August 6, 2002, 12:00 AM

CRM support systems will surge while CRM slows

The market for professional services automation, which supports CRM, will grow 40% this year, Aberdeen reports. Forrester says annual growth in CRM spending will be 11.5% for the next five years.

The market for professional services automation, which is the basis for customer relationship management, enterprise resource planning and human resources systems integration, will reach $810 million this year--up 40% from last year--and will continue to grow from there, researcher firm The Aberdeen Group says in a new report.

"While workforce management solutions, and many point solutions have been available for several years, it is their integration built on an Internet platform that has created such a strong demand for PSA over the past few years," said the report’s author David Hofferberth, research director of Aberdeen`s PSA practice. "These early successes, despite the ongoing economic and political concerns, will give the PSA market a substantial growth rate of approximately 40% in 2002."

Professional services automation is important, Aberdeen says, because such solutions increase operational efficiency and enterprise profitability through improved planning, increased collaboration and personnel utilization, and integrated knowledge management. One of the major findings of the research is that vendors are differentiating themselves by focusing on specific vertical markets.

Meanwhile, Forrester Research Inc. reports that CRM spending will grow more slowly over the next few years. Forrester expects average annual growth of 11.5% for the next five years. Forrester says CRM spending will decline this year by 5.4% from last year. CRM spending will reach $73.8 billion in 2007 from $42.8 billion this year.

Factors affecting the CRM for the next five years, Forrester predicts, will be cross-channel integration, vendors adopting vertical market approaches, growth in web services and a shift in application pricing models. Forrester also predicts that firms will shift their focus from the technical elements of channel integration to efforts focused on improving customer experience by changing business processes.

Customer-facing CRM applications will experience the slowest annual growth rate at 7.3% over the next five years while marketing automation will represent the fastest-growing segment at 17%, Forrester says.

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