The Open Road

John Roberts on Wednesday resigned from his post as CEO of open-source CRM vendor SugarCRM, leaving board member Larry Augustin to assume the role of interim CEO while the company conducts a formal search for his replacement.

John Roberts

(Credit: SugarCRM)

Roberts, whose grounds for leaving the company and future plans remain undisclosed, has made a huge impact on the open-source world, innovating the "Open Core" business model and helping drive open-source applications into the enterprise.

SugarCRM, despite losing Roberts, will be in good hands with Larry Augustin, who, as founder and former CEO of VA Linux, sits on a number of open-source company boards, including Pentaho, Compiere, Appcelerator, and Medsphere. He understands how to run an open-source business and, importantly, what to look for in leadership. Augustin should be able to find a strong CEO to lead SugarCRM.

Augustin's near-term task is clear, as he outlines in his blog announcing the change in leadership:

Yesterday, I stepped into the role of interim CEO at the company. I have an immense amount of respect for the founding CEO, John Roberts...My goals for the next 30 days at SugarCRM are fairly simple: get to know the team, customers, and partners. I am looking forward to helping them to continue to execute and (taking) the company to the next level.

In other words, continue the solid work that Roberts started.

I first met Roberts at an SDForum event in 2004, at which time I thought that he was crazy for believing open source could succeed in applications. He and his SugarCRM team persisted in their Quixotic dream, building SugarCRM into a thriving company that brought in tens of millions of dollars in sales last year and has an eye on an IPO.

I couldn't reach Roberts for comment but hope that he spends a little of his downtime on cycling, one of his passions, before he leaps back into the open-source world. As Augustin notes of Roberts, "Few people have taken a company from concept to major growth the way John did at Sugar."

I agree. Roberts will be missed. Fortunately, his legacy should live on at SugarCRM, one of the pioneers of commercial open source.

Disclosure: I am an adviser to SugarCRM.

Follow me on Twitter @mjasay.

SugarCRM has long driven roughly 30 percent of its revenue through Sugar-on-Demand, its hosted offering. But in a recent TechTarget interview, SugarCRM CEO John Roberts pushes the envelope a bit on what it means to be open source and cloud-based:

Today, SugarCRM is deployed on more than 55,000 servers worldwide and growing. Where are the servers? Those servers are in the cloud, they're not in local data centers. They're in all the cloud infrastructure providers from Amazon to Rackspace to British Telecom to IBM. They need applications, and SugarCRM is an application that runs basically on every cloud environment that is being built right now.

At the same time, we believe the maturation of the Internet to a cloud infrastructure, where you can run your application in the cloud but also have a choice of cloud providers, is a great advantage to customers in terms of giving them more control over systems architecture but also giving them more price control. I think the days of software vendors doing everything from the hardware to the software and building a 100% lock-in based model doesn't really benefit the customer anymore.

It's subtle, but Roberts says something profoundly important: choice in cloud providers. This isn't something that is specific to open source, per se, but it's something that Google, Microsoft, and others have bypassed in their attempts to make the cloud an extension of their desktop/server-based applications, rather than making such applications portable between different cloud providers.

Of course, by virtue of having its code open source, SugarCRM also gets the benefit of letting its software proliferate through these different cloud providers, which can then return to pay SugarCRM money if the service proves itself out and it wants either support or additional software not available in the open-source version. End-users, for their parts, always have the option to take their data out of the cloud and run it locally using open-source SugarCRM.

In this way, open source gives choice and flexibility to the cloud providers, who in turn deliver choice and flexibility to end-customers. SugarCRM starts the process, and benefits from it. It's a smart use of cloud computing to grow an open-source business, one that I would expect to see more open-source vendors try.

Disclosure: I am an advisor to SugarCRM.

Follow me on Twitter at mjasay.

Larry Dignan at ZDNet calls out a significant customer concern with SaaS: data lock-in, particularly if a SaaS vendor goes out of business. How can a SaaS customer get its data out of a failed SaaS system without undergoing the burden of escrow agreements?

The answer is simple, but perhaps not palatable to SaaS vendors: open source a version of their software.

SugarCRM does this, letting its customers run SugarCRM "in the cloud" but giving them the code via an open-source license so that they can support their own deployment if necessary. Why couldn't a Salesforce.com or RightNow do the same?

Answer? They could, and wouldn't even need to open source their code today. Perhaps they could create a special escrow agreement that triggers open sourcing the code upon a winding down of operations? There are problems with this, of course, as it may diminish the value of the vendor's assets, but it's a relatively clean resolution to a customer concern, and one that is already being used in the industry.

Disclosure: I am an advisor to SugarCRM.

CFO Magazine is running a great story about the cost savings available from open-source software. This is a topic that you'll hear open-source vendors crow about, but it's somewhat rare to actually get a CFO on the record about her benefits from open source, so it's notable.

Open source is gaining at proprietary software's expense.

(Credit: Gartner)

Recent Gartner research suggests that over 27 percent of enterprises will deploy open-source software in 2009. (Note: the remaining 63 percent will, too, but Gartner must have asked the CIO, and the CIO is the last to know.) That's up from 25 percent in 2008, while the share of proprietary software deployed will actually go down.

