Open-Source SugarCRM Takes On Siebel, Salesforce.com

Open-source startup SugarCRM Inc. is offering a new version of its core application next week that adds campaign management, E-mail marketing, sales forecasting, and wireless support. The offering puts SugarCRM in a better position to compete with CRM stalwarts Siebel Systems Inc. and Salesforce.com.

Coming off a January release that focused on easing customization efforts, SugarCRM this time was focused on delivering something that would be seen as more competitive with larger, more proprietary applications like Siebel. Yankee Group analyst Sheryl Kingstone says the added functionality in the new version should help SugarCRM, which is available as an on-demand service for $39.95 a month per user, get a closer look from cost-conscious CRM buyers. "You've got to take a look at what you're getting for that $39 a month, and you're getting a lot," says Kingstone. Siebel's and Salesforce.com's on-demand offerings are nearly twice as expensive as SugarCRM.

SugarCRM also is available as an on-premise application, with user licenses running $239 a year. The supporting Sugar Cube Linux-based server runs $4,000 for a single CPU that can support 100 users; a double CPU server, which can support 400 users, costs $8,000. CEO John Roberts says demand for larger, on-premise deployments has taken off after an initial focus on small deployments of five to 10 users. Roberts, a former Epiphany executive, says the company is closing more 100- to 300-seat deals. "The corporate world is starting to take open source much more seriously than they were a year ago," he says.

Kingstone says that's consistent with the trend she's seeing of open-source CRM increasing among midsize companies. Small companies, she says, aren't going to be willing to write code for an on-premise, open-source application. "They just don't have time."

Other new functionality in SugarCRM 3.0 includes a group-scheduling server that lets CRM app users point their Outlook clients toward dedicated Linux servers to coordinate calendars; project- and document-management tools; and a CRM employee directory that can be populated by importing directory information from an LDAP server, allowing sales and marketing people to locate each other without jumping out of the CRM app and into the corporate directory. The company also launched a self-service development community last month, SugarForge.org, where developers access tools for building new apps on the SugarCRM platform.

SugarCRM first launched its on-premise product last July, followed by the introduction of its on-demand offering in November. It has attracted nearly $8 million in venture financing, most recently closing a series B round of $5.75 million in December.

This story was updated April 6.