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SugarCRM: "Sales directors don't care about the open source!"

2nd Apr 2012
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Larry Augustin, CEO of SugarCRM, explains to K2 Advisory's Dr Katy Ring that his company wants to become better known for its functionality than for being open source.

Open source has, of course, always offered an interesting non-commercial model for the IT market, but possibly because of this lack of a corporate business wrapper it has always presented itself as a slightly geeky sub-sector of the industry. In the UK public sector the Cabinet Office is mid-way through a three-month period of consultation on open standards to be used in the government's G-Cloud initiative and open source is high on the agenda. Indeed, Liam Maxwell, Cabinet Office director of ICT futures, has been out and about over the past few weeks saying that open source has grown up and it's time to dispel lingering misconceptions about this technology and development process.

But I have seen some truly awful presentations by open source companies arguing that their functionality is mainstream while simultaneously being handicapped by incompatibility with Microsoft PowerPoint. When I mention this to Larry Augustin, CEO of SugarCRM, I get a wry smile in response. Augustin met me recently when on his way to a meeting with Francis Maude as part of the Government consultation process. He commented that, "many open source companies have a very strong technical background and this is often given more weight internally than business skills."

Augustin should know this better than most: he became CEO of SugarCRM in 2009 and since then the company has become an IBM Global Alliance Partner, as well as becoming cash positive for the first time in its seven year history while promoting the "commercial open source" tagline.

SugarCRM was set up in 2004 to develop a new generation of CRM applications and its founders chose to use open source to do this. Augustin sees this as a positive because open source creates distribution for a new entrant in terms of the freemium model. This enables a good ecosystem to become established from which it is easy to build market mindshare and develop a business pipeline. However, the downside to this is that SugarCRM is better known for being open source than for anything else. Augustin commented, "we are selling to sales directors who are looking to increase revenue and sales satisfaction and who want to have a full view of the customer. They don't care about the open source!"

Augustin wants SugarCRM to become better known for its functionality than for being open source. For many organisations barriers to use of open source include the perception that open source licenses are viral, lack of formal support and training, the velocity of change, and a lack of a long term roadmap. SugarCRM is an interesting example of an open source company evolving into a corporate software vendor. The relationship with IBM is part of that evolution, SugarCRM’s approach to Cloud is another part: it can operate in a client’s secure data centre, as it does for a large central government office in the UK, or it can offer services from its own public Cloud or from other infrastructure providers’ public and private Clouds.

As Augustin puts it: "we are not 100% open source, 100% Cloud, 100% freemium or 100% inbound marketing. We are a commercial company with commercial offerings, which happen to be less expensive to buy and more flexible to use than those from most competitors."

But in the public sector, for the time being, that open source label is the one that will open doors.

Dr Katy Ring is director of K2 Advisory.


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By hideki hashimura
02nd Apr 2012 10:55

True, sales directors don't care about open source, but they care about ROI, managing their budgets and providing tools to their sales-force that work. The added value of SugarCRM as an open source platform is on it's versatility and flexibility to adapt to pretty much any business model at a very low cost, way below most propietory enterprise solutions. Sales directors have to work with budgets and with IT departments, so they do care about TCO; thus making SugarCRM the best solution in a lot of cases. The ability of customizing the solution for complex business models at a very low cost is definitely a huge bonus of added value for any solution. IBM must see this clearly as it has strategically partnered with SugarCRM as their preferred CRM solution. Great job Larry!

-- Hideki Erigh Hashimura CMO REDK Software Engineering

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