CRM market returns to health; SAP trails Oracle, Siebel |
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By Barney Beal, News Editor
23 Aug 2005 | searchSAP.com |
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The CRM market, once troubled by widespread failures and slow growth, is seeing a resurgence, according to multiple market studies and as evidenced by recent earnings reports.
San Francisco-based Salesforce.com recently reported net income of $5 million for the quarter and total revenue of $71.9 million. The company added 41,000 new subscribers, bringing its total to roughly 308,000.
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| Changes ahead for mySAP CRM: |
While SAP continues to trail Oracle and Siebel in the CRM market, according to IDC, executives say big plans are ahead for mySAP CRM. Speaking to analysts last month, SAP CEO Henning Kagermann indicated the company plans to launch a hosted CRM product later this year.
Sales of SAP's mySAP CRM software were down in the second quarter and some financial analysts believe it could have been the result of pressure from hosted CRM provider, Salesforce.com. But Kagermann disputed the assertion, saying a lag in CRM software sales in one quarter does not indicate a trend.
"We are in preparation," Kagermann said of SAP's hosted CRM plans. "You'll see something soon. We're making our business models right at this time."
In May, SAP America CEO Bill McDermott, disputed the assertion that SAP was feeling pressure from Salesforce.com or Siebel and hinted that a better integrated, feature rich offering would be launched.
"Salesforce provides good service If what you want is a disconnected CRM application," he said. [SAP] does have an on-demand model and we'll be talking about more of this in the future. Stay tuned."
McDermott also cited several SAP CRM wins. EarthLink has a standalone call center run by SAP, Forrest Labs chose SAP over Siebel, he said.
- Robert Westervelt |
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The hosted delivery model for CRM, applications accessed via the Web, has helped to drive much of the new growth in the market.
Fellow hosted provider RightNow Technologies Inc. in Bozeman, Mont., also reported an earnings rise for the last quarter and released version 7.5 of its product.
According to Framingham, Mass.-based IDC, the CRM market as a whole returned to positive growth in 2004. The market for applications rose 8% to $8.8 billion last year and buyers plan to continue to focus on CRM initiatives this year.
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Growth of the relative newcomers, as well as new functionality and licensing models ... have rejuvenated the market and turned the spotlight on true customer need.
Mary Wardley,
vice president of CRM applications research, IDC
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"The CRM applications market turned an important corner in 2004," said Mary Wardley, vice president of CRM applications research. "The growth of the relative newcomers, as well as new functionality and licensing models from established vendors, have rejuvenated the market and turned the spotlight on true customer need."
IDC identified San Mateo, Calif.-based Siebel Systems Inc. as the market leader with 10.7% of market share, while Oracle Corp., with its acquisition of PeopleSoft Inc., edged out Germany's SAP AG for second place.
The renewed interest in CRM has filtered down to small and midsized businesses (SMBs) as well.
Another study, this one from Santa Cruz, Calif.-based Evans Data Corp., lists CRM as one of the top three projects for SMB developers this year, along with business-to-business e-commerce and workflow management.
Roughly 41% of SMB developers are planning CRM projects in the next 12 months, according to the report.
Salesforce.com, which took off thanks to the SMB market and still garners a significant amount of its revenue from that segment, is steadily gaining traction with enterprise customers as well, a point CEO Marc Benioff was quick to make during yesterday's earnings call with financial analysts. Its largest customer, Automatic Data Processing Inc., is now up to 5,500 users.
Salesforce.com has signed a 1,400-seat deal with Citizens Bank and a 5,000-seat deal with Aon Corp. Cisco Systems Inc., despite reports that it is struggling to integrate Salesforce.com with its existing applications, is expected to add another 1,000 seats this year, Benioff said.
Additionally, Salesforce.com is building additional data centers to provide "mirroring" capabilities, allowing corporate data to be copied to networks on each coast.
This story also appears at SearchCRM.com, part of the TechTarget network.
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