KDnuggets : News : 2001 : n26 : item16    (previous | next)


CRM spending forecasts from Aberdeen and Gartner
The customer relationship management tool market will grow at an
annual rate of just over 14 percent next year, predicts Aberdeen
Group. The research firm says corporate America will spend $4.2
billion on applications, $8.4 billion on integration services and $2.7
billion on related hardware. By 2005, Aberdeen says, annual CRM tool
spending will total $27.7 billion.

Another report says that worldwide CRM software revenue is expected to
decline 8 percent in 2001, down from 89 percent growth in 2000,
according to Dataquest Inc., a unit of Gartner. Worldwide CRM software
revenue is projected to reach $3.6 billion in 200, and the industry's
growth rate will remain flat in 2002 as new license revenue will again
total $3.6 billion. The market is forecast to grow 10 percent in 2003
to $4 billion.

"The economic slowdown, coupled with the current military action led
by the United States, will immediately intensify the weeding out of
the weak CRM software companies," says Tom Topolinski, vice president
for Gartner Dataquest's Application Software Industry Research
group. "Software companies that have large cash reserves, little
reliance on investment monies, solid business management and a good
return on investment (ROI) proposition will fare best."

As viable vendors begin to stagnate, the trend for merger, acquisition
and divestiture activities will increase. The reduction of players
will eventually benefit the market by allowing more consolidation in
functionality and increasing enterprise adoption. However, in the
short-term, many enterprises will defer decisions because of rapid
vendor change and perceived risk.

Buyer behavior is changing from a strategic focus to more tactical
decisions, and these requirements from the demand-side are creating a
buyer's market. "Fear and uncertainty are embedded in buying
decisions, shifting longer-term strategies into short-term tactics,"
Topolinski says.  "This translates into buying criteria being hinged
on short-term ROI or on mission-critical results and is causing delays
or postponements of projects not directly impacting the bottom line."

KDnuggets : News : 2001 : n26 : item16    (previous | next)

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