This story was originally published on April 19, 2011, and is brought to you today as part of our Best of ECT News series.
Computer software requires an enormous amount of support. That fact has enriched companies such as Oracle and SAP, which levy annual support fees of about 20 percent of the sale prices of their applications.
That’s one of the things that just sticks in the craw of Clint Oram, chief technology officer and a co-founder of SugarCRM, as he told CRM Buyer during a recent interview held prior to SugarCon 2011.
CRM Buyer: Are you doing for open CRM what Red Hat did for Linux?
If you look specifically at Red Hat, they don’t own and drive the product roadmap around Linux. They came along after this open source community and product had formed, and their value-add is to be the sheriff in the Wild Wild West and to bring support to the product.
At the end of the day, every commercial open source business has to add value. Adding support to this community is their value add.
We at SugarCRM started the community, started the product, owned the source code and owned the product roadmap from the beginning. So our valu-add is not necessarily around adding support to the application, because I’ve owned the roadmap from the beginning.
There’s a huge ecosystem around us that I don’t have control in running. But I have the choice of how much support I build into the application.
I have a specific view about building software — the best software doesn’t need support. So I haven’t built an application where it needs a bunch of customer support around it, and this is where there’s a lot of nuances that will come next. I have been building an application that’s easy to use.
Now, CRM is not a point solution; it’s a process solution. A point solution is easy on, easy off; a process solution is hard to adopt, but once it’s adopted, you’ll never get rid of it. Migrating customers from spreadsheets to CRM is a change management process within a company.
I want to build an application that doesn’t need any customer support, but adopting CRM and implementing around CRM is something that my partners have built practices around. Take a sales organization — it has quotas, and you need to align people, process and technology around it.
We have a structured partner program, tiering, training and certification around partners to make sure my view is not impacted.
CRM: So are you doing what some other companies like Sun Microsystems and Oracle do — use an open core and then monetize whatever comes out of that?
I can release the software under whatever license the customer needs. Some want AGPL, others want a commercial subscription license.
That model, this open core model of having the core of the application licensed under an open source license and professional and enterprise licenses under subscription licenses — in this whole model I’m designing an application that doesn’t need a lot of help.
But the business purpose, the problem you’re trying to solve, is how to build a sales machine, how to build a customer support machine, how to align people, process and technology.
This is where our VARs come in. They align people, process and technology, they define process, train people on processes, help companies climb the CRM adoption curve.
CRM: It seems you train your VARs and channel partners in groups. Why don’t you have a centralized set of rules and competencies they must match up to? That way it’ll be less time consuming and costly.
The training I give my VARs is not just around technology. I’m teaching them how to sell, giving them co-marketing programs. I’m not going to invest market development funds in a partner who hasn’t exhibited a certain base competency in technology as well in execution.
I have a series of metrics built around not just the technical component but also my VARs’ and channel partners’ ability to acquire and retain customers. CRM doesn’t win just by having the best technology; you have to help companies develop the best practices to gain and retain their customers. The technology piece is just a piece of it.
My job is to create customers who keep coming back. How do you do that? You solve their problems.
Let’s talk about the buying process. At the end of the day, people buy from people that they can trust. This is why the “R” in CRM is important. At the end of the day when your job is to create customers, you do that because people buy from people.
How do I approach that? Through openness. Relationships are built on trust. Openness and transparency build accountability, accountability builds trust, trust is the foundation of relationships.
All Salesforce talks about is they have the biggest, baddest technology on the face of the planet. Who’s my Number One business partner? [Salesforce.com CEO] Marc Benioff. He’s created an ecosystem of pissed-off business partners around him.
CRM: Will you create a Platform as a Service? Certainly you and [CEO] Larry [Augustin] seemed to be hinting at that.
Thirteen years ago if I was building a company around SaaS, I would’ve gone with Salesforce’s route. I would’ve had to design around the cost constraints of Oracle and Sun — and they were expensive — and would have had to build a data center from scratch.
Today are Internet startups building on Oracle Database or Sun? They’re building on top of MySQL, PHP, Amazon AWS. IaaS (Infrastructure as a Service) is a commodity now. PHP delivers these business application frameworks that run on top of the cloud providers that are available today.
Salesforce.com’s approach was correct at the time; it’s not the way things are built today. So why would I go out and build a cloud platform when I can run on top of AWS, Rackspace, the IBM cloud? Salesforce has seven data centers here and in Singapore; I have access to hundreds of data centers worldwide because I run on top of these cloud platforms.
CRM: So are you looking to create a Platform as a Service?
Right now, we’re focusing on openness.