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SugarCRM Company Viability Review

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Vendor Longevity

SugarCRM Viability
Despite its impressive business performance, growing user base and maturing developer community, as an underdog in the segment, SugarCRM faces its own unique challenges and risks.

The company's marketing and promotion is at times under-whelming and generally trails competitors. For instance, Salesforce.com has aggressively promoted its Chatter product and reaped the rewards. SugarCRM points out that it had a similar product—then called Sugar Feeds; today called Activity Streams—two years prior to Chatter. While true, the product was not well branded (Feeds sounds more like an RSS technical tool than a user benefit) and if the market is unaware of a solution, the product doesn't much matter.

Sugar has increased its reliance on an indirect sales channel. This can be a powerful, low cost method to scale, but growing effective reseller channels is difficult to say the least. Business software VAR channels too often deliver along the Pareto principal whereby 20 percent of the channel contribute 80+ percent of the revenues—while the 80 percent who don't contribute revenues suck up the company's resources and generally deliver the problem customers. SugarCRM seems to be slowly finding its balance between channel producers and channel overhead. And while getting the right channel partners is difficult to begin with, operating a hybrid sales model with both direct and indirect sales teams is often a non-starter for the most mature partners who have been burned in the all too common channel/publisher conflicts. To date, the most successful small and midsize business CRM and ERP publishers (Microsoft, Sage, etc.) sell entirely through their channels in order to be clear in their relationships and encourage their partners to make bigger investments. SugarCRM is clearly advancing their channels but continues to face both challenges and opportunities in leveraging an indirect channel to get to the next level of company size.

Open source longevity is contingent on a well organized external development community. SugarCRM must continue to aggressively grow its developer and independent software vendor (ISV) partner channel and cloud ecosystem, in order to offer customers a robust SugarExchange marketplace of integrated vertical, market niche and business process extensions, and in turn deliver a multiplier effect of new customer acquisitions. To date, the company has done a good job, however, gaps in areas such as industry specific software exist, representing a tactical weakness as vertical market solutions are clearly highly successful go to market strategies for CRM market share acquisition.

The open source software industry is fluid and both independent and competing firms can invoke technology decisions which impact SugarCRM and its community. For example, most recently Oracle decided to end IBM isupport for its MySQL database. MySQL is the most popular database to run SugarCRM. This is a pointed example that affects joint SugarCRM and IBM customers—particularly as big blue has only ever supported two relational database management systems in its 22-year history: DB2/400 and MySQL.

Open source software is at risk from competing derivative products. In Sugar's case, SlendidCRM and vtiger CRM are derivative products forked from SugarCRM. While derivative products are not necessarily bad for the original brand or the community, too many times these forked solutions are little more than uninspired knockoffs that have a way of confusing the market place and diluting the original company value proposition and messaging. To date, Sugar has averted this potential market confusion by maintaining a continuous cycle of innovation and customer support that me-too knockoffs or other clone works simply can't keep up with.

The company's roadmap is unclear. There are many innovative opportunities in the CRM apps space—social, analytics, consumer technologies, green, trends toward lead management systems and more—but in some ways it's unclear if Sugar aspires to be a leader or is content with being a follower.

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Sugars roadmap is unclear. There are many innovative opportunities in the CRM apps space—social, analytics, consumer technologies, green, trends toward lead management automation and more—but in some ways it's unclear if Sugar aspires to be a leader or is content with being a follower.

 

 

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