May 7, 2012
SugarCRM was kind enough to invite me to its analyst day and conference — a three-day event packed with product, strategy, customer, and partner information. The firm’s focus was clearly on its momentum into the enterprise. Here are my thoughts:
- The CRM market still has room to grow. Sugar used IDC’s numbers to project CRM market growth: $18.74 billion for 2012, $19.97 billion for 2013, and $21.37 billion for 2014. Even though CRM vendor solutions are mature, the CRM market has not stagnated.
- The SugarCRM 6.5 product. Today, SugarCRM has 1 million users, has seen 11 million downloads, is used by 80,000 organizations, and has 350 partners on five continents supporting the product. Its newest release focuses on usability and performance enhancements. It offers simplified navigation, an enhanced UI design, a new search framework with integrated full-text search, new calendaring and scheduling capabilities, IBM platform support, and deeper integration with third-party apps. Although the product lacks advanced social features and robust analytics, it does provide solid, well-rounded CRM capabilities.
- The open source focus. Open source is more than a movement. It provides results by allowing its 30,000-large developer ecosystem to evolve the product in line with customer demand. “Open” is also part of Sugar’s culture — for example, pricing is readily available on its website, and you can try the product for free.
- The IBM relationship. SugarCRM runs on IBM hardware and can also be deployed in the IBM cloud. It’s integrated with Cognos for business intelligence, SPSS for advanced analytics, Lotus Notes for email, Lotus Live and Connections for collaboration, Unica for marketing, and more. IBM and SugarCRM also have a well-aligned go-to-market strategy.
- Its partner ecosystem. Sugar’s partners have a global reach and are responsible for the sales and support of SugarCRM. Partners are also able to customize the application and offer customized versions on their application exchange (SugarExchange). More than 100 solutions are currently posted. The top 10 partners added 400 customers last year, which demonstrates their influence.
- Their market momentum. SugarCRM turned cash flow-positive in Q4 2010 and has been growing ever since. It has reported 10 quarters of record sales, and in 2011 saw a 67% increase in sales over 2010. The firm recently raised $33 million in venture and debt funding, which it will use to continue its advancement in the enterprise CRM market.
- Large-scale endorsement. IBM recently announced the replacement of close to 70,000 seats of Siebel with SugarCRM — which demonstrates the maturity of the solution in the enterprise.
The CRM market is consolidating around three main large players: Microsoft, Oracle, and salesforce.com. Oracle and Microsoft offer a complete end-to-end solution of hardware, middleware, and software, which has demonstrable total cost of ownership benefits. Salesforce offers similar benefits using its cloud model. SugarCRM, by aligning with IBM, is also leveraging these efficiencies. Even though it’s a small company (about 250 employees), expect to see SugarCRM (with the help of IBM) start to surface in larger deals in which the Big Three players are competing.