That is perhaps the scariest data point for proprietary vendors who have to grapple with former safe havens like InterContinental Hotel Group, which CFO Magazine notes is adopting Red Hat, Alfresco, SugarCRM, and MySQL, among other open-source products, for its mission-critical systems going forward.

Against this backdrop CFO Magazine calls out the benefits of open source in a tight economy:

One of the initial raps against [open source] was that, while the idea of free and continuously modified software had a certain appeal, it also inspired a certain terror; what business would hitch its technological star to software that was pulled off the Web and unsupported by a major vendor? Who knew what lurked in the code, or how easily that code might be cracked into?

Today, the recession and its attendant impact on IT budgets have prompted companies to live with a certain level of anxiety. And, as well, years of experience by those on the cutting edge have shown that many applications within the [open-source] world may now be ready for prime time. Vendors do in fact play a role in supporting [open source], and while their fees have been rising, overall cost of ownership is still substantially lower; often that vendor support feels more like a security blanket than a shakedown.

This isn't a Payless Shoe Store commercial, either ("You could pay more, but why?"), promoting goods of generally less quality. Open source has hit its stride, and often the open-source competition is actually better for enterprise requirements than the proprietary alternative. For example, if an enterprise is running Web applications, it would be daft to not at least consider using the leading Web database: MySQL.

Better software, lower price. What's not to love?

If you're a CFO, there's much to love in open source. If you compete with open source, well, perhaps you won't be so enamored. Sorry about that. Competition has returned to software.

Disclosure: I am an Alfresco employee, and an adviser to SugarCRM.

Installing an open-source enterprise application has never been easier. No hardware? No sophisticated IT department? No problem. At least, not if you use one of 38 JumpBox-enabled open-source applications, as it announced recently.

A rising number of companies offer virtualized instances of popular open-source applications, but JumpBox takes it a step further, deploying to the Amazon Elastic Compute Cloud (EC2) service, almost completely obviating hardware and setup quandaries.

JumpBox offers small to midsize organizations a library of open-source applications packaged as pre-built, pre-configured virtual appliances through JumpBox Open, its annual subscription service. Public Amazon Machine Images (AMI) for 12 JumpBox applications, including Ruby on Rails, (Alfresco, Movable Type, Magento), Drupal, SugarCRM and more have been made available for free. AMIs for the full suite of 38 applications are available to plus and premium subscribers to JumpBox Open.

Pricing of JumpBox Open starts at $299 per year (for one persistently running JumpBox instance of each application), rising to $999 per year to run up to 15 simultaneous production instances of any JumpBox-enabled application. In other words, it's dirt-cheap.

Powerful software, low price, and no fuss. What's not to like? If you're an SMB customer, probably not much.

But if you're an open-source application vendor, I suppose it's still an open question how JumpBox will work with you to share revenue. In my conversations with the JumpBox founders, this potential conflict has come up, and I know the JumpBox team is working on it. How well it gets resolved may well determine how much emphasis open-source vendors will put on the JumpBox sales channel which, in turn, could decide the fate of JumpBox.

With or without the vendors, however, this is a great service and suggests a bright future for enterprise software.

Disclosure: I work for Alfresco and advise several of the companies whose open-source applications JumpBox distributes.

InternetNews.com's Andy Patrizio pens an excellent analysis of why EMC, the storage giant, just might gobble up Sun, the former Unix king. While there are potential conflicts to such a match, the synergies might well outweigh them.

Patrizio walks through a range of benefits EMC could derive from Sun's hardware prowess (tape storage to complement EMC's expertise in NAS and SAN, enhanced server throughput performance. ZFS, etc.), as well as its software line-up (Java, RSA security, database replication, etc.). The list is long and the potential benefits would be huge.

But it's actually in the very thing that Patrizio describes as a potential deal-killer - open source - that EMC could derive the biggest benefit. Patrizio warns:

There is one big snag to this EMC/Sun theory. EMC has displayed no interest in the open source movement, while Sun has embraced it in a big way. This could prove a no-win situation if EMC picks up Sun and open source advocates demand that it open source other products -- especially if GPL-licensed (define) products start mixing with EMC software. If EMC balks, it could wreck the goodwill Sun has built over the last few years. Then again, goodwill doesn't pay the bills.

True enough, but Sun's struggles derive from fighting open source (e.g., Linux kicking Unix out of data centers), not its embrace of open source. In areas like its Open Storage strategy, Sun has been doing very well.

What does EMC need that every vendor on the planet needs? Customers. But customers in the current environment and, indeed, well before it, are exceedingly expensive to acquire. A friend at Oracle tells me that his company routinely spends $1 million to win a $1 million license deal in order to capture the ongoing maintenance revenue stream.

One of the primary benefits of open source, contrarily, is that it drops the cost of customer acquisition to nearly $0.00. Sun's explicit strategy with open source is to use high-volume downloads of Java, MySQL, and other open-source projects to drive sales of its hardware and services. Sun's software, in other words, does the heavy lifting of lead acquisition while its hardware and solutions businesses do the heavy lifting on lead conversion.

