20 Dec Growth by Specialized Vertical Players in the CRM Marketplace and their Need for Machine Learning
An interesting software market to observe is the Customer Relationship Management (CRM). Its evolution exemplifies current trends throughout the software application space toward cloud solutions and deeper specialization for vertical industries.
Given the expensive customizations needed with most big CRM software implementations, customers are turning more and more to the specialized niche players within their industries. The Big 4 CRM software vendors (Salesforce, SAP, Oracle and Microsoft), as a group, dipped below 50% of the market share in 2012 and have been declining ever since.
Yet, the CRM software market is showing steady growth. Gartner is projecting a $36.5 billion market by 2017 as compared to $26.3 billion in 2015. The makeup of that market is also changing quickly from on-premise software licenses to the Software-as-a-Service (SaaS) delivery model. In 2015, the SaaS revenues surpassed the on-premise license revenues for the first time. Now, the trend is only accelerating.
The door is wide open for CRM SaaS players with vertical specializations to gain greater market share. These new nimble players will be bringing more customized domain relevance into their various industries. In addition, they will need to offer more accurate and better predictive insights around their data sets. This will mean leveraging Machine Learning to offer improved forecasting, as well as insights around how to close deals faster, predicting customer churn, assessing sentiment of customer relationships, among many other types of predictive advanced analytics.
The CRM SaaS vendors who can offer predictive data insights as a part of their offering will have a distinct advantage as the CRM market continues its healthy growth.
However, the global talent pool for data engineers and data scientists will become even more scarce in the coming years. For example, Gartner projects that there will be a shortage of 200,000 data scientists in the US alone by 2018. Thought-leaders in the marketplace is projecting that many companies, especially the SMBs, will have to turn to managed Cloud Analytics companies to productize their data sets. A developing trend will be the outsourcing of data science capabilities to a third-party provider for these CRM SaaS niche players. The ones that recognize the benefits, such as speed to market, ability to focus solely on their core competency, will gain key competitive advantage by outsourcing data science capabilities before their competitors.
At TenPoint7, we are already supporting SaaS vendors with a Machine Learning-as-a-Service (MLaaS) solution. We will be one of few new providers that offer a solution to dealing with the global shortage of data scientists and data engineers for these niche CRM SaaS companies as they continue to gain increasing market share in the CRM software space. To learn more about our unique MLaaS offering for the CRM SaaS companies and other SMBs, please go to our website.
John Song (Co-Founder, John@TenPoint7.com)