Mumbai: A new report by independent market analyst Datamonitor (DTM.L), reveals small to medium sized businesses (SMBs) are expected to become the next big growth engine and revenue generator for CRM vendors yielding revenues of around $2 billion by 2008 - more than double the value of that today. Vendors who had ignored SMBs (companies with headcount of 1-1,000) as potential users of customer relationship management (CRM) in the initial 'CRM rush' of the late 1990's are now looking at them in a more positive light.

SMB CRM spending in Europe Middle East and Africa (EMEA), the largest market globally, is expected to be in excess of a $600 million market in 2008 - nearly double those revenues in 2004. In the Asia-Pacific region (APAC), it is estimated to exceed $500 million in 2008, approximately double that of today.

The report, CRM for small to medium businesses, highlights the huge potential this previously un-tapped market possesses. Datamonitor expects global SMB CRM application spend will total close to $2 billion by 2008 - more than double the value of that today. EMEA, the largest market globally, is expected to be in excess of a $600 million market in 2008 - nearly double those revenues in 2004. In the Asia-Pacific region, SMB CRM spend is estimated to exceed $500 million in 2008, approximately double that of today.

SMBs to provide a growing share of global CRM revenues
Today, with a saturated enterprise CRM market, vendors are looking to new markets to compensate for slowing sales. According to Datamonitor, the clear answer lies in smaller companies previously overlooked. Numerous, and often with as much appetite for CRM as their larger counterparts.

Smaller companies are faced with many problems faced by large companies' enterprises. These include difficulties in the field of sales, marketing and service. Availability, revenue generation, customer service and channel management are four primary reasons driving increased CRM solutions amongst SMBs globally, says Datamonitor.

Datamonitor believes this segment of the market will be the growth engine for CRM in coming years. Datamonitor expects the share of global CRM revenues generated by SMBs to increase significantly by 2008.

According to Tom Pringle, technology analyst at Datamonitor and author of the study, "A new CRM market is being created, one which encompasses those businesses which were not part of the initial CRM adoption phase; CRM is being pressed into the mass market." Therefore the SMB space, adds Pringle, should be at the forefront of vendors' minds and the different categories of CRM vendors must now work hard to raise market awareness in the SMB space to translate this huge potential into reality.

With SMBs, delivery is critical
Enterprise-class CRM is out of reach for SMBs. However, the latest CRM versions look to encompass as much of the functionality as possible, but at a fraction of the cost. Different groups of vendors are now attacking this market, from traditional enterprise vendors to newer SMB-focused vendors.

Possibly the single biggest debate in this market is the means by which CRM solutions are delivered to companies. Traditionally CRM has been an onsite deployment, but a strong focus on cost and deployment speed is helping the development of hosted offerings. A hosted solution allows 'plug-in' access to CRM functionality at a predictable cost; negating the need for more onsite technology and high capital costs. Datamonitor expects a growing proportion of this market will use a hosted environment.

Pringle concludes, "Price, functionality and deployment are three concerns any potential customer is likely to harbour. Key to success here lies in the flexibility of access provided by the vendor. Much in the same way phone operators offer their customers different headsets, tariffs and options within their price plan, vendors of CRM in the SMB market must be similarly flexible."