The Open Source Pragmatist

As we trudge through the weak economy looking for ways to attract new clients and grow our business, the old Marketing 101 adage comes to mind:

“Your best new customers are the customers you already have”

At Levementum, we’re finding that this rings true in an amazing way.

With our SugarCRM, Compiere, and Magento Open Source service offerings, we’re finding that the hit rate (on new Open Source apps) for customers that previously have implemented one of these outstanding products, is well over 50%…an amazing rate of Opportunity conversion.

Why is that?  I think its a reflection of how these clients have crossed their own chasms relative to the key “Objections” raised in the course of a Commercial Open Source sale.

When we talk to a new customer - one that has never implemented an Open Source product at an enterprise level, the four concerns we tend to see are:

1. Concerns about the Project/Company viability.

2. Concerns about support and SLA.

3. Concerns about Intellectual Property rights of derivative works.

4. Concerns about quality and features.

Clearly these objections are colored in the spirit of Open Source as a “new” and “disruptive” force, and customers have to be carefully navigated through these discussions.

The key  is, once the bridge has been crossed with one application project, the propensity to steamroll through these objections on the following application project is very high.

We’re finding that SugarCRM customers love Compiere…Compiere customers love what SugarCRM has to offer, and we’re also seeing an interest in Magento from customers of both SugarCRM and Compiere.  Again I propose its because they’ve already taken the Open Source plunge - and already subscribe to the unparallelled value proposition that they can take advantage of:

1. Control of Your Own Destiny.

2. Cost Benefit and TCO.

3. The Quality factor (as a strength)

We’re hoping to continue to see more and more progress - its a bet Levementum has made in spades - and why we continue on our path to being at the forefront of service firms that help Enterprises make sense of how to deploy broad Open Source solutions as an enabler for their own value propositions.

We’re in exciting times in the world of Open Source…The strength of the community has been, well, the community!  I see the opportunity for the SugarCRMs, Compieres and Magentos of the world to cross pollinate - share customers - share ideas - define boundaries - maximize opportunity value.  Its a win win for everybody, mostly for our customers .

Insight & Thoughts, Software & Technology compiere, crm, ecommerce, erp, levementum, magento, open-source, pentaho, sugarcrm, talend, varien

Yesterday SugarCRM announced new pricing for it’s flagship products SugarCRM Professional and Enterprise, as well as simplified pricing and a brand new entry level product SugarCRM Express.    By eliminating price differences for on-demand and on-premise versions, while lowering the price to $360/user/year for PRO and $600/user/year for Enterprise, Sugar also signaled it’s strong desire to be the leading “Open Cloud” application provider.   The lower prices gives SugarCRM customers more value at a lower cost - just when they need it most - in the middle of the worst economy in 80 years.

The CRM Guru, Paul Greenberg agrees - check out his ZDNet blog from yesterday.

The changes also make great sense for SugarCRM as well as the general partner community for two reasons.

First is the release of Sugar Express, which allows Sugar, for the first time, to obtain a revenue stream for those who only need the functionality of the open source (Sugar CE) version, are not ready to pursue the higher Professional versions, but still want a reliable support program. They are basically taking on the non-sanctioned companies out there who aren’t in the partner program, who are hosting/selling CE hosting services and generating revenue without contributing to the community. This is a good thing to protect the brand - to many customers who think Sugar is a bad product because they choose a ‘fly by night’, non-sanctioned company who was hosting CE and not doing it very well.

Second, by standardizing on one price for each version (instead of a lower price for on-premise vs. on-demand) Sugar will actually increase it’s total revenue dramatically and get better leverage from their open cloud environment.  It’s no secret that the majority of Sugar implementations are on-premise. By standardizing the pricing, giving all customers an on-demand environment (while still allowing them to go on-premise if they like which is a KEY DIFFERENCE from other SaaS vendors) they will a) generate more net revenue by capturing more hosting service revenue b) ensure a better experience for customers and c) get better cost leverage out of their hosting environment.

Sugar is also working hard to enable the partners to more effectively implement and configure the Pro and Enterprise applications in their cloud environment with the Cloud Console (rebranded version of Data Center Edition).

Some partners with hosting services will complain that Sugar is taking hosting revenue away.   That may be true if all the parter was doing was loading Sugar on a box.   But there is clear room for value added hosting services in Private Clouds, especially where the customer wants to retain complete control at the root and database level or even better, host mutliple open source applications, connected together, in the cloud.   Levementum uses private clouds on Amazon EC2 to allow customers to manage BOTH Compiere and SugarCRM applications that are integrated as one solution.

