Customer relationship management (CRM) software revenue is forecast to reach $23.9 billion in 2014, with cloud revenue accounting for 49 percent.
Demand for modern technology customer relationships is driving refreshed or expanded integration and usage of all areas of customer relationship management (CRM) software, according to a report from IT research firm Gartner.
The study projects CRM market growth to stay moderate in 2014, following three strong years of investment, and CRM software revenue is forecast to reach $23.9 billion in 2014, with cloud revenue accounting for 49 percent of the total.
Software as a Service (SaaS) and cloud-based CRM deployments currently represent more than 40 percent of all CRM deployments and look set to reach 50 percent during 2015, according to the report.
"CRM will be at the heart of digital initiatives in coming years. This is one technology area that will definitely get funding as digital business is crucial to remaining competitive," Joanne Correia, research vice president at Gartner, said in a statement. "Hot areas for CRM investment include mobility, social media and technologies, Web analytics and e-commerce."
The study said marketing technology is a hot area for IT investment, but solution decisions are increasingly being driven by CMOs and the marketing organization, with little to no IT involvement.
With that in mind, CIOs will need to work more closely with CMOs and marketing leaders to adapt to the increasing technology demands emanating across the marketing organization.
"Unsurprisingly, high-tech, banking, insurance, securities, telecommunications, pharmaceutical, consumer goods, IT manufacturing and IT services vertical industries will continue to be the largest spenders on CRM as they have the widest use of different types of CRM applications and technologies," Ed Thompson, vice president and distinguished analyst at Gartner, said in a statement. "All these industries are also increasing investment in emerging economies, further driving spend."
The main drivers behind the hot topics in CRM--cloud, social, mobile and big data--are being joined by a fifth driver: the Internet of things, where sensors connecting a range of things to the Internet create new services previously not thought of.
As cars, buildings, bodies and chairs are connected to the Internet and as the price of sensors and communications drops down toward a dollar, the automotive, construction, health care and hospitality industries, among many others, will be transformed.
The report noted that at the forefront of this shift will be sales, marketing and customer service departments in promoting, selling and supporting the new services.
"These drivers are spurring a critical need for more traditional operational CRM as CRM continues to top software investment priorities. This further validates businesses' focus on enhancing customer experience and consistent investment in CRM software, especially in CSS, marketing and sales software," Correia said.