Leading Analyst Firm Charts the Future of CRM

IDC, one of the world’s largest technology analyst firms, recently made four interesting predictions about the future of CRM.

Trend #1. CRM Services will experience worldwide growth. CRM services consist of hiring developers, programmers and consultants to help companies achieve an effective CRM environment. While IDC predicts growth for the CRM services market to be modest to moderate through 2006, expectations are for the market to accelerate and become moderate to strong over the five-year period ending in 2009. The CRM services market has been revitalized over the past year due to a recovering economy, higher-than-expected business profits, a trend toward more complex consulting and systems integrations contracts and a flourishing interest in transformation outsourcing, according to IDC. The top vertical industries for CRM services revenues in the United States will continue to be banking, communications and media, and discrete manufacturing.

Trend #2. Sales of CRM software are slowing in Western Europe. The CRM applications market in Western Europe, which had experienced rapid growth, is now expected to grow less than 5% annually. While CRM remains a top priority for 2005 for many Western European companies, IDC found that investments are being held back by slow economic growth in key Western European markets, such as Germany, Italy and France.

Trend #3. Rapid growth in CRM analytics. Analytic programs come in two types – core and predictive – and use CRM data to address specific problems, such as corporate planning, and broad company issues, such as optimized pricing across a distributed sales force. Core analytics are used to define or analyze a current or past state, such as the current relationship of sales to profitability. Predictive analytics, which include both tools and packaged applications, determine the probable future outcome of an event or the likelihood of a current state. IDC believes analytics will grow through 2008 with compound annual growth rates of approximately 8%, reaching revenues of more than $11 billion in 2008.

Trend #4. Companies using CRM will continue to move customer care functions to third world countries where labor costs are cheaper. This movement is being driven by a growing interest in business process outsourcing (BPO) and offshoring. Because of this, IDC predicts customer care services will continue to gain solid traction over the next year and experience healthy growth through 2009. Vendors of customer care software and services are becoming more attuned to cost containment, ROI and business process optimization, according to IDC. They also are building tactical and strategic partnerships with service providers and other CRM vendors, while focusing on delivering value to clients through transformational outsourcing. In addition, such firms are delving into related areas of BPO, such as finance and accounting and human resources, and becoming involved in the training and certification of customer service representatives. Ideally, they hope to offer sales teams an appropriate mix of onshore and offshore contact center solutions.

For more information, contact IDC directly at 508-988-7988 or through sales@idc.com.