Five Conferences 2013: SugarCRM next up

Overture

OK, this is apology number two (or apology twice repeated). This is one of several technology conference "seasons" where they pile onto one another. Thus, as I'm writing this, I'll have been to five conferences in about three weeks, though my good friend and thought leader Ray Wang actually went to five conferences in three days recently, so I clearly have nothing to complain about. I'm going to write individual blog posts for each, but they will be much shorter than the norm. I apologize that I won't be giving them the full review of the conference I would have otherwise. It will be in this order (with the date of the conference in parentheses):

1. Infusionsoft (March 25-29)

2. SugarCRM (April 6-9)

3. Clarabridge (April 17-19)

4. Infor (April 21-24)

5. Lithium (April 23-25)

I'll be repeating this overture in each of these posts — except that as I complete one, the link to it will be in the Overture list. This is going to take some time, too. So don't look for it as a weeks-long project. It might take me a month or two.

SugarCRM and SugarCon 2013: The biggest picture

SugarCon 2013, in NY at the Waldorf Astoria probably was SugarCRM's most important event in the last several years for multiple reasons. SugarCRM itself is at an inflection point – one that will drive its success, or lack thereof – in the next several years, depending on the direction that it goes from here. I'm not attempting to be dramatic at all. As all of you probably know, I've been a fan of this company for nearly a decade and have seen its potential all this time and have seen them start to realize this potential. But I don't think it's ever reached this kind of nodal point before — one that can make or break it over the next couple of years — and this was reflected at the conference.

The good news is that the indicators are considerably more positive than negative, though it has some things that it must (and I do mean must) resolve to make sure that there are no obstacles in the way of its potential growth.

The conference: Location, location, location

Before we get into it, I want to say a couple of things about the location of this conference.

Why, you might be wondering? Who gives a flying ... whatever about that? And why should you (Paul Greenberg) cover this?

There is always a reason, grasshoppers.

As I've said many times before, conferences are key moments in the life of a company — especially a technology company, which is not only in a highly competitive environment, but in a closely watched industry segment — closely watched by financial and industry analysts, general business media, and investors. What a company does at a conference, how it present itself, the feeling that it leaves the attendees with, the experience that the attendees have, and the themes that it presents all have lasting impact on both the immediate, often visceral and reactive responses of those who one way or the other watch or participate, and the long-term impressions that it leaves — all of which can impact business performance over a year.

If the conference impression is "bad" rather than "good" — and there is a lot that goes into those big terms — then the things that occur over a year with the company — a prospect making a decision, an investor deciding to invest, a bad or good article in the business press — can be decided, especially if the decision is marginal — by the "badness" or "goodness" — the feeling that the attendee or watcher has about the company that has been shaped by the conference. This isn't crass or raw; its rather subtle, but the impact on decisions that could go either way is there.

Think about it. If you attend a conference and your impression of that conference is that it was messy or busy or crowded or the food sucked or the presentations were poor or the message was unclear or the videos were salesy or the attention to you was lacking, how are you going to feel about the company that held the conference? Of course, that depends on a lot of things, but odds are good that you won't have a good feeling about things.

I'm not trying to overblow the importance. But the conference is watched closely by those who have an impact on the company, so the conference needs to be carefully handled and well produced.

That said, while all in all, SugarCon 2013 was a very good conference, I would never hold another one at the Waldorf Astoria. This is clearly a hotel that was built for captains of industry to stay at — with grand ceilings, beautifully appointed lobbies, a world-class bar and fantastic conference food (best ever, in fact) — but it was almost impossible finding one's way around from track to track, room to room. You needed sherpas to figure out how to get from one place to another. Not only that, but the staff that ran the A/V for the Waldorf clearly didn't understand the tech industry, because they tried — though SugarCRM's staff backed them off somewhat — to run things with far too much "efficiency" and with far to little "effectiveness".

The true saving grace of the conference was the quality of the content, once you managed to find the room that the presentations were in. To Larry Augustin and SugarCRM's credit, they had the greatest array of influencers speaking both as keynotes and in tracks that I've ever seen in a single event. That goes to the regard that these influencers hold SugarCRM, believe me. I won't say why I'm putting it that way, but it really says a lot about that. The content presented all in all was exceptional, and that goes a long way to making or breaking a conference. This made this one.

All in all, not great, but a good experience due to the quality of some of the content and effort by the SugarCRM people, who are very nice generally, to make it pleasant, which, given the hotel set up, was actually a significant achievement. At this point, SugarCon is better off in San Francisco, as much as I love NY — and I really, really do.

The strategy

SugarCRM's strategy for the last two years has been crystalline and consistent. It is among the most refreshing companies in the industry, because unlike other companies that I won't name here, it remains committed and proud of its commitment to CRM. It doesn't run from it, which is to its enormous credit. Thank you, SugarCRM.

