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Does market share matter?

There is debate about whether Siebel or SAP is CRM's market leader, but one analyst warns not to let it influence your technology-buying decision.

Given all of the various predictions that SAP will or won't soon pass Siebel Systems for honors for the No. 1 position in the CRM marketplace, you'd think this is actually a topic of considerable importance. But it's really not that big of a deal.

I'll be the first to tell you that market leadership matters, and that Siebel has certainly benefited from the perception of leadership -- which is leadership -- for many years. And I'll agree that, to at least some degree, market share and market leadership are related. The No. 1 CRM vendor -- which clearly has been Siebel -- should be able to charge some premium because it has been able to set much of the agenda for the industry itself. The financial community clearly cares about this -- which is why SAP desperately wants to grab that title for itself.

At the same time, the comings and goings of various technology vendors is entertaining and makes for great press (and gossip). But just because something is fun to write and read about doesn't mean it should have much impact on your internal CRM initiatives. The market share battle between SAP, Siebel and others is about as important as the marriages of Britney Spears and JLo.

But wait, you say. CRM is a significant investment and declining share can be a warning sign that your investment may be at some risk. True. This is why you might want to think twice about going to a vendor with zero market share. But that is far away from the battle between the No. 1 and No. 2 vendors in the marketplace.

There's also the definition of the "market," which factors into this equation in a big way. There are as many definitions of the CRM market as there are for CRM vendor (perhaps even more these days). As a matter of fact, the term "CRM" continues to be so nebulously and inconsistently defined that calculating these rankings is dependent upon so many assumptions that it becomes little more than hypothetical naval-gazing. Inside Aberdeen Group, we don't even use the term "CRM" anymore.

Most importantly, the relevant "market" to care about is the one that's relevant to your business and to your customers. If you're a midsized company, why should you care who owns the bigger share of the Fortune 500? If you're a manufacturer that needs to more effectively support your field sales reps and channels, should some analyst's computation of who sold more call center software to the banking industry make a bit of difference to your decision?

I recommend that you ignore the market share noise and focus on business needs and value. If you've got industry-specific or company-specific requirements (and we ALL do), you may be much better served by working with a more focused vendor that gives you more attention and better understands the needs of your company, your industry and your customers. This is precisely why little-known (except within their industries) specialist firms like Azerity, Dendrite and Interface Software continue to survive and in many cases thrive -- despite the fact that they couldn't be further removed from the dubious "battle for No. 1."

In the end, market share is fun to talk about. It's great media fodder and a guaranteed headline grabber. There may even be some people who prefer the CRM brand of gossip to the pages of People Magazine. But does it deserve any real significance in evaluating how CRM -- or any technology -- can deliver business value to your company and your customers? No.

For more information:

Article: Who cares which vendor is CRM's top dog?

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