Interview: SugarCRM CEO Larry Augustin discusses how he aims to expand the firm globally...
With the rise of social networking and media, businesses are increasingly looking to use information from outside their organisation to improve the service they give customers and boost their fortunes as a result.
This shift is something that Larry Augustin, CEO of open-source CRM software company SugarCRM, has clearly taken note of. "Traditionally that information - orders, contacts, all those things - you gather from inside the company. But more and more that's becoming about information that you gather from outside the internet," Augustin told silicon.com.
SugarCRM started life as an open-source project in 2004, becoming a fully fledged company following venture capital investment later that year.
By September 2004, 25,000 copies of the Sugar application had been downloaded - attracting further investment - and the company now has 800,000 end users, making it the third-largest CRM provider in the world behind Microsoft and Salesforce.com.
Now based in Cupertino, California, the company saw its billings grow by 50 per cent in 2010 while it also became cash positive for the first time - no mean feat for an open-source software company.
The company provides its technology as software as a service, as well as on-premise and as an appliance hosted in third-party datacentres.
There are three editions of the Sugar CRM product - the free Sugar Community Edition and the subscription-based Sugar Professional and Sugar Enterprise.
The open-source Community Edition is developed by the SugarForge.org community while third-party extensions are made available via Sugar Exchange.
Version 6.2 of the CRM platform was recently unveiled, adding versions for Android and BlackBerry and native support for the iPad to its armoury. General availability of the latest version is planned for later in the spring.
silicon.com recently caught up with Larry Augustin to discuss developments and the company's priorities.
A focus on mobile and social media
Although SugarCRM technology had long been available through mobile browsers, Augustin said the company is working hard to provide client-based applications for mobile platforms.
The latest version of Sugar includes mobile apps for Android and BlackBerry, as well as an upgrade to the existing iPhone app. There is also a version of the CRM technology optimised for the iPad.
"You'll see continued emphasis on mobile - that's very important," Augustin said.
Another area where the company is trying to strengthen its hand is social technology, to allow users to interact more effectively with customers and have better visibility of these interactions.
The use of this kind of technology will provide businesses with...
...an insight into how customers are interacting with Facebook or Twitter and similar technologies.
"Our vision is that all those interactions are now part of, tracked or visible to the salesperson from within the CRM system, so they have a full view of all that information," Augustin said.
This kind of functionality has existed in the SugarCRM technology for a few years but Augustin said the plan is to "deepen, strengthen and broaden those kinds of connections".
By having this kind of information - as well as other customer interactions, such as emails - in the CRM application, salespeople will be able to avoid the process of having to open multiple windows when looking for information on customers.
Expanding the scope of the Sugar platform
Although Augustin wants to expand the business, he doesn't have plans for SugarCRM to move into significantly different application areas - such as ERP or financial software - in the foreseeable future.
But the flexibility of the technology that already exists will allow more customers to use its features in new ways other than just for traditional sales-based CRM.
"I see a very large market in CRM for the near term. When people think CRM, they think traditional lead to cash - a sales situation. But we have a lot of customers and I think this is where you will see us do more - it's what I call a general relationship-management business," Augustin said.
Some examples of this kind of use of the SugarCRM include a customer that keeps track of accountants, their contact details and level of certification using the technology.
Meanwhile, a London-based online ad-serving company is using a highly customised version of SugarCRM to run its whole front office and allow staff to provision advertising and track delivery of advertising against customer orders using the technology.
"You'll see us continue to develop that market, continue to develop value-added resellers (VARs) that help pull us into that market. It's a great fit for us and it's an area of expansion that I think is a little bit beyond what you think of traditional CRM."
Although the bulk of customers are using the SugarCRM technology for sales-related processes, there are a growing number using it for other purposes.
"That's where I think products like [Microsoft] Dynamics don't go as far. I don't see Dynamics that's as easy to customise to that degree and that's where we win business."
Strength through flexibility
Augustin feels the flexibility of the SugarCRM technology is one of the things that makes his company's product stand out, compared with Microsoft Dynamics and Salesforce.com's CRM tech.
The way SugarCRM technology can be run as software as a service, a reseller-hosted technology or on-premise makes...
...it "very flexible, very open, very intuitive" Augustin said.
As it's based on open-source software, the SugarCRM technology is easy to customise for different business needs and easy to integrate with other systems, according to Augustin.