With the signing of the partnership with IBM, it is now focused strongly on one thing: Moving upstream to the enterprise. This does not mean that it is going to ignore the small and midsized market that it's flourished in, but it does mean that it is doing all those things that it has to do — painful or not — to get the company ready to meet that upmarket challenge.

Over the last year, and right up to the conference, this meant several things:

1. Proof of concept that it could scale to the enterprise: It did this in spades, not just because IBM showed faith in it by signing the deal, but far more that IBM decided to replace all 67,000 seats of Siebel with SugarCRM. By the conference, many of those seats had been replaced. To make this more definitive, one of its newer customers, New York Life, is going to be scaling SugarCRM up to 4,500 seats as part of its deployment. Case closed here, gang.

2. Be an "enterprise-ready" company: This meant a large number of senior personnel changes with a significant number of its long-time senior management departing the company over the last year. Not all of them have been replaced yet — more on this in a short while — but those slots that have been filled are filled with people who know how to handle the enterprise. But it also means having a culture that can handle the enterprise, and it is getting there. It has reorganized to put all customer-facing efforts into a single organization; it is hiring more salespeople who know how to sell directly to the enterprise; it is providing executive sponsorship to named accounts, and making other moves too numerous for me to cover. But it is not quite there yet — because of one significant hole — and that is related to its personnel changes. Nice, how the loop works here. For me, at least. Who, you ask? Soon.

3. Make more changes at the partner level: The SugarCRM partner network consists of some excellent partners — but only a few know how to sell into the enterprise. Which means that SugarCRM now has to find partners that can sell into the enterprise. The combination of that with the departure of long-time channel VP Jeff Campbell created a somewhat mistakenly nervous partner network, which is a short-term problem. But regardless of the partners' skittishness, a partner issue not a SugarCRM issue, SugarCRM is doing exactly what it should here, which is to add enterprise partners. It is not neglecting the rest of the partner network. Its plans indicate a significant level of increased attention to the existing partners and to the new partners as it gets them. On the one hand, it has announced that it is going to improve the tools and services that it provides partners with to help them be successful. It is also going to invest more effort in the partners that show value. That's all great. But it is also doing what it needs to by starting to recruit the larger systems integrators to become partners. Not only does it have IBM, but it also has PwC and Cognizant, among others. All in all, while it may be a bit scary for the partners, SugarCRM is doing exactly what it must to make both the partners and the company be successful and "grown up". So partners, stop being paranoid. Really. This is a good thing for you.

4. Make sure that the product architecture scales: SugarCRM 7.0 most assuredly does. For SugarCRM, this might be the most significant version in its history. More on this in a few minutes. This is its crown jewel.

Just to be clear, the transformation of the company to its enterprise-ready state is ongoing and on target, but, like any transformation, it is in flux. It's at that point where it could go oh so right, or a misstep, and it could be set back significantly. Thus, this is an inflection point. Luckily, it has veteran investor and CEO Larry Augustin and some superb senior management, such as Lorna Heynike, the group VP of Product Strategy; who knows what the hell they are doing. They are proving to be a significant steadying influence as the ship continues to turn. Plus, the SugarCRM product has proven to be rock solid over the years. It stays consistently contemporary, and is able to handle both the legacy customers and the customers looking for a full architectural refresh. And it has now proven its scalability. Its foundation remains very strong.

The 2012 results were telling. It had 60 percent year-over-year revenue growth for the company — not surprising, given the evolution of this company over especially the last three years. This meant, at the end of 2012, 1.2 million users and 6,500 subscription customers. In the first quarter of 2013, further growth of 30 percent year over year for the quarter has occurred. Sweet. Strong.

The messaging and the marketing

So there is no question that despite some of the painful changes that SugarCRM has been making, it is on the right path. But here is where the conundrum comes in.

The conundrum roll, please.

It is on the friggin' money when it comes to its messaging, yet its marketing overall has taken a step back in the last year. It must and I mean must hire a CMO. Priority number one.

How does that work, and why should it?

First, there is clearly more to marketing than just messaging and branding. Among other things, there is:

1. Influencer relations

2. The presentation and representation of the company to the public — as a company, not the product

3. Marketing as the first line of conversation with the public in all its forms

4. Thought leadership.

When it comes to its messaging, it couldn't be any smarter or better than its "Every user, every customer, every time" approach. In an era where customers and users, aka, people, are demanding highly personalized individual responses, no message could resonate as it scales up better than this "CRM for Every(one)." This is right for two reasons:

1. It indicates that it is in touch with the contemporary market — each CRM user or person impacted by CRM has a personalized experience with it. It could be in the customization of the UI and UX, or in the result of the interaction between the customer and the company. But it is singular.

2. The "every user, every customer, every time" reflects the scalability, the portability and the reliability of the products.

Trust me here. It's the right message. This is one of the best messages, given the offering, in the industry.

But in the other areas, it has fallen back a bit. That would include influencer relations, thought leadership, and the representation of the company to the public in general, which includes its visibility.

Let's briefly look at each.

