- Asia/Pacific grew the fastest of all regions globally, increasing 9% 2015, closely followed by greater China with 18.4% growth.
These and many other insights into the current state of the global CRM market are from Gartner’s Market Share Analysis: Customer Relationship Management Software, Worldwide, 2015 (PDF, client access) published earlier this month. The top five CRM vendors accounted for 45% of the total market in 2015. Salesforce dominated in 2015, with a 21.1% annual growth rate and absolute growth of over $902M in CRM revenue, more than the next ten providers combined. Gartner found that Salesforce leads in revenue in the sales and customer service and support (CSS) segments of CRM, and is now third in revenue in the marketing segment. Gartner doesn’t address how analytics are fundamentally redefining CRM today, which is an area nearly every C-level and revenue team leader I’ve spoken with this year is prioritizing for investment. The following graphic and table compare 2015 worldwide CRM market shares.
Adobe, Microsoft, and Salesforce Are Growing Faster Than The Market
Adobe grew the fastest between 2014 and 2015, increasing worldwide sales 26.9%. Salesforce continues to grow well above the worldwide CRM market average, increasing sales 21.1%. Microsoft increased sales 20% in the last year. The worldwide CRM market grew 12.3% between 2014 and 2015.
Analytics, Machine Learning, and Artifical Intelligence Are The Future Of CRM
Advanced analytics, machine learning and artificial intelligence (AI) will revolutionize CRM in the next three years. Look to the five market leaders in 2015 to invest heavily in these areas with the goal of building patent portfolios and increasing the amount of intellectual property they own. Cloud-based analytics platforms offer the scale, speed of deployment, agility, and ability to rapidly prototype analytics workflows that support the next generation of CRM workflows. My recent post on SelectHub, Selecting The Best Cloud Analytics Platform: Trends To Watch In 2016, provides insights into how companies with investments in CRM systems are making decisions on cloud platforms today. Based on insights gained from discussions with senior management teams, I’ve put together an Intelligent Cloud Maturity Model that underscores why scalability of a cloud-based analytics platform is a must-have for any company.
Sources: Gartner Says Customer Relationship Management Software Market Grew 12.3 Percent
Gartner published the report What’s Hot in CRM Applications in 2013, by Ed Thompson on June 20, 2013. The report covers areas of interest by clients in the four areas of marketing, sales, customer service and e-commerce.
The report states that “the 2013 What’s Hot list was compiled after examining Gartner inquiry volumes by topic. It was then supplemented by asking all Gartner CRM analysts to offer their opinions on what has been generating the most interest during all the client inquiries they have taken since the end of 2012 and in the beginning of 2013.”
Big data, cloud, social, mobile and the Internet of Things are the five catalysts that are driving inquiries in the hottest areas of interest. Gartner’s Ed Thompson, author of the report, states that “this is where our clients’ interests lie, although not their current CRM spending.” Technologies highlighted in red are the hottest in terms of interest, shown in the following table Highest CRM Application Priorities for 2013.
What This Says About the Future of CRM
Mobility is just one part of delivering an excellent customer experience.
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
- It is surprising that Gartner clients aren’t looking to create a more unified strategy to customer experience across all channels at all times. As the report states, “The refreshing of an aging agent desktop with a new, more intelligent and unifying user interface has shot to the top of the heat charts once more.” The findings of this Gartner analysis make the highly promoted claims of usability by many CRM vendors look overly hyped. I think usability is the fastest path to greater system adoption of any CRM system, and that has to include mobile. It is surprising that a related technology in this area didn’t rise farther in the rankings.
- Second, mobile sales on smartphones and tablets dominate, followed immediately by Social – Internal Collaboration and Social – Integration with Social Data. What is fascinating about this group of four top items in Sales is the indication that the behavior of how sales teams work individually and together is changing fast. Collaboration is a strong catalyst for Return on Investment (ROI) from social technologies and the sequence of these priorities in Sales underscores that.
- Third, the vision of the mobile-enabled support representative able to be autonomous yet fully supported to solve customer problems is rapidly approaching. Of all patterns emerging from this data, this is one shows the greatest profit potential. Service Lifecycle Management (SLM) and the many forms of service management all have very significant profitability associated with them for manufacturers. The quicker this area of mobility moves, the faster SLM and Maintenance, Repair and Overhaul (MRO) strategies will grow – giving manufacturers and service providers the ability to mine their installed bases for more profits.
