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Industry Research : IT Software Spending Will Focus on CRM in 2011
February 25, 2011 -- Customer relationship management will get the largest increase in software spending this year, a Gartner survey says. The rise comes as overall software spending is expected to rise 31 percent, led by the Asia/Pacific region. SaaS spending for CRM could rise to $4 billion by 2014, Gartner says, while marketing automation is showing strong growth.
A new survey indicates that customer relationship management (CRM ) software will have the largest spending increase this year among all types of software. The survey, by industry research firm Gartner, said 42 percent of respondents expect to increase their CRM spending from 2010.
About 39 percent will increase outlays for office suites, and 36 percent for enterprise resource planning. The survey was conducted among 1,500 heads of IT departments in 40 countries through last July. The questions were oriented toward actual budgets for last year and projections for 2011.
Opportunities in 'Greenfields'
The growing increase in CRM spending comes as spending on application software in general is rising a projected 31 percent this year. The largest increase is taking place in the Asia/Pacific region, which is growing 37 percent. Latin America application spending is growing by 35 percent, and the EMEA (Europe, Middle East, Africa) region by 27 percent.
Gartner describes both Latin America and Asia/Pacific as "greenfields" with the greatest sales opportunities.
Hai Hong Swinehart, a Gartner research analyst, said key areas for general software investment include the online channel; software as a service (SaaS ) deployments; and technologies that enable customer loyalty management, cross-sell and up-sell opportunities, and levels of customer service that are more targeted.
"Software application vendors should continue to build, fund and invest in software sales and marketing programs as the market is recovering," Swinehart said. He added that a market downturn and its aftermath are "disrupters that create great marketing and sales opportunities" if a company has "the right products, market programs, and funding."
For CRM buyers, Swinehart said, spending is focusing on customer retention and ways to enhance the customer experience, and there is increasing interest in "technologies that encourage development of customer communities and social networks."
Gartner said SaaS within the CRM industry could top $4 billion in revenue by 2014, which would make it nearly one-third of the entire CRM market. The segment with the strongest growth is marketing automation, driven by campaign and lead management and analytics.
The survey comes at a time when, according to Gartner, CRM is in a new era that is more about relationships and less about management. This new emphasis, the research firm said, is being driven by social media, and is yielding a "more open, honest and balanced approach" that works with customers to provide mutually beneficial relationships.
Earlier this month, Gartner reported that the CRM market is entering a three-year shake-up period with rapid changes. That report said the keys to the shake-up are the rise of social CRM and SaaS, the market reshuffling led by Salesforce.com, and the selling of CRM software from consultants and system integrators.
Posted by Veronica Silva Cusi, news correspondent
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Published: Sunday, February 27, 2011