Open source CRM hits milestone, still trails SaaS

SugarCRM has reached 1,000 customers with its open source CRM application and counts Starbucks as a customer, but it may not be the disruptive force experts predicted.

SugarCRM, the open source CRM provider, announced this week that it has reached 1,000 paying customers, but while it's gained ground on Software as a Service (SaaS), it hasn't seen as much success as some predicted.

Cupertino, Calif.-based SugarCRM offers a free open source CRM application as well as a commercial offering in SugarCRM Professional, which includes support and added functionality.

In addition to its 1,000 commercial customers, the free, open source application has been downloaded more than a million times, according to the company.

Amongst those customers, SugarCRM counts such companies as First Federal Bank, Honeywell and Starbucks, which uses the application to manage relationships with employee candidates.

Sterling PCU, a provider of specialized equipment for the appliance and automotive industries, signed on with SugarCRM two years ago after a short run with San Francisco-based Salesforce.com.

"We liked an on-demand, Web-based solution, but we didn't necessarily like the cost," said Christopher Edwards, general manager of sales and marketing with Dayton, Ohio-based Sterling PCU.

Sterling PCU ran into some unexpected costs with Salesforce.com, having to turn to a third party to integrate the software with its Domino client, which turned out to be "very buggy," Edwards said. A rotating cast of sales and support people from Salesforce.com also helped convince Sterling to switch.

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"And then at the end of the day the final straw was we would be charged for backing up the data," Edwards said. "It's our data. We had a corporate requirement to provide backup, and they were going to hit us with additional charges."

So Edwards elected to switch to SugarCRM's on-demand option and deployed it to 25 employees two years ago.

With customers like Starbucks and Sterling PCU, SugarCRM has made some headway in the CRM market after its first release in September 2004 -- just not quite as much as some SugarCRM's pricing model -- which operates in a more traditional way and is less "open source-like," according to Greenberg -- will make it difficult to keep up with SaaS companies like Salesforce.com and San Mateo, Calif.-based NetSuite Inc., as it scales up.

In fact, though Starbucks may have customized SugarCRM to manage potential employees, NetSuite today released a new employee resource management (ERM) module. The new ERM system allows employees to enter expense reports, purchase requests and other human resources-related documents and lets managers approve expenses and monitor their teams.

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