Open-Source CRM Delivers More Control, Less Cost

A good CRM package does you no good if employees aren't willing to use it. Case in point: IMA Financial Group, a medium-sized financial services company based in the US. IMA had installed a commercial customer relationship management system that "was flexible and configurable and attractive on the front end," says business processes manager Jennifer Hallam.

But the seeming advantage of a vastly configurable system was irritating her internal customers-and so only 10 to 15 per cent of them were using it.

"The old system simply had too many bells and whistles," she says. Even bringing in a developer to simplify the interface didn't do the trick, she adds.

After a good deal of internal discussion, the 500-employee company moved users off the old system late last year (IMA has asked not to disclose the vendor's name) and installed ConcourseSuite 5.0, an open source CRM solution from Concursive (formerly Centric CRM).

An open source application in an US$80 million company? "It was a hurdle to get the management team to accept open source; they didn't understand the business model," says Hallam. But accept it they did, and the package has been adopted by 90 per cent of the company's users.

The Right Fit for You?

The success of open source operating systems and middleware is an old story: Linux and tools such as Apache have long since moved from the fringes to mainstream adoption. But now, open source enterprise applications, including CRM, are beginning to show up on IT's radar screen, says Gartner analyst Laurie Wurster. According to a recent open source survey by CIO, 45 per cent of the 328 IT leaders queried use desktop applications such as OpenOffice.org and 29 per cent use open-source enterprise applications. The most popular of those enterprise applications are collaboration tools, CRM tools and ERP applications, according to the survey.

To be sure, this is a nascent trend. Open source CRM barely registers when industry watchers like Gartner compile market share charts. "We have to look at open source CRM the way we looked at Linux five years ago," says Wurster.

And like the early adopters of Linux, the pioneers of open source enterprise applications aren't yet a representative cross section of business. They tend to be companies that are medium-sized, often engaged in business-to-business commerce, and equipped with good in-house development skills.

Enterprise adoption is not unknown; H&R Block, for example, is a SugarCRM customer. But that's something of an exception to the rule, in part because most big businesses already have a sizable commitment to an existing commercial CRM package. Also, transaction-heavy, consumer-oriented businesses and other large enterprises may need more features than those offered by the open source competition.

If your company does fit the profile, there's quite a bit to be gained. Open source CRM packages (including support and charges for premium editions) cost approximately 20 per cent as much as corresponding commercial solutions, says Wurster.

Since most of the code is open, the applications tend to be very customizable, run on any platform, and have a good, if not all-encompassing, feature set. Indeed, SugarCRM, the largest player in the category (Concursive is No. 2), has added more mobile features than many of its commercial rivals.

Page Break

A Big Trust Question

No CIO minds saving money, but some worry that open source software is, well, too cheap. That was part of the problem faced by IMA Financial's Hallam when she tried to get the OK to deploy Concursive. "We view our software vendors as long-term partners. There was concern that they might disappear at some point," Hallam says. Ultimately, though, management was won over by the understanding that even if Concursive should fail, the open source code would still be IMA's and the open source community would continue to offer a measure of support.

Despite its roots, open source has moved well beyond the stage where it represented a cultural revolt against the software establishment. Today, many open source companies keep a sharp eye on the bottom line by selling services as well as enhanced versions of their free-for-the-downloading community editions.

Still, there's no getting around it. The economics of open source are different. "Any CIO who considers open source to solve a critical business need will look at its commercial viability," says Ron Bongo, CEO of Corra Technology, a systems integrator specializing in open source. That's not always easy since the providers of open source CRM are privately held.

But even the larger open source CRM companies are hungry for paying business, which means that a CIO considering a major deployment has a good deal of leverage.

"SugarCRM had a passion to land us as a customer," says Evans Wroten, CIO of InterAct Public Safety Systems. Wroten had led deployment of Salesforce.com and Siebel CRM on other jobs, but having seen the success of open source infrastructure projects, Wroten was ready to listen to Sugar's pitch when the new management took the helm at InterAct following the acquisition in 2005.

