Online providers are driving growth for customer relationship management (CRM) software, according to a study from analyst firm IDC.

The rise of online providers including Salesforce.com and RightNow allowed the market to grow by eight per cent in 2004, after declining in recent years. IDC's research projected that customers will continue to invest in the technology in 2005.
"The growth of the relative newcomers, as well as new functionality and licensing models from established vendors, has rejuvenated the market and turned the spotlight on true customer need," said Mary Wardley, vice president of CRM applications research at IDC.

"End users are the winners in this shift as the market focuses on business benefits rather than functionality for the sake of functionality."

CRM software helps organisation manage their customer data and sales leads. After a promising start at the end of last the last millennium, the software took a nosedive in 2002 when it turned out that many employees refused to use the applications because they lacked functionalities or were too complicated.

The applications were pioneered by Siebel Systems, which is still struggling to regain profitability. The vendor remains the largest CRM maker based on revenues. Oracle and SAP are tied in a battle over second place.

These revenue-based market share figures accurately show the rise of online providers such as Salesforce.com and RightNow.

Such vendors make their software available through a web browser rather than requiring customers to install it locally. They charge a monthly per-user fee and are considered to be cheaper to use and maintain than packaged software such as Siebel's.