Will Open Source Drive CRM Growth?

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SugarCRM lauds its open-source underpinnings as the secret sauce behind its success. But it's likely open-source qualities that have helped keep SugarCRM's solutions easy to deploy, easy to use and affordable will be critical factors in CRMs' market growth.

Open source has its share of challenges, but its biggest fans extol the platform as open, malleable, flexible and cost-effective.

Nowhere are these qualities more in demand -- or lauded -- than in the customer relationship management (CRM) market. In fact, open-source attributes not only play well into the small-but-growing CRM niche, theycould be the catalyst that drives its growth.

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There’s definitely a case to be made here. Open source CRM is often more cost-effective than its proprietary counterparts. It allows an organization to test-drive software. It’s easily modified, which gives the channel leeway to tailor it to their customers’ IT environment. Solution providers with necessary skills can charge for related services at a premium.

Open source is also strong bet for organizations leveraging social CRM. The biggest reason: It allows customers to add data links to social media and tailor them to suit their business needs instead of waiting for a proprietary software vendor to do the job.

The trend toward open source CRM, especially regarding social applications, is made evident by rising growth statistics. A May 2012 “Future of Open Source” survey, conducted as a collaborative effort between the 451 Group, The North Bridge Venture Partners and Black Duck Software, reveals that open source is a driver, not follower, in high growth technologies such as cloud, Big Data, mobile apps and enterprise mobility.

The report projects more than 50 percent of software acquired in the next five years will be open source. Specifically, open source will represent an even greater percentage of software acquisitions, adoption by non-technical segments will gain stronger traction and open source projects will continue on the path toward enterprise maturity.

The study cites the quality of open-source applications, once used as an excuse for non-adoption, are now one of the top three reasons for adopting the code. For the channel, these factors make open source CRM offerings an attractive differentiator in enterprise environments.

Case in point: One of the biggest players in the space is SugarCRM, emerging as a strong open-source competitor, a viable contender in the commercial space and a formidable opponent to industry leaders Salesforce and Microsoft Dynamics CRM.

Founded in 2004, the Cupertino, Calif.-based firm features an open-source base, written in PHP and working with MySQL and MS SQL databases. Recent innovations, such as a streamlined interface, refreshed mobile support, knowledgebase, self service portal and upgraded analytics, have given it a strong competitive edge and caused the platform to receive more than a second glance in the marketplace.

SugarCRM touts its open-source underpinnings as the secret sauce behind its success. Open source has helped the company stay true to its mission to provide CRM tools that are easy to deploy, easy to use and, most of all, affordable -- qualities that have helped SugarCRM expand its market presence.

Open source also allows organizations to break out of rigid, predefined parameters and gain a market edge through social capabilities. Like any open-source platform, it allows more openness and greater flexibility, and enables easier and faster integration with social media channels, which can be a strong selling point for enterprise markets reliant on social media opportunities.

It’s a recipe that's caused SugarCRM to emerge as the fastest growing CRM vendor around, presenting stiff competition to well-established rivals. The firm experienced 68 percent sales revenues in 2011 followed by a 73 percent revenue spike during the first half of 2012.

SugarCRM’s growth stats reflect the rejuvenated growth of open source as a whole -- the platform recently experienced a 49 percent uptick to reach $675 million, and new open-source software companies are emerging with innovative technology and adaptive business models that attempt to nip at the heels of larger competitors.

Other open source CRM vendors are experiencing healthy returns, and more are sure to follow, indicating a strong channel alternative that appears to have a bright future in 2013.

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