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CRM Software Market Should be Seeing Double in the Next Five Years

By Robyn Greenspan     Feedback

The growing number of small-to-mid sized e-businesses results in an increased reliance on CRM solutions.

New York, NY--According to Datamonitor, a leading business information firm that specializes in industry analysis, the North American customer relationship management (CRM) software market is expected to grow from $3.9 billion in 2000 to $11.9 billion by 2005. Consequently, accrued revenues for the application service provider (ASP) channel could yield a 128 percent growth rate over the next five years, bringing $431 million to CRM software vendors in 2005.

This information comes courtesy of a new Datamonitor report, CRM Distribution Strategies in North America to 2005, which states that the most rapid areas of growth will occur in the government, entertainment and Internet retailing industries. This increase represents the growing significance of CRM solutions among companies not traditionally associated with extensive CRM strategies, as well as additional infiltration into the small-to-mid sized enterprise (SME) sector.

The ASP channel will reap the benefits of the extra attention being paid to CRM by providing previously unaffordable CRM solutions to SMEs. This could essentially result in massive growth among ASPs over the next four years.

"Traditionally, the CRM market has been dominated by the enterprise sector," said Robin Goad, analyst with Datamonitor. "The cost of implementing a CRM strategy has been a significant barrier to entry for customers in the SME sector. The ASP channel will remove this barrier, offering key benefits to SMEs such as reduced cost, ease of integration, savings on IT labor, and access to new applications," added Goad.

A critical component in the exploitation of this new high growth SME market exists in the relationship between vendors and partners as they join efforts to embrace the ASP channel. Datamonitor predicts that the share of ASP revenues derived from CRM applications in North America will grow from 14 percent in 2000 to 21 percent in 2005.

"Currently, hybrid distribution channels are the most significant channels for CRM vendors in North America, accounting for 48 percent of vendors' revenues," noted Goad. "We believe that CRM vendors must partner aggressively to take advantage of the current trend towards hybrid distribution channels, as we have seen with Siebel and IBM, and Oracle and Cisco," he added.

In addition to CRM Distribution Strategies in North America to 2005, Datamonitor offers six recent reports that comprise a special CRM package. They are:

  • Opportunities in North American Call Center Markets to 2005
  • US Customer Relationship Outsourcing to 2005
  • eMarketing Software Markets to 2005
  • eSales Software Markets to 2005
  • IP: The Future of ACD?
  • Future of ACD?
This article was originally published on March 13, 2001
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