Small and medium sized businesses want to promote and retain healthy relationships with their customers just as much as their larger competitors do. Unfortunately the number of software choices to support this desire is wanting. As they wait for more sensibly priced alternatives, many SMBs are seriously considering hosted/software-as-a-service (SaaS) CRM solutions. The increased availability such solutions and the cost savings they can provide over in-house deployments managed to spark increased spending for this market in 2006. And, according to analysts, this trend should continue in 2007. For more of a general look at the CRM market, here are four predictions of interest to the SMB.

  • CRM market changes: Forrester Research predicts the worldwide CRM market will reach nearly US$74 billion in sales in 2007, with applications representing about $21 billion of the market and services accounting for the rest. It also indicates that the market for CRM solutions has changed significantly during the past 18 months. Consolidation of leading CRM vendors (including Epiphany/Infor Global Solutions, Onyx Software/M2M Holdings, Oracle/PeopleSoft/Siebel), has intensified the competition from big applications players (SAP and Microsoft). Meanwhile the rise of new SaaS deployment options (including salesforce.com and RightNow) mean enterprises must rethink their CRM solution strategies. According to an October report by Forrester Research, companies with fewer than 1,000 employees will account for about one-third of the spending for CRM applications in 2006.
  • Skills shortages are everywhere: Gartner, the technology market analyst firm, reports that the CRM applications market will remain strong in the coming year, but that there will be a shortage of skilled CRM workers. This means the search for the right source of CRM expertise will be more important than ever, as it becomes increasingly difficult to find good CRM-trained professionals.
  • SMBs increase SaaS CRM spending: According to the New York-based Access Markets International (AMI) Partners Inc., small and medium businesses with between one and 999 employees worldwide will spend US$2.44 billion on hosted/SaaS CRM and ERP/SCM next year, up about 17 per cent over 2006 levels. “Hosted/SaaS CRM and ERP/SCM are gaining market share over packaged software as more and more SMBs opt for these hosted services for their mission-critical applications,” said Spencer Richardson, New York-based analyst at AMI. “Hosted software solutions already account for four per cent of the total global software spend by SMBs. This is set to rise in the coming years.” Worldwide, Canada, France and Sweden look to become the big adopters of hosted/SaaS CRM and ERP/SCM, with compound annual growth rates (CAGR) of 15 per cent over the next five years.
  • Large company trends: Approximately $565 million will be spent in 2007 on e-service, CRM, contact centre and field service technologies by large technology companies with more than $1 billion in revenue, according to the Service & Support Professionals Association (SSPA). The association’s study found that 62 per cent of overall spending will be allocated to contact centre and CRM software. The largest percentage, 36 per cent, is allocated to contact centre applications, with CRM coming in second with 26 per cent of planned spending. Spending by small and medium businesses will be around $884 million, taking the total to $1.4 billion.

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