About half of SugarCRM's customers that run the Sugar technology in its datacentres have customised modules as part of their implementation.
Augustin admits that Microsoft Dynamics makes sense for companies with a mainly Microsoft technology stack. "If you want to take Office and extend it with an ability to track leads and customers and extend the contact manager features from Outlook, that's where I think Microsoft fits well," he said.
However, it's when companies are using systems from a range of vendors that SugarCRM might make more sense.
"If you're looking for a variety of technologies, you're looking to integrate into different systems, you've gone outside the Microsoft stack or you want to build a workflow that's custom to your business - that isn't really a good fit for the Microsoft product," Augustin said.
Compared with the other giant of the CRM world, Salesforce.com, Augustin said SugarCRM's ability to be hosted on-premise is a big differentiator. A third of SugarCRM's customers run the technology on their own datacentres as they want a level of access and control that software as a service can't provide.
Another third of SugarCRM customers run the CRM technology as a service hosted by VARs local to their business. This emphasis on local provision is one of the approaches that Augustin feels has helped the company prosper in Europe.
"That makes a huge difference to a customer that's looking to get local service and support as opposed to some company that's far-distant from them or even some company trying to serve their market hosting out of a US datacentre," he said.
By working with its reseller community, the SugarCRM product is now available in 80 languages, significantly more than the 15 languages available with the out-of-the-box version. The next release of SugarCRM will have more than 20 languages.
"That highlights our open model in fact. When we work with a VAR or a reseller we consider it a partnership - we want to help them build their business and many of those VARs work with us to support particular technologies, to enhance the products - that's a deliberate part of our strategy," Augustin said.
One of the big objectives Augustin has for SugarCRM in 2011 is to expand its businesses to add larger enterprises to its customer base.
"Our business has traditionally been very mid-market focused but we're seeing a lot more opportunity to move up into the enterprise market," he told silicon.com.
Many larger companies have expressed an interest in SugarCRM as they look to replace older products such as Oracle Siebel as part of...
...their planned replacement cycle, according to Augustin.
Because SugarCRM uses a traditional web-based architecture, it's relatively easy to scale up for enterprise use while the technology's ability to be run inhouse also appeals to larger businesses.
Larger companies tend to have more integrated applications - such as ERP and analytics built on database technology - so on-premise implementations often make it easier to integrate CRM with these applications, according to Augustin.
"It's a really good fit for us and over the course of this year, you'll see us I think doing more and more up in that market," he said.
Another part of SugarCRM's strategy is to work with larger technology companies to get a foothold in new markets.
An example of this approach is the global alliance the company signed with IBM in January in which the SugarCRM platform was integrated with IBM's Lotus Live. SugarCRM has been building integrations with other IBM technologies, which will emerge later this year.
"IBM is a big integrator that we could potentially use to bring in some of those large accounts. Part of the goal of that alliance is to give us a partner that has the scale and reach to help support us in big enterprise customers," Augustin said.
SugarCRM signed a similar partnership with tech services giant Capgemini in November 2010 and is also working with Accenture.
"Partnering with systems integrators and [value-added resellers] has always been a key differentiator in our strategy. As we move upmarket I think it just becomes more important because the large customers are going to want to have a systems-integration partner in there."
Using cloud to boost expansion
Although based in the US, the company generates about 40 per cent of its revenue in Europe and has focused attention on expanding the business on this side of the Atlantic even further over the past year.
The company installed a European general manager based in Munich to head up a sales, service and support organisation on the continent. Augustin is also keen to expand the business in the growing economies of Asia and South America in 2011.
One of the approaches SugarCRM is taking to expand globally is to take greater advantage of cloud computing.
"Our strategy is to take advantage of cloud-computing services worldwide and let our customers run out of those cloud services and we'll make that easier as opposed to trying to build our own datacentres," Augustin said.
The company is working to make it easier to run the CRM application on third-party infrastructure.
It can already run on Amazon's infrastructure along with Microsoft's Windows Azure platform. The company is also working with resellers to make it easier for them to run local instances of SugarCRM for customers.
Despite competing with Microsoft in the CRM market, SugarCRM is still able to use Microsoft's infrastructure to serve customers that want to use SugarCRM in a cloud environment.
"Microsoft is both an application provider and they provide the infrastructure. They've been a supporter of ours on the infrastructure side," Augustin said.