| By Chuck Schaeffer
Social CRM Shows Most Accelerated Growth
According to analyst firm Gartner, prior year trends will continue to give the customer relationship management (CRM) software market a boost in 2011, while at the same time the industry will enter a three year shake up in 2011, as a number of key trends take hold.
Sales, marketing and customer service technologies, projects and implementations will incur new changes and increased growth over the next few years. "Over the next three years, social CRM (SCRM) will continue its exponential rise, Software-as-a- Service will become routine, Salesforce.com will reshuffle the market order, and consultants and system integrators will sell their own CRM software," predicted Ed Thompson, vice president at Gartner, in a prepared statement.
Social Software to Exceed $1 Billion Worldwide by 2013
The $1 billion prediction for spending on social CRM compares with Gartner's forecast of more than $12 billion for overall spending on CRM software applications in 2012, means that social CRM will encompass approximately 8% of all CRM spending in 2012, up from about 4% in 2010.
In the analyst firms prior year Customer 360 Summit, it was speculated that the total revenue mix of traditional CRM applications, social CRM solutions and analytics would redistribute from the current 90%/9%/1% mix to approximately 70%/20%/10% allocation - leaving traditional CRM software with the lion's share of the market, but clearly taking a back seat to both social CRM and analytics in terms of market growth.
The analyst firm recommends that buyers of social CRM (SCRM) pursue a three step strategy toward developing a social CRM strategy:
- Determine if there are social CRM projects already under way; start by looking in the marketing and customer service departments first.
- Calculate the likelihood that you will be forced to begin a project in 2011 — your industry and company culture are the best indicators.
- Find case studies specific to your industry that can provide measurable examples of what is possible, and share them among decision makers within your business.
One-Third of New CRM Software will be SaaS by 2015
In 2009, 24% of the CRM software market was delivered via the software-as-a-service model, and this grew to more than 26% in 2010, up from virtually zero in 1999. By 2015, Gartner predicts that 32% of the CRM software market will be delivered remotely by SaaS.
Gartner said that CRM software buyers should resist the temptation to bypass the IT department when purchasing SaaS CRM solutions. Instead, engage IT in software selection and purchase decisions to avoid the most frequently cited downstream issue of data integration, and to address potential concerns about scalability, information security and data privacy. IT organizations should focus on system integration skills. The other limitations of SaaS CRM remain, but are eroding over time, whereas integration remains a challenge.
All Tier 1 CRM ESPs will Create Their Own Bolt-on CRM Application Software by 2015
In 2010, all Tier 1 CRM external service providers (ESPs) custom-built CRM application software on projects; developed configurations or industry templates for major independent software vendors (ISVs); packaged CRM applications for accelerated delivery and vertical markets; and productized work done on projects to re-purpose on subsequent engagements. However, less than half of the Tier 1 ESPs developed additive stand-alone CRM applications that coexist with ISV packaged applications. The majority of the Tier 1 CRM ESPs are now investing in client-agnostic R&D that is not project-funded to build their own bolt-on or best-of-breed CRM application software to run with platform-as-a-service (PaaS) solutions such as Salesforce's Force.com, Oracle's Fusion and Microsoft's xRM.
Gartner and other analysts recommend that CRM consultants and system integrators carefully select areas of software development investment, start with their vertical market and process strengths, and avoid overinvesting in the short term. CRM buyers should watch for further declines in independent advice on the selection process from ESPs and take appropriate caution when evaluating ESP software applications. Above all, they should avoid letting existing brand and reputation cloud their perceptions of the applications.
Categories: CRM Software
Tags: CRM Market
Author: Chuck Schaeffer