2012 was a notable year for the Customer Relationship Management industry, and in many ways outpaced the innovation, change and progress as compared to prior years.
Social CRM continues to evolve in ways few predict. Social CRM barely made up 1% of the total CRM software market just a few years ago, but is now growing at over 50% year over year, will reach just about $1 billion this year and now makes up about 8% of the total CRM software market. Social now has its own Magic Quadrant, and Gartner predicts that social CRM will grow to about 10% of the total CRM technology spend in just a few more years.
From an adoption perspective, analyst Denis Pombriant notes a clear social CRM evolution, “If you imagine a social stack as I do then at the bottom you have communications, the next level up captures data and analyzes it, the next level might act on the information that the data analysis generates. This year we see many more companies innovating around the concept of doing something with the data and doing something with social that is more than simply opening a line of communication. This is important because the communication level makes social little more than an interesting curiosity. The next levels up provide practical business value.”
While I continue to believe social CRM solutions will ultimately get gobbled up by the larger CRM software vendors, and social CRM and CRM will morph and thereby revert back to the moniker of just “CRM”, it’s clear social CRM isn’t done innovating, growing or maintaining its own identity just yet.
Cloud CRM continued its rise. In 2012, Gartner reported that 36% of CRM software purchases were SaaS, and the analyst firm predicts this figure will reach 40% in 2013 and cross the 50% mark in 2016. When drilling down into more specific CRM market sectors, Sales Force Automation (SFA) and marketing automation have already crossed the 50% SaaS threshold.
On-premise CRM software isn’t dead by a long shot, but Gartner also reports that cloud CRM will grow three times faster than on-premises applications. The compound annual growth rate (CAGR) for the total CRM software market is forecast to be 9.1% from 2012 through 2016, and 15.4% for cloud CRM during the same period.
An interesting change were seeing in CRMsearch.com buyer surveys is that mid-market and enterprise organizations are steadily reducing their number of pilot SaaS CRM deployments in favor of full scale SaaS deployments. Clearly, the cloud has changed the dynamics in large deployments and made ‘rip and replace’ a much less scary three letter phrase.
Another change we’re seeing in CRM buyer surveys is the increased desire for cloud CRM portability—a factor that has risen from #12 in 2011 to #6 in 2012. Buyers are reluctant to be locked into a single vendor’s cloud, or be denied the ability to switch to a public cloud (i.e. Amazon, Azure, etc.), and certainly don’t want to invest in custom developed extensions, add-ons and integrations with their vendors’ platform as a service (PaaS) tools but don’t work on any other cloud network. Many CRM vendors such as Oracle, Microsoft and SugarCRM to name only a few, are responding to requests for portability by permitting choice in delivery (cloud, on-premise or a hybrid combination of both) and/or permitting cloud portability with the option to move the vendors CRM software to the customers public cloud of choice. Expect this trend to continue.
Customer Experience (CX) became a rising technology both complimenting and in some ways competing with CRM. In fact, several major CRM software publishers are changing their CRM messaging to either append or replace what we’ve been calling Customer Relationship Management since Siebel first coined the term in about 1992. For these enterprise software technology vendors, “CX” is the term now in vogue.
CX technology claims to enable CX business strategies by delivering just the right (relevant, contextual and personalized) knowledge or content at every customer touch point, regardless of channel or device. The business goal is clear, and seeks to create competitive advantage by delivering consistent and rewarding customer experiences at every customer interaction. However, whether that business goal is best satisfied with purpose-built CX software solutions, or remains within the domain of CRM software, may depend upon your perspective and business objectives, or quite possibly the level of promotion delivered by the enterprise software publishers pushing this burgeoning sector. Expect CX messaging to amplify further in 2013.
Marketing Automation is another technology which compliments CRM and earned big growth in 2012. The leader and original marketing automation software vendor Eloqua is now the first to graduate to public company status. Tight on their heels, Marketo may push an IPO in the next year and Act-On Software is suggesting they may follow. And indicative of another trend that gained momentum in 2012, Oracle acquired Eloqua in an effort to bolster its Marketing Cloud and supplement its CRM software with marketing automation capabilities.
These vendors and others are illustrative of a red hot market born from a void in CRM software, or more specifically CRM software’s inability to offer key marketing functions such as digital lead tracking, online lead acquisition, lead scoring, nurture marketing, dynamic content offers and rich lead generation analytics. Oracle and Microsoft have begun the process to acquire marketing automation software companies and embed that functionality into their CRM applications, and it would seem only a matter of time before others follow.
The CRM software competitive landscape continued to jockey for position, but not much really changed in terms of ranking or market share. SugarCRM continues to achieve near triple digit growth and may be targeting an IPO in the next year. There not yet amongst the Big 4 CRM software leaders, but they’re next in line. Salesforce.com introduced a few new products this year, most trivial, but a (social) marketing cloud that looks interesting. At the moment it’s big on vision and short on execution but that may change in the near term. Gartner reports Salesforce.com passed Oracle last year in CRM software sales, and will pass SAP next year to become the CRM software leader. Cloud convert Oracle has become the cloud vendor to catch. Fusion CRM, and six other Fusion suites, are available and securing a growing install base. Oracle also now offers impressive IaaS and PaaS solutions, and has quickly become the second largest SaaS provider in the world (behind Salesforce.com). Microsoft and SAP also continue to hold top CRM software leadership roles, but failed to deliver anything substantive or grow their leadership positions in 2012.
And finally, if you used a social listening tool that measured amplification, you’d know that CRM Idol was again the event that garnered the most industry media attention in 2012. Having now completed its second season, the small business competition founded by Paul Greenberg and judged by the industry’s top influencers has ratcheted up the level of competition as contestants have both upped their innovation and messaging as compared to last year.
The competition began with 40 companies from the Americas and 20 companies from the rest of the world. After multiple rounds, 4 finalists from the Americas and 3 finalists from the ROW were down selected, and based on a global vote top honors were then designated to Crowdtap and Artesian Solutions. These are impressive companies that I’m sure we’ll be hearing more about in 2013 and beyond.
2012 wasn’t a watershed year for the CRM industry, but it did yield substantive strategy and technology advancements which will most certainly aid businesses in their quest to acquire, develop and retain mutually beneficial customer relationships.