Companies, vendors upbeat on SaaS-based CRM

by CXOtoday News Desk    Apr 29, 2013


Increased demand for marketing automation is escalating the growth of Customer Relationship Management (CRM) software in recent times. In a recent Gartner report, the analyst firm noted that the CRM software market had grown 12.5 per cent in 2012 and the trend is accelerating. More importantly 40 per cent of CRM software sold last year was SaaS-based, suggesting that enterprises are increasingly replacing their legacy systems with SaaS-based CRM solutions.

The SaaS-based CRM advantage

What is driving CRM investment is a focus on acquiring customers, analyzing and acting on customer behaviors, and increasing all-channel management performance.  Big data inquiries are also rising in CRM, driven by the interest enterprises have in getting more value from social network data and interactions, according to Gartner.

“These enterprises are seeking out easier-to-deploy CRM systems compared to on-premise alternatives,” says Ajay Sawant, MD, AllTimeIT Solutions.  He believes that SaaS-based CRM solutions not only have cost advantages over on-premise ones, they are easily accessible and agile. Many of these solutions can be integrated with BI applications.  

Enterprises driving SaaS based CRM investment include telecom, banking and IT services, mainly because of their call center facilities. In 2013, verticals such as media, insurance and manufacturing are also slated to increase their CRM spendings significantly. Gartner report notes that SaaS-based CRM systems are delivering innovative applications that deliver complementary functionality not possible with legacy and previous-generation CRM platforms.

“Faster deployment is one of the key factors contributing to this market growth of SaaS-based CRM market where enterprises are increasingly looking to effectively cater to their customers. The only concern is data security could pose a challenge,” says Sawant. However, he also believes with security vendors and CRM providers increasingly addressing this space, the market for SaaS-based CRM will continue to increase.

With corporate cash at all-time high, many vendors are willing to pay high premiums to acquire specific technologies and expertise in an increasingly dynamic and competitive CRM market environment.
-Joanne Correia, Vice president, Gartner.

Vendors upbeat

The high demand of SaaS-based CRM solutions have prompted vendors in this space to come up with cost-effective and high quality solutions in this area. Gartner sees that vendors will have a very important role to play in influencing enterprise CRM investment in the coming months.

“Competition among CRM software vendors is heated up with major players vying for broader market penetration internationally and more widespread adoption within midsize to large enterprises,” says Joanne Correia, Vice president, Gartner. She explains that market growth last year was three times the average for all enterprise software, highlighting how ‘CRM is at the eye of the Nexus of Forces storm.’

The top five CRM vendors accounted for nearly 50 per cent of CRM software revenue in 2012. replaced SAP as the largest vendor in the CRM market as its direct sales pushed its CRM revenue to more than $2.5 billion. SAP occupied the second place with less than one percent of revenue in doller terms, largely because currency headwinds were stronger in 2012 and the euro was weak. While SAP was not the worldwide leader in CRM for 2012, it was still the largest vendor in terms of revenue in Western and Eastern Europe.

In 2012, vendors continued to expand their offerings with new features and functionality, often through acquisition. The wave of consolidation activity that began flowing through the market in 2009 continued throughout 2012, with more than 50 acquisitions, resulting in increased competition at the top end of the market, with the real start of the global sales forces kicking in some sales. Marketing has been the focus for investment in the past couple of years, growing at more than four times the software industry forecast norm in 2012.

Marketing was also the target area for acquisitions by IBM, Microsoft, Oracle and others as analytics, lead quality and multichannel support for social and mobile technologies continue to lead the list of requirements by line-of-business buyers.

Correia also explains that with corporate cash at all-time high, many vendors are willing to pay high premiums to acquire specific technologies and expertise in an increasingly dynamic and competitive CRM market environment.