“The worldwide CRM market grew from $61.6 billion in 2019. The CRM market grew 12.6% to $69.3 billion in 2020, a strong performance but with wide variations in growth due to pandemic impacts. However, CRM generally continues to thrive and grow above the overall software industry average rates, which were 8.8% in 2020”.
“CRM accounted for the largest share in the overall enterprise software market at 29%”
“Salesforce’s CRM revenue grows by 18.8%, Reaching $13.5 billion In 2020”.
“SAP and Oracle each witnessed a slight decrease in market share to 5.2% and 4.4%, respectively, in 2020, down slightly from 5.7% and 4.7% in 2019”.
Gartner found that “Digital commerce grew at a rate of 17.1%, up from 13.2% growth in the prior year, highlighting the shift to digital”. The research firm also defined a new CRM submarket called Cross-CRM comprised of Customer Data Platform (CDP) and Voice of the Customer (VoC) spending. According to Gartner, “Customer Service and Support (CSS) also continues to be the largest segment in the overall CRM market, accounting for 35.5%share. The following graphic compares the top five vendors’ revenue by subsegments:
Additional interesting insights from Gartner latest CRM market share update include the following:
Five vendors comprise 35.6% of an increasingly fragmented CRM market. “Salesforce, SAP, Oracle, Adobe, and Microsoft jointly held share in the CRM market is at 35.6%, up slightly from 35.2% in 2019, while still leaving a highly fragmented 23% stake for 81 named vendors (that we track in market share) and 41.5% stake for the remaining large number of other software vendor”s. “Shopify grew 41.5% year on year, a higher rate than the previous year’s 38%”.
Salesforce, Microsoft, and Adobe grew faster than the market in 2020. “Salesforce’s CRM revenue grows by 18.8%, Reaching $13.5 Billion in 2020”. Microsoft’s CRM Revenue grew by 17.5% in 2020. Sales is its largest segment with 61% of its CRM revenue and achieved 13.7% growth, above the sales average growth of 10.9% suggesting Dynamics attractive price point, integrated with Power Platform and Office and as a unified CRM suite, are appealing to buyers”. Adobe is the most significant marketing software vendor with its “CRM revenue totaling $2.4 billion in 2020 (just ahead of Salesforce at $2.35 billion), up from $2.1 billion in 2019”.
$55 billion of 2020 CRM sales were cloud-based, comprising 79.4% of all sales, increasing from $47.7 billion in 2019. Gartner believes that “Cloud growth was slightly slower due to the pandemic, and on-premises software (new license and software support services) still had very small growth of just over 4% up from the previous year”. Vertical market niche-based applications are sold on-premise, including those tailored to the specific needs of banking, financial services, manufacturing, and process industries’ operations.
“North America and Western Europe hold the largest share in the CRM market, with 59.6% and 20.7% stakes, respectively”. According to Gartner, “Mature APAC and Japan emerged as the fastest-growing regions with 19.2% and 17.5% growth rates respectively. Adoption lags in these markets compared with North America and Western Europe, and this higher growth rate shows more investment as companies catch up. At the moment however, Mature APAC and Japan together only account for about 9% of the overall CRM market share”.
Global spending on Customer Service and Support (CSS) grew 12.9% in 2020, down from 14.78% in 2019. “The CSS market saw growth of 12.9% in 2020, down from 14.78% in 2019, reaching $24.6 billion, up from $21.8 billion in 2019”. “The leading vendor in the CSS segment is Salesforce , with $5.3 billion in revenue,with service being its biggest cloud, overtaking sales in 2020”, according to Gartner. The next three top vendors include Genesys, Oracle and Zendesk – with Zendesk replacing SAP at No. 4 Zendesk, achieved revenue of $866 million and a growth rate of 25.1%”.
Worldwide end-user spending on public cloud services is forecast to grow 23.1% in 2021 to total $332.3 billion, up from $270 billion in 2020.
Garter predicts worldwide end-user spending on public cloud services will jump from $242.6B in 2019 to $692.1B in 2025, attaining a 16.1% Compound Annual Growth Rate (CAGR).
Spending on SaaS cloud services is predicted to reach $122.6B this year, growing to $145.3B next year, attaining 19.3% growth between 2021 and 2022.
