John Ryan

Recently, Gartner reported that the overall Customer Relationship Management software business had grown 12.5 percent in 2008. But the two clear winners for growth were Microsoft and Salesforce.com at 75 percent and 42.7 percent growth, respectively.

So in the middle of a downturn, Microsoft CRM grows 75 percent. If you were to take the Microsoft CRM as a separate business, you would be in revenue shock right now. How can someone grow 75 percent in this economy? The high growth is because CRM delivers the ability to get new buyers and retain existing clients. Companies are coming to the conclusion that the category helps them make and save money. Once the buyers see the benefits of the category, they then choose the best solution for them in the category.

Microsoft for many companies gives them the ability to leverage the existing usage of Microsoft Outlook so it’s less of a cultural change for them which means they will actually use the software. Salesforce.com also continues to grow at a blistering pace relative to the economy and it seems at the expense of the larger enterprise players.

SAP and Amdocs are not really participating in the overall growth of CRM. Oracle’s growth is keeping pace, but is slowing. It’s starting to look like a two horse race for the long term and if you extrapolate out the current growth rates, Microsoft looks like the winner in just a few years.

One might say that Microsoft can’t enjoy 75 percent growth year after year. In 2007, Microsoft showed 88.6 percent growth based on Gartner’s estimates which was also the highest in the group. Based on the last two years of data, it appears Microsoft is keeping a strong head of steam at the expense of the competition during a down market.

When we think of trends, we tend to focus on what we hear in the U.S. market. However, if you look outside of the states, Microsoft has been in many European and emerging markets for a long time as a trusted brand while newer brands may represent risk. Although these growth numbers are shown in U.S. dollars, they are global numbers where the CRM category is still just catching on. The other intriguing point here is the "others" grouping which would show fragmented solutions. This represents another opportunity for Microsoft and Salesforce.com to offer a compelling reason for these buyers to come to a supported platform from a market leader.