CRM Market to Reach $17.7 Billion by 2006

BOSTON, MA --The Customer Relationship Management (CRM) market is expected to reach $17.7 billion by 2006, growing at an average annual rate of 6.7%, according to a new report by Aberdeen Group, a leading market analysis and positioning services firm. Beneath this seemingly sedate growth, however, is a massive shift in how user organizations will acquire and pay for CRM solutions.

"Purchasing of new CRM application software will rapidly transition to an application service provider (ASP), subscription-oriented model," said Hugh Bishop, Aberdeen Senior Vice President and author of Worldwide CRM Spending: Forecast and Analysis 2002-2006. "The financial benefits and risk mitigation associated with this new model are driving user organizations to abandon the perpetual license model. CRM suppliers also see an advantage to this model, since it provides them with predictable, renewable revenues. As a result, license revenues will decline at an average annual rate of 4.8%, while subscription revenues will skyrocket to $2.8 billion."

Bishop also pointed out that CRM spending by small and medium-sized businesses is expected to exceed that of larger enterprises, partly as a result of the new pricing and software architecture models now available. The report notes that the U.S. will continue to be the dominant market for CRM, while its share will drop slightly over time as a result of increasing global adoption, particularly in the Asia/Pacific Rim. In 2002, the U.S. accounted for $7.14 billion (or 52.2%) of the overall market. By 2006 that share is expected to be 51.9%.

In addition to tracking the transition to the subscription model, the Aberdeen report provides market share data, as well as forecasts for seven separate CRM product segments including: sales automation; marketing automation; customer service automation; call/contact center management; field service management; partner relationship management; and internal help desk. Also provided is a breakdown for the U.S. by vertical market and user organization size.

For more information on how to acquire Worldwide CRM Spending: Forecast and Analysis 2002-2006, please visit www.aberdeen.com.

Aberdeen Group is an IT market research leader since 1988.

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