On-demand CRM model gaining momentum

London:
The on-demand customer relationship management (CRM) model is gaining rapid adoption and according to independent market analyst firm Datamonitor, will witness double-digit growth rates over the medium term. The report points out the potential for the growth of on-demand CRM solutions and its expanding footprint into the sweet spots of other CRM delivery models, which will intensify competition.

“The double digit growth rates in the on-demand CRM market are grabbing headlines and attracting the attention of potential acquirers and investors alike,”said Surya Mukherjee, Senior Analyst, Datamonitor. “However, investors and acquirers will start getting disillusioned with growth if there is no payoff. The need of the hour for on-demand CRM vendors is to accelerate their path to profitability by driving operational efficiency,”he added.

The global on-demand CRM market, estimated by Datamonitor at about $1.7 billion in 2008 in subscription revenue alone, is expected to reach $3.8 billion by 2013, growing at a compound annual growth rate of 17.7 percent during this period. Vendors currently offering on-demand solutions should effectively capitalize on this high-growth period to expand their customer base.

“Achieving profitability will be challenging, especially in the wake of increased competition from more entrenched delivery models,”said Mukherjee. “The on-demand model is relatively new and depends heavily on S&M expenses to promote itself. If S&M continues to be higher than the industry average, vendors will need to look at managing general and administrative costs better. Off shoring of product development could be a possible option to that end. Given that most on-demand vendors plan to expand data-centers in the near term, asset utilization will also be a critical parameter to watch,”he substantiated.