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Healthy growth for CRM, security

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The world may be looking into the barrel of a recession, but some sectors of the IT industry are still flourishing. Gartner reports this week that CRM is expected to grow by 14% this year, while security is tipped to turn in 11% growth. 

Worldwide customer relationship management (CRM) software revenue is projected to surpass $8,9-billion in 2008, a 14,2% increase from preliminary 2007 revenue estimates of $7,8-billion, says Gartner. This market is poised for healthy growth through 2012 when revenue is forecast to reach $13,3-billion.
"The composition of the worldwide CRM market is evolving as vendors continue to extend regionally, increase penetration within existing accounts and gain new clients, offer flexible deployment models, and continue to develop the channel," says Sharon Mertz, research director at Gartner.
"Initial 2007 market share estimates (final 2007 statistics are to published in June), backed by strong fourth quarter and year-end earnings reports, indicate solid market performance and record growth for the worldwide CRM market in 2007.
Furthermore, vendor confidence and buyer intent to purchase going forward indicate an overall positive outlook for the market in the mid- to long-term, despite softening economic conditions."
Emerging regions such as Latin America, Eastern Europe and the Middle East and Africa will see positive upward trends in CRM spending, particularly in specific industries. Increasing penetration of CRM solutions in developing economies will make greater contributions to vendor revenue during the next few years.
Mertz highlights a number of trends influencing the CRM software market. "Overall we expect software as a service (SaaS) to continue to gain popularity as an increasingly critical element of buying sourcing strategies and will continue to drive growth through 2012. Buyer demand will continue to focus on applications that provide vertical industry functionality, business analytics and applications provided by best of breed vendors that deliver specific value," she says.
Gartner predicts that consolidation will continue in the CRM market as suite vendors look to extend their application portfolios, best of breed vendors seek to acquire solutions to complement their strengths and vertical industry players expand geographically. However, this consolidation will be offset by new, smaller entrants offering specialised functionality.
A continued bouyancy in the security software market will be driven by growing awareness of the damage caused by security breaches, together with the increasing demand for a more mobile and remote workforce, says Gartner.
Worldwide security software revenue is projected to total $10,5-billion in 2008, an 11,2% increase from 2007. The market is forecast to surpass $13,1-billion in 2012.
"Organisations are increasingly accepting the need to have a more 'open' connectivity with business third parties," says Ruggero Contu, principal research analyst at Gartner. "Consequently, assessing third-party security and defining how to securely communicate are becoming critical factors for businesses."
Contu says that small and midsize businesses (SMBs), in particular, are increasing their interest in security technology and services and are gradually moving away from stand-alone tools to integrated multifunctional products.
Gartner says that, in the short term, prioritising selection of security technologies in the current business environment continues to be the top issue for organisations, particularly with companies and government agencies facing pressure to demonstrate compliance under various regulatory requirements and to show business value and cost-effectiveness for security measures.
Compliance with government regulations continues to play a significant role in security spending decisions. Investment is often justified because the downside of breaches and failure is so great.
"Security spending is driven by a variety of pressing concerns, the most immediate of which is the need to 'keep the bad guys out' through defensive measures, such as next-generation firewalls," says Contu. "However, the 'let the good guys in' discipline, such as identity and access management, is where business benefits and return on investment can be more clearly shown."
There are also some short-term barriers to market growth, such as the economic instability that is expected to weigh down IT budgets, particularly for the purchase of new software licenses. High levels of merger-and-acquisition activity can also inhibit new purchases because end users are wary of investing in new tools whose support could end following a merger or acquisition. Furthermore, competitive pressure is influencing the market, particularly certain segments, such as antivirus and e-mail security.
The coming to market of large players, such as Microsoft and Google, will push prices down, affecting overall revenue growth in the next few years.
In the longer term, Gartner maintains that the need to have security tools in place to protect against malicious attacks and unintentional security incidents, such as leakage of sensitive corporate information, will remain. Security risks will evolve alongside the changes brought by new IT environments and new working practices, such as the use of mobile and remote workplaces.
Increased regulations dealing with reliability will continue to drive additional IT spending across the board, including information security.