These and many other insights are from Gartner Forecasts Worldwide Public Cloud End-User Spending to Grow 23% in 2021. The pandemic created the immediate need for virtual workforces and cloud resources to support them at scale, accelerating public cloud adoption in 2020 with momentum continuing this year. Containerization, virtualization, and edge computing have quickly become more mainstream and are driving additional cloud spending. Gartner notes that CIOs face continued pressures to scale infrastructure that supports moving complex workloads to the cloud and the demands of a hybrid workforce.
Key insights from Gartner’s latest forecast of public cloud end-user spending include the following:
36% of all public cloud services revenue is from SaaS applications and services this year, projected to reach $122.6B with CRM being the dominant application category. Customer Experience and Relationship Management (CRM) is the largest SaaS segment, growing from $44.7B in 2019 to $99.7B in 2025, attaining a 12.14% CAGR. SaaS-based Enterprise Resource Planning (ERP) systems are the second most popular type of SaaS application, generating $15.7B in revenue in 2019. Gartner predicts SaaS-based ERP sales will reach $35.8B in 2025, attaining a CAGR of 12.42%.
Desktop as a Service (DaaS) is predicted to grow 67% in 2021, followed by Infrastructure-as-a-Service (IaaS) with a 38.5% jump in revenue. Platform-as-a-Service (PaaS) is the third-fastest growing area of public cloud services, projected to see a 28.3% jump in revenue this year. SaaS, the largest segment of public cloud spending at 36.9% this year, is forecast to grow 19.3% this year. The following graphic compares the growth rates of public cloud services between 2020 and 2021.
In 2021, SaaS end-user spending will grow by $19.8B, creating a $122.6B market this year. IaaS end-user spending will increase by $22.7B, the largest revenue gain by a cloud service in 2021. PaaS will follow, with end-user spending increasing $13.1B this year. CIOs and the IT teams they lead are investing in public cloud infrastructure to better scale operations and support virtual teams. CIOs from financial services and manufacturing firms I’ve recently spoken with are accelerating cloud spending for three reasons. First, create a more virtual organization that can scale; second, extend the legacy systems’ data value by integrating their databases with new SaaS apps; and third, an urgent need to improve cloud cybersecurity.
CIOs and the organizations they serve are prioritizing cloud infrastructure investment to better support virtual workforces, supply chains, partners, and service partners. The CIOs I’ve spoken with also focus on getting the most value out of legacy systems by integrating them with cloud infrastructure and apps. As a result, cloud infrastructure investment starting with IaaS is projected to see end-user spending increase from $82B this year to $223B in 2025, growing 38.5% this year alone. End-user spending on Database Management Systems is projected to lead all categories of PaaS through 2025, increasing from $31.2B this year to $84.8B in 2025. The following graphic compares cloud services forecasts and growth rates:
CRM revenue in 2018 is comprised of software and services revenue from Customer Service and Support (35.7%), Sales (25.9%), Marketing (25.4%), and Digital Commerce (13%). These four categories together comprise the customer experience and relationship management market, according to Gartner.
Details Of What’s New In Gartner’s Hype Cycle For CRM, 2019
Four new technologies are on the Hype Cycle for CRM, reflecting enterprises’ need for greater integration of diverse systems and the demand for more predictive and prescriptive analytics-based insights. The four technologies include the following:
Blockchain for lead generation. Gartner sees the potential for blockchain to provide a decentralized peer-to-peer network model that supports exchanging data to the highest bidders using smart contracts. Gartner predicts this approach reduces or in some cases eliminates the need for a centralized authority such as a data intelligence solution. It also allows for a new ecosystem of managing, sharing and monetizing data for revenue-generating purposes.
Knowledge graphs for sales. The ability to build an AI-enabled knowledge model of real-world entities and their relationships to one another, expressed in a data schema, shows potential to increase sales effectiveness. Gartner predicts this emerging technology provides organizations with the ability to create data-driven sales organizations using graphs arranged in a network of nodes rather than in tables of rows and columns. The significance is the ability to correlate sales activities and benchmark against performance metrics in a more digestible and insightful way, which is often too complex for human analysis.
Digital adoption solutions. Gartner sees potential in this technology to improve the adoption of multiple tools across a selling and marketing organization. Digital adoption solutions enable sellers to onboard more quickly and improve productivity.
