AMR Research: Sales of Hosted CRM Applications Jump 105 Percent

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Sales of hosted customer relationship management applications grew 105 percent in 2004, according to a new report from AMR Research, Boston.


Two leaders in the hosted CRM market, RightNow Technologies and salesforce.com, enjoyed 97 percent and 83 percent growth rates, respectively, the report said. Salesforce.com grew from number 22 in 2003 to 12 in 2004 in terms of total CRM revenue.


"The hosted model has reinvigorated a market that failed to grow over the past several years," AMR senior research analyst Rob Bois said in a statement. "The hosted category has changed the whole perception of customer management with faster implementations, quicker time to value, and easy customization."


AMR's report indicates that the hosted model has reached prime time as a delivery method for CRM applications.


The hosted model differs from traditional licensed software because applications are served over the Web, rather than installed on-site. In addition to impressive hosted growth, the overall CRM market saw double-digit growth for the first time in five years.


However, the market is still led by traditional installed-base application vendors.


SAP, which had the No. 1 spot, grew its customer management applications business by 30 percent and unseated Siebel as the revenue market share leader.


AMR expects SAP to continue to grow, especially in the manufacturing sector where the company holds an advantage.


Siebel's CRM OnDemand represents one of the largest growth opportunities for the company as the product continues to gain momentum, AMR said.


The overall CRM applications market grew a healthy 10 percent in 2004. Across the top 40 customer management vendors evaluated in the report, five grew at over 50 percent from 2003 to 2004: Concerto, Digital River, salesforce.com, RightNow Technologies and Unica.


Microsoft, another winner, topped 3,500 customers and recorded 32 percent growth.


Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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