gartner spokeswoman. CRM revenues will continue to rise over the next several years, reaching an estimated US$13.3 billion in 2012, according to Gartner.

The weak dollar contributed to the higher totals for 2007, and while growth will remain strong overall, ongoing economic conditions will cause a short-term dip and slightly impact the long-term picture, Gartner said.

“Although demand continues across all subsegments, Gartner expects a softening during 2008 to reflect current economic fluctuations and as businesses consume prior purchases.” The analyst firm now estimates an 11.1 per cent compound annual growth rate for 2007-2012, down from the 11.9 per cent prediction it made in July 2007.

Growth is being driven by SaaS (software-as-a-service) product sales, which took an estimated 14 per cent of the market in 2007, representing more than US$1 billion in sales, according to Gartner.

However, open-source CRM is not yet making significant inroads. Market share for such offerings will remain below one per cent through 2008, Gartner said.

Geographically, the most significant portion of 2007 sales came in North America, which drew US$4.3 billion in revenue during 2007 compared to Europe’s US$2.6 billion.

Emerging markets will become more significant in coming years, according to Gartner.

In addition, more consolidation will occur in the CRM space, according to Gartner.

While a small handful of vendors control more than half the market share, there are hundreds of small players making up the remainder, the report notes: “These specialized vendors are often attractive acquisition targets for larger software providers that seek to enhance their software portfolios, establish a presence in other countries, add specific verticals or broaden their installed base.”

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