Gartner comments on social CRM spending

Spending on social software to support sales, marketing and customer service processes will exceed $1 billion worldwide by 2013, said Gartner.

February 10, 2011

The customer relations management (CRM) market will enter a three year shake up in 2011, as a number of key trends take hold, according to Gartner, Inc. Sales, marketing and customer service technologies, projects and implementations will all see rapid changes over the next few years.

“Over the next three years, social CRM will continue its exponential rise, software as a service (SaaS) will become routine, will reshuffle the market order, and consultants and system integrators will sell their own CRM software,” said Ed Thompson, vice president and distinguished analyst at Gartner.

In order to offer sales, marketing, service and other business line managers, as well as C-level executives’ guidance with their CRM investments, Gartner has detailed its predictions for CRM in 2011 and beyond.

By 2013, spending on social software to support sales, marketing and customer service processes will exceed $1 billion worldwide.

The $1 billion prediction for spending on social CRM compares with Gartner’s forecast of more than $12 billion for overall spending on CRM software in 2012, means that social CRM will encompass approximately 8 per cent of all CRM spending in 2012, up from approximate 4 per cent in 2010.

Gartner recommends that buyers of social CRM should take a three-step approach to enable them to develop a social CRM strategy over the next 12 months:

  1. Determine if there are any social CRM projects already under way; look in the marketing or customer service departments first.
  2. Calculate the likelihood that you will be forced to start something in 2011 — your industry and culture are the best indicators.
  3. Find case studies specific to your industry that can provide examples of what is possible, and share them with other decision makers in your organisation.

By 2015, one-third of spending on new CRM software will be SaaS.

In 2009, 24 per cent of the CRM software market was delivered by SaaS, and this rose to more than 26 per cent in 2010, up from virtually zero in 1999. By 2015, Gartner forecasts that 32 per cent of the CRM software market will be delivered by SaaS.

Gartner said that buyers of CRM applications should resist the temptation to bypass the IT organisation in the short term. Instead, involve IT in purchase decisions early on to avoid the most-frequently cited downstream issue of data integration, and to address potential concerns about inadequate security, scalability and privacy. IT organisations should focus on integration skills. The other limitations of SaaS remain, but are eroding over time, whereas integration skills remain problematic.

By 2015, all Tier 1 CRM ESPs will invest in their own bolt-on CRM application software.

In 2010, all Tier 1 CRM external service providers (ESPs) custom-built application functionality on projects; developed configurations or industry templates for major independent software vendors (ISVs); packaged CRM applications, such as SAP and Oracle’s Siebel; and productised work done on projects for use on later bids. However, less than half of the Tier 1 ESPs developed additive stand-alone CRM applications that coexist with ISV packaged applications. The majority of Tier 1 CRM ESPs are now investing in client-agnostic R&D that is not project-funded to build their own bolt-on or best-of-breed CRM application software to run on platforms such as and Microsoft’s xRM.

Gartner recommends that consultants and system integrators should carefully select areas of investment, start with their industry and process strengths, and avoid overinvesting in the short term. Buyers should watch for further declines in independent advice on the selection process from ESPs and take appropriate caution when evaluating ESP applications. Above all, they should avoid letting existing brand and reputation cloud their perceptions of the applications.