CRM market share is used by vendors to demonstrate leadership, viability and the release of innovation that matters to customers. CRM buyers often consider this metric as an early stage indicator of which vendors to short list. However, more telling than market share position at a point in time is trajectory. CRM buyers often remain leery of vendors in sustained decline.
Each year Gartner releases CRM market revenues and market share among top vendors. In this CRM market share analysis I’ve consolidated the annual data to show trending and filtered among the big 4 vendors in order to demonstrate some data driven findings, display some inherent challenges with the data and compare the results to another source.
Source: Figures consolidated from Gartner annual market share releases
- Many CRM pundits suggest that the Big 4 CRM vendors (Salesforce, SAP, Oracle and Microsoft) are increasing their collective market share. The data show otherwise. When I sum all CRM vendors other than the Big 4, this group grew its market share from 46 percent in 2007 to 55 percent in 2014.
- CRM media often suggest that the combination of eroding Siebel market share coupled with an unclear CRM strategy make Oracle the market’s top decliner. The data show SAP is the top decliner.
- There are increasing claims that Microsoft Dynamics CRM is the top challenger to Salesforce. If current trending continues this may be true, however, the data shows that Salesforce has more than three times the current market share and is growing its market approximately four times faster than Microsoft. This suggests that Salesforce is widening its market share leadership.
- Gartner advises that 2015 marks the tipping point whereby Software as a Service (SaaS) CRM revenues exceed on-premise. The analyst firm further forecasts that SaaS CRM adoption will reach 80-85% by 2025. As cloud CRM is both the majority and higher growth delivery method, CRM vendors whose revenue concentration is heavily favored toward the cloud are better positioned to grow their market share than vendors with significant on-premise concentration. This bodes well for Salesforce, and to a lesser extent Microsoft, and will likely create even greater headwinds for Oracle and SAP.
- Gartner also forecasts the CRM software market with grow at a 14.8% compound annual growth rate (CAGR) through 2017, with SaaS CRM growing at 22.6%. CRM vendors which fail to grow their CRM revenues by these figures are by definition in market share decline.
According to Gartner, the CRM software market reached $23.2B in 2014, up from $20.4B in 2013, representing a 13.3% annual growth.
Source: Gartner. All figures in billions.
The research firm also forecast continued growth with the CRM market reaching $36.5 billion by 2017.
Further Analysis Needed
Gartner CRM market share analysis is based on two factors – estimated market revenues and individual vendor revenues. I believe Gartner’s estimated market size is solid. However, getting each CRM vendor’s disclosed or estimated CRM revenues can be a tricky exercise. Large vendors such as SAP and Oracle may bolster CRM software revenues with products or product lines which are tangential to CRM. Microsoft chooses not to disclose its Dynamics revenue allocation between CRM and ERP. Only Salesforce reports CRM revenues in a fairly straight-forward manner.
So here’s the rub. If Microsoft Dynamics CRM 2014 revenues were just under $1B, that would represent 4.3% – not 5.8% – of a $23.2B market. Similarly, if Salesforce reports CRM revenues of $5.5B its market share should be a whopping 25.9% and not 16.3%.
I’m confident Gartner’s market share allocation is directionally correct, however, to get another perspective I’ve been tabulating CRM visitors on CRMsearch.com since 2010. In July my outsourced contact center asked 313 visitors what CRM software system they were using. Deducting the responses of visitors who were not using any CRM system, the data revealed the following.
Source: CRMsearch.com annual tabulation; current year survey taken July 18-19, 2015; N=313
- While CRM software market growth continues its low double digit evolution, how that growth is being allocated among CRM software vendors is incurring steady change.
- Salesforce continues to lead the pack, and its pace suggests it is poised to widen the gap.
- If existing trends continue, Microsoft, Oracle and SAP will near a convergence point next year. However, viewing their trajectories shows two of these software publishes on the decline and the third demonstrating a growth trend that suggests it will assume the number two market position.
- CRM vendors other than the big 4 are gaining ground, suggesting the CRM market is becoming less top heavy.
I’m not suggesting the CRMsearch.com tabulation is an empirical study or delivers a more accurate representation than Gartner. However, as long as CRM vendors lack transparency in CRM software revenue reporting, other sources need to be considered and compared in order to estimate which vendors are truly the CRM market share leaders.