Analysts at Tier1 Research (T1R) find in a new report that since software as a service (SaaS) can be a cost-effective delivery method for software functionality, it is rapidly gaining acceptance. Nowhere has this adoption been more evident than in customer relationship management (CRM) -- a front-end customer-facing platform consisting of sales automation, marketing automation and customer service.

While the on-premise enterprise CRM market has reached relative maturity and is expected to experience annualized growth of 6.2% through 2010, the on-demand CRM market is expected to grow at a compound annual rate of 41.0% through 2010.

These findings are contained in a report released today by New York-based T1R, an independent research firm that analyzes the financial and industry implications of developments affecting public and private companies within the hosting, IT, communications and Internet sectors. The On-Demand CRM Marketplace report provides analysis and perspective on key technology trends and developments in the SaaS market.

"The global growth story for the on-demand CRM market is clearly an exciting one," said Wesley Kennedy, senior analyst at T1R and author of the report. "And while the rising tide will lift all boats, it is evident that some boats will rise higher than others. Those companies that are levered to the fastest-growing sections of the market will clearly be the greatest beneficiaries."

T1R analysts find that growth from European enterprises will be driven by the demand for point software applications as opposed to applications that can be integrated or are already integrated with other applications. Meanwhile, unlike the U.S. and Europe, many larger enterprises in Asia have not yet adopted a CRM platform (on-premise or on-demand). The on-demand value proposition will be much more compelling for larger organizations in Asia. As a result, T1R analysts expect larger enterprises to lead the charge in terms of on-demand adoption, with smaller companies following suit 12-18 months later.

"The market has become so competitive and the established vendors have such a head start across all enterprise sizes and geographic locations that a new entrant to the on-demand CRM world would not be able to survive," said Kennedy.

About this study

This 37-page Tier 1 Research report, "On-Demand CRM Marketplace," analyzes where growth for the on-demand CRM market is coming from and which vendors are best positioned to capitalize on that growth. It also looks at the growth prospects for respective on-demand CRM vendors and examines whether the on-demand CRM opportunity for each vendor is appropriately valued.

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