1. Influencer relations: To its credit, it has brought back the always amazing Martin Schneider, so whatever influencer relations glitches it has, if he's involved in any way, will go away. But at least at SugarCon, there was a more lackadaisical approach to the IR than in the past — and this is not acceptable for a company that has a great deal of positive capital among the influencers who know it. There are two things it needs to do to rectify this. Pay closer (not more) attention to those it already knows and also go beyond them, by expanding its network. There were a number of problems at the conference that had nothing to do with influencer egos, but had to do with lack of attention to detail that hurt SugarCRM more than the influencers. The only one for the most part out of SugarCRM's control was poor internet connectivity that took a long time to get resolved — which made it hard to cover the conference in real time — which the influencers were ready to do. Worse, though, and something ity could control, were inconsistent interactions with the SugarCRM staff and the influencers. This meant sometimes trying to cram in too much at once and other times unable to get anything finished even when started. This is not because they aren't nice people, they are very nice, but because they were overwhelmed by the amount of work they had to do, and they were not experienced at the IR part of this — except Martin Schneider, who handled it perfectly as pretty much always — since he is an influencer in his own right. This definitely damaged the overall impression that the influencers had of the event. What should have occurred, which would have dealt with the inexperience, was a more programmatic and planned approach at the event, including one-on-one meetings, assigned, rather than ad hoc access, and letting the staff know the limits on both sides of the interaction — meaning when its too much and when its too little. This allows one to set expectations on both sides — the staff and the influencers. Secondly, there was a decidedly smaller group of influencers than last year, which, given where SugarCRM is trying to go, is not wise. SugarCRM needs to bite the bullet and reach out to some of the enterprise influencers who cover a wider swath than CRM but are focused on the enterprise software world. It might be a wise move. Bring them to the event. I could say more, but I won't.

2. Thought leadership: there was no evidence of that at the conference. Nor since the conference. To its credit, SugarCRM has eliminated open source as a differentiator, which admittedly takes away what was its thought leadership focus for years. It forces it to retool. It has a clear theme for the refresh, though. That would be "personalized deployment while scaling to thousands". Start building the assets to support that superb messaging.

3. Representation/visibility of the company: Again to its credit, SugarCRM might be the most transparent company on the market. It is not afraid to talk about its tough decisions; it is not afraid to expose some of its weaknesses, and it is always open and friendly, and amenable to answering all kinds of questions. But it has to do much more than just that. It has to be out there, representin'. SugarCRM is one of the good stories when it comes to the CRM world. It is a company that has gone through a lot of changes, yet consistently comes out on the right side of those changes. It has good people working there; it has a great product; it has influencer goodwill. it doesn't emphasize its philanthropy or values as a company. It underestimates itself. It needs to make changes. More of the values and less of the how to increase revenue discussions at SugarCon 2014. (UPDATE: I made some changes and retracted the "SugarCRM management doesn't get out there. My research was faulty apparently. SugarCRM CEO Larry Augustin made a more than compelling case to show that they are truly out there a lot. So I am sorry for saying something that wasn't ultimately the case. My bad)

Look. This boils down to a simple thing. While it does so much right, when it comes to its public-facing activity, it needs to find and hire a CMO — and sooner rather than later. All of these issues go away when that happens.

SugarCRM 7.0

With all the things that it has to do, this is the one thing that it doesn't have to do. It has a rock-solid, contemporarily architected, functionally intelligent, outcome-based, gee-tar pickin' , oops, sorry, highly customizable product that competes with almost anything out there that you can name.

SugarCRM 7.0 might be its greatest release in the last decade – if not, it is its most important. It covers all platforms, ranging from desktop to tablet to smart devices, with native interfaces for each of them — all HTML5 based. But what makes it great — because it is customizable down to the object level — is that it can scale, and yet each user can have their own personalized version of the application without compromising the security or the quality of the data or the functionality that is being universally used by the company. The user interface is vastly improved, and while no one is at Infor's standard, this provides a pretty damned nice user experience.

It has made an interesting choice on how it deploys its cloud. It has a private cloud — which in this case means a locally hosted one — with datacenters in the United States, Ireland, Singapore, Japan, Australia, and Brazil. The rationale is that this provides network and data isolation, which in turn allows for greater security and more control over change management.

I can't say enough about this product — so I won't say anymore. Again, I have limited space. But this is a crown jewel, and one that it has managed to align with the crown of the contemporary king.

Summary

SugarCon 2013 was an interstice for SugarCRM, because it pointed out the soundness of the direction it is taking, and the one glaring weakness it needs to resolve to get there. It is on the right track, and it remains one of my favorite companies for its leadership, its product, its candor as a company, and because it is just really interesting. But by SugarCon 2014, it needs to have resolved this one weakness, and if it does, I suspect that you will see a company that has already either leapt to a new level or is at the cusp of doing so. If it doesn't, I suspect it will be like the Waldorf Astoria: Grand ceilings, but a confusing path. Knowing it, I'm preparing to celebrate its growth. In San Francisco.