Worldwide customer relationship management (CRM) software totalled $23,2-billion in 2014, up 13,33% from 20,4-billion in 2013, according to Gartner.
“Large vendors leveraged their acquisitions to extend their position in new markets and to enrich the depth of their current feature sets in 2014,” says Joanne Correia, research vice president at Gartner. “We saw market consolidation continue, and price wars started quickly as large vendors fought to keep their installed base from moving to other vendors and to stop the descent of their maintenance revenue.”
Overall, the top 10 CRM vendors accounted for more than a 60% share in 2014, or $14-billion, growing 14% over 2013. The top 10 vendors in 2014 had very little change in ranking compared with 2013. However, with the notable exceptions of Salesforce and Microsoft, most vendors in the top 10 only held their positions or they lost share in 2014.
“Strong demand for software as a service (SaaS) continues, with SaaS accounting for almost 47% of total CRM software revenue in 2014,” says Correia. “This is driven by organisations of all sizes seeking easier-to-deploy and faster-ROI alternatives to modernising legacy systems, implementing new applications, or providing alternative complementary functionality.”
Buyers’ preference for SaaS and strength in the sales sub segment kept Salesforce in the number one position for the worldwide CRM market and raised the company to first position in customer support.
Pure-play vendors generally saw strong revenue growth as midsize and large organisations sought to build out digital market and customer experience capabilities. Successful vendors, particularly pure plays, supported user demand for add-on functionality and the transition away from an on-premises model.
Spending in North America and Western Europe continued in double digits as North America continued to generate the bulk of revenue (52,33%) in the overall CRM market. These two regions represent 78,6% of all CRM software spending, and both saw mid-double-digit growth in 2014. Infrastructure for cloud/SaaS deployments is more mature in these regions, and customer retention and acquisition continue to be main drivers of focused build outs for major vendors and the on-premises software that is being upgraded.
Emerging Asia/Pacific grew the fastest, with growth of 18,7% in 2014, while Eurasia, greater China and Latin America also experienced good growth in the low double digits, even though growth was slower than in 2013 due to economic issues. The Middle East and North Africa and mature Asia/Pacific continued their build outs and saw healthy growth, while sub-Saharan Africa saw the lowest growth.
More than 23% of 2014 CRM spending was in the communications, media and IT services industries because they focus on large groups using call centre technologies and have mobile field service and sales organisations.
Manufacturing (including consumer packaged goods) is not far behind, with companies in this industry using CRM for product and channel management. Third-ranked is banking and securities, in which customer service experiences and upselling to other financial products are core to growth, including through enhanced analytic capabilities.