Worldwide customer relationship management (CRM) software revenue is projected to surpass $8.9 billion in 2008, a 14.2 percent increase from preliminary 2007 revenue estimates of $7.8 billion, according to Gartner, Inc. The market is poised for healthy growth through 2012 when revenue is forecast to reach $13.3 billion.

"The composition of the worldwide CRM market is evolving as vendors continue to extend regionally, increase penetration within existing accounts and gain new clients, offer flexible deployment models, and continue to develop the channel," said Sharon Mertz, research director at Gartner.

"Initial 2007 market share estimates (final 2007 statistics to published in June), backed by strong fourth quarter and year-end earnings reports, indicate solid market performance and record growth for the worldwide CRM market in 2007," said Mertz. "Furthermore, vendor confidence and buyer intent to purchase, going forward indicate an overall positive outlook for the market in the mid- to long-term, despite softening economic conditions."

Gartner expects the strongest growth in CRM spending to come from Asia/Pacific where revenue is forecast to grow from $410 million in 2007 to $840 million in 2012. Emerging regions such as Latin America, Eastern Europe and the Middle East and Africa will see positive upward trends in CRM spending, particularly in specific industries. Increasing penetration of CRM solutions in developing economies will make greater contributions to vendor revenue during the next few years, although Gartner analysts said that more-significant and less-taxing opportunities in other, more-familiar business environments will cause many vendors to concentrate in Western economies.

Mertz highlighted a number of trends influencing the CRM software market. "Overall we expect software as a service (SaaS) to continue to gain popularity as an increasingly critical element of buying sourcing strategies and will continue to drive growth through 2012. Buyer demand will continue to focus on applications that provide vertical industry functionality, business analytics and applications provided by best of breed vendors that deliver specific value," she said.

Gartner predicts that consolidation will continue in the CRM market as suite vendors look to extend their application portfolios, best of breed vendors seek to acquire solutions to complement their strengths and vertical industry players expand geographically. However, this consolidation will be offset by new, smaller entrants offering specialised functionality.

"Many buyers have experienced multiple CRM implementations and are more knowledgeable of their requirements for the next phase," Mertz said. "Expect buyers to be more discriminating and focus on more-targeted solutions moving forward."