The days of on-premises customer relationship management (CRM) systems are numbered, according to research firm Gartner. It says the tipping point will occur next year when cloud deployments of CRM will exceed those on premises for the first time, and that in another 10 years 85 percent of CRM will be provided from the cloud.
According to Gartner's CRM Vendor Guide 2014, “the CRM software market is projected to grow at a 14.8 percent compound annual growth rate (CAGR) through 2017, with cloud revenue growing at more than 22.6 percent CAGR." Gartner says: "Strong demand for software as a service (SaaS), which represented more than 41 percent of CRM total software revenue in 2013, was driven from organisations of all sizes seeking easier-to-deploy alternatives to replace legacy systems, implement net-new applications or provide alternative complementary functionality."
Joanne Correia, research vice president at Gartner, said: "CRM will be at the heart of digital initiatives in coming years. This is one technology area that will get funding because digital business is critical for companies to remain competitive."
Gartner says that competition has intensified as major players continued to vie for broader market penetration internationally, and as a result of more widespread functionality adoption within midsize to large enterprises.
"The top five CRM vendors accounted for 50 percent of CRM software revenue in 2013. Salesforce.com continued to be the largest vendor overall in the CRM market with 16.1 percent of the market. SAP remained in the No. 2 position in the overall CRM space, but is still the leader in terms of revenue and market share for the sub-segments of customer service and e-commerce."
Cloud based CRM solutions are more cost effective and more flexible than premises based solutions so enable businesses to implement customer service and marketing strategies much more rapidly than with their own CRM systems. Also they don’t need to be supported and maintained.
According to Forrester Research, 18 percent of US enterprises are using SaaS-based CRM to complement existing legacy CRM system investments and 1 percent are replacing most/all legacy CRM systems with SaaS.
It adds: “The advent of software-as-a-service (SaaS) application adoption has the potential to produce dramatic benefits for businesses across industries, not the least of which is the ease and flexibility of access to the information needed for productivity.Combine this benefit with the increasing popularity of bring-your-own-device (BYOD) and ‘shadow IT’ practices (IT solutions deployed without the approval or involvement of the IT department), and the march is on toward a truly anywhere, anytime, any-device workforce.”