Worldwide customer relationship management (CRM) software revenue totalled $8.1 billion in 2007, a 23.1 percent increase from 2006 revenue of $6.6 billion, according to Gartner.

"Though currency buoyed growth, this represents the fourth year of solid market performance for CRM," said Sharon Mertz, research director at Gartner. "The market was driven by greater contributions from emerging regions, continued rapid adoption of software as a service (SaaS), and a continued focus on investments that promote customer retention and enhance the customer experience."

SAP was the number one vendor in worldwide CRM software revenue in 2007, accounting for 25.4 percent of the market. Oracle maintained the number two spot with 16.3 percent of the market. SalesForce.com and Microsoft registered the highest growth rates of the top vendors with 49.8 percent and 88.6 percent growth, respectively.

SaaS continued to drive the market forward, representing more than 15 percent of total CRM software market revenue in 2007. Growth in SaaS resulted from gains by SaaS pure plays, traditional on-premise vendors offering on-demand solutions and vendors transitioning their installed base from on-premise to on-demand. Though the sales segment still represents the largest contributor to SaaS revenue, demand is increasing for marketing automation and customer service and support solutions. Vendors that offer both on-demand and on-premise solutions are acquiring new customers and shifting their customer bases and revenue models to a greater proportion of SaaS in response to market demand.

The CRM market remains highly concentrated in western economies, with emerging markets accounting for only about 15 percent of the market. In 2007, over 53 percent of the CRM market was concentrated in North America, and Western Europe garnered 32 percent of the market. However, growth rates in emerging markets surged in 2007 with the Middle East and Africa region and Eastern Europe both exceeding 40 percent growth. Growth in Latin America is beginning to accelerate, and Asia/Pacific is providing growth prospects for an increasing number of vendors as the CRM market expands into Singapore, Malaysia, Hong Kong, Vietnam and South Korea. Australia continues to be the largest market in Asia/Pacific, but China and India represent significant longer-term market opportunities.

"CRM vendors should focus on offering products, services and contractual arrangements that enable customers to create the optimal experience for their clients,” said Mertz. “Top priorities include online communities, workforce optimisation, analytics, multi-channel campaign management and marketing resource management."

"Looking forward, social networking, collaborative technologies and social software are producing a major impact on the CRM market. Enterprises face increasing challenges to determine how best to harness these trends and technologies for growth, both internally and in their customer service strategies," said Mertz.