The CRM market is set for steady growth throughout the foreseeable future, according to Gartner.
The analyst firm said on Monday that overall CRM (customer relationship management) revenue would rise by around $1bn (£490m) each year between now and 2011.
Gartner predicts that the market for CRM software is set to exceed $7.4bn (£3.6bn) this year, which is up 14 percent from 2006. The increase is being fuelled by growth across all sub-segments of the market and by "the explosive growth of software as a service [SaaS] solutions within the sales subsegment", Gartner said in a research note.
In 2006, SaaS represented 12 percent of total CRM software revenue, and it is on track to reach nearly 14 percent in 2007. By the end of this year, SaaS will represent more than $1bn in CRM software revenue, growing at more than double the rate of the total CRM software market, the analyst firm said.
"The sustained performance of major on-demand solutions providers is driving the growth in the SaaS segment," said Sharon Mertz, research director at Gartner. "As businesses refresh existing salesforce automation systems to align with their renewed drive for business and revenue growth, we expect this to push sales software to become the largest CRM segment by 2011."
Gartner added that CRM software growth would slow in the next 12 to 18 months because of the impact of economic conditions, but that the overall market size would continue to increase.
Talkback
Larry Ellison just said couple of days ago that no one has figured a way to make money in SaaS for SMBs!
I love larry, but he is so wrong!
Many SaaS startups such as Salesforce.com, Netsuite, Salesboom.com, Rightnow, and others are making a ton of money in the software-as-a-service marketplace, and the market has been growing by over 100% year over year since 2003!
With the capabilities of hosted on demand CRM Software compared to that of traditional on site CRM it is no wonder we are seeing the amount of growth within this market as we are. Vendors such as Salesforce, Netsuite and Salesboom.com only continue to better their platforms with each release. With more use of Ajax based software the workflow within hosted CRM Software has even become smoother cutting out the need to refresh your browser. I can only see even more growth like we've be witnessing as the internet and other technology speed up processes and the availability of you data in you pocket as a sales person goes to a call.