Thursday, February 26, 2009

Reviewing the State of CRM in 2000 Foretells Its Future in 2020

The business goals and challenges of customer relationship management (CRM) programs will remain the same today as they were 10 years ago, and they will continue to predominate during the next 10 years, according to Gartner, Inc.

CRM application pricing has changed dramatically during the past 10 years, with organizations commonly paying $1,000 to $1,500 per licensed user in 2009 compared with over $3,000 at its peak in 2000. The most common pricing model is still per user, but process-based pricing, fuelled by service-oriented architecture (SOA) and software as a service (SaaS) will become commonplace by 2020, up from less than 1 per cent of the time in 2009.

The shift to SaaS will see nearly 50 per cent of all field sales applications be delivered in this way by 2012, compared with less than 1 per cent in 2000. However, the percentage of all CRM applications delivered through SaaS will be only 25 per cent in 2012, and 40 per cent in 2020. As competition for SaaS CRM intensifies, pricing will drop from $800 per user per year in 2009 to near $500 by 2020.

Since 2000 the biggest change to technology-enabled CRM projects came with offshore external service providers. The shift to using offshore external resources for deploying CRM applications has reduced implementation costs, in most cases. More than 80 per cent of CRM application implementations in the US and UK involve some form of offshore resource. Yet, in countries such as France, Germany and Japan, this figure is less than 5 per cent. During the next decade, the use of offshore resources for these types of CRM projects will steadily rise as international competitive pressure increases, and the suppliers become more available.

The worldwide CRM application software market grew at a rate of nearly 90 per cent in 2000 then collapsed in 2001 bottoming out in late 2003. Since 2004, the market has grown steadily, at 11 per cent to 23 per cent per year. It is set for 10 per cent growth from 2007 to 2012, despite the recession in 2009 and knock-on in 2010. Gartner estimates that total revenue for CRM application software market in 2008 amounted to nearly $9 billion worldwide and will reach $10 billion in 2009, a 7 per cent per cent year-on-year increase. This includes licenses, maintenance and subscription revenues.

While the vendor landscape has changed dramatically, it is likely to change beyond recognition with the number of vendors leaving the market outpacing the number of new entrants. The five largest CRM application vendors are estimated to represent almost 60 per cent of the market in 2008. Gartner estimates that three or four large vendors will remain with an aggregate of more than 50 per cent market share in 2020.

More information on CRM can be found at www.CRMindustry.com

1 comment:

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