Consulting, Integration Firms Stake Claim to CRM Market

Michael Singer

Updated · Dec 06, 2001

While economic conditions appear to have forced some companies to delay projects or reduce the scope of implementation, a survey by Gartner’s Dataquest Inc. found that 65 percent of the respondents plan to have CRM initiatives deployed in their enterprise by 2002.

“Through 2002, large and midsize enterprises will continue to implement big-name CRM suites using top-tier consulting and system integration companies,” said Debashish Sinha, senior analyst for Gartner Dataquest’s IT services worldwide group. “CRM initiatives are evolving and iterative in nature, often requiring multiphase implementations, continued application management and several individual projects based on an overall program strategy.”

Gartner Dataquest analysts said there is a high propensity among enterprises that use external service providers (ESPs) to consider their services ongoing. This gives the ESPs the opportunity and requirement for long-term commitments, but can also poses a threat to service providers that cannot build their client base quickly.

“Given their position among the top and upper mid-market enterprises, the top-tier consulting and systems integration companies are in the best position to gain leadership in the CRM services market,” Sinha said. “After 2003, based on continued growth in the their customer relationships, they will effectively own the CRM services space.”

A key challenge faced by organizations attempting a CRM deployment has been the lack of coordination among various user departments. While corporate executives are planning enterprise-wide deployments, specific divisions continue to implement point solutions based on their current needs and business environment. This confusion will force enterprises to consider Tier 2 service providers for CRM services. Smaller companies demonstrate a more focused approach to business process issues and are largely willing to commit to quantifiable benefits to gain visibility within large enterprise customers.

“Enterprises struggling with lack of coordination across departments should consider the needs of individual groups and work on a top-down/bottom-up strategy,” Sinha said. “Because department-level CRM deployments may be more cost-effectively supported by a Tier 2 system integrator with domain-specific skill sets and software relationships, the enterprise should identify a master list of approved smaller service providers to work on individual projects.”

Top-tier providers can then focus on supporting the continued convergence of the enterprise’s IT and business strategy, help develop the standards for the CRM solution, implement the core components of the CRM initiative, manage the coordination across departmental-level initiatives and provide methodologies to track the overall business impact.

The Aberdeen Group’s “Worldwide CRM Spending Forecast” report, which covers 2001 to 2005, predicts that CRM revenues will increase at a compound annual growth rate of 19.9 percent over the next five years — from $13.45 billion in 2001 to $27.76 billion in 2005.

The report covers CRM market segments such as Sales Force Automation, Marketing Automation, Customer Service Automation, Field Service Management, Help Desk and Partner Relationship Management.

“At present, the CRM market is being negatively affected by economic conditions and worldwide events, resulting in an overall market contraction for the second half of this year,” said Hugh Bishop, co-author of the Aberdeen report. “However, thanks to the clear return on investment and rapidly increasing adoption in overseas markets, the global CRM market will rebound strongly from the worldwide slowdown in IT spending.”

Markets outside North America will play a big part in the success of the CRM market, not only in the coming years, but in this year as well.

“Overseas markets will be a primary growth engine for CRM,” said Christopher Fletcher, managing director of Aberdeen’s CRM practice. “Non-North American markets will contribute more than 38 percent of total worldwide CRM expenditures in 2001.”

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    Michael Singer

    Michael Singer is a career coach, podcast host, and author to help you step into a career you're excited about. Currently, He is a coach and trainer helping entrepreneurs and executives achieve business and leadership success. He is also an award-winning business journalist focused on the intersection of technology, Big Data, Cloud, SaaS, SAP, and other trending technology.

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