CRM Market Poised For Growth

As E-business increases competition, companies continue to make customer retention a critical part of revenue growth. That need for service will spark the customer-relationship management market to grow to $16.8 billion by the year 2003, according to a report released today by analyst firm AMR Research.

AMR's "Customer Relationship Management Software Report, 1998-2003," notes that CRM vendors generated revenues of $2.3 billion in 1998. AMR expects that number to climb 60% to $3.7 billion this year, as the demand for customer-relationship applications surges. For the following three years, revenue growth is expected to remain at a steady 49% for the CRM market, after most companies have made their initial purchases and move to implementation.

Leading the pack in 1998 revenue were the best-known names in CRM: Siebel, Vantive, and Clarify. But Oracle and Baan also penetrated the top five for 1998, and AMR expects more enterprise resource planning vendors will work their way into the market with integrated CRM suites that will be more appealing than standalone applications. "CRM is becoming a key factor in ERP vendor selection," says Judy Andaloro, senior analyst at AMR Research. "Customers are demanding a complete offering instead of just front-office and back-office applications, so we expect more consolidation through either acquisitions or partnerships."

The role of the Internet in customer service will also serve as a market driver, as issues such as order fulfillment become more important to satisfying customers. "The Internet is a channel through which you touch your customers and a component of a CRM strategy," Andaloro says. "We see E-business, ERP, supply-chain management, and CRM as intertwined,"

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