- Fourth, predictive analytics and big data are reordering how marketing strategies are designed, implemented and managed. Given the increasing complexity of marketing automation systems and the strategies they support, predictive analytics and big data are starting to dominate the conversations I’ve personally had with Chief Marketing Officers (CMOs) and many demand generation professionals. I expect the predictive analytics aspects of marketing, combined with big data, to accelerate quickly over the next year.
- Fifth, the rapid adoption of mobile-based platforms including the Apple iPad in the Configure, Price, Quote (CPQ) continues throughout the professional services, discrete and process manufacturing companies I often visit. One manufacturer I often work with on their CPQ strategies has the ability today to present a completed 3D model of the proposed product, embed it in a quote and e-mail it to the prospect all from an iPad. The future of CPQ is going to be dominated by mobility and enterprise support for key order management, pricing and product configuration options.
The latest enterprise software forecast from Gartner shows Customer Relationship Management (CRM) increasing to a $36.5B worldwide market by 2017, a significant increase from the $20.6B forecasted in Q1 of this year. CRM also leads all enterprise software categories in projected growth, showing a 15.1% CAGR from 2012 to 2017, also revised up from 9.7% in the Q1 forecast.
The latest round of forecasts published in the report, Gartner Forecast: Enterprise Software Markets, Worldwide, 2012-2017, 2Q13 Update shows CRM eclipsing ERP in worldwide market size in 2017. The following graph compares the relative growth of CRM, ERP, Business Intelligence (BI), Supply Chain Management and Web Conferencing, Collaboration/Social Software Suites. Source: Gartner Forecast: Enterprise Software Markets, Worldwide, 2012-2017, 2Q13 Update. Please click on the image to increase its size for easier reading.
- Worldwide enterprise software spending is projected to be $304B in 2013 in the latest forecast, up from $279B in the Q1 forecast. Gartner claims stronger demand for CRM, supply chain management and security are leading to accelerating market growth.
- ERP spending worldwide is projected to grow from $26.03B in 2013 to $34.3B in 2017, attaining a CAGR in the forecast period 2012 – 2017 of 7%.
- Business Intelligence (BI) worldwide is projected to grow from $14B in 2013 to $18.6B in 2017, attaining a CAGR in the forecast period 2012 – 2017 of 7.3%.
- Supply Chain Management (SCM) worldwide is projected to grow from $9.16B in 2013 to $13.6B in 2017, attaining a CAGR in the forecast period 2012 – 2017 of 10.4%.
- Data Integration Tools and Data Quality Tools worldwide are projected to grow from $4B in 2013 to $6B in 2017, attaining a CAGR in the forecast period 2012 – 2017 of 10.3%.
Bottom Line: Gartner’s latest forecasts show that enterprises are realizing the most valuable assets they have are solid, long-term customer relationships. Trust really is the new currency, as my friend Michael Krigsman often says.
Last year, four out of every ten CRM systems sold were SaaS-based, and the trend is accelerating.
In the recent Gartner report Market Share Analysis: Customer Relationship Management Software, Worldwide, 2012 published April 18, 2013 the authors provide insights into why the worldwide CRM market experienced 12% growth in 2012, three times the average of all enterprise software categories. Gartner cites demand they are seeing from their enterprise clients for CRM systems that can help acquire customers, analyze and act on customer behaviors, and increase all-channel management performance. Big data inquiries are also increasing in CRM, driven by the interest enterprise clients have in getting more value from social network data and interactions.
Key take-aways from the report include the following:
- The CRM worldwide market grew from $16B to $18B attaining a 12.5% growth rate from 2011 to 2012.
- 80% of all CRM software in 2012 was sold in North America and Western Europe. North America CRM sales grew 16.6% from 2011 to 2012. The highest growth regions of CRM sales between 2011 to 2012 included Greater China (26.9%) and Latin America (24.3%).