Relationship intelligence. By relying on machine learning, sales organizations can map out their universe of network connections, both internal and external, to identify potential avenues of engagement with any prospect or client. Gartner sees this as useful in its ability to provide warm introductions or even referrals for revenue-generating activities while reducing sales cycles.
Gartner predicts the following five technologies will deliver the most significant transformational benefits to selling organizations in 2 years or less. The five most transformation technologies in the near term are the following according to Gartner:
CPQ Application Suites
Digital Content Management for Sales
Partner Relationship Management (PRM)
Price Optimization and Management for B2B
The following CRM technologies have gained wide usage and adoption in the last year, as reflected by their position on this year’s Hype Cycle. Data intelligence solutions for sales, CPQ application suites, digital content management for sales, and sales KPI analytics are among the most adopted mature technologies on the hype cycle today.
Visual configurators have moved at a much faster pace to mainstream adoption along the Hype Cycle this year. Gartner credits visual configurators’ rapid adoption rate to how the majority of them are now embedded or easily integrated with configure, price, quote (CPQ) applications, or in digital commerce sites. State-of-the-art visual configurator are enabling engineering, production, and sales to become real-time collaborators in creating new products. For additional insights into visual configurators, please see How To Make Complex CPQ Selling Simple With Visual Configurators published earlier this week.
Algorithmic guided selling is now listed as obsolete. Gartner has re-assigned this technology as it’s now an embedded core capability in many CPQ and sales force automation (SFA) applications. By doing this, Gartner is saying it is doubtful algorithmic guided selling applications will be sold stand-alone in the future.
Social for sales and predictive B2B marketing analytics are off the CRM Hype Cycle. Gartner has chosen to merge them into the data intelligence solutions for sales market. Social for sales is more of a process, not a technology market. The majority of social for sales-based strategies are executed over social networks that have the audience and scale to make them succeed, with LinkedIn being an example. Gartner believes the predictive B2B marketing analytics vendor landscape has shrunk and is not a viable market long term, as they have seen inquiries regarding market share in this area steadily drop in this area since 2016.
Gartner is seeing two main drivers of investment and innovation in CRM in 2019 and beyond. The first is digital optimization or a process and program of using digital technology to maximize existing operating processes and business models. The second is predictive/prescriptive-enabled technology or technology using capabilities such as machine learning that provides predictive signals and prescriptive “next best action” recommendations. Please see their research note, 4 Key Insights from the Gartner Hype Cycle for CRM Sales Technology, 2019, for additional details.
Salesforce dominated the worldwide CRM market with a 19.5% market share in 2018, over double its nearest rival, SAP, at 8.3% share.
Worldwide spending on customer experience and relationship management (CRM) software grew 15.6% to reach $48.2B in 2018.
72.9% of CRM spending was on software as a service (SaaS) in 2018, which is expected to grow to 75% of total CRM software spending in 2019.
Worldwide enterprise application software revenue totaled more than $193.6B in 2018, a 12.5% increase from 2017 revenue of $172.1B. CRM made up nearly 25% of the entire enterprise software revenue market.
With 19.5% market share, Salesforce has over 2X the CRM sales SAP has and over 3X of Oracle. Salesforce continues to dominate CRM globally, increasing its market share from 18.3% in 2017 to 19.5% in 2018. Adobe is the only other vendor to grow its market share in 2018. Microsoft and SAP successfully held onto to market share while Oracle lost share.
Adobe and Salesforce grew faster than the overall market, increasing CRM revenues 21.7% and 23.2% respectively. Adobe’s CRM sales jumped from $2B in 2017 to $2.4B in 2018. Salesforce CRM revenues increased from $7.6B in 2017 to $9.4B in 2018, growing the fastest of all competitors in this market. SAP grew 15.5% between 2017 and 2018, just below the overall market growth of 15.6%. Microsoft (15%) and Oracle (7.1%) grew slower than the market. The following graphic compares growth rates between 2017 and 2018.
Adobe dominates the marketing subsegment of CRM with 19% market share in 2018. Salesforce has 11.7% of the marketing subsegment, followed by IBM (5.7%), SAP (4%), Oracle (3.6%) and HubSpot (3.4%). Gartner estimates the marketing subsegment was a $12.2B market in 2018, increasing from $10.3B in 2017, achieving 18.8% growth in just a year.
