Report: CRM Growth Stagnates

Spending on customer relationship management (CRM) technology will remain flat over the next two years, as companies look to conserve cash and buy only when
bargains present themselves, a new study from Meridien Research predicts.

The Newton, Mass., market analysis firm focused on the financial services industry, predicts that overall 2002 CRM spending will be approximately $6.7 billion, level with 2001.

Stagnant growth following an
industry-wide slump is unsurprising. But somewhat unsettling for software makers is Meridien’s conclusion that there will be no significant growth in the sector until
2004.

One reason is that large companies are struggling with the costs of building and maintaining data warehouse
infrastructure needed to plug data into CRM applications, Meridien said. Some companies are still assessing the return-on-investment from previous CRM projects.

“Top management at financial institutions that ‘get CRM’ will carefully seize upon the market confusion to quietly strengthen their arsenal of capabilities, often at
bargain terms,” said Tom Richards, Meridien’s research director. “In particular, we expect leading institutions will dig into business processes, probing for
both cost savings and better service levels for customers.”

Meridien’s report was based on 55,000 institutions and covers external IT spending for hardware, software, and related development, consulting, and
implementation services.

Among the Massachusetts firm’s that deal in CRM are Art Technology Group, Applix and Infinium.