Three out of four customer relationship management (CRM) software vendors will drop out of the market by 2003, according to researcher Gartner.
Speaking at the company's European Symposium in Cannes this week, analyst Ed Thompson said that there are several hundred companies in Europe that call themselves CRM vendors, but that only 200 of these are actually what they claim to be. "Of these, around 50 will remain by 2003," he warned.
"Most of the winning vendors will be niche players that specialise in vertical markets and key functions. Few [broad-based] vendors like Siebel will emerge," he added.
Thompson said there is currently no single vendor that can provide customers with an entire CRM solution, despite what they may claim. "Customers want generic solutions but no application vendor addresses the full CRM need of an industry vertical. Vendors need to provide industry-specific solutions," he explained.
He said that Siebel currently dominates the market with a 27 per cent total market share in Europe. "The company grew 90 per cent between 1999 and 2000, although this may be an underestimate as we are still not at the end of the year. This is outrageous growth," he said.
The majority of Siebel's revenue is from around 40 large contracts which represent around 60 per cent of the company's business in Europe. "However, Siebel loses around one in two deals - there are some gaps in its functionality. People choose them for risk aversion," said Thompson.
The analyst also admitted to having some concerns over Oracle's CRM provision. "They have the second broadest solution and we are quite impressed with their functionality, but they haven't got any customers as they haven't shipped the code yet. They will do well over the next year but it's currently 'wait and see' on Oracle," he said.
On CRM vendor SAP, Thompson said: "SAP's Christmas 1999 release of its software was appalling - a complete dog that crashed all the time. But the new release in May was better. SAP will emerge as one of the top three CRM vendors next year as people are waiting for it to get it right. It will do well with existing customers but will be non-existent elsewhere."
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