Customer Relationship Management (CRM) Research

Defining Customer Relationship Management (CRM)

Customer Relationship Management (CRM) systems serve companies to evolve their customer relationships strategies. Business aim CRM strategies to understand anticipate and respond to the needs of enterprise's current and potential customers, in order to grow the relationship value. CRM systems offer comprehensive and holistic customer focus, which evolves with customer activity. CRM software is a necessary enabler to achieve most CRM strategies and objectives.

CRM strategies software solutions have evolved from managing and streamlining customer-facing transactional processes, to harnessing customer information in order to better interact and collaborative with customers. Social media phenomenon (user-generated content, social networking sites, blogs, etc.) gave birth to this "CRM 2.0", which continues to evolve.

CRM software systems offer an abundance of functionality rich, CRM applications designed for vertical markets. The newer Software -as-a-Service (SaaS) or on-demand CRM systems have yet to release the breadth or depth of comparable industry solutions. SaaS continues to gain popularity as an increasingly critical strategy element, and will continue to drive growth through 2012.

CRM adoption varies greatly by market size. Enterprise CRM software solutions have saturated the Fortune 1000 market, while middle market and small business application providers have yet to fulfill the majority of the small and midsize business (SMB) market. SaaS CRM systems have made significant inroads in satisfying the SMB market and continue to drive upstream in penetrating enterprise level organizations.

Main CRM Industries

The predictions expect the Telecommunications Industry to remain the heaviest investor in CRM technologies, followed by Energy & Utilities and Financial Services. The predictions expect that CRM investment by the Healthcare, Public Sector and Life Sciences sectors will exceed the rate of growth in the Telecommunications sector, fueled by the adoption of customer-oriented approaches to public sector services and the relative success of applications supporting a relational, not transactional, approach to customers.

In terms of the size of enterprises deploying CRM, the composition of the CRM market also changes. Once a domain of large organizations, in 2006 CRM application spending by enterprises with fewer than 1,000 employees accounted for one-third, and by 2012, that sector is projected to account for over 42% of the market.

Global CRM Software Market

Worldwide CRM software revenues were projected to surpass $8.9 billion in 2008, a 14.2 % increase from 2007 revenue estimates of $7.8 billion (Gartner, Inc.), and the CRM market shows a healthy growth potential through 2012, with revenue reaching around $13.3 billion.

North America is the largest market for CRM total software revenue, as it accounted for $4.3 billion of revenue in 2007, and it will total $7.6 billion in 2012. Europe is expected to exhibit steady growth rising from $2.6 billion in 2007 to $3.9 billion in 2012.

CRM license revenue and maintenance revenue together are expected to surpass the $10 billion mark globally by 2012, with maintenance revenue reaching approximately $3.6 billion.

Not surprisingly, analysts expect the strongest growth in CRM spending to come from Asia/Pacific, where revenue forecasts presume to grow from $410 million in 2007 to $840 million in 2012.

Asia Pacific CRM Market

CRM strategies and software applications are increasingly becoming cornerstone building blocks for corporations in the Asia Pacific region. Early adoption by the telecommunications and banking sectors has been quickly followed with CRM initiatives in many other sectors such as transportation, retail, government, health care and professional services. Key drivers fuelling continued CRM software growth include the quests for increased customer share, market share, retention and efficiencies. Asian CEO's view their CRM spending as a strategic investment to ensure customer loyalty.

Springboard Research studies reveal that the Software-as-a-Service (SaaS) CRM market in Asia grows at a compound annual growth rate of 61% from 2006 to 2010. The SaaS CRM market is expected to reach $460 million by 2010 from just $69 million in 2006.

Almost all Asian countries' annual growth ranges from 4 to 9%. India, China and Malaysia are generally agreed to be the Asian markets with the greatest growth potential.

Research firm Datamonitor predicts that CRM vendors from Europe and America will face stiff competition from Indian and Chinese local CRM providers. Also, in this market, pricing and local business knowledge are more important requisites than functionality in almost all cases except maybe in outsourcing.

Malaysia, China and India show great promise and more growth potential compared to other Asian countries. India’s CRM market is characterized by call center technologies. Malaysia offers a small but stable CRM market while China offers a large and active market to CRM vendors.

In Malaysia and China, two of the three leading growth markets (India being third), local vendors will prevail over Western giants.

The Asian small and midsize business market is the sole market not dominated by western software suppliers but by local and inexpensive CRM vendors instead. A high number of Western CRM solution providers have been disappointed by the poor returns from their Asian investments. Analysts suggest that local vendors will often prevail over the large Western software companies from the United States and Europe due to both software localization requirements and government interference.

China

China's CRM growth is planned to outrun all other Asian countries with a staggering growth rate of 30%. China is set to experience four major developing stages in the near future: information collection, process management, refined sales, and strategy decision support.

Most CRM system users China are at stages 1 and 2. Some of the pioneer enterprises attempt to deepen the application of their CRM (exCC) system to achieve refined sales. Considering the overall IT establishment level of the Chinese market, China still needs some time to achieve the CRM application at stage 4.

Top CRM Software Systems and Suppliers

Oracle Siebel CRM

With the $5.85 billion acquisition of Siebel Systems in 2005, Oracle acquired its way into a top CRM software vendor position. Combined with the PeopleSoft acquisition and its CRM solution, Oracle's Customer Relationship Management (CRM) software is the global leader and supports over 20 industries with vertical market software solutions.

SAP (CRM & ERP)

Not content to leave arch rival Oracle in a sole leadership role, competitor SAP also claims the top CRM software system and references independent support from Gartner Dataquest which suggests that SAP is the worldwide software market share leader for CRM, ERP (Enterprise Resource Planning) and SCM (Supply Chain Management) business management applications.

Onyx (CRM)

While not the top CRM software system, Onyx supports more than 1,450 middle market and enterprise customers in about 50 countries. While Onyx is largely known for its horizontal customer relationship management software suite, it also provides vertical market editions for the financial services, health care, call center, high-tech, professional services and government CRM or public sector industries.