CRM market in the doldrums

The market for customer relationship management (CRM) software has hit a wall. Figures out today from a leading analyst house suggest it shrunk 25 per cent in 2002, compare with 2001, and that the next three years are likely to be very hard for certain vendors.

With users spending less on CRM, big vendors such as Oracle and Siebel saw "precipitous declines in licence revenues" in 2002, according to a study by Datamonitor. It forecasts the market will have barely recovered to 2001 levels by 2005.

However, all is not lost for purveyors of such wares. The low end of the market - where all eyes are on Microsoft's imminent entry - is set to grow at three times the high-end rate, and regions such as Asia-Pacific and the Caribbean and Latin America will see growth of 20 and 14 per cent respectively. The forecast for the US, for example, is just 4 per cent between 2002 and 2005.

The biggest factor for vendors is the type of CRM technology they provide, Datamonitor said. Vendors that concentrate on process-oriented applications such as sales force automation will struggle while those who encompass whole business processes, for example linking analytics to front office CRM software, will be in a market that will grow six times as fast.

Datamonitor's latest report on this subject, 'Operational CRM: Identifying Niche Opportunities in a Maturing Market' is now available.