Canada stalls somewhat on CRM

A Gartner study released today shows that CRM software took a big leap from last year, with 23 per cent more software rolling out in 2007 than the year previous.

Worldwide CRM software revenue totaled $8.1 billion last year, jumping 23.1 per cent from the 2006 take of $6.6 billion, according to Gartner. Info-Tech Research Group associate senior research analyst Tim Hickernell said that Canada is strong in the market, too, with a notable mid-market presence and a heavier-than-usual saturation in the more “physical” markets like manufacturing and engineering.

Growth levels are not as high in Canada, said IDC Canada’s Vinay Nair, research manager for enterprise applications, due to Canada’s usual lagging behind the States in technology adoption rates. “It’s more of a wait-and-see attitude, and we’re not quite there yet. We see it really picking up by 2010 or 2011, when the usage rates will hit about 10 per cent—right now we’re in the early adoption phase, while the States just had their big spike,” he said.

SAP took the number-one spot in worldwide CRM software revenue in 2007, taking up a quarter of the market. Oracle stuck at number-two, raking in 16.3 per cent of the market.

Their numbers are mainly attributable to the company’s bundling strategies that see SAP often packaging CRM in with its other offerings, said Hickernell. Oracle and Sage are other examples of a CRM company using this tactic to its advantage. Honourable mentions in descending order were SalesForce.com (6.9 per cent), Amdocs (5.6 per cent), Microsoft (2.7 per cent), and others (40.6 per cent).

SalesForce.com and Microsoft grew the most, with rates of 49.8 per cent and 88.6 per cent growth, respectively, which Hickernell attributes to the companies’ craving the perceived ease-of-use of a software-as-a-service set-up.

Software-as-a-service does indeed continue to be a market driver, claiming over 15 per cent of last year’s total market revenues, according to the study. The United States is farther ahead with this trend, however, said Nair, due to their typical earlier “embracing of new innovations.” “One trend that I foresee as getting bigger is people taking a hybrid approach (with a mix of the two),” said Hickernell, who pointed out SugarCRM as one of the vanguards of this approach. Another trend that Hickernell has noticed is the growing popularity of self-side commerce (the customer-facing commerce portal). “This hasn’t been affected by the economy,” he said.

Mobile ability will also eventually come into play more, and CRM companies wishing to compete will need a decent mobile version, said Nair. “This development could be slowed in Canada, too, though, due to the number of data centres and availability,” he said.

Fifty-three per cent of the CRM market was concentrated in North America, while Western Europe grabbed 32 per cent of the market. CRM use in Middle East and Africa region and Eastern Europe have skyrocketed, achieving 40 per cent growth.