As enterprises continue to invest in front-office applications, worldwide customer relationship management (CRM) software revenue is forecast to exceed $7,4-billion 2007, up 14% from $6,5-billion in 2006, according to Gartner.
The strong performance of the CRM software market is being fuelled by growth across all subsegments and the explosive growth of software as a service (SaaS) solutions within the sales subsegment.
In 2006, SaaS represented 12% of total CRM software revenue, and it is on track to reach nearly 14% 2007. By year-end 2007, SaaS is forecast to represent more than $1-billion in CRM software revenue, growing at more than double the rate of the total CRM software market.
"The sustained performance of major on-demand solutions providers is driving the growth in the SaaS segment," says Sharon Mertz, research director at Gartner. "As businesses refresh existing sales force automation systems to align with their renewed drive for business and revenue growth, we expect this to push sales software to become the largest CRM subsegment by 2011."
The worldwide CRM software market will experience healthy growth through 2007; however growth will slow in the next 12 to 18 months because of the downstream impact of economic conditions, but also because the market size overall will increase. The market is forecast to grow to more than $11,4-billion in total software revenue by 2011.
"In late 2008 and 2009, forward momentum will return to the market as buying decisions become clearer and customers undertake platform migrations to service-oriented architectures," says Mertz. "Increasing demand for analytics, marketing automation and a focus on SaaS solutions will also drive growth during this time. Buyer application selection will continue to focus on areas showing rapid return on investment in all CRM subsegments."