Worldwide customer relationship management software revenue is projected to surpass $8.9 billion in 2008, a 14.2 per cent increase from preliminary 2007 revenue estimates of $7.8 billion, according to research mavens Gartner (News - Alert), Inc.

 

The CRM market is "poised for healthy growth through 2012," when revenue is forecast to reach $13.3 billion, Gartner says in "Customer Relationship Management Software, Worldwide 2007-2012."

"The composition of the worldwide CRM market is evolving as vendors continue to extend regionally, increase penetration within existing accounts and gain new clients, offer flexible deployment models, and continue to develop the channel," said Sharon Mertz, research director at Gartner.

Metz said software as a service will continue to gain popularity as "an increasingly critical element of buying sourcing strategies," and will "continue to drive growth through 2012." Also, buyer demand will continue to focus on "applications that provide vertical industry functionality, business analytics and applications provided by best of breed vendors" that deliver specific value.

"Initial 2007 market share estimates, backed by strong fourth quarter and year-end earnings reports, indicate solid market performance and record growth for the worldwide CRM market in 2007," said Mertz. "Furthermore, vendor confidence and buyer intent to purchase going forward indicate an overall positive outlook for the market in the mid- to long-term, despite softening economic conditions."

North America is the largest market for CRM total software revenue, as it accounted for $4.3 billion of revenue in 2007, and it will total $7.6 billion in 2012. Europe is expected to exhibit steady, positive growth rising from $2.6 billion in 2007 to $3.9 billion in 2012.

Gartner expects the strongest growth in CRM spending to come from Asia/Pacific where revenue is forecast to grow from $410 million in 2007 to $840 million in 2012.

 

Increasing penetration of CRM solutions in developing economies will make greater contributions to vendor revenue during the next few years, although Gartner analysts said that more-significant and less-taxing opportunities in other, more-familiar business environments will cause many vendors to concentrate in Western economies.

Last week analysts at Tier1 Research reported that since software as a service "can be a cost-effective delivery method for software functionality, it is rapidly gaining acceptance." Nowhere has this adoption been more evident, they say, than in customer relationship management (CRM), which they describe as "a front-end customer-facing platform consisting of sales automation, marketing automation and customer service."

 

While the on-premise enterprise CRM market has reached relative maturity and is expected to experience annualized growth of 6.2 percent through 2010, Tier 1 finds, the on-demand CRM market is expected to grow at a compound annual rate of 41.0 percent through 2010.