The Tale of Forrester's $74 Billion Projection

David Sims : First Coffee
David Sims
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The Tale of Forrester's $74 Billion Projection

By David Sims
david@firstcoffee.biz

The news as of the first coffee this morning, and the music is Peter Wolf's great solo album Sleepless:

Yesterday First Coffee got an e-mail from Mike Smock, managing director of vSente, who had evidently read Paul Greenberg's CRM blog, PGreenblog, and saw the following entry, slightly edited for this format:

2007; CRM 2.0 Gets Going

OK, neck out wide time. Cut me if I'm wrong. But here's my 2007 forecast interspersed with other 2007 forecasts I've found out there and my comments on their comments.

First Them for 2007....

Forrester Research -- Their Forecast: CRM revenues will skyrocket to $74 billion (approximately $21 billion in applications sales, $53 billion in services sales. There will be a serious shortage of CRM skilled workers).

My Thinking: While I'm not sure how whether they are calling CRM-related on demand subscriptions a service or an application, I can see strong numbers in 2007 for CRM without a doubt -- though how anyone can forecast numbers that specifically is beyond me.
</end quote>

Incidentally, First Coffee agrees with Greenberg here, I have no clue how anyone can sit down, sift numbers and come up with specific projections like "$21 billion" or "$53 billion" instead of "$20 billion" or "$55 billion." Maybe analysts have twigged that we business readers suspect nice round number projections like "$10 billion" are nice round guesses, so they throw out jagged numbers like "21" and "53" to lend an air of exactitude. But I speculate.

Mike wondered about that $74 billion number, so he contacted Paul, who referred him to this reporter, who on December 22nd had written in an article on VendorGuru here on TMC the following:

With the customer relationship management (CRM) market for 2007 predicted to grow 11 percent, VendorGuru.com recommends that businesses find a CRM vendor who "recognizes the benefits of an effective CRM strategy to build customer loyalty within their specific industry."

There you go, Merry Christmas from all of us.

According to technology market analysts at Forrester, the CRM market is set to hit nearly $74 billion in sales in 2007. CRM applications represent about $21 billion of that market, with services making up the rest.
</end quote>

Mike sent me a nice e-mail:

Hi David,

I'm trying to track down the Forrester $74 billion projection. The only thing I can find is from a 2002 report by Bob Chatham here:

http://www.forrester.com/ER/Research/Report/Summary/0,1338,14653,00.html

Do you happen to have the link to the current projection?

I asked Paul Greenberg who referenced you...

http://the56group.typepad.com/pgreenblog/2006/12/2007_crm_20_get.html
</end quote>

I wrote back saying I had gotten the figure from a press release VendorGuru had issued, giving him the article I wrote cited above. Mike then took it to VendorGuru:

Can you confirm the source of the Forrester projection you used in your press release:

http://prweb.com/releases/2006/12/prweb493215.htm

It appears to have been pulled from a 2002 Forresters projection by Bob Chatham.

Both Paul Greenberg and David Sims have referenced this projection.

We're all curious where it came from.

Help!
</end quote>

Somebody from Pepperlake Communications, the PR firm which First Coffee surmises had prepared the press release for VendorGuru, answered Mike, writing "Yes, I believe you're correct.  The projections came from the 2002 report by Bob Chatham."

So as Mike wrote to me, "it seems as if the $74 billion number was pulled from the 02 Chatham report by VendorGuru."

Fine. Then Mike -- wouldn't you love to have this guy working for you? -- wrote Forrester to confirm, and got this interesting reply from their Vendor Relations department:

Mike,

Thank you for bringing this to our attention, the reference in the Vendor Guru was not approved for use by Forrester. Please note that Forrester's projections for the CRM market have been updated in the October 2006 report entitled CRM Market Size And Forecast, 2006 To 2010.
http://www.forrester.com/Research/Document/0,7211,40497,00.html
</end quote>

Now, hang on a second. Although Forrester says the reference in VendorGuru's release was "not approved for use" by Forrester they don't say they didn't make the projection, they did, and they're still selling it. The online summary for Chatham's October 2002 report accessed early this morning reads "After shrinking by more than $2 billion in 2002, the CRM market will grow at more than 11% annually -- hitting $73.8 billion in 2007. During this period, users will shift from integration to continuous optimization."

The 2002 report retails for $499. Forrester's happy to ding your credit card for $499 today for the report. There's nothing on the page saying "Hey, wait, before we bank your five hundred bucks, you should know that these numbers have been updated, and that we really don't stand behind these projections anymore."

The 2006 report Forrester directed Mike to, titled "CRM Market Size And Forecast, 2006 To 2010," written by respected analyst William Band, which is said to contain the best-as-we-know projections and numbers, retails for $279. There's nothing on the Web page saying "This report renders our October 2002 report obsolete."

So I'm sorry, Forrester, if you're still taking $499 for a report then it's perfectly jake for guys like VendorGuru, Paul and myself to cite those numbers as what you're selling today. If you don't stand behind the numbers anymore then stop charging $499 for them, take the report down, put some disclaimer on the page saying "These numbers have been updated, they don’t represent the best available analysis anymore." If you don't stand behind your product then do the honorable thing and stop selling it.

As far as I'm concerned if you're selling anything, cars or ice cream or CRM analysis, you're standing behind what you're selling, and if you're not standing behind it you have no business selling it. If I buy a 2002 model Ford from a Ford dealer I expect to be able to drive it, if the dealer knows it's unreliable he should be sued for selling it to me.

The fault, if there is any in all this, is entirely Forrester's. Not Bob Chatham's for doing the best he could with 2002 information, not VendorGuru's for relying on unqualified numbers sold for full price today by Forrester, certainly not William Band's for doing the best he could with more recent information, but entirely the fault of Forrester itself for selling outdated information.

Bottom line: If you don't want to be associated publicly with the projection, Forrester, stop selling the damn projection publicly. You can't have it both ways.

If  read off-site hit http://blog.tmcnet.com/telecom-crm/ for the fully-linked version. First CoffeeSM accepts no sponsored content.


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