A Spoonful of SugarCRMCase Study and Review of an Open Source CRM Solution

Company Overview

SugarCRM is a relatively young company hoping to be the sweet spot on the menu of CRM solutions. Based in San Jose, California (US), the company was founded by John Roberts, Clint Oram, and Jacob Taylor, who brought skills from their backgrounds with E.piphany, BroadVision, Baan, and IBM to the company. SugarCRM provides a number of CRM products, which are based on its open source core product, Sugar Sales. The following study concerns the SugarCRM phenomenon and one of its customers, Prevalent Networks. It highlights some of the reasons a company like Prevalent would be attracted to an open source solution such as SugarCRM, as well as some of the potential difficulties.

SugarCRM's business is to sell a more feature-packed commercial version of its open source product (licensed under its version of the Mozilla Public License), while eventually working the commercially-released features back into the open source core. Additionally, the company offers support, implementation services, hosting, and CRM appliances. CEO John Roberts explained:

We generate revenue from a very small percentage of the people that use our software, which was part of our business model from day one and that's the way it should work. We want to be paid when people upgrade to our professional edition. Once they're truly in production, they are indeed getting value from the software and want more.

This could become a pleasant percentage for the company. The first month of SugarCRM's existence saw 40 downloads of its open source beta product, the second month saw about 1,000, in the third about 5,000, the fourth about 14,000, and in September it had reached about 21,000 for the month. With that sort of expanding pool of sites experimenting with or using SugarCRM, there could be a wide net of potential clients and development resources. However, downloads do not necessarily translate into sales, which explains why the company is pushing its solution on several different fronts. For example, even if companies host SugarCRM's application via other providers, clients still may prefer to purchase support from SugarCRM, which essentially extends the company's services to areas where customers would want to rely on SugarCRM's expertise.

The Sugar Sales application cannot yet compete with all of the CRM market's well-known vendors on functionality alone but its hyper development rate and strong customer support have made it a compelling product to hundreds of sites already in production. SugarCRM is working at the pace typically espoused by the open source mantra of "release early release often" by slating releases of its product every six to seven weeks.

Customer Study

Currently, the SugarCRM solutions are targeted toward companies with annual revenues between the $50 to $200 million (USD) range. The products are geared toward 5 to 500 users with a budget range at the top end of that spectrum around $150,000 (USD). These amounts make Sugar Sales Professional a contender with a number of products that Jonathan Dambrot, Founding Partner at Prevalent Networks, compared in his search for a better CRM solution.

Prevalent Networks is an information security consulting firm that does vulnerability assessments, legislative compliance, and other work in the field of Internet and network security. Prevalent's main goal is to work with its clients on mitigating internal and external risk. Prevalent employees need to keep information concerning their clients up-to-date on a regular basis and they need to do it easily and from remote sites. Jonathan Dambrot stated that his company had been using FrontRange Solutions GoldMine for its CRM application.

Because Prevalent Networks' employees often work from various locations outside of the company's headquarters they must access the CRM application from these sites. Even though there is a web-based product that sits on top of the GoldMine application, Jonathan's group was not comfortable working with the GoldMine architecture. One of his major issues was that he couldn't get buy-in from all of the Prevalent employees—the engineers and consultants wouldn't use the product. Although GoldMine has a lot of important features, features that don't get used don't help. Thus, Prevalent figured out its requirements for a CRM application and started to research alternatives.

Prevalent's main requirements were to maintain and manage client information in real time and to be able to do so on a system that was both easy-to-use and on which it is easy to train new employees. After they considered scaling out their existing GoldMine solution, they began to research other products including Microsoft Business Solutions (MSBS) CRM, Salesforce.com, and Sugar Sales Professional. In addition, Jonathan wanted a system that would be reliable and solid enough to support Prevalent's planned growth to about one hundred users within the next two years.

How did those products compare for Jonathan's requirements?

Getting ahead of ourselves, let's begin with the future. What would a company like Prevalent consider solid enough to support their growth? Since they were using GoldMine, they had an idea of what a Windows and Microsoft SQL Server environment could do, which would be similar to the type of platform that MSBS CRM supports. On the other hand, SugarCRM is based on the LAMP stack. That means that Sugar recommends a well-known standard combination of operating system, web server, database, and programming language, namely Linux, Apache, MySQL, and the application itself is written in PHP (note that sometimes the P in LAMP refers to Perl or Python). However, Sugar Sales Professional can just as easily function in other environments, such as Windows (a WAMP environment), UNIX, or BSD/Mac OS X systems. SugarCRM was able to offer information about the scalability of its product and Prevalent was comfortable with open source technologies like Apache and PHP. It is well-documented that Apache is the dominant server platform for the World Wide Web, and PHP has built a reputation as an easy-to-work-with scripting language—adaptable to many different applications. This combination went toward satisfying Prevalent's requirements for its planned growth and the platform hints at the usability issue. Namely, the web browser interface is familiar thus Prevalent's users could pick up on the navigation fairly quickly. According to Jonathan, "Not only is it scalable, but it's web-based—[when] we have a new user come on board, whether they're in-house or remote, it's pretty straightforward."

