Germany's SAP AG is poised to overtake Siebel Systems Inc. as the market leader for CRM, according to a report released Wednesday by AMR Research Inc.
The CRM market forecast for 2003-2008 found that while San Mateo, Calif.-based Siebel retained the top revenue position in 2003, its revenues shrank 17%. SAP, on the other hand, saw its CRM revenue grow by 30% and seems destined to overtake Siebel this year.
SAP's surge is based on CRM revenues and not on actual seats in use. Laura Preslan, AMR's research director and co-author of the report, estimates that only 35% of shipments of mySAP CRM 4.0 are actually live. Many companies plan to implement them, but CRM is a lower priority for them, she said.
That appears to be changing, however. In follow-up research, Preslan said she spoke with 20 SAP customers with an average seat size of 1,200 who are implementing CRM.
"Every single one said the key reason they chose SAP was integration," Preslan said. "The function gap was not as key to them as having one vendor that integrated all their applications."
The report backs up many claims that the feature/function wars are over. The rapid growth by Microsoft CRM and San Francisco's Salesforce.com with easy-to-use, easy-to-implement tools show that companies are putting less weight on an application's functionality when making a decision, the report said.
The news comes on the same day Siebel announced lowered earnings expectations due to low license revenues and acquisition costs. The company's new CEO, Mike Lawrie, said he expects Siebel to report revenue of $301 million for the second quarter, compared with expected revenues of $357 million.
"They didn't 'just' miss the quarter," Preslan said. "Part of that could be attributed to the leadership change, but our customers told us they were happy with that."
In fact, 17 of the 20 SAP customers she spoke with said Siebel was a competitor in the deal. The lowered license revenue expectations also come after Lawrie announced that one of Siebel's big pushes in 2004 is bringing up license revenue.
"Siebel is not dead by any means," Preslan said. "They'll be very successful in heterogeneous environments like financial services and telecom, but other industries are looking for integration."
In another finding of the report, AMR said CRM as a whole should rebound from some lean years. While the days of double-digit growth are over, AMR predicts a compound annual growth rate of 8% through 2008, making CRM the fastest-growing application category.
Hosted, customer analytics, price management and systems integration applications will make up the bulk of the CRM growth.