BriefsCRM 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."
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