Secure with the future scalability of the product, there were still other issues to consider. For example, ensuring the product is truly user-friendly is one issue but making sure its features actually support the users' activities would found some of the rationale behind selecting the product. Prevalent needs to manage a multimillion dollar pipeline and track its employees' activities with respect to client accounts. While the Sugar Sales Professional product can do quite a bit toward that end, the functionality performance graph below shows that both GoldMine and MSBS CRM, for the most part, currently outperform Sugar Sales Professional in terms of brute functionality.

In the graph, bars running to the right of the zero baseline mean the product supports a greater quantity of functionality than Sugar Sales Professional, while bars running to the left of the zero baseline mean the product does not support as great a quantity of functionality. This graph is useful for identifying general competitive functional areas from a high level. It addresses the whole hierarchy of over 2,000 criteria from TEC's CRM model so really a company should look more deeply into the product's capabilities before making a judgement on what can best serve its requirements.

A contribution analysis graph of the products offers a different perspective. If we view the functionality from a basis of setting every category of CRM criteria in our model to an equally relevant importance we can easily see which areas in each product most contribute to the product's overall functionality. The following graph does not chart the products in relation to one another but rather only with reference to each product's own areas of concentration.

The contribution analysis graph above shows that when every category in TEC's CRM model is of equal importance MSBS CRM displays a fairly evenly wavering line that crosses the different categories. This means each category of criteria is as important in contributing the amount of overall functionality to the Microsoft CRM product. GoldMine has a lot of peaks and valleys. SugarCRM lets the marketing automation, sales force automation, and analytics areas define the focal points of its product. It also has potential to satisfy different industries and support product technology areas, whereas the other categories are rather neglected. What does this graph mean? It is likely that the Microsoft solution has fewer peaks and valleys because it has a longer history and thus the time and resources focused into supporting a wide variety of user requirements. That is, it supports a fairly complete range of criteria for each category so it's likely to apply to a broad base of clients.

SugarCRM's chart however is not surprising, when we consider that SugarCRM only recently (mid 2004) introduced its product. It's likely that SugarCRM began by focusing on a few core areas, in particular, as an open source product it would be responding closely to the demands of its core user base. Often with open source projects, if there isn't a high demand for specific functionality, namely if a client company doesn't have reason to sponsor the development of that functionality or developers have not had reason to code it, that functionality won't show up in the product. The converse is true as well, when the user community starts demanding a feature, it gets developed rather quickly. The latter point was made clear in SugarCRM's practice, as John Roberts explained how the company's release cycles reflect their users' demands,

An example is that after we did our 1.0 everyone started asking for internationalization—and internationalization is something we were going to do a little bit later, but we rearranged our roadmap and focused our next release on it and we released that in August as 1.1.

Thus the product is now translated in about fifteen different languages to support the international community. Within SugarCRM's main focal points (marketing automation and sales force automation according to TEC's CRM model) we can delve further into the degree to which Sugar Sales Professional supports the criteria. The contribution analysis of marketing management shows a blue baseline of what a product would look like if each area was given an equal priority.

One can see that Sugar Sales Professional has focused on reporting, campaign optimization, and database connectivity. Outside of reporting the other areas are where SugarCRM is in fact targeting a lot of its future development.

In terms of its sales force automation (SFA), the greatest contribution of functionality comes in the area of service and sales support management, pipeline management and the core SFA functionality.

The graphed functionality corroborates a customer profile revolving around the type of features that Prevalent sought. Sugar Sales Professional provides the key functionality to let a company create, maintain, and view sales opportunities; do some analysis based on the activities of its users; identify customers by name, location, and business characteristics; and manage the pertinent data for these processes. Knowing that the product could handle the essentials of what they needed was one issue, but Prevalent also desired other features, which were not as much of a priority.

Prevalent consulted with SugarCRM and verified against the company's development roadmap. This is an area where open source communities shine like a flashlight for the would-be customer on the vendor's path. As an open source-based company SugarCRM relies on its user, developer, and partner community to publicly engage in finding and fixing bugs, recommending good solutions for their product roadmap, and expressing their likes and dislikes with the product. That means that a company like Prevalent has quite an opportunity to review the feedback of SugarCRM's actual users, which can help inform it with an impression about how responsive the company will be solving problems and following-through with developing important requirements. Jonathan explained why he appreciated that SugarCRM was able to demonstrate its commitment,

I've looked at several open source products that when you look at their web sites you see a request from 2001 that is still not done. I know [SugarCRM] will make things happen and therefore it made it a lot easier in terms of the decision making they instilled trust in me.

