IDG News Service —

The worldwide market for CRM (customer relationship management) software will grow 14.2 percent to US$8.9 billion in 2008, according to a Gartner estimate.

The prediction is based on preliminary sales figures for 2007, which total $7.8 billion. That compares to roughly $6.5 billion in 2006, according to a Gartner spokeswoman. CRM revenues will continue to rise over the next several years, reaching an estimated $13.3 billion in 2012, according to Gartner.

The weak dollar contributed to the higher totals for 2007, and while growth will remain strong overall, ongoing economic conditions will cause a short-term dip and slightly impact the long-term picture, Gartner said.

"Although demand continues across all subsegments, Gartner expects a softening during 2008 to reflect current economic fluctuations and as businesses consume prior purchases." The analyst firm now estimates an 11.1 percent compound annual growth rate for 2007-2012, down from the 11.9 percent prediction it made in July 2007.

Growth is being driven by SAAS (software-as-a-service) product sales, which took an estimated 14 percent of the market in 2007, representing more than $1 billion in sales, according to Gartner.

However, open-source CRM is not yet making significant inroads. Market share for such offerings will remain below 1 percent through 2008, Gartner said.

Geographically, the most significant portion of 2007 sales came in North America, which drew $4.3 billion in revenue during 2007 compared to Europe's $2.6 billion.

Emerging markets will become more significant in coming years, according to Gartner.

The Asia-Pacific region will have the strongest growth curve, with spending forecast to rise from $410 million in 2007 to $840 million by 2012, according to the report.

Latin America will see a 16.6 percent rise over the same period, from $131 million to $282 million; and the Middle East/Africa region is set for a 12.9 percent rise from $95 million to $174 million.

In addition, more consolidation will occur in the CRM space, according to Gartner.

While a small handful of vendors control more than half the market share, there are hundreds of small players making up the remainder, the report notes: "These specialized vendors are often attractive acquisition targets for larger software providers that seek to enhance their software portfolios, establish a presence in other countries, add specific verticals or broaden their installed base."