Recently, I had the pleasure of speaking with Martin Schneider, Senior Director of Communications at SugarCRM where he provided information about the company, Sugar 6 (latest version), and social customer relationship management (SCRM). In this first up close and personal blog post, Martin will discuss what made Sugar CRM the most successful open source CRM product and one of the best CRM products in the market.
Q: Could you please summarize the history of SugarCRM?
A: The company was founded in 2004 and has been growing steadily ever since. The critical point is that SugarCRM is one of the first CRM companies out there to have an open source model. At that time, in 2004, there were a few open source CRM projects out there, but they were very small projects and they did not have a lot of support and community behind them. And the founders of Sugar quickly realized that the proprietary model of developing and selling a marketing CRM software was flawed with a lot of inefficiency.
People spent most of their money when trying to start a company on hyping the product, get it out there in the market, hiring and paying sales people, and that became 80 to 90 percent of the budget, with 10 to 20 percent spent to actually developing the product—and it should be the other way around. The founders of Sugar thought: How can we do this? How can we get our name out there and become popular in the CRM space without spending millions of dollars on big launch parties and events? And they wrote the initial application and released it as a free and open source download on SugarForge.
People were immediately attracted to the idea, to the application, to the model and what it meant—in 2004 open source was very popular, there was a lot of open source infrastructure but there wasn’t really large amounts of application projects out there. Sugar was the first to do that and they went from a few downloads to dozens, then a few thousands, and then hundreds of thousands.
We had our open source product, open source tools and extensions that people could download on SugarForge and these have been downloaded more than 8 million times. We’ve grown in five or six years to see over 600,000 end users—between our open source and paid edition, we have between 60 and 70 thousand active installations. So, really in a short time, it was a very little amount of capital investment and Sugar has been able to seize the market, become identified as a market leader—and not just as an open source market leader—but a very viable CRM provider, regardless of being open source or not. Over 6000 paying customers would take companies 15 or 20 years to win— – we were able to do it in about three years.
Q: What happened to the other open source CRM vendors? How come you’re the only major open source CRM vendor?
A: I think there is a little bit of luck, because for some reason, the analysts and the press picked Sugar as the one to cover and think about. We also got lucky in the market from a timing perspective, who we knew; but on the other hand, there was a lot of hard work. It really comes down to the fact that at that time it was the most well designed and mature CRM application at any stage of our growth around open source. Secondly, lots of the other projects out there did one or all of the following: a lot of people used the Sugar code to become the harvester when we were the creator, and they were always behind the curve and the community would rather go to the source and be part of the larger inclusive community of Sugar than a sub-set community with something like vtiger; or, they decided to build an open source version of CRM on other technologies than the ones we used (Linux, Apache, MySql, PHP).
The problem is that technologies such as Microsoft .Net don’t have a large community of developers interested in working on them as does PHP, Linux, Apache, and Sugar by consequence, just because it’s built on such open and flexible components. And I know people who did both: took Sugar code and put it in .Net but no one was interested in that at all.
In the summer of 2007 we moved from our open source license to the General Public License version 3 (GPL) and this made it difficult for people who were copying the code because their old work wouldn’t be compatible with our new code and they got into a dead end at the 4.5.1 release. And even more recently, in February-March of this year we moved to Affero General Public License (AGPL), which stopped people from hosting our software in certain ways, so it really protected the people who wanted to use our application and develop on it in a proper way.
We rely on the community for a lot of bug testing and insuring great quality, as well as some minor code, but for the most part we keep a very centralized, stable public build through our SVN repository. This way we can foster a highly-opened development model, with one core tree, but also insure for our commercial users that they are using pristine code in their operations.
To be continued…
The second part of the interview will cover Sugar 6 (the new version of SugarCRM), the Sugar Exchange online marketplace, software as a service, social CRM, etc. In the meantime, let me know if you have any questions about SugarCRM and its offering.