Open source vendors, often in the early stages of introducing their solution to the world, struggle to develop the kind of trust that is necessary for client adoption of their system. Potential clients need to know that the leaders coordinating development of the software will commit and follow-through. Certainly SugarCRM got a boost in this regard by garnering venture funding from Draper Jurvetson, which allowed their developers to blast full time into their product development. This is something that open source developers have not traditionally had the ability to rely on so early in their product's life cycle.

Prevalent did not require SugarCRM to implement the system, rather they installed everything themselves. Prevalent had to develop their own method for migrating their data from GoldMine to Sugar Sales Professional (SugarCRM now offers a utility to do this migration). Furthermore, Prevalent had some individual business process requirements that SugarCRM developed for them. According to Jonathan,

To be quite frank, if we'd wanted to spend the time on it, we'd have done some of it ourselves. They [SugarCRM] understand the product far better than anyone else at this point so we felt that instead of spending our resources internally on stuff, we had to be working on our core competencies, let them work on theirs, and let them build it for us.

As a CRM solution with open source underpinnings, it would have been possible for Prevalent to develop these changes on their own but it wasn't something they wanted to do—better to rely on the core team's expertise.

In sum, Prevalent chose Sugar Sales Professional for its capacity to support their current and future requirements, its usability, and its cost. They determined that costs would rise prohibitively for more than five users on MSBS CRM and Salesforce.com as opposed to what they'd spend on GoldMine or Sugar Sales Professional. Depending on the amount of users, Sugar Sales Professional can range up to about $250 (USD) per user per year (including annual maintenance and support). At that range, Jonathan believes his company began to see payback in three to four months. His engineers finally swallowed their medicine and now use the system.


Since September, SugarCRM has made improvements listed in their roadmap, including lead management, calendaring, customizable home page, advanced reporting, team selling with data security, and a quotes and price list. The company's 2.0 release brought a number of other changes, namely the launch of an off-premise (hosted) solution, which the company intends to position as competition to Salesforce.com and Siebel. SugarCRM's approach contrasts to the multi-tenant architectures a number of other CRM companies provide; instead SugarCRM offers a single-tenant architecture (application and a database for each client).

The company also hopes to get customers biting for its SugarCube, which is a preconfigured rack server. The SugarCube appliance comes in single or dual CPU units with a preinstalled and preoptimized Sugar Sales Professional system. The SugarCubes are LAMP systems running on Red Hat Linux with the Zend Performance Suite, which makes them the same machines the company uses for its hosting center.

As SugarCRM found its customer demand increasing, it had to find ways to better support migrations from other systems. A GoldMine migration tool was one item on the list, but they had a high rate of users requesting migration tools for other products and thus created an import tool with custom import maps, again targeting Salesforce.com by allowing users to import contacts, accounts, and opportunities to the SugarCRM system.


As an open source vendor, SugarCRM benefits from its user community. The company will need to tread carefully here for several reasons. First, it will be important to avoid alienating the open source user community with its commercial editions. John Roberts expressed this sentiment in claiming that they are "die-hard open source as part of the DNA of the company," thus SugarCRM expresses its genes by gradually pushing its commercial development efforts back into its open source solution.

Second, it will have to manage partner and user contributions wisely. Some professional open source developers have noted that poorly managed open source projects can become overrun with code taking the project into the wrong direction and thus killing its momentum.

In this regard, one step SugarCRM is taking in the right direction seems clear from its recognized developer program. SugarCRM found that companies doing their own implementations wanted to customize the product for specific needs. Especially VARs that participate in SugarCRM's open source development—they are actually doing installations and customization thus they have a good idea of what is required for the system. SugarCRM hands out the recognized developer award to partners and individuals based on the code, application design, or community support these people provide. This is part of SugarCRM's effort to grow its partner community, especially in different areas of the world and shows that they give credence to wisely managing their open source project contributions.

Finally, in looking at their roadmap, we can see that e-mail marketing, Microsoft Outlook contact synchronization, forecasting, and territory management are some of the next areas the company has planned for development. This may denote one of their main challenges—that is, SugarCRM has to continue filling in areas of functionality they currently lack if they wish to position themselves against CRM offerings from many of the other well-recognized vendors (both proprietary and open source). The Sugar Sales Professional product quite capably satisfied Prevalent's needs without the additional confusion of software bloat. In the future, one hopes that SugarCRM continues to do a good job accommodating its increasing number of clients without losing sight of its product's usability.

About this Article

TEC launched its Free and Open Source Software (FOSS) Evaluation Center (http://www.fossevaluation.com/). It provides impartial analyses of enterprise solutions that support FOSS platforms such as Linux. To complement the evaluation center, TEC is augmenting its research coverage of Free and open source service providers and solutions.

Please send comments or inquiries to the author, Joshua Chalifour, at jchalifour@technologyevaluation.com.

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