CRM Market Due for Upturn

Aberdeen sees customer relationship management spending hitting $20 billion by 2005

Boston  July 22, 2002  Worldwide customer relationship management (CRM) spending will remain nearly flat for the remainder of 2002 but will resume growth in 2003 and reach nearly $20 billion by 2005, according to a new report from technology consultancy Aberdeen Group.

"The economic slowdown has affected all sectors of the technology market," said Denis Pombriant, managing director of Aberdeen's CRM practice and co-author of the report, entitled "Worldwide CRM Spending: Forecast and Analysis, 20012005."

"We expect 2002 CRM spending to grow only 2 percent over 2001, reaching $13.74 billion by the end of the year," Pombriant continued. "However, double-digit growth should resume in 2003, and we expect CRM spending to reach $19.6 billion by 2005."

Aberdeen said its research indicates that a large part of future CRM growth will come from midsize enterprises and/or the adoption of relatively new CRM application categories, such as sales force effectiveness and partner relationship management.

The report further suggests that as the U.S. and global economies resume spending growth in 2003, CRM will increasingly penetrate markets outside of the United States.

"Clearly, U.S. CRM spending is being adversely affected by a slowdown in the telecom and financial services sectors," said report co-author Hugh Bishop, a senior vice president at Aberdeen. "Other sectors, however, are picking up some of the slack."

The Aberdeen report comes on the heels of a study out earlier this month from ARC Advisory Group that pegged 2001 CRM sales at $6.75 billion and similarly forecast a rebound from the current slump. ARC saw the CRM market hitting $10.4 billion by 2006.