Open source CRM set to go mainstream

The lack of upfront license payment is boosting the adoption of open source software but quality issues still abound, says a new report, hampering further growth.

Open source CRM is approaching a tipping point for mainstream adoption, according to new research from International Data Corporation (IDC).

An IDC survey of 515 Western European IT decision makers in organisations with more than 50 employees found that 9% of respondents reported current use of an open-source back-office application, while 7% of respondents used an open source CRM application.

From a general perspective, the survey showed that the main driver behind open source adoption is the absence of an upfront license payment along with a lower total cost of ownership. The main inhibitor inhibiting organisations from adopting open source applications are concerns related to the level of software support and the quality of open source software.

“The survey results show that open source adoption in ERP and CRM has reached a critical threshold and should now make a 'bleep' on every vendor's radar screen, particularly for those that compete in the mid-market," said Bo Lykkegaard, research director, European enterprise applications and services at IDC. "In an enterprise applications market in which large vendors boast a 10% market share, adoption rates of 9% and 7% appear very high.”

Ousting commercial counterparts?

But this does not mean that open source applications are ousting their commercial counterparts from their installed base. "Of course, usage can mean anything from departmental use or niche use to enterprise-wide deployment,” added Lykkgaard. “We expect the majority of users of open source enterprise applications to use commercial enterprise applications at the same time.”

IDC predicts that open source applications will become ever most cost-attractive for end-users, especially in the current economic downturn. “IDC believes the net effect of the emergence of open source enterprise applications will be one of price pressure, in particular in the mid-sized segment,” said Lykkegaard. “We do not expect a religious war between an open source community on one side and commercial proponents on the other. Rather, it will all come down to a battle over who can provide the customer with the most ERP or CRM per euro."

Among leading open source vendors, SugarCRM has recently added several large deployments with European brand names including Fuji Film Spain, Loomis UK, Coca Cola France and Avis Scandinavia. "While demand in Europe for our modern and flexible CRM platform has been steadily growing over the last several years, the recessionary economy has only increased activity and adoption," said Liz Smith, VP of sales at SugarCRM EMEA.