The on-demand CRM market is expected to grow by a compound annual rate of 41 percent over the next three years, driven primarily by small and midsize businesses (SMBs). But as software-as-a-service CRM vendors fill the SMB niche, Microsoft is poised to be a powerful player at the expense of Salesforce.com.
That’s according to a new report from Tier1 Research, which analyzes the financial and industry implications of IT developments. Equity research analyst Wesley Kennedy, who wrote the On-Demand CRM Marketplace report, told us that the bulk of the growth of on-demand CRM options will come from Europe and Asia.
“Historically, in the United States, the growth rate is actually coming down because a lot of early adopters have already chosen CRM applications, especially in the on-demand space, so in the United States, you’re starting to see a decline in growth. The real growth is being driven by Europe and Asia,” he said. In the United States, Kennedy said he expects a compound annual growth rate of about 34 percent.
The Asian Question
Kennedy said it’s unlikely that traditional CRM vendors will be able to penetrate the Asian market very quickly. Rather, he expects there to be “a lot of organic growth domestically” for these applications. At the same time, a lot of large enterprises in Asia have not yet adopted a CRM application, he said. So the question for them is whether to go with an on-demand or on-premise solution.
“Against the backdrop of a slowing economy and the cost-efficiencies engendered by an on-demand platform, we feel they’re going to be more inclined to go with an on-demand application, because in two years, that’s where everybody’s going to be anyway, for the most part, so they might as well make that decision now,” Kennedy said.
Microsoft vs. Salesforce.com
The on-premise market for CRM…