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CRM to keep chugging along

A new report weighs in on how hosting, midmarket growth and vendor consolidation will affect the CRM market.

A British research firm forecasts that the global market for CRM will grow between 8% and 12% this year.

CRM should pick up steam in 2004 because consumer demand for better service has never been stronger or more vocal, said Nick Hewson, author of the new report and managing director of Norfolk, U.K.-based Hewson Group.

There is a temptation for people to acquire hosted solutions as a simple answer to a complicated question.
Nick Hewson
managing director

Hewson Group

The CRM market expanded from $7.4 billion in 2001 to $8.8 billion in 2003. During that time, greater emphasis on analytics and telephony helped to counter declines in traditional CRM enterprise software revenue, according to the report.

Investment in outsourcing and hosted applications should expand significantly as the midmarket heats up, Hewson said. But he warned that companies that take this route run the risk of CRM failure.

"There is a temptation for people to acquire hosted solutions as a simple answer to a complicated question," Hewson said.

Similarly, companies that see outsourcing call center operations as a cost-driven exercise might miss out on learning what their customers really want and need, he said.

The midmarket remains a hot spot, even though it's not widely penetrated. Several vendors are well placed to meet the needs of midmarket users, the report states, including Best Software Inc. (the maker of SalesLogix and ACT software), PeopleSoft Inc., SAP AG,, Maximizer Software Inc. and Siebel Systems Inc., with its Siebel CRM OnDemand.

"I was surprised at just how many companies are involved in what one might call CRM," Hewson said. "It's certainly not a market where you'd say people are relying on 10 or 15 key players. There are a lot of [vendors] still out there."

PeopleSoft and SAP have found customers among the pool of risk-averse companies looking to tie their CRM applications to the back office. That is likely to continue through the next year or two, until Web services architectures gain momentum and make integration less of an issue, Hewson said.

The report anticipates no slowing of CRM-related mergers and acquisitions. While many large vendors have acquired the technology they need, specialist providers will either expand their footprints or be bought out.

Hewson also sees a growing trend in customer experience management (CEM), which focuses on the points at which companies interface directly with customers.

"It's an end-to-end process," Hewson said. "Are contact center staff trained to meet the needs that customers have? [CEM] is an understanding of who the customer is in a behavioral sense. It really extends into analytics."

There is significant ROI in maximizing the customer experience. Getting it wrong -- particularly in the online world -- means losing customers at every point in the buying cycle, the report states.


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