Sugar is still on the track as the first Open Source business application to go IPO.   It’s fun to be along for the ride.

Insight & Thoughts cloud-computing, compiere, levementum, open-source, sugarcrm

Software conferences are usually marginal at best.   Agendas are usually filled with sessions light on substance and heavy with promotion.   Exhibitors and partners are a ‘means to an end’ - there to help fund the event with access to customers their primary reward.   I’ve always found conference’s mediocre events of marginal value.   Rarely does the software company succeed in creating an experience where all involved get something really valuable.

SugarCON Bucks the Trend

This past week my team and I attended our third straight SugarCON event.  For those who don’t know, SugarCON is the seminal event for customers, partners, and followers of SugarCRM.  This year’s event was the largest to date - with over 600 in attendance.  Considering that this is only the third conference for a very young company (Sugar was founded just over 4 years ago), what struck me most about this year’s event was it’s overall quality.   Three things stood out in particular - the quality of the participants, the session agenda, and the breath of discussion about using SugarCRM as a platform.

The customer’s at this years event were, by and large, more sophisticated in their understanding of Sugar’s value and how SugarCRM could be used as a platform for more than basic CRM.   To their credit the team at Sugar did a great job of facilitating the sharing of ideas with two full agenda tracks dedicated to customer case stories.   The majority of the customers I met with were seeking to use Sugar’s rapid modeling tools (known as Studio and Module Builder) to integrated sales and operational processes and go well beyond a cookie-cutter CRM implementation.

Focus on Partners

However, I was more surprised with the focus SugarCRM placed on their partners this year.   In addition to an entire agenda track of sessions dedicated to the partner community, the conference included two additional days for the first “Partner Boot-camp”.   The dedicated sessions gave the team at Sugar a forum to facilitate collaboration amongst the partners, expose us all to new ways of providing value to our customers, and give feedback to Sugar on product features, strategy, and our takes on all this ‘cloud’ business (my thoughts on the cloud to come next week.)  The quality of the partners has also improved over prior years.   We saw a diversity of high quality and creative offerings from companies like Redpill (SugarCRM Training and Integration in Europe), Lampada (Offshort SugarCRM Development), and OutDare (CTI Integration).   The team at Levementum looks forward to working with these companies in the future.   Kudos to Mitch Lieberman, Jeff Campbell, and Paul Oh of SugarCRM for the extra focus on partners.   John Robert’s emphasized the importance of partners for Sugar’s growth strategy in his keynote for the bootcamp.  He backed it up with a great event.

Most Important Takeaways

The most valuable things I took away from the conference this week were:

• Sugar’s new Authorized Learning Partner program geared to expand customer access to quality SugarCRM training.
• Paul Greenberg gave a great keynote on the priority companies should place on customer retention during ecomonic downturns.   Paul continues to demonstrate why his unique insights on our industry are worth following.
• The awesome new CTI integration available from the guys at Outdare - while they need to add some additional work flow scenarios into their offering, the initial release is pretty dazzling.
• Cloud computing is on everyone’s mind, but means something different to each person you talk to.   It’s clearly hip to talk about “The cloud” (and SugarCRM is no exception) but we need to all do a better job of educating ourselves and the marketplace on the concept.   Most definitions are too narrow.
• Sugar’s product development team, led by Clint Oram, provided a good picture of the upcoming 5.5 and 6.0 releases.  As usually his team mostly hit the mark.   Although I’d like to see more emphasis on improving the flexibility of the mail plug-ins to match Sugar as a platform.   Stuff I was excited about:
  • A new REST base API layer to complement the current service layer
  • Rules based Studio capabilities for conditional UI interaction, dependent drop downs, conditional actions, etc.
  • Expansion of the portal to provide true Partner management capabilities - a key feature for companies with diverse sales channels.
  • Team Hierachies and ad-hoc team assignment in the security model
  • Improvements in Theme and UI management including better stubbing in the UI layer to help developers influence UI behavior in upgrade safe ways
• The ‘Phrase that Pays’ is now part of the sub-culture of SugarCRM events.  Congrats to Jason Nassi, who runs Sugar’s Support Team on being invited to the official PtP executive committee.
• Data Center Edition - Sugar’s toolset for managing deployments and licensing of Sugar has great potential for those of us providing managed administration of Sugar in the cloud.   There are also great applications for Business Process Outsourcers and call centers (more on that later).
• SugarCRM’s expansion continues with a new office in Munich, a support center in China, and conference plans for Europe in the fall.

