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Europe CRM Applications 2021-2025 Forecast

Europe CRM Applications 2021-2025 Forecast

  • August 2021
  • 23 pages
  • ID: 6127552
  • Format: PDF
  • IDC


Table of Contents

The COVID-19 pandemic dampened demand for customer relationship management (CRM) software in Europe in 2020. But our original forecast of 7.6% year-on-year growth for Western Europe (WE) was too pessimistic: The Western European CRM market expanded by 9.5% year on year in 2020. The Central and Eastern European market expanded by 11.8%. The total European market grew by 9.6%.Throughout 2020, suppliers added and expanded functions, refined value propositions, and developed aggressive sales strategies to increasingly target vertical markets. Suppliers responded rapidly to the surge in digital working, sales, and marketing. B2C and B2B clients added AI and automation tools and adapted existing solutions to the new dynamic. Non-cloud customers were spurred to migrate to cloud-based solutions. As the market matures, IDC believes these trends will continue. The net impact will be steady expansion, reflected in a five-year compound annual growth rate (CAGR) of 10.3%.A few insights: Cloud is devouring the CRM market. The software market for customer experience (CX) management in Europe could be fairly characterized as a cloud-based arena. IDC forecasts it will jump from just under 71% of revenues in 2020 to 87.0% in 2025. This stands in contrast to other software areas, where on-premises (or other non-cloud deployments) still account for major chunks of investment. IDC expects cloud-based enterprise resource planning (ERP) deployments, for example, to account for half of European revenue for the first time in 2022. For AI platforms, it will take until 2023. For analytics and business intelligence software, it will be 2024. And for data management and business intelligence software, it will be sometime after 2025. The current push to integrate CRM with back-office, analytics, data management, and other applications means hybrid IT environments are now standard.Customer service applications will be the hottest application area. The pandemic-fueled acceleration of digital working and customer engagement has brought attention to a well-understood element of CX: It is only as good as the service it provides. In most instances, service must be supported by human agents, regardless of how well-developed and planned the automated and self-service elements. IDC forecasts the European market for customer service applications to be the fastest growing CRM functional area, with a five-year CAGR of 14.4%. By 2025, it will be vying with marketing campaign management (MCM) applications for the title of largest functional area.MCM will be the largest spending area. Customer services applications are hot on its heels, but the MCM space will remain the largest through 2024, accounting for around 23% of total revenue over the forecast period and posting a five-year CAGR of 11.3%.Germany, France, and the U.K. will be the largest markets. As Germany, France, and the U.K. are Europe's three largest economies, it is no surprise that they will be the largest spenders on CRM, collectively representing just under 56% of the European market. They will exhibit healthy annual growth of just over 10% on average through 2025.The Czech Republic, Italy, and Poland are the fastest growing markets. IDC expects the Czech Republic to be the fastest growing market for CRM solutions in Europe, with a five-year CAGR of 12.8% through 2025. Italy and Poland will be in a close race for second, with Poland (11.9% CAGR) expected to expand just a tad faster than Italy (11.6% CAGR). This IDC study analyzes and sizes the European CRM applications market for 2018-2020 and includes forecasts for 2021-2025. IDC divides the CRM applications market by functionality (six functional segments), deployment model (software as a service and on premises), and country/region (15 European states/regions)."All European countries and regions offer excellent growth opportunities for CRM applications between 2021 and 2025. Public cloud software spending will more than double between 2020 and 2025. A CAGR of 15% will represent 87% of total market spend by 2025. The CRM market reflects the highest proportion of cloud-based software purchasing of any applications market in Europe. This plays to the advantage of cloud native vendors like Salesforce and Google." -- Research Director Gerry Brown, IDC Europe

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