- Salesforce.com is the world’s leading CRM software vendor with 14% market share in 2012 ($2.5B in sales), surpassing SAP (12.9%, $2.3B in sales), Oracle (11.1%, 2.01B in sales), Microsoft (6.3%, $1.1B in sales), IBM (3.6%, $649M in sales) and all others. The top ten vendors worldwide generated $10.9B in sales alone in 2012.
- Worldwide CRM software spending by subsegment shows Customer Service and Support leading all categories with 36.8% of all spending in 2012 ($6.6B), followed by CRM Sales (26.3%, $4.7B), Marketing (includes marketing automation) (20%, $3.6B) and e-commerce (16.9%, $3B). The following chart shows the distribution of revenue by category:
- 40% of all CRM software sold in 2012 worldwide was SaaS-based. Gartner states that they are seeing their enterprise clients seek out easier-to-deploy CRM systems compared to on-premise alternatives. The report states that many enterprises are now replacing their legacy systems with SaaS-based CRM systems as well. Enterprise clients also report that SaaS-based CRM systems are delivering net-new applications that deliver complementary functionality not possible with legacy and previous-generation CRM platforms.
- Ten fastest growing CRM vendors as measured in revenue Annual Growth Rate (AGR) in 2012 include Zoho (81.2%), Hybris (78.6%), Teradata (70.4%), Bazaarvoice (56.2%), Marketo (54.3%), Kana (44.2%), Demandware (43.9%), IBM (39.4%), Technology One (37.1%) and Neolane (36%).
- Communications, media and IT services were the biggest spenders on CRM in 2012 due to their call center requirements. Manufacturing including Consumer Packaged Goods (CPG) was second, and banking & securities were third.
All enterprises, regardless of what they produce or the services they deliver, are really information businesses.
The accuracy, speed and precision of IT systems means the difference between winning or losing customers, keeping supply chains profitable, and solidly translating new concepts into revenue-producing products and services. The world’s best-run services businesses have customer-driven IT as part of their DNA; it is very much who these companies are internally.
In the recently published Garter report CEO and Senior Executive Survey 2013: 21 Top Companies Admired for Competitive IT completed between October and December, 2012, which was part of the 2013 CEO and Senior Business Executive Survey, C-level respondents were asked to name the companies they most admired in terms of their ability to apply IT-related business capabilities for competitive advantage. Respondents were also asked to limit their responses only to their own and related industries.
391 respondents participated in the survey with 147 being CEOs, 149, CFOs; 49, COOs; and 46 being board members including Chairman of the board and president. Geographic distribution included 152 respondents from North America; 124 from Europe; 78 from Asia/Pacific; 20 from Brazil; 12 from South Africa; and 5 from the Middle East with minimum company size being $250M in annual sales or above.
The following is the list of the world’s most admired companies using IT for competitive advantage.
Most Admired Companies Making IT A Competitive Advantage
Hospital Corporation of America
JP Morgan Chase
Proctor & Gamble
- Customer-driven IT is the single most admired trait of all 21 companies in the list. Associated with this attribute is the proven ability of these enterprises to manage complex e-commerce systems & platforms, support multichannel management, in addition to continually show the ability to innovate quickly.
- Enterprises need to consider how the business successes their investments in IT are enabling can be used for branding and recruitment. Providing benchmark performance data and stories of how IT helped create entirely new markets and solve customer problems needs to be used for recruiting. Many of the 21 companies mentioned are doing this, using success stories as a catalyst for driving recruitment efforts for analytics, cloud computing and systems integration experts.
- Don’t underestimate the disruptive power of cloud computing and mobility to completely re-order enterprise systems quickly. Gartner mentions that there are enterprises whose IT organizations would have made the list had they not slowed down. While not directly stated, Gartner warns IT departments to not become complacent over time. From personal experience working in IT departments however, it is clear that complacency is a leading career hazard. It’s imperative for CIOs to keep challenging their organizations to stay intensely focused on new developments, seeking out how they can be used to strengthen business strategies.
- Four of the top five factors that most impressed respondents about the admired companies are customer-related. Customer-facing IT (15%); followed by an integrated/standardized/unified IT organization and process framework (13%); exceptional use of CRM (11%); customer-centered innovation (9%); and product design & offerings (9%) are the most mentioned attributes of the highest-performing companies. Multiple responses were allowed to this area of the survey. The following graphic provides an analysis of which factors most impressed the C-level executives who were respondents to the survey.
