Gartner looks at CRM market

A recent study shows a heavy volume of merger and acquisition activity during 1999 in the customer relationship management market might cause concern for vendors and clients but is not unexpected, according to a recent report from Gartner, a business technology research firm.

Four main trends are responsible for the new partnerships and buyouts in CRM, Gartner says.

“Clients do not want 50 vendors” is the first trend Gartner cites, referring to the number of pieces of technology an enterprise might need to build a complete CRM system. In such a fragmented market, it’s natural for enterprises to merge.

The instability of niche markets is the second trend Gartner identifies. Of the 50 CRM-related companies, many are too specialized to stand alone. In such an environment, companies “make a big splash” and create a niche, only to find that they need to merge to expand and survive, Gartner says.

The third trend is the need for integration by “Type B” firms, which Gartner defines as moderate technology adopters, who implement new technologies only after they have been proven useful and become mainstream. Type A companies, on the other hand, are technology driven and willing to risk using immature technology to gain competitive edge. The CRM market is moving from Type A to Type B, according to Gartner, demanding those more tightly integrated solutions that encourage mergers and acquisitions.

The fourth trend is the flood of money into the CRM space. Venture capitalists have discovered CRM, says Gartner, and many enterprises are beginning to conduct IPOs successfully. That creates revenue to buy other small companies.