SugarCRM is hoping a recent partnership with IBM will give it credibility among enterprise-class customers, some of whom still consider its open source CRM applications as alternative software that doesn’t fit mainstream business operations.
Last week IBM anointed SugarCRM’s software as the first CRM system for the IBM SmartCloud platform. The deal extends last year’s partnership in which SugarCRM was named an IBM Global Alliance Partners for the IBM cloud services.
“Let’s face it, even in business you are judged by the company you keep,’’ said Nick Halsey, executive vice president and chief marketing officer at SugarCRM of Cupertino, Calif.
SugarCRM’s Sugar 6 is generally available now for the SmartCloud Enterprise and will be sold through channel partners of both companies. It will initially target mid-market buyers.
“It raises awareness of the company and gives them credibility,’’ said Carter Lusher, a chief analyst at Ovum, a research firm headquartered in London. “If an IT manager has been thinking about SugarCRM and wondering about their staying power, IBM inviting them to partner is an implicit endorsement.’’
The IBM deal is considered a smart move by other industry analysts and existing customers.
“How can we take a product called Sugar seriously?’’ said Shannon Boyd, director of marketing for BNSF Logistics, LLC, which switched from Salesforce.com to SugarCRM four years ago. “But if you can get past that, it’s like the David and Goliath story in the market. They are a solid application. I feel very comfortable with the decision we made.’’
Boyd said his company, based in Springdale, Ark., evaluated several CRM software options four years ago because, while it had been using Salesforce.com software, “we wanted the ability to configure and make changes to the software,’’ Boyd said. “Sugar allowed us to do that.’’
Boyd said he is looking forward to SugarCRM acquiring more clout in the open source CRM market.
With about 7, 500 customers, SugarCRM’s presence in the CRM market is dwarfed by powerhouse Salesforce.com, which has more than 100,000 customers.
Unlike Salesforce.com and other CRM market leaders such as Oracle Corp., Microsoft and SAP, SugarCRM provides open source CRM applications, which can be modified and freely distributed. SugarCRM offers a free open source CRM, which accounts for 90% of its user base.
There is an open source community of SugarCRM users and repository of free applications called SugarForge, which, as of last week, included 998 programs, Halsey said.
The company makes money by selling its own modified versions of the open source software. There are four versions that scale up in price, functionality and support with the top-of-the-line version costing $100 per user per month.
SugarCRM’s offers on-premises and cloud-based versions of its software. The deal with IBM is not exclusive and Halsey said the company plans to offer its software on other platforms as well. In addition to being part of the IBM SmartCloud services, SugarCRM also runs on Amazon, OpSource and Rackspace.
But the IBM deal “is the most important partnership they’ve ever had,’’ said Paul Greenberg, president of The 56 Group. “It gives them the ability to go to the enterprise.’’