Gartner: CRM makes up 1/4 of global enterprise software spend

Worldwide spending on customer experience and relationship management (CRM) software grew 15.6% to reach $48.2 billion in 2018, according to research from Gartner.

CRM remains both the largest and the fastest growing enterprise application software category.

Worldwide enterprise application software revenue totalled more than $193.6 billion in 2018, a 12.5% increase from 2017 revenue of $172.1 billion.

CRM made up almost a quarter of that revenue.

Australian organisations spent almost AU$2.3 billion on CRM software in 2018, an increase of 19.4% over the previous year.

Organisations in New Zealand spent NZ$220 million on CRM software in 2018, an increase of 13.9% over the previous year.

Approximately 72.9% of CRM spending was on software as a service (SaaS) in 2018, which is expected to grow to 75% of total CRM software spending in 2019, with agility and flexibility being big drivers, along with the requirement for remote and mobile users.

"Cloud growth has dropped slightly in 2018 but remains strong at 20% and significantly above the overall growth rate of 15.6% for CRM," says Gartner senior director analyst Julian Poulter.

"As an early mover to the cloud, CRM software is probably seeing a gradual reduction in cloud growth rates due to high adoption.

The top five CRM software vendors accounted for more than 40% of the total market in 2018.

The top five vendors had very little change in ranking compared with 2017 with Salesforce taking 19.5% of the market, followed by SAP and Oracle.

Microsoft re-entered the top 5 this year, narrowly displacing Genesys.

All subsegments of the CRM market grew by more than 13.7%, with marketing emerging as the fastest growing segment, increasing by 18.8% and representing more than 25% of the entire CRM market.

Customer service and support retain their number one position, contributing 35.7% of CRM market revenue.

"To exploit the significant market opportunity, product managers in CRM application providers should double down on cloud deployments and consider adding functionality in the fast-growing marketing segment," adds Poulter.