12 July 2004 Customer relationship management (CRM) market leader Siebel Systems is set to lose its lead in the market to enterprise applications giant SAP, according to a study by analysts AMR Research.

The report found that sales of CRM software, which were flat in 2002, increased by 4% in 2003, and will grow by 6% in 2004. The growth, says the report, is being fuelled chiefly by increased IT spending among small and medium-sized companies.

According to the report, Siebel earned $1.29 billion in CRM revenues in 2003, beating SAP’s $1.28 billion marginally. But the report predicts that SAP will oust Siebel in 2004, with the former expected to grow 12%, compared with Siebel’s 3%.

Siebel is the sector’s historic market leader. Its share peaked at around 23% in 2001, according to analysts IDC. However, the two software vendors have long been at loggerheads over which company ships the most CRM software.

Although SAP has long claimed that it is fast catching up with Siebel, a large number of the CRM licences it ships remain uninstalled in many organisations – a fact admitted last year by SAP CEO Henning Kagermann.

The two also face growing competition at the lower end from Microsoft. Microsoft’s CRM revenues for Great Plains were $148 million in 2003. The report forecasts that Microsoft’s CRM revenues will grow by 40% in 2004, thanks to users’ confidence in Microsoft’s long-term viability, integration capabilities and ease of use.

SAP’s market share is growing in most of the sectors where it operates. A preliminary quarterly results statement released this week says software sales for the second quarter will grow 15%, to $614 million. Overall revenues grew by 9% to $1.78 billion.

See also:
SAP customers leave CRM on the shelf