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8/18/2006
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Rick Whiting
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Analysis: Now Is The Time To Consider Open Source CRM

Open source apps are a tiny fraction of the CRM market, but the advantages and advancements make it a worthwhile contender for more.

Open source versions of CRM software aren't on the radar of most businesses. But considering the advantages of these products, it's time to take a closer look.

Open source CRM software is a tiny portion of the $5.7 billion-a-year CRM software market, and deployments generally are fewer than 50 users. The dozen or so vendors of these applications, meanwhile, face an uphill battle to convince large businesses that their software is as scalable and functional as commercial CRM apps.

Still, some companies--particularly small and midsize ones with open source experience--are giving open source CRM apps a serious look because of their flexibility and low cost. And a growing ecosystem of developers and third-party vendors that provide support, add-on products, application hosting, and other services is making open source CRM less of a gamble.

Easy On The Wallet, bar chartSome businesses are even switching from big-name CRM products. Last year, Sterling Production Control Units began using SugarCRM's hosted app after a year using Salesforce.com's CRM service. "The per-user cost is substantially better, and the product out of the box provides everything we need," says Christopher Edwards, Sterling's PCU sales and marketing general manager.

The Linux operating system, MySQL database, and JBoss application server are among the open source offerings that play a big role in IT shops. But open source ERP, CRM, and business intelligence apps are in earlier stages of development and adoption; vendors such as Centric CRM, Compiere, and OpenCRX aren't well known. SugarCRM, with more than 800 paying customers, has the most recognition.

Sage Software, which sells commercial CRM apps for small and midsize businesses, says the open source crowd isn't serious competition. "We just don't run into them," says Larry Ritter, product development VP for Sage's Act contact management software. Product management director Chris Reich says Compiere's and SugarCRM's names have cropped up a few times.

But open source applications have advantages--low cost being the most obvious for companies with limited IT budgets. CRM vendors follow the traditional open source model: Provide free software, which builds a customer and developer base, and make money by charging for more sophisticated versions of the apps and service and support. Centric CRM gives its software away and charges $400 per user per year for maintenance. Compiere provides free downloads of its integrated ERP and CRM apps, then charges subscription fees to business partners that provide implementation services and support. SugarCRM prices its Sugar Network support and training services at $99 per user.

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The free version of SugarCRM only supports up to 20 users, while Sugar Professional is designed for up to 500 users. Sugar Enterprise supports up to 5,000 users and offers an offline client and other goodies. On-demand versions of SugarCRM Professional and Enterprise are priced at $40 and $75 per user per month, respectively, while on-premises versions are priced at $239 and $449 annually per user.

All open source CRM vendors let users see and modify the source code, but each has added its own spin to the standard license. SugarCRM sells its software under a modified Mozilla Public License; modifications made to its Enterprise version belong to SugarCRM. Centric CRM lets anyone modify the code of its apps, but they can't resell or distribute it without making a deal with Centric first.

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