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Worldwide CRM market up on emerging markets and SaaS

New research by Gartner Research shows that CRM software revenue rose to $8.1 billion in 2007

Worldwide customer relationship management (CRM) software revenue grew to $8.1 billion in 2007, a 23.1% increase from 2006, according to Gartner Research.

"Though currency buoyed growth, 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."

In 2007, SaaS represented more than 15% of the total CRM software market revenue. Gartner says this growth came from gains by pure SaaS vendors as well as traditional vendors offering on-demand solutions and vendors changing from on-premise to on-demand.

Vendors that offer both on-demand and on-premise CRM are acquiring new customers and are attributing a greater proportion to SaaS in response to market demand, the research firm added.

SAP was the number one vendor in worldwide CRM software revenue in 2007, accounting for 25.4% of the market, while Oracle maintained second place with 16.3%. Salesforce.com and Microsoft had the highest growth rates of the top vendors with 49.8% and 88.6% growth respectively.

According to the research, the CRM market still remains highly concentrated in Western economies, with emerging markets accounting for only about 15% of the market. However, growth rates in these markets were high, with the Middle East and Africa region and Eastern Europe both exceeding 40% growth.

"CRM vendors should focus on offering products, services and contractual arrangements that enable customers to create the optimal experience for their clients," Mertz concluded, "Top priorities include online communities, workforce optimization, analytics, multichannel campaign management and marketing resource management."