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CRM spending to hit $113.8 million in MEA in 2008

Gartner predicts 14.2% global increase in CRM expenditure, MEA region to grow 19.7%

Gartner has announced that expenditure on CRM software will rise by 19.7% this year in the Middle East and Africa (MEA) region.

Globally, CRM spending will rise by 14.2%, based on preliminary 2007 revenue estimates of $7.8 billion, to reach $8.95 billion.

Although North America will continue to be the largest market for CRM up to 2012, reaching $7.67 billion, Gartner expects the strongest growth from Asia/Pac and emerging markets such as MEA, Latin America and Eastern Europe, particularly in specific industries.

MEA will experience a compound annual growth rate (CAGR) of 12.9% from 2007 to 2012.

"In terms of the industries that we're really talking about for MEA, it's some of the industries within professional services, financial services - basically those areas which are at the moment seeing a boom. As Dubai and others transform their economies from being more oil-based towards more professional services/financial services-oriented, that's where we expect some of the growth in CRM to come into play," said principal research analyst at Gartner, Chris Pang.

The analyst firm expects software-as-a-service (SAAS) to continue to gain in popularity, thereby driving growth.

"In terms of SAAS uptake in North America and parts of Western Europe, that's been very quick and it's been growing quite significantly year on year," said Pang, "However, in the Middle East, we expect the uptake to be a little bit slower and follow the trend of continental Europe, places like France and Germany as opposed to places like the UK and Netherlands which have been faster adopters of SAAS.

"One of the reasons for this is the local infrastructure. In places like Dubai, for example, that's not going to be a problem, there's good connectivity there. But in other parts of MEA, where broadband isn't quite so ubiquitous, there's going to be some major performance issues if you're trying to use SAAS applications."

"The other issue would be the lack of local vendors offering a SAAS solution. Most of the SAAS solutions at the moment are coming out of North America and so that's why there's a high adoption there as well as some of the English-speaking parts of Europe," he added.

Gartner also predicts continued consolidation in the CRM market. The analyst firm stated that vendors are looking to extend their portfolios, and acquire new solutions to complement their strengths as well as expanding geographically, which leads to consolidation. It added, however, that this consolidation would be offset by new, smaller entrants offering specialised functionality.

"Consolidation is good and bad, really, for end-users. It helps them in the sense that it makes vendor management easier. Instead of dealing with wall-to-wall vendors for your ERP, CRM and SCM systems, potentially you can narrow that down to one or two vendors," said Pang.

"However, in terms of the cons of consolidation, it does mean that with vendor selection, people have got to be a lot more careful and look at due diligence because they're going to be worried about the prospect of their vendor not being there two or three years down the line.

"Basically what end users want is security that the vendor they choose now will be around in years to come to support and update their application and provide continuous innovation to the product. In cases where vendors have acquired other vendors, you will have seen a slowdown in sales in the first 18 months as the vendors consolidate internally to see what is going to be the go-forward platform? What are going to be the key functions they're going to really put investment into?" he concluded.

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