Open Source, CRM and the Realities of Business

A funny thing happened to open source CRM over the last few years: It stopped being all about open source and started being about delivering CRM — at least, for some vendors.

That shift makes sense. Customers of CRM products want applications that meet their business needs, not their desire to have access to the source code. That access is a bonus — especially for those in a vertical market with unique requirements. However, it’s not the core reason businesses invest in CRM, which is to accomplish things.

By itself, open source confers no value on your business. If the ability to alter the source code is your primary concern, then you might as well develop your own CRM application in-house. What’s most important is functionality. Does the application do what you need it to do to make your business successful?

Playing the Cost Card

So, led by SugarCRM, the smart open source CRM vendors are backing away from open source as their leading selling proposition. It’s a wise move — it not only shifts the emphasis to what is really important about any business application, but also opens up the market for these vendors to customers who are inclined toward initially using out-of-the-box functionality.

Customizations may be made later — and they’re likely to be cheaper with open source — but they are not necessarily the most vital things for companies looking to get a handle on the basic sales, marketing and support issues plaguing them today.

Open source CRM vendors also have the cost card to play — but again, without functionality, buying a cheap CRM product is not an answer if it can’t solve the problems that drove the CRM buying process in the first place.

Buyers seem pretty clear on this, and many vendors are catching on. It’s refreshing to see how business models are shifting from the old-style, free application/paid-consulting model to other models. Some are very much like the traditional software approach, while others introduce elements of community, consulting and partnering into the mix.

Slaves to the Past

Yet there are still some in the open source CRM space who seem slaves to the past. Scanning the various discussion groups of open source communities, you still see complaints against vendors that they “aren’t really open source.” The frequency of these attacks correlates fairly well to the overall revenue of the vendor under attack.

SugarCRM is a frequent target; the free community edition lacks some modules that are present in the enterprise editions, thus leading some to take shots at the company. Other times, Sugar has been knocked for the validity of its open source licenses. The same accusations have been leveled at other vendors who offer free/fee alternatives.

Here’s the reality: As Martin Schneider, the director of product marketing at SugarCRM told, “Open source doesn’t mean free and was never really meant to mean free.”

Vendors in this space are pursuing profit, not engaging in a hobby. They have to have something to sell. The people taking swipes at these vendors are not basing their bashing on business concerns — they’re devolving back to IT concerns, and IT concerns should never prevail when it comes to making CRM decisions.

Solve Business Problems First

Do you think that the VPs of sales in their organizations give a fig about the open source purity of their CRM applications? If your VP of sales is focused on such things, I suggest updating your resume and getting your LinkedIn contacts in order.

Open source CRM has evolved the only way it could be expected to evolve — somewhat away from its roots as a community-driven and developed application and more strongly in the direction of being a business-critical tool.

As much as the open source fanboys might resent it, CRM has to be focused on solving business problems first and fitting into IT philosophies a distant second. Getting those priorities backwards will kill your business.

CRM Buyer columnist Chris Bucholtz blogs about CRM at Forecasting Clouds. He has been a technology journalist for 15 years and has immersed himself in the world of CRM since 2006. When he’s not wearing his business and technology geek hat, he’s wearing his airplane geek hat; he’s written two books on World War II aviation, and his next two are slated for publication in 2010.

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