Gartner Says CRM and Security Software Markets Will Grow

Gartner Says CRM and Security Software Markets Will Grow

Whenever there is an economic slowdown, not every sector of the IT space sees decreased spending. Some areas seem to be immune to calls from the boardroom to cut spending because these technologies help the company retain customers, provide better or cheaper products or services, or even boost sales. And so it seems to be with both customer relationship management (CRM) and security software sales, according to the analysts at Gartner.

CRM is, of course, a decade-old extension of ERP systems that aims to keep better track of customers and allow companies to up-sell and cross-sell products and services to their customers--to wring more money and therefore profits out of their existing customers because it is ten times more expensive to get a new customer than to keep one (or so the saying goes). Gartner says that CRM software spending globally hit $7.8 billion in 2007 and are projected to rise by 14.2 percent to $8.9 billion this year. Gartner's economic models already have cooler IT spending growth built in, and the company is currently forecasting 3.3 percent overall IT spending growth worldwide in 2008. (See \r\nMost CIOs Say 2008 IT Budgets Are Stable, So Far for more on that general trend.) And based on current projections, Gartner is projecting that CRM software sales will continue to be robust through 2012, when Gartner says that it will hit $13.3 billion.

The North American market is the biggest part of the CRM market, accounting for $4.3 billion in CRM sales in 2007, or 55.1 percent of the global market, and spending is accelerating somewhat. In 2012, Gartner reckons that North American companies will spend $7.8 billion, or 58.6 percent of the total spending, on CRM wares. Sales in Europe, by contrast, were $2.6 billion in 2007 and will only grow to $3.9 billion in 2012. As a percentage of the total CRM market, Europe is declining (although in absolute terms, CRM spending will rise by 50 percent in the five years between 2007 and 2012). For all the talk about the explosion in IT sales in China and India, a lot of the companies in these areas do not interface with users, but are manufacturers that make products for other wholesalers and retailers--and as such, CRM is not as critical (or at least seems not to be based on spending). Gartner is projecting that CRM spending in the Asia/Pacific region was $410 million in 2007, and will more than double to $840 million by 2012. Gartner said that software as a service (SaaS) would play an increasingly key role in the CRM space, but did not elaborate on how much money SaaS implementations of CRM software would generate. (You have to pay for that data.)

While CRM software is not necessarily critical for all companies in modern economies, the ubiquitousness of Internet technologies in systems and networks and the Windows platform on the desktop means security software is important for everyone. And that is why spending on security software is high and going higher. According to Gartner, security software of all types accounted for $9.4 billion in spending globally in 2007, and is projected to rise by 11.2 percent to $10.5 billion in 2008. Looking out to the five-year span that ends in 2012, Gartner says that it anticipates security software spending to hit $13.1 billion.

"Security spending is driven by a variety of pressing concerns, the most immediate of which is the need to 'keep the bad guys out' through defensive measures, such as next-generation firewalls," says Ruggero Contu, the principal research analyst at Gartner who tracks security software. "However, the 'let the good guys in' discipline, such as identity and access management, is where business benefits and return on investment can be more clearly shown."

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