Gartner forecasts customer relationship management to increase in importance

San Jose, CA -- December 20, 2000  As enterprises deploy more Web-enabled systems for customer interaction, CRM (customer relationship management) services is becoming more important for companies, according to Dataquest Inc., a unit of Gartner Group, Inc. Gartner Dataquest said the worldwide CRM services market is on pace to reach $19.9 billion in 2000, an increase of 28 percent over 1999 revenue. Spending plans for CRM initiatives among end users show that, on average, enterprises budget more than $1 million for their CRM initiatives, and this spending will double over the next 12 months.

The CRM services market is being driven by increased penetration of the Internet as a technology platform, growing importance of CRM as a strategic initiative, the growth in e-commerce driving the use of Web channels for CRM, and the growing need for scalable customer management solutions, said Debashish Sinha, senior analyst for Gartner Dataquest's IT Services worldwide group.

While there are great market opportunities, the CRM market has been hindered by a lack of skilled resources. Many enterprises can benefit from CRM services, but Gartner analysts said there is a lack of CRM expertise. As this market grows, the resource constraints will begin to show in implementation services, as well as the enterprise's ability to handle the increasing volume of customer interaction, Sinha said. Although Web-based self-service may take up some of the overflows, we believe that access to a global workforce for handling the increased interaction flows of successful CRM implementations will become a service component provided by the CRM service providers.

CRM is a business strategy aimed at anticipating, understanding and responding to the needs of an enterprise's current and potential customers. CRM involves capturing customer data from across the enterprise, consolidating all internally and externally acquired customer-related data in an integrated data repository, analyzing the consolidated data, distributing the results of the analysis to various constituents of the extended enterprise and using the information when dealing with the customer. The market for CRM services is divided into two major segments: maintenance-related services and professional services.

Maintenance-related services include hardware maintenance and support services, and software maintenance and support services. Professional services are broken into six major market segments: 1) consulting, which includes business consulting and IT consulting; 2) development and integration, primarily application development, system integration and deployment services; 3) education and training; 4) IT management services, which involves managing and operating the enterprise IT infrastructure; 5) transaction processing services; and 6) business management services, including managing and operating IT intensive business processes.

Additional information on this market is available in the Gartner Dataquest Market Trends report, CRM Services Market Trends and Demand Characteristics for 2000. This report examines the current status of the CRM services market, and it looks ahead to what the key market drivers, accelerators, and inhibitors will be going forward in this market.