Interview: Larry Augustin, CEO, SugarCRM

With its applications downloaded over five million times and serving over 500,000 users, SugarCRM is an open source phenomenon. Stuart Lauchlan met up with CEO Larry Augustin on a recent trip to London.

You get nothing for nothing - so what does that mean for the open source world? One firm that's managed to prove the exception to that rule is SugarCRM. Founded as an open source project in 2004, SugarCRM applications have been downloaded over five million times and currently serve over 500,000 users in 75 languages. Stuart Lauchlan met up with CEO Larry Augustin on a recent trip to London.

MyC: The economy may be showing signs of recovery, but there are still a lot of tight budgets out there and it's likely to remain like that for a long time. Does the 'free' nature of open source help with convincing organisations to come and talk to you?

LA: We are still seeing a lot of cost-driven stuff out there. The desire to hold won costs is the hottest. We've actually seen our web site traffic go up over the last year which is a sign of strong interests. All of that is related to the economy of course. We've seen that in general across open source companies. As the economy was doing the worse, interest was going up in the free products. That's good because it translates into increased in interest in the commercial product. Things are beginning to change though. The interest in us is more than just because it's free or because we're growing as a company. It's about people being interested in how we're reinventing ourselves as a company and being interested in how we handle our growth.

MyC: In terms of that growth and evolution, how do you define Sugar today?

LA: We are open source, but we rely heavily on our Cloud strategy for differentiation. The open source aspect remains vitally important though. I can see a lot of things in common between open source and Cloud Computing. If you take a step back, they're both about lowering barriers to adoption. I've had this conversation with some people who argue that they're competitive, but really they're about the same thing from a customer perspective. Customers wants easier adoptions. They don't want to have to go through long and cost adoptions and implementations. Anything that allows a customer to get started cheaply, quickly and rapidly is of interest. Cloud works like that, open source works like that.

MyC: But do CIOs really trust things that are free? There's no such thing as a free lunch after all.

LA: CIOs do trust things that are free, but they do want a commercial vendor that will be able to back it up. They want someone on the hook, under contract. That doesn't mean that they don't trust the free stuff, but it's just that when they pay for stuff they get things that they can't get if it's for free. So there is a desire and a willingness to pay for those extra things.

MyC: Do you have a view on the ongoing debate over the future of the MySQL database? Would Oracle be a good steward for such high-profile open source technology?

LA: I don't think that Oracle owning MySQL will make that much difference. Open source is extremely resilient. We've proven that over the past 20-25 years. If you look at the worst case evil scenario and Oracle completely closed down MySQL, what would happen? At best you'd get a bit of a speed bump, barely noticeable in terms of open source databases. There's a whole new generation of databases appearing out there that are designed specifically for the web.

MyC: What about the social CRM space, do you have a play there?

LA: Social CRM is an interesting place right now. It's certainly something that we're seeing out there and there is interest, but it's kind of all over the place. For me social CRM is just all about the different ways in which customers may want to interact and can interact over the Internet. It's more than just being about Twitter or Facebook, it's about the fact that there are data sources all over the internet. It's about integrating things like Hoovers, for example. We think about about it more in terms of community. You have people talking on Twitter and a critical aspect of that is the conversation that they're having. But a different aspect to consider is the data aspect. What that means is, if you're looking at a prospect or a customer, then are you able to tell me the people who are connected to that customer through multiple tiers of connection. Can you take advantage of social networking technologies to help you to do that.

MyC: In terms of the new generation of Cloud applications, do you believe there will be a wholesale shift to the Cloud? Or are we looking at lots of co-existence between the old world and the new world?

LA: We favour the hybrid approach. When you deploy our architecture in the Cloud, everyone has their own database instance and I think that approach works. It's a pendulum thing – these things don't go all the way one way or the other. Databases at customer sites are not going to go away, there are too many things in them that end up being mission critical. At the same time, cheaper availability of bulk resources outside the organisation, in the Cloud, is going to make that a resource  enterprises are gong to want to take advantage of. Does that mean that the whole world moves out into the Cloud? No. In the same way, the Microsoft world doesn't mean that the world is not going to use the Cloud and stay internal.

MyC: What is your relationship with the big ticket systems integrators like? What role can they play in the Cloud/open source worlds?

LA: SaaS applications do limit you ability to integrate and they limit the ability of an Accenture to customise, integrate and so on, the stuff that they have been making money out of.  I find it hard to imagine a business the size of Accenture emerging in the Cloud market as there's just not enough for them to do from an application integration point of view. What is limiting for customers  is that, even more so than with a proprietary piece of software, their ability to differentiate at the customer level goes down. They get a more generic solution in a SaaS application. In the open source world, we see a lot of mid-sized systems integrators who take open source applications, integrate them, then offer them as a service. They're able to do that integration at an apps level and to take that offering out to particular vertical markets. It's fascinating.  But I think the Salesforce.com, Netsuite sort of model is difficult for an Accenture.  But the Cloud model in which an Accenture takes some services, integrates them and then runs them on Amazon or whoever, that can work. It's still doing apps integration, just deploying them in a different space.