Midmarket CRM makes Wave |
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By Barney Beal, News Director
08 Mar 2007 | SearchCRM.com |
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These are heady times for midmarket CRM. Two research firms recently issued reports highlighting significant growth, and a third predicts that Software as a Service (SaaS), the technology pushing much of the midmarket spending, will continue to pick up steam.
According to New York-based Access Markets International (AMI) Partners Inc., almost 40% of midsized businesses use CRM applications today, and almost one quarter plan to adopt CRM in the next year. That amounts to some serious spending. Cambridge, Mass.-based Forrester Research Inc. predicts that small and midsized businesses (SMBs), companies with 1,000 employees or fewer, will account for 38% of total CRM spending by 2010, reaching $4.2 billion.
Meanwhile, Gartner Inc., based in Stamford, Conn., said this week that the SaaS market will grow from $6.3 billion in 2006 to $19.3 billion by 2011. CRM and human resources applications have fueled the initial deployments, and SaaS is now expanding to procurement and compliance management, according to Gartner.
While SMBs present a major opportunity for CRM vendors, one of the largest SaaS CRM vendors is pushing its way into enterprise businesses. Last week, San Francisco-based Salesforce.com announced a 25,000-seat deal with Merrill Lynch.
"A lot of the growth is going on in the midmarket, but enterprise spending is still healthy," said Liz Herbert, senior analyst at Forrester. "Salesforce is not going to stop selling into the midmarket. They want to be seen as [a company that] competes in these enterprise deals."
In fact, Salesforce.com was identified as a "strong contender" in the Forrester Wave for Enterprise CRM suites. Last week, Forrester issued a similar Wave report looking at the midmarket -- CRM suites that serve companies with 1,000 employees or fewer.
The midmarket CRM leaders, according to the report, are RightNow Technologies, Oracle Corp.'s Siebel CRM Professional edition, Salesforce.com, Microsoft Dynamics CRM, and Oracle's Siebel CRM On Demand. SaaS is increasingly dominating the market these days, Herbert said, pointing out the performance of RightNow, Siebel CRM On Demand, and Salesforce.com. In addition, pure SaaS vendors Entellium and NetSuite were listed as strong performers.
In this year's report, Microsoft was named a leader for the first time, thanks partly to its Dynamics CRM 3.0 release. It, too, is planning a SaaS CRM offering. Open source also made its first appearance on the Wave this year with SugarCRM, which was named a strong performer.
"Sugar's been coming onto the scene slowly but surely," Herbert said. "We've had a lot of clients asking about open source CRM in general and sometimes about Sugar in particular. It offers a lot of flexibility."
Open source vendors like CentraView and Vtiger are also appearing in deals, according to the report, particularly in shops that already have some stake in open source technology.
Vendors are also beginning to champion hybrid deployments -- one part on-premise, one part on-demand -- in the midmarket, but adoption has been slow.
"The vendors who offer it have been able to showcase some examples, but we're not seeing overwhelming demand," Herbert said. "I do see some demand for the ability to shift from one to the other."
Some firms are starting out with on-demand and then turning to on-premise as they look to customize the application or take control of pricing.
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