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CRM in Europe Up Ten Percent, Gartner Finds


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July 26, 2006

CRM in Europe Up Ten Percent, Gartner Finds

By David Sims, TMCnet Contributing Editor

Fueled by what it calls the "renewed business focus on revenue and customer growth," total customer relationship management (CRM) software revenues, licence and maintenance, in Europe totaled $1.9 billion in 2005, an increase of 9.7 percent from 2004, according to Gartner. 

While SAP and Oracle (following its acquisition of Siebel earlier this year) together account for more than 50 percent of the total CRM software market, increasing adoption of on-demand products produced significant gains for the likes of, which grew 86.4 percent in 2005.

Probably due to the fact that it's such a recent entrant into the CRM market, Microsoft experienced the fastest growth in Europe, at 88.1 percent.

Ten percent growth sounds good, right now a lot of industries would take that, but actually the CRM market growth in Europe was lower than the 13.7 percent increase seen worldwide in 2005 and lower than the 15.1 percent seen in the region in 2004. 

The Gartner report points out several factors that contributed to the growth of CRM in Europe, and stressed that "despite the lower revenue growth, there is actually more CRM business in the market," according to Gartner officials.

For one thing, "the picture in Europe is very fragmented," according to Chris Pang, senior research analyst for Gartner: "Our research shows that growth in spend on CRM software correlates strongly with economic growth measures such as gross domestic product (GDP)."

In June Gartner released finding showing that, driven by “significant gains in license and maintenance revenue,” worldwide customer relationship management total software revenue totaled $5.7 billion in 2005, a 13.7 percent increase from 2004.

“As business confidence returned in a strong commercial economy, buyers focused on products that drive revenue and expand business opportunities,” said Sharon Mertz, research director at Gartner in June. “Robust gains resulted from strong vendor performance across the market, continued rapid adoption of on-demand products, increasing penetration of emerging markets, and buyer recognition of CRM applications as key drivers of customer acquisition and retention.”

SAP was the No. 1 CRM vendor based on total software revenue, the June report found, with a 25.9 percent market share in 2005. Increased midmarket opportunity drove growth across the CRM market for both the large suite vendors and on-demand providers, such as Siebel’s strong fourth quarter results drove growth, but at the expense of Oracle and PeopleSoft CRM products, Gartner officials said.

Pang explains that GDP growth in countries such as Italy and Germany remains lower than the rest of the world, while market growth in countries such as the UK, Sweden, Norway and Denmark has been "more consistent with that in North America." This means, he says, "we are seeing CRM growth rates ranging from a slight negative to more than 27 percent depending on the individual country." 

David Sims is a contributing editor for TMCnet. For more articles please visit David Sims' columnist page.

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