The Hot Spot For Software Vendors

Cahners In-Stat Group, Newton, Mass., projects that total worldwide CRM application revenue will hit $9.4 billion by the end of this year and increase to $30.6 billion by 2005, with particular growth in the U.S. midmarket, as well as in Europe and Asia.

"In our business, CRM is definitely the hot software," says Greg Lewis, founder and executive vice president of midmarket solution provider Emerging Solutions. "Our customers are viewing it as the most strategic application they can deploy."

Competition among CRM software vendors is as hot as the market's growth, Cahners notes. Siebel Systems currently leads the CRM market, with large vendors such as Oracle, SAP and now PeopleSoft hot on its trail. Other technology giants are joining the pursuit; Microsoft's desire to branch out into CRM applications is the IT industry's worst-kept secret. IBM has also marked CRM as a key growth area, and, although it no longer makes applications, Big Blue has formed major alliances with both Siebel and PeopleSoft.

Like PeopleSoft, JD Edwards, another ERP software vendor, has also entered the arena with its recent acquisition of YouCentric, a Java-based CRM software company. Mike Pinette, vice president of corporate development and marketing at Infogain, says smaller, second-tier vendors, including Clarify, E.piphany, SalesLogix, are doing quite well and are aggressively building channel relationships around their CRM products.

Despite the fierce competition, more CRM vendors are popping up. Companies such as Salesforce.com, Soffront, Synchrony and others are using Web-based software architectures similar to PeopleSoft's approach to deliver sales-force automation and call-center services via the Internet, bypassing high-cost software implementation.

With Cahners predicting operational CRM revenue to grow 30 percent to 40 percent during the next four years, expect the CRM software landscape to swell even more next year.