CRM Spending on the Upswing

Apr 10, 2002

Robyn Greenspan

The worldwide customer relationship management (CRM) services market is expected to rise as much as 15 percent in 2002, according to Dataquest Inc., a unit of Gartner, Inc.

Spending in the sector has been steadily increasing — $19.9 billion in revenue in 2000; $22 billion in 2001, representing a 10.6 percent increase; $25.3 billion forecast for 2002; and reaching $47 billion by 2006.

The information is contained in the report, CRM Services Market Size and Forecast, 2001-2006, providing an outlook on the various segments in the industry. It finds that development and integration will continue to be the dominant service line in 2001, but IT management services and business management services also grew significantly and are expected to positively impact the overall CRM services market. Business process management, including contact center outsourcing in support of CRM solutions, will show healthy growth in 2002.

"In the coming year, the focus of CRM initiatives is expected to turn from operational and tactical CRM initiatives to CRM analytics and business intelligence, with Web-based customer support stabilizing, though still quite important," said Debashish Sinha, principal analyst for Gartner Dataquest's IT Services program.

Analysts indicate that a key factor to the market growth is that the small-to-midsize (SMB) segment is set to grow faster than the broader market, as large enterprises pause to re-evaluate their CRM strategies. Integrated enterprise architectures, new solution delivery models and an overall reduction in price points for application software will contribute to the wider acceptance of enterprise CRM solutions, especially by the upper mid-market.

Sinha continues, "The CRM services market will become increasingly challenging for most service providers, and continued success in this market will depend on the vendors' ability to look beyond implementation services and focus on developing CRM strategy and architectures that map with specific process expectations. Developing a total solution will continue to be a key requirement."

Even though the CRM industry is experiencing significant growth, a Data Warehousing Institute (TDWI) survey of more than 1,670 business executives and IT professionals found almost three-quarters of companies have not yet deployed a CRM solution, although most plan to do so in the near future. On the flip side, one-quarter of respondent companies have deployed a CRM solution to one extent or another. These "early adopter" companies are mainly large ($10 billion+) firms in competitive industries, such as financial services, software, or telecommunications.

Comprised of extensive survey and case study data, TDWI's 2000 Industry Study, Harnessing Customer Information for Strategic Advantage: Technical Challenges and Business Solutions, indicates that CRM has moved from concept to reality, but still has a long way to evolve before it reaches market maturity.

"It is clear from the survey data that most respondents are in the planning phases of their CRM projects, right now they are looking for insight and answers about the best way to deploy CRM at their companies," said Wayne Eckerson, director of Education and Research at The Data Warehousing Institute. "Companies are starting small-small budgets, low data volumes-but most have big plans."

On average, the study indicates that the majority of CRM strategies consist of at least six cross-functional applications, including database marketing, telephone call centers, Web marketing, direct-mail campaigns, field sales, and Web self-service for customers.

The study, sponsored by CRM solution providers Acxiom, Compaq, EMC, IBM, Microsoft, NCR, Oracle, Sybase, and Sagent, also addresses the issues business and IT professionals face when deploying a CRM system. Respondent companies face a range of organizational challenges, including managing expectations, hiring skilled personnel, and standardizing rules. On the technical side, managing project scope and maintaining data quality and consistency are the top two technical challenges.

"CRM is challenging because it requires companies to reinvent their corporate cultures around customers and integrate disparate information systems and delivery channels," said Eckerson.

This story first appeared on CyberAtlas, an site.


0 Comments (click to add your comment)
Comment and Contribute

Your comment has been submitted and is pending approval.



 (click to add your comment)

Comment and Contribute

Your name/nickname

Your email


(Maximum characters: 1200). You have characters left.