February 5, 2002, 12:00 AM

Buyers may be in the driver’s seat with CRM purchases, says new report

Datamonitor says the service automation software market will double to $4.4 billion by the end of 2006. But vendors must rethink business models and discover ways to add value to product portfolios, Datamonitor says.


Customer relationship management systems and software may be important to retailers, but since many organizations today are strapped for resources, CRM applications not going to be high priority lists, says a new report from Datamonitor. Thus vendors who are planning to make a market out of customer service automation systems had better devise a plan to provide them at a cost that consumer-oriented businesses can afford, Datamonitor concludes.

New York-based researchers Datamonitor says the service automation software market, worth $2.32 billion in 2001, will grow to $4.4 billion by the end of 2006. To remain competitive and achieve viable levels of growth, vendors must rethink their business models and discover new ways to add value to existing product portfolios, Datamonitor says. Due to declining revenues and limited access to capital, service automation software vendors do not have the requisite financial and human resources to adequately target new markets and develop functionality for non-core products. “Vendors must now provide added value to their existing products. Datamonitor believes that analytical customer relationship management and knowledge management functionality are the logical additions to existing operational CRM solutions. As firms seek to manage vast volumes of customer data, the demand for these applications is likely to increase,” Datamonitor says.

According to the new report, The Future of Customer Service Software: North American Service Automation Software Markets to 2006, there will also be an increase in comprehensive e-service suite solutions, as end-users demand greater depth and functionality to their CRM technology needs. To avoid the risk of being marginalized, vendors must also forge partnerships with systems integrators, consulting companies, complementary software vendors and ASPs.

“Increased importance is being placed on the small-to-medium size enterprise market and it will continue to be an important market segment over the next five years. Historically, vendors have focused almost exclusively on large corporations due to the cost and complexity of their solutions. The current economic climate highlights the need for vendors to target SMEs, as well as individual business units within the enterprise, as large enterprises are less inclined to make massive CRM expenditures in the face of corporate earning woes,” Datamonitor says. “ASPs will have the greatest success targeting this market by providing the SME with previously unseen benefits including: reduced costs, ease of integration, savings on IT labor and access to new applications.”

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