Total customer relationship management (CRM) software revenue increased 12.5% to $18 billion in 2012, according to Gartner.
"Market growth in 2012 was three times the average for all enterprise software, highlighting how CRM is at the eye of the nexus of forces storm," says Joanne Correia, VP at Gartner.
Software as a service (SaaS) accounted for 40% of all CRM software revenue, due to strong demand for easy-to-deploy systems.
The lead vendor in the market in 2012 was Salesforce.com, with revenue of more than $2.5 billion, passing SAP for the first time. SAP, meanwhile, experienced low growth (less than 1% in US dollar terms), largely because of the weak euro in 2012. However, it had the largest revenue in Europe. The top five CRM vendors alone accounted for nearly 50% of the total CRM software revenue in 2012.
"Competition among CRM software vendors really heated up in 2012, as major players continued to vie for broader market penetration internationally and more widespread adoption within midsize to large enterprises," notes Correia.
While all regions experienced growth in CRM software, North America and Western Europe accounted for 80% of the total revenue. The report indicates that comparisons with previous years are difficult to draw due to Western Europe's less than 1% growth, attributed to slower IT spending in Europe because of economic difficulties, and the relative strength of the dollar.
According to the report, emerging markets - including Eastern Europe, Eurasia, the Middle East and Africa - continue to be strong areas of growth, due to increased spending on the modernisation of infrastructure.
In 2009, acquisition became a common way for enterprises to expand their offerings and make new features and functionality available. This trend continued in 2012, which saw more than 50 acquisitions resulting in increased competition among the top vendors in the market.
Marketing, the investment focus in the past few years, was a target area for acquisitions by main players, including IBM, Microsoft and Oracle, growing at four times the software industry forecast norm in 2012.
Correia explains: "With corporate cash at all-time highs, many vendors are willing to pay high premiums to acquire specific technologies and expertise in an increasingly dynamic and competitive CRM market environment."
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