Enterprises are beginning to change their buying behaviors based on the deployment speed, economics and customization that cloud-based technologies provide. Gartner cautions however that enterprises are far from abandoning their on-premise models and applications entirely for the cloud.
Based on an analysis of the Gartner Hype Cycle for Cloud Computing, 2012, the best results are being attained by enterprises that focus on a very specific strategy and look to cloud-based technologies to accelerate their performance. Leading with a strategic framework of goals and objectives increases the probability of cloud-based platform success. Those enterprises that look to cloud platforms only for cost reduction miss out on their full potential.
The Hype Cycle for Cloud Computing, 2012 is shown below:
Cloudwashing and Inflated Enterprise Expectations
While the hype surrounding cloud computing may have peaked, cloudwashing continues to cause confusion and inflated expectations with enterprise buyers. This just slows down sales cycles, when more straightforward selling could lead to more pilots, sales and a potentially larger market. Cloud vendors who have the expertise gained from delivering cloud platforms on time, under budget, with customer references showing results are starting to overtake those that using cloudwashing as part of their selling strategies.
Additional take-aways from the Gartner Hype Cycle for Cloud Computing include the following:
- Cloud Email is expected to have a 10% adoption rate in enterprises by 2014, down from the 20% Gartner had forecasted in previous Hype Cycles. This represents modest growth as the adoption rate of this category had been between 5 and 6% in 2011.
- Big Data will deliver transformational benefits to enterprises within 2 to 5 years, and by 2015 will enable enterprises adopting this technology to outperform competitors by 20% in every available financial metric. Gartner defines Big Data as including large volumes processed in streams, in addition to batch. Integral to Big Data is an extensible services framework that can deploy processing to the data or bring data to the process workflow itself. Gartner also includes more than one asset type of data in their definition, including structured and unstructured content. The Priority Matrix for Cloud Computing, 2012 is shown below:
- Master Data Management (MDM) Solutions in the Cloud and Hybrid IT are included in this hype cycle for the first time in 2012. Gartner reports that MDM Solutions in the Cloud is getting additional interest from Enterprise buyers as part of a continual upward trend of interest in MDM overall. Dominant vendors in this emerging area include Cognizant, Data Scout, IBM, Informatica, Oracle and Orchestra Networks, are among those with MDM-in-the-cloud solutions.
- PaaS continues to be one of the most misunderstood aspects of cloud platforms. The widening gap between enterprise expectations and experiences is most prevalent in this market. Gartner claims this is attributable to the relatively narrow middleware functions delivered and the consolidation fo vendors and service providers in this market.
- By 2014 the Personal Cloud will have replaced the personal computer as the center of user’s digital lives.
- Private Cloud Computing is among the highest interest areas across all cloud computing according to Gartner, with 75% of respondents in Gartner polls saying they plan to pursue a strategy in this area by 2014. Pilot and production deployments are in process across many different enterprises today, with one of the major goals being the evaluation of virtualization-driven value and benefits.
- SaaS is rapidly gaining adoption in enterprises, leading Gartner to forecast more than 50% of enterprises will have some form of SaaS-based application strategy by 2015. Factors driving this adoption are the high priority enterprises are putting on customer relationships, gaining greater insights through analytics, overcoming IT- and capital budget-based limitations, and aligning IT more efficiently to strategic goals.
- More than 50% of all virtualization workloads are based on the x86 architecture. This is expected to increase to 75% by 2015. Gartner reports this is a disruptive innovation which is changing the relationship between IT and enterprise where service levels and usage can be tracked.
Bottom line: Gartner’s latest Hype Cycle for Cloud Computing shows that when cloud-based platforms are aligned with well-defined strategic initiatives and line-of-business objectives, they deliver valuable contributions to an enterprise. It also shows how Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) are the catalysts of long-term market growth. The following slide from the presentation High-Tech Tuesday Webinar: Gartner Worldwide IT Spending Forecast, 2Q12 Update: Cloud Is the Silver Lining (free for download) also makes this point.