CRM shake-out will see more consolidation

After a spate of consolidations in the customer relationship management sector market, which saw both PeopleSoft and Siebel snapped up by Oracle, there will be no let-up in merger activity, according to analyst house Gartner.

Listing 12 acquisitions "of note" in the last two years, the analyst said in their latest research note: "The CRM market will continue its consolidation unabated."

It said one of the reasons for the activity is disenchantment among CRM founders, who "are selling out in capitulation" or company boards "growing frustrated by the slow (or negative) pace of growth".

According to Gartner, these factors point to further consolidation ahead. Another factor is the market hype around the software as a service model, used successfully in the CRM market by Salesforce.com and others, which "places pressure on software providers".

It is a difficult market even for the most experienced, said Gartner, which points out that even "Oracle determined itself unable to cost-effectively develop a CRM solution likely to generate maintenance revenues as high as PeopleSoft and Siebel".

But, said the analyst, the winners in CRM could well not be Oracle/Siebel/PeopleSoft but Microsoft, market-leader SAP and Salesforce.com.

Despite two of the largest purchases in the software business, "Oracle has not finished purchasing CRM vendors", Gartner predicted. Over the coming year Oracle "will look at adding analytics, industry-specific solutions, workforce automation and a software as a service (on-demand) vendor."

Both Microsoft and SAP "have a pattern of technology purchases when gaps have been identified", said Gartner, while Salesforce "has the resources and desire to gain scale and close the gap with two market leaders" through purchase.

According to Gartner's latest market share figures, SAP is the market leader in CRM, Siebel is in second place and Oracle, including PeopleSoft, is in third.

The rising star in the CRM business is still Salesforce.com which, according to Gartner's figures, saw its business grow by 77 per cent last year.

Colin Barker writes for ZDNet UK