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The CRM application market is bouncing back, Meta Group said Tuesday. The research firm released a poll showing that 75 percent of respondents plan to spend at least as much on CRM software in the next 12 months as they have in the previous 12. In addition, a portion of that 75 percent plans to spend even more.
According to Meta Group vice president Elizabeth Roche, the survey was conducted at the company's Web site. Anyone could take it, though she said most of the 100 to 200 respondents were affiliated with Global 2000 companies.
Supporting a Trend
The results "actually support 
a trend we have been watching over the last six months [that shows] CRM spending on an uptick," Roche told CRM Buyer.
She said the magnitude of the positive response is a leading indicator of what is to come, rather than a reflection of the situation that has existed during the past two years.
Roche noted, however, that even during the worst point of the economic downturn, CRM remained among the top five corporate initiatives. It is still considered a key strategic initiative for most organizations and has gained some momentum from the slightly recovered economy.
In addition, she said, professionals who were reluctant to invest in CRM solutions early in the game have watched leading-edge companies and have learned from those companies' mistakes. As a result, the risk of failure has diminished.
Provider Beneficiaries
"What organizations are spending [their CRM budget] on is different than it was before the downturn," Roche noted.
Instead of buying from traditional ERP vendors like SAP (NYSE: SAP) and PeopleSoft, organizations increasingly are considering offerings from specialist CRM vendors like Unica and E.piphany, she said.
For example, buying a component from Unica, which specializes in marketing solutions, to solve an immediate sales problem might make more sense than spending six months testing the myriad functions of a solution designed by a giant vendor, according to Roche.
"Companies are beginning to realize that they do not have to solve problems in sales and in customer service all at once," she explained.
"There's an introduction of risk if [companies] put all their eggs in one basket," Roche added. "The idea of a componentized environment with function-specific solutions is a way for some organizations to spread their risk around."
Big Hurdles Still Exist
Louis Columbus, a senior analyst with AMR Research, told CRM Buyer that although his firm also believes the growth rate in the CRM space will increase steadily, he is not convinced that CRM specialist providers will be the beneficiaries of this new incremental mindset.
According to Columbus, best-of-breed specialists face three major stumbling blocks in integrating their products with larger CRM systems. All of those hurdles revolve around building a CRM system that understands the way people work.
Columbus described the three obstacles as: usability within a system; modularity, or the way in which a component application works within a larger system; and knowledge of how business processes work so that modules can be tailored to how company divisions interact in their CRM workflow.
Play Ball
"When you take all that together, there are few companies on the planet that can offer products that can provide the sort of integration, usability [and] modularity [that is needed], and that can tie into a back-office system that makes CRM a living application," Columbus said.
He added that today's CRM industry is a buyer's market, a situation that has caused larger vendors to offer incremental solutions more in tune with their customers' needs.
"If you have an ERP partner already, [that partner] is more than willing to play ball," he said.
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