Final Thoughts - Valuing the Cloud

At SugarCON, everyone was talking about ‘Cloud Computing’.   It was part of John’s keynote, the exhibitors displays, the customers questions.  But it’s such a vague concept that more often than not confusion trumped clarity.  I’m convinced more and more that the ‘cloud’ is not a place or thing, but a concept of leverage.  It’s about leveraging the best services and technology available.   It’s also about enabling that leverage when we design information related products and services.   I propose that we should value most, the tools that give users the most flexibility in leveraging the services and information ‘in the cloud’, without constraints.  I’ll elaborate further in my next post.

I’d like to personally thank John Roberts and the entire SugarCRM team for conducting such a valuable event.   I’m looking forward to next year’s event.

Industry cloud-computing, cti, levementum, sugarcrm, training

Consider the scenario. You’re the CIO of a regional distribution company, supporting a “knowledge worker” environment of 200 users spread though 18 warehouses in 7 states. Your accounting team is demanding a flexible and scalable solution that lets them adapt in the face of changing economics and measures. Your warehouse teams are demanding more feature rich Order Management solutions that provide better information at the Point of Sale. Your Sales team is screaming for wireless access to orders and inventory, so they can respond to customer needs in real time…and of course your boss, the CEO, is demanding that you deliver all of the above, on a shoestring budget, and wants a working proof of concept that covers all these solutions - Accounting, Sales and Inventory/Order Management with Wireless…in 3 weeks…for less than 10k.

So you’re the CIO. What do you do? Laugh? Polish off the resume?

Well, if you’re Russell Smith, the CIO of Estes Industries, you take a deep breath – and look to Open Source. Estes Industries, based in Wichita Falls, TX, is a distributor of crop protection chemicals, specialty chemicals, seed and fertilizer. Smith turned to Levementum LLC, an open source consulting firm, to help complete this “Mission Impossible”.

Levementum brought three enterprise class solutions to bear, SugarCRM, Compiere ERP and Talend Data Integration to implement a complete ERP, CRM and Data Integration solution, in less than 3 weeks, and at an astoundingly low cost.

Levementum selected all three of these solutions, recognizing them as best of breed Open Source Software solutions. All three software packages have come of age relative to the tried and true(…but expensive) commercial closed source solutions in the marketplace.
Compiere, a robust Enterprise Resource Planning (ERP) solution was deployed to support accounting and operational needs. SugarCRM, the leading open source Customer Relationship Management (CRM) solution, was deployed to support the myriad of Sales Force Automation needs, as well to satisfy the need for Wireless access to Customers, Contacts, Orders and Inventory (using SugarWireless). Talend, a software product touted as the first provider of open source data integration software, was used to tie the systems together in a clean manner. Using add-ins and prebuilt adapters available in the Open Source community, Levementum was able to assemble, connect and deploy the solution quickly and cleanly.

The integrated pilot solution was built by Levementum using free “community editions” of all 3 software packages, but Estes intends to upgrade these to the Professional or Enterprise versions of the software packages, to take advantage of software support for these mission critical systems as they begin to roll the solution out in production.

Certainly there was a lot of excitement among Estes’ users – certainly a highlight of the project was demonstrating Order Tracking and Inventory management on an iPhone…but beneath the fun and excitement of accomplishing the critical functional goals of the program, there were a couple key takeaways, that are lessons for any CIO:

1. The Breadth of Open Source Solution offerings that are available to the public, are empowering companies to cover almost any information challenge they have. Whereas in the past all you had was Linux, today you have SugarCRM, Compiere, Talend and a host of other robust software packages that you have to choose from.
2. Open Source Solutions have “Come of Age” (like Compiere, SugarCRM and Talend). From a feature and architecture perspective, these applications have “grown up” and provide the depth of functionality, and the scalability that Medium and Large companies require.

The fact is, what cost hundreds of thousands or millions in the past, can now, with Open Source, be accomplished at a fraction of the cost. Open source solutions are the “great technology/value equalizer”. Luckily, over the past decade, these solutions have come of age – and as CIOs tackle their most challenging problems, Open Source tools are steadily proving to be far and away the most valuable tools in the arsenal.

Uncategorized compiere, crm, levementum, sugarcrm, talend, wireless