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Gartner: CRM spending looking up

The economy isn't keeping CRM down. CRM spending is expected to grow 14% this year, according to Gartner.

Despite talk of recession and economic slowdown, the global market for CRM spending remains healthy, according to Gartner Inc.

The Stamford, Conn.-based research firm's latest projections say worldwide CRM software revenue is projected to surpass $7.8 billion this year, a 14.2% increase from 2007.

The past year was a strong one for CRM, helped partly by some of the larger vendors, which report in non-dollar currencies. Yet, despite indications of a weakening economy, first-quarter guidance and returns from CRM vendors continue to be positive. Gartner predicts that healthy growth will continue through 2012, when total worldwide CRM software revenue will reach $13.3 billion.

"Historically, CRM is subject to economic fluctuations," said Sharon Mertz, research director at Gartner. "It's tough to predict the outcome of the sub-prime economic fiasco, but to date businesses are still spending money. They see CRM is critical to their business strategy. We are keeping a very close eye on it. The forward vendor guidance continues to be good."

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Gartner bases its figures on license sales, upgrades, maintenance and support, and subscription fees for on-demand software. It does not include professional services.

Organizations are now more carefully targeting their CRM investments, particularly in the areas of customer analytics and Web- and self-service applications, according to Mertz. In addition, Software as a Service (SaaS) is doing well and has the potential to remain strong as organizations redirect their capital investments in hard times. SaaS deployments require less upfront investment.

CIOs still prioritizing CRM spending

In Gartner's annual survey of CIOs last fall, respondents indicated that they would be spending the same or slightly more on IT projects in 2008.

"We went back and tested the waters again in the first quarter of this year," Mertz said. "A small percentage said they would spend less, but it was still positive. [Business intelligence] and enterprise application software were still the top two priorities on the list, and that bodes well for CRM."

In fact, CRM software is a good place to make investments when the economy goes south, according to Mertz.

"Be open to some of the newer technologies that make business more competitive, optimize productivity and enhance the customer experience," she advised. "When the economy slows down and consumers don't spend as much, businesses need to fight harder for every dollar of consumer spend. Customer experience will only help that."

North America remains the largest market for CRM software, accounting for $4.3 billion in revenue in 2007 and projected to reach $7.6 billion in 2012, according to Gartner research. The strongest growth will come from Asia/Pacific markets, where revenue is forecast to rise from $410 million last year to $840 million in 2012.

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