Customer Relationship Management (CRM) software buyers often consider CRM market leaders to have staying power and be relatively safer bets. CRM software publishers use market share figures to jockey for competitive position, convey strength and infer buyer confidence. However, most CRM software leadership claims are based on undocumented disclosures and a variety of different measures such as install base, growth or other ways to slice the market.
This CRM software market share analysis looks at three sources in order to compare data points, remove bias and rank the top CRM software solutions.
According to Gartner, the CRM software market reached $26.3B in 2015, up from $23.2B in 2014, representing a 12.3% annual growth. The analyst firm forecast the CRM market reaching $36.5 billion by 2017.
Each year Gartner releases CRM market revenues and market share standing among top vendors. For this analysis I've consolidated the annual data over the prior 8 years in order to show trending and filtered the data among the big 4 vendors and 'everybody else' in order to show market share leadership.
Source: Figures consolidated from Gartner annual market share releases
Many CRM pundits suggest that the Big 4 CRM vendors (Salesforce, SAP, Oracle and Microsoft) are increasing their collective market share. The data show otherwise. When I sum all CRM vendors other than the Big 4, this group grew its collective market share from 46 percent in 2007 to 58 percent in 2015.
Salesforce is the clear CRM software market share leader. During the prior year the company grew faster than the market, and nearly three times the rate of its next three competitors.
Predicting the number 2 CRM software vendor is difficult. While SAP and Oracle jockey for this position, both vendors are suffering steady market share declines. Prior year CRM market share analysis showed Microsoft on a trajectory to surpass Oracle and SAP, but the data now shows Microsoft growth is softening.
The analyst firm reports that Salesforce and Microsoft Dynamics 365 CRM together account for 54 percent of CRM implementation service projects, with the remaining 46 percent spread across all other CRM systems.
Oracle and SAP continue multi-year declines. CRM media often suggest that the combination of an eroding Siebel install base coupled with an unclear CRM product strategy make Oracle the market's top decliner. However, the data shows SAP has incurred the largest market share loss from the prior year and over the prior eight years.
There is a significant gap between the Big 4 CRM vendors and those next in line. Gartner previously positioned IBM as the number 5 CRM vendor, however, now positions Adobe number 5. IBM and Adobe CRM products consist almost entirely of marketing software.
Gartner advised that 2015 marked the tipping point whereby Software as a Service (SaaS) CRM revenues exceeded on-premise. For the prior year, SaaS revenue grew 27% while on-premise license revenue declined 1%.
Global System Integrators
For another perspective I reached out to the top 2 global system integrators (GSIs) to get their take on CRM software growth among the Big 4 vendors. While the discussions are anecdotal, these firms experiences provide limited but empirical consideration.
Accenture is the top Salesforce integrator and its Avanade subsidiary is a top Microsoft CRM partner. The company also has veteran consulting groups for Oracle and SAP CRM. I'm told that the Salesforce practice is the highest growth, followed by the Microsoft consulting subsidiary Avanade. This would seem to be supported by Accenture's appetite for acquisitions such as Tquila and Cloud Sherpas, and the formation of its new Accenture Cloud First Applications group which includes Salesforce, ServiceNow, NetSuite and Workday.
IBM also has seasoned consulting groups for Salesforce, SAP, Oracle and Microsoft. IBMs top CRM consulting growth practice is Microsoft Dynamics 365, however, like Accenture, the company's recent acquisition of Bluewolf would suggest that they are following market demand and doubling down on Salesforce.
The most significant deviation when compared to the Gartner data is that the integrators are seeing bigger market increases for Microsoft Dynamics CRM. An initial thought is that the largest GSIs generally implement the largest customers, so Microsoft CRM growth data may be skewed or limited to larger enterprises. However, we know that Microsoft sells far more CRM software to small and midsize businesses (SMBs) than enterprise organizations, which would suggest that Microsoft's CRM growth is increasing across the board.
I found another consistent theme in talks when including other integrators. Each integrators' Oracle practice is in significant decline. Most Oracle consultants still provide services around Siebel but that's lessening as this product continues to erode and be replaced by more modern CRM systems.
Gartner CRM market share analysis is based on two factors – estimated market revenues (which is speculative) and individual vendor revenues (which are generally inferred as most vendors do not disclose CRM revenues).
Most readers of this blog know that I've been periodically tabulating CRM visitor data on CRMsearch.com since 2010. To get a perspective from the demand side instead of the supply side, in July I had an outsourced contact center ask 448 visitors what CRM software system they were using. Deducting the responses of visitors who were not using any CRM system, the data revealed the following.
Source: CRMsearch.com annual tabulation; survey taken July 18-19, 2016; N=448
The data shows that Salesforce has approximately three times the market share as compared to the vendors vying for the number 2 position. Additionally, Salesforce is growing its market faster than its competitors. These factors suggest that Salesforce is widening its market share leadership. Additionally, the company's install base is becoming stickier as customers adopt more Salesforce clouds. 60% of company revenues now come from preexisting customers, while attrition rates have fallen 45% since 2011 (now at 91% retention rate, up from 89% the prior year). 75% of Salesforce top 200 customers are using 4+ clouds, which compares with 20% of the top 100 just one year ago.
The current year data shows a three way tie for the number 2 market share position. However, viewing their trajectories shows two of these software publishes (SAP and Oracle) in decline as the third (Microsoft) ascends. Microsoft will assume the sole number two market position if trending continues.
CRM software vendors other than the big 4 are gaining ground, suggesting the CRM market is becoming less top heavy.
While not shown in the chart above, the number 5 CRM vendor was SugarCRM. This is in contrast to the Gartner analysis which reports Adobe is number 5.
Near Market Share Consensus
Multiple sources should be reviewed when no definitive data source exists. Further, as large vendors such as SAP and Oracle may bolster CRM software revenues with products or product lines which are tangential to CRM, and Microsoft chooses not to disclose its Dynamics revenue allocation between CRM and ERP, the CRM market should be reviewed from both the demand side and the supply side.
Fortunately, the market share percentages are directionally consistent across all sources, giving CRM software buyers an educated understanding of the competitive landscape, now and pursuant to continued trending.
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Salesforce is the clear CRM software market share leader. The company grew faster than the market, and nearly three times the rate of its next three competitors.