Eastern and Western Europe were the fastest growing regions at 19.7% and 17.5% respectively. North America and Western Europe were the largest two regions with North America growing at 15.2% to reach $28.1B in revenue.
Gartner continually tracks and analyzes the areas their clients have the most interest in and relies on that data to complete their yearly analysis of CRM’s hottest areas. Inquiry topics initiated by clients are an excellent leading indicator of relative interest and potential demand for specific technology solutions. Gartner organizes CRM technologies into the four category areas of Marketing, Sales, Customer Service, and Digital Commerce.
The following graphic from the report illustrates the top CRM applications priorities in Marketing, Sales, Customer Service, and Digital Commerce.
Key insights from the study include the following:
Marketing analytics continues to be hot for marketing leaders, who now see it as a key business requirement and a source of competitive differentiation. In my opinion and based on discussions with CMOs, interest in marketing analytics is soaring as they are all looking to quantify their team’s contribution to lead generation, pipeline growth, and revenue. I see analytics- and data-driven clarity as the new normal. I believe that knowing how to quantify marketing contributions and performance requires CMOs and their teams to stay on top of the latest marketing, mobile marketing, and predictive customer analytics apps and technologies constantly. The metrics marketers choose today define who they will be tomorrow and in the future.
Artificial intelligence (AI) and predictive technologies are of high interest across all four CRM functional areas, and mobile remains in the top 10 in marketing, sales and customer service. It’s been my experience that AI and machine learning are revolutionizing selling by guiding sales cycles, optimizing pricing and enabling CPQ to define and deliver smart, connected products. I’m also seeing CMOs and their teams gain value from Salesforce Einstein and comparable intelligent agents that exemplify the future of AI-enabled selling. CMOs are saying that Einstein can scale across every phase of customer relationships. Based on my previous consulting in CPQ and pricing, it’s good to see decades-old core technologies underlying Price Optimization and Management are getting a much-needed refresh with state-of-the-art AI and machine learning algorithms, which is one of the factors driving their popularity today. Using Salesforce Einstein and comparable AI-powered apps I see sales teams get real-time guidance on the most profitable products to sell, the optimal price to charge, and which deal terms have the highest probability of closing deals. And across manufacturers on a global scale sales teams are now taking a strategic view of Configure, Price, Quote (CPQ) as encompassing integration to ERP, CRM, PLM, CAD and price optimization systems. I’ve seen global manufacturers take a strategic view of integration and grow far faster than competitors. In my opinion, CPQ is one of the core technologies forward-thinking manufacturers are relying on to launch their next generation of smart, connected products.
It’s in customer service where AI is receiving the highest investments in real use cases rather than proofs of concept (POCs) and experimentation. It’s fascinating to visit with CMOs and see the pilots and full production implementations of AI being used to streamline customer service. One CMO remarked how effective AI is at providing greater contextual intelligence and suggested recommendations to customers based on their previous buying and services histories. It’s interesting to watch how CMOs are attempting to integrate AI and its associated technologies including ChatBots to their contribution to Net Promoter Scores (NPS). Every senior management team running a marketing organization today has strong opinions on NPS. They all agree that greater insights gained from predictive analytics and AI will help to clarify the true value of NPS as it relates to Customer Lifetime Value (CLV) and other key metrics of customer profitability.
Sales and customer service are the functional areas where machine learning and deep neural network (DNN) technology is advancing rapidly. It’s my observation that machine learning’s potential to revolutionize sales is still nascent with many high-growth use cases completely unexplored. In speaking with the Vice President of Sales for a medical products manufacturer recently, she said her biggest challenge is hiring sales representatives who will have longer than a 19-month tenure with the company, which is their average today. Imagine, she said, knowing the ideal attributes and strengths of their top performers and using machine learning and AI to find the best possible new sales hires. She and I discussed the spectrum of companies taking on this challenge, with Eightfold being one of the leaders in applying AI and machine learning to talent management challenges.
Source: Gartner by Ed Thompson, Adam Sarner, Tad Travis, Guneet Bharaj, Sandy Shen and Olive Huang, published on August 14, 2018.