I highlighted the growth issues mentioned in this Frost & Sullivan report in a bold font.
--Mike Buckley
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MOUNTAIN VIEW, Calif., June 1 /PRNewswire/ -- The customer relationship management (CRM) explosion has re-energized the sales force automation market (SFA), renewing interest in a market previously viewed with skepticism. Having been redefined as a component of the CRM market, it has rushed to re- embrace size as a part of a larger enterprise solution. However, this market is beginning to show signs of consolidation as a number of larger competitors
have been acquired.
According to recent research by Frost & Sullivan (www.frost.com), The Sales Force Automation Software Market grew 62 percent in 1998, reaching $468 million. The total market is in the mid to late growth stages, and is expected to grow to $1.8 billion by 2005 [21% annually] as organizations continue to recognize the importance of quality customer information and support systems. Some of the applications included in SFA software are e-mail
scheduling, product catalogs, marketing encyclopedias, sales forecasting, expense reports, order entry, inquiry, quoting and time management.
The SFA market is divided into three sectors being small implementation with less than 50 users, mid-size implementation with 50-499 users and large implementation with over 500 users. The mid-size segment makes up the major share of revenues, holding 55 percent of the market in 1998. The large implementations market was 23 percent while the small implementations accounted for 22 percent.
SFA application vendors have marketed themselves in a number of categories including customer relations management (CRM), customer information systems (CIS) and technology-enabled selling(TES), along with others. "Despite the various labels, the base functionality of SFA remains the same. While various added functionalities are being built around it, the main function of SFA is the management of customer contacts and leads," says Frost & Sullivan
Analyst, Patrick Hee.
Top drivers in this market include the need to more quickly identify and qualify business opportunities, the need to get closer to customers, and the increasing competition on a global scale. On the other hand, market restraints include the limited talent pool in development and sales, the inability of organizations to make the leap from knowledge of the sales process to its automation and the legacy of SFA failures.
In 1998, the large implementations market was dominated by call-centric solutions providers and vertical solutions targeted at the pharmaceuticals space. Revenues generated in this market segment totaled $108 million in 1998, up 57 percent from 1997. Despite the high growth seen in 1998, the large implementations market is expected to experience a rapid slow down due to the high cost of implementation and the long roll out period. There
are, however, some drivers that will keep this market alive including previous automation of most business processes other than sales, the search for a new growth model, as well as front office and call-center integration.
The mid-sized implementations market saw a number of mid-sized NT-based vendors making inroads into the market. Because of this, revenues generated totaled $266 million in 1998, up 54 percent from 1997. One factor that will continue to drive this market is the continuing growth of Microsoft's Windows NT platform. The restraint focused particularly on the mid-sized implementations is the customer's lack of an established sales process.
The small-sized implementations segment was the fastest growing segment of the market in 1998 due to its relatively late start. Competition in the small market was increasing as the segment saw a number of vendors moving up from the contact management space. Revenues that reflect the growth of this implementation reached $103 million in 1998, up 95 percent from 1997. This high rate of growth is expected to continue through the next several
years. The primary drivers of the small-sized implementations included realization of the limitations of contact management software relative of SFA applications, and increasing focus on smaller sales teams. The factors that could slow this growth potential include the free availability of Microsoft Outlook and the customer's lack of an established sales process model.
While the packaged SFA software space is seen as extremely large and relatively unsaturated, competition is rapidly intensifying, as reflected by the beginnings of market consolidation. However, the size of the market suggests that there are still many opportunities for smaller vendors. The key to success in the SFA software space will be the ability to integrate with other enterprise applications and provide ease of use.
Market Participants Include ActionWare, Aknaf Software, Applix Inc., Acquire Software (A Division of Aspen Systems, Inc.), Baan USA Inc., Bedford Associates Inc., Big Business Inc., Borealis Technology Corporation, CallBack Software, Cedalion, Clarify Inc., Client Technologies Inc., Corepoint (a division of IBM), DataCode Inc., Deltek Systems Inc., Dendrite International Inc., Drums Inc., Edify Corporation, Empower Systems Corporation, EN5 Systems,
ENDPOINT!, Marketing Information Systems, Enter Infosystems Inc., Firstwave Technologies Inc., Foresight Solutions Inc., Gateway Systems Corporation, Geac Publishing Systems, GoldMine Software Corporation, GrapeVINE Technologies, The Great Elk, GWI Software, IMS HEALTH, Strategic Technologies, Ingenium Technologies Corporation, Information Management Associates, Inc., Inspired Design, Integrated Marketing Solutions, IntellAgent Control Corporation,
James Integrated Technologies, Janna Systems, Inc., LogicLab Inc., Market Power Inc., MarketWare Software, Media Marketing Inc., The Mehta Corporation, MEI, Moss Software Inc., Multiactive Software Inc., NETView Communications Inc., New Horizons Development Group Inc., ON!contact Software Corporation, ONYX Software, Optima Technologies, Oracle Corporation, Pegasystems Inc., Pipestream Technologies, Pivotal Software Inc., Platinum Software
Corporation, POINT Information Systems Inc., PowerCerv Corporation, Primix Solutions, The Profits Software Group Inc., Profit Solutions Inc., Quintus Corporation, Relavis Corporation, Remedy Corporation, Sage U.S. Inc., SaleMaker Corporation, Sales Focus Inc., SalesBook Systems, SalesLogix, SalesManager Software Inc., SalesVision Inc., Saratoga Systems, SDC Software Inc., Siebel Systems Inc., Siena Hill Inc., Silent Partner Ltd., SoftAd Software of
the Future Inc., SuperOffice Corporation, Surado Solutions Inc., Synergistics Inc., Thinque Systems, Touchtone Corporation, Trilogy Software Inc., Unitrac Software Corporation, UpShot Corporation, The Vantive Corporation and Versatility Inc.
Frost & Sullivan presents Market Engineering Awards to recognize companies that have worked hard to make a positive contribution to the sales force automation industry.
The 1998 Market Engineering Customer Focus Award goes to SalesLogix for exhibiting superior knowledge of customer needs and the ability to meet and exceed customer expectations. SalesLogix has developed an SFA application which is inexpensive, scalable and easy to use. This exceptional customer service is reflected in its ability to implement over 25,000 users in its first year and a half of sales.
The 1998 Market Engineering Leadership Award is presented to Siebel Systems for maintaining its lead in the market despite vigorous efforts of competitors to gain market share. Siebel Systems products are among the most functionally comprehensive products for full spectrum of enterprise-class sales environments.
The 1998 Market Engineering Product Innovation Award is given to Sales Vision for its 100 percent Java solution which provides the ability to implement a variety of deployment models without code customization through its object component architecture. By using Java development tools, Jsales business objects can be created or manipulated to meet the needs of any specific SFA implementation.
The 1998 Market Engineering Entrepreneurial Award is given to Upshot Corporation for its growth rate within a two-year period. The implementation of their 100 percent Web-driven product in the second half of 1998, has been designed around the needs of the sales person and has drawn considerable notice within the industry.
Frost & Sullivan is an international marketing, consulting and training company that monitors the information technology industry for market trends, market measurements and strategies. This ongoing research is utilized to update a series of subscriptions including the Networking Custom Subscription (www.frost.com/online) and to support industry participants with customized consulting needs.
Visit the Frost & Sullivan Web Site: frost.com.
Report: 5908-70 Date: May 1999 Price: $3,450
SOURCE Frost & Sullivan
CO: Frost & Sullivan
ST: California |
