The Big Four Aren’t All There Is

When it comes to customer relationship management (CRM) software, the common perception is that market leaders need to have staying power, as this could imply a better competitive position, strength, customer loyalty, and buyer confidence. That is certainly one element that defines a leader, and we at CRM magazine have updated the scoring formula for determining our Market Leaders over the past few years to reflect this changing perception. We now incorporate factors like revenue, customer retention, and total customer counts into our calculations, much to the chagrin of our editors, whose math skills don’t always match their ability to creatively turn a phrase. 

Though some might argue that taking such numbers into consideration could potentially disadvantage smaller companies whose annual income can’t compare with Salesforce.com’s, Microsoft’s, Oracle’s, IBM’s, or SAP’s, adding those figures into the mix makes perfect sense from a practical standpoint: After all, how can we name a company an industry leader if it is likely to go belly-up in six months? How can a software vendor be considered among the industry’s best if it is hemorrhaging cash and its customers can’t wait for their licenses to expire so they can buy from someone else?

And if current industry trends—and the results of this year’s polling for our Market Leader Awards—are any indication, there is plenty of room for smaller competitors to stake their claim in the vast CRM software market. Gartner has predicted the overall global CRM software market will reach $36.5 billion this year, up from $26.3 billion in 2015 and from a mere $8.1 billion just 10 years ago, in 2007. Fellow research firm Global Industry Analysts predicts that the market will hit $48.4 billion by 2020 as companies look to deal with intensifying competition and deteriorating customer loyalty.

Today, perhaps more so than ever before, the CRM software market is definitely wide open for smaller vendors to claim a seat at the table. CRMSearch, in its annual “CRM Software Market Share” report, noted that CRM vendors other than the big four (Salesforce.com, Microsoft, Oracle, and SAP) grew their collective market share from 46 percent in 2007 to 58 percent in 2015, suggesting that the CRM market is becoming less top-heavy. Salesforce is still clearly the market leader, holding three times the market share of its nearest competitors, but the other top vendors are seeing declines or softer growth that is being absorbed by smaller, more niche players.

This year, we can look to bpm’online, Zoho, SugarCRM, Xactly, Act-On Software, Marketo, Talend, Wipro, and Ernst & Young as companies that gained a lot of traction, and a lot of analyst attention, over the past year or so. These companies made strong advances in the analysts’ 2017 balloting. Granted, most of these companies still operate inside limited domains within the larger CRM universe, but the fact that they are on the leaderboard (in some cases for the first time ever) shows just how fragmented the CRM market has become.

That fragmentation has been good for the industry. It has paved the way for a lot of the innovation that has changed businesses’ perceptions of CRM. Early on, most CRM efforts were reported as failures, and many thought the industry’s days were numbered. In the years since, CRM has undergone a good many transitions and transformations, leading ultimately to a paradigm shift. Despite the many setbacks, CRM remains full of promise for both businesses and customers. CRM has been brought back to the foreground, and that growth will continue if this year’s Market Leaders, Rising Stars, Influential Leaders, and Elite companies have anything to say about it. We congratulate them all for their efforts over the past year and look for more from them in the years to come.

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Leonard Klie is the editor of the CRM magazine. He can be reached at lklie@infotoday.com.