After a spate of consolidations in the customer relationship management sector that saw both Siebel and PeopleSoft snapped up by Oracle, there will be no letup in merger activity, according to analysts Gartner.
"The CRM market will continue its consolidation unabated," the analysts said in their latest research note, and listed 12 acquisitions "of note" in the last two years.
According to Gartner, one of the reasons for the activity is disenchantment among CRM founders, who "are selling out in capitulation" or company boards "who are growing frustrated by the slow (or negative) pace of growth."
These factors point to further consolidation ahead, Gartner says. Another factor is the market hype around the software-as-a-service model, used successfully in the CRM market by Salesforce.com and others, which "places pressure on software providers."
It's a difficult market even for the most experienced, says Gartner, which points out that even "Oracle determined itself unable to cost-effectively develop a CRM solution likely to generate maintenance revenues as high as PeopleSoft and Siebel."
Despite two of the largest purchases in the software business, "Oracle has not finished purchasing CRM vendors," Gartner predicted. Over the coming year Oracle "will look at adding analytics, industry-specific solutions, work force automation and a software-as-a-service (on demand) vendor."
Both Microsoft and SAP "have a pattern of technology purchases when gaps have been identified," Gartner pointed out, while Salesforce "has the resources and desire to gain scale and close the gap with two market leaders" through purchase.
According to Gartner's latest market share figures (released last week) SAP is the market leader in CRM with $1.47 billion of revenue in 2005 and 25.6 percent market share. In second place is Siebel ($966 million, 17 percent) and in third, Oracle, including PeopleSoft ($367 million, 6.4 percent), giving a combined total of $1.3 billion, significantly less than SAP.
The rising star in the CRM business is still Salesforce.com, which, according to Gartner's figures, saw its business grow by 77 percent last year.
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