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| Gartner Dataquest Says CRM Software Vendors Are Struggling Through Difficult Year |
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Lowell, Mass., December 13, 2001 - The economic slowdown has had a negative impact on all segments in the software market, and the customer relationship management (CRM) software market is no exception. Worldwide CRM software revenue is expected to decline 8 percent in 2001, down from 89 percent growth in 2000, according to Dataquest Inc., a unit of Gartner, Inc. (NYSE: IT and ITB).
Worldwide CRM software revenue is projected to reach $3.6 billion in 2001, and the industry's growth rate will remain flat in 2002 as new license revenue will again total $3.6 billion. The market is forecast to grow 10 percent in 2003 to $4 billion. "The economic slowdown, coupled with the current military action led by the United States, will immediately intensify the weeding out of the weak CRM software companies," said Tom Topolinski, vice president for Gartner Dataquest's Application Software Industry Research group. "Software companies that have large cash reserves, little reliance on investment monies, solid business management and a good return on investment (ROI) proposition will fare best." As viable vendors begin to stagnate, the trend for merger, acquisition and divestiture (MAD) activities will increase. The reduction of players will eventually benefit the market by allowing more consolidation in functionality and increasing enterprise adoption. However, in the short-term, many enterprises will defer decisions because of rapid vendor change and perceived risk. CRM software vendors will need to focus and cater to their installed base to maintain revenue levels. However, new business will be possible at a slower rate. Buyer behavior is changing from a strategic focus to more tactical decisions, and these requirements from the demand-side are creating a buyer's market. "Fear and uncertainty are embedded in buying decisions, shifting longer-term strategies into short-term tactics," Topolinski said. "This translates into buying criteria being hinged on short-term ROI or on mission-critical results and is causing delays or postponements of projects not directly impacting the bottom line." Additional information is available in the Gartner Dataquest Perspective "CRM Software Market Growth Down Sharply." This report looks at how the recession and recent events are affecting the CRM software market. This information is produced by Gartner Dataquest's Worldwide Software Industry group. This research group provides analysis on infrastructure and application product market trends, player positioning and channels of the packaged business application software market. To subscribe to Gartner Dataquest's Software Applications or Infrastructure Worldwide programs, please call 408-468-8000. Reports can be purchased on the Internet at www.gartner.com. Gartner Dataquest is the recognized leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software, and services sectors of the global information technology industry. Gartner, Inc. is a research and advisory firm that helps more than 11,000 clients understand technology and drive business growth. Gartner's divisions consist of Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner, Inc. is headquartered in Stamford, Connecticut, and consists of 4,300 associates, including 1,200 research analysts and consultants in more than 90 locations worldwide. The company achieved fiscal 2001 revenue of $952 million. For more information, visit www.gartner.com. |
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Contact: Christy Pettey 408-468-8312 christy.pettey@gartner.com |