From an IT perspective, the company had been flying by the seat of its pants. InterAct lacked a central repository for customer information. Each sales rep had a separate stash of contact files and a spreadsheet of likely sales. "All of that information was stuck in silos," says Wroten.

Disorganized sales contacts are bad enough. But the new managers found that making an accurate financial forecast was very tough. "They (the salespeople) would walk into meetings with estimates on a yellow legal pad," he says.

A few items on Wroten's check list stood out as InterAct picked a new CRM vendor. First, of course, the application had to have the requisite features and had to fit into the existing infrastructure. "Since we had systems in place, we liked Sugar's open platform and its ability to write to other systems," says Wroten.

In particular, the CIO needed to integrate the new CRM system with an existing customer support intranet written in ColdFusion. Wroten could do it with SugarCRM, without resorting to expensive systems consultants often needed for commercial CRM deployments.

InterAct's execs decided they liked the flexibility and openness of open source applications; other companies might not. "Think about the cost of building and maintaining your own features," suggests Sheryl Kingstone, director of enterprise research with the Yankee Group. "You have to understand what you are getting into."

Page Break

Control Over Code a Plus

Unlike commercial software, open source code, is just that-open. Users are free to modify and distribute most of it under any of the several commonly used open source licenses. In fact, openness and the right to modify the source code is a key advantage for tech-savvy companies willing to take on development tasks. But it could be a burden for small businesses with meager IT resources.

Development languages, for example, become a key issue, says Bongo, the systems integrator. "Sugar is written in PHP, and for a lot of Java shops, that would be a non-starter," he says. Concursive, on the other hand, is Java-based, so for some organizations it would be the better choice, Bongo adds.

If you can handle it, though, the flexibility of open source CRM is very powerful. At NetroMedia, a provider of streaming media services, the in-house IT staff transformed Splendid's CRM package into "a control panel for our entire business," says Matthew Carson, the Canadian company's founder and CTO.

NetroMedia, with nearly 500 customers in 77 countries, had been using Salesforce.com for several years, but had problems integrating new features the company needed. Carson looked at SAP, Microsoft, Accpac and others as well, and found them too closed for his taste. "Control is a big issue. You want to be able to write the (CRM) system around your business model, not the other way around," he says.

Carson notes that his experience with SAP was several years ago, and it may have evolved the platform to the point that his earlier concerns no longer apply. However, he remains a SplendidCRM customer and expresses satisfaction with the deployment.

Control, in a slightly different sense, was a key issue for Axel Products, a testing lab in the US. As the business added customers, it was clearly outgrowing packages like Outlook and ACT, and was looking for a CRM application that would fit a six-person business. As he experimented with different software, company president Kurt Miller made an unsettling discovery. "I couldn't get our data, and that's hundreds of customers, out of ACT."

Eventually, he did, but the lesson stuck. Miller settled on SugarCRM largely because it's built on top of MySQL, an open source database. "No matter what happens, I control my own data. Sugar could disappear and my data remains in MySQL for to do what I want," he says.

No one would call either Sugar or Concursive a giant, but both have sizable user bases and are known to the IT analyst community. Concursive has extended its functionality into team collaboration; in fact the shift from its former name of Centric CRM was made to reflect the company's broader scope. Splendid has its partisans, but is admittedly quite small, and appeals to smaller businesses. There are scores more small open source CRM providers listed on sourceforge.net.

Is open source CRM right for you? There's no one answer. Those apps save money, are flexible, and give you lots of control over your data and infrastructure. If your company has had good experiences with Linux, or an open source database like MySQL, you'll be in a stronger position to recommend open source CRM to your management team. If you're not ready to take the plunge, a pilot deployment might well answer your questions, without much strain on the budget. Or, give it another few years. Linux grew up; so will open source enterprise applications.