Wouldn't EMC need the same thing? And, arguably, EMC would be in a better position to convert open-source leads into paid customers because it has more closed complements to sell to such leads.

Open source, in other words, may be one of the primary reasons for EMC to acquire Sun, not avoid it.

SugarCRM announced a new Cloud Connectors program on Monday that opens the leading open-source CRM solution to cloud services like LinkedIn.

SugarCRM also got a bit more social, with a new Social Feeds feature that provides alerts and status updates found in Web services like Facebook.

It's a great way of opening up the SugarCRM system beyond mere source code, as PC World reports:

If you're logging into third-party sites "while you're on the phone with someone, you're going to be hemming and hawing and you're not going to have it at your fingertips," [director of product marketing Martin Schneider] said. "The idea is to drive adoption and keep people in one space, but also give them unfettered access to bringing content into the CRM system."

Windows, which SugarCRM is calling "Cloud Views," will pop up with relevant information, such as which of a user's LinkedIn connections work at a certain company. Users can also import this information into SugarCRM.

I find myself using LinkedIn, as well as SugarCRM, all the time in the context of my work managing U.S. and Latin America sales for Alfresco. Having both in the same place or, rather, having data from LinkedIn tied into my CRM system, makes a lot of sense and should help me to save time.

This is the next level of "source" integration. What was once purely about source code is now equally a matter of open, mobile data. While SugarCRM's Cloud Connectors feature doesn't break ground that others like Salesforce.com haven't already covered, the combination of open source and open data is a potent combination for enterprises looking to expand CRM efficiency while reducing CRM lock-in.

Disclosure: I am an adviser to and customer of SugarCRM.

I read this CNET interview with Microsoft CRM division general manager Brad Wilson, and it felt like I was reading an interview with SugarCRM CEO John Roberts.

No, Roberts doesn't talk about lock-in, monopoly power, and such, but then, neither does Wilson.

Instead, Wilson discusses values that are core to open source: adoption, choice, and lower cost (as well as open source!)

When asked how Microsoft CRM is going to win in the market, he said:

...[F]or us, user adoption is key. If they (the users) are not going to use the system, you are pretty much guaranteed a failed deployment.

We give you enough flexibility so that you can run the system how you want to. So I find we will beat a classic offering from your CRM vendors on end-user adoption and platform flexibility. Those factors will far outweigh the fact that other people have more prebuilt stuff [only 7 percent of which, at least in one case, actually fits without modification]....

I think the old model of 10 years ago, where you built a system that had a big slab of stuff that you had to adopt, has gone. At the same time, we will still bring out our accelerators with pre-packaged software, and more and more of them. But we release them as open source. The idea is that we just put this stuff out there and let people use it. And, if our partners use it, all the better.

Did you catch that? Instead of making its core open source, as SugarCRM does, Microsoft is going the other way, open sourcing the complements to its core. You pay for the core, but the complements are free. It's an interesting twist on the open-source model, and particularly so since it's being used by Microsoft.

We're definitely seeing convergence in the market: proprietary vendors embracing open-source complements, and open-source vendors embracing proprietary complements. This, however, is the first time I've seen Microsoft baldly identify open source as a key business strategy.

The times they are a-changin'.

I used to think that Microsoft would make a likely suitor for SugarCRM. Now it appears it decided to become SugarCRM, instead.

Disclosure: I am an adviser to SugarCRM.

Silicon Valley Watcher has the scoop on SugarCRM being booted from the San Francisco Marriott hotel during Salesforce.com's recent Dreamforce conference, but SugarCRM isn't the only open-source company getting shafted by its proprietary competition.

At last year's EduCause conference, an inside source tells me, Microsoft refused to sponsor the conference unless the conference organizers denied Zimbra the opportunity to take a big, prominent booth at the event.

Two billion-dollar companies fretting about Lilliputian open-source competitors? Surely you jest!

Nope. As SugarCRM CEO John Roberts explains:

"When Marc Benioff found out we were at the Marriott he pressured the hotel to move us out. That's how we ended up here at the St. Regis, and Marriott is paying for it."

The reason SugarCRM might be irking Mr Benioff is that it's growing very fast. "We now have more than four thousand customers, and more than half-a-million users, in 80 languages. That's in just four years."

While Mr Roberts credits Marc Benioff with educating the market about the benefits of software as a service, he says SugarCRM is winning business because there isn't any customer lock-in as there is with Salesforce and its proprietary behavior...."What is the point of Apex? We built SugarCRM in PHP and we use Internet standard technologies. We are open source, our technologies are owned by the Internet. We view ourselves as the Linux of the CRM world."

In other words, perhaps Microsoft, Salesforce, and their ilk do have something to fear from the Zimbras and SugarCRMs of the world. Value wins in a recessionary economy, to the extent that anyone does, and these open-source vendors are providing a heck of a lot of value...for a very low price.

Disclosure: I am an customer of and advisor to SugarCRM and a customer of Zimbra's.