An Ecosystem of Competition (Salesforce.com) Vs. An Ecosystem of Distribution (SugarCRM)

I spent a lot of the day on calls, between me and CEO Larry Augustin and several with financial analysts. It seems there is a lot of interest in there in SugarCRM’s model where our partners do much of the hosting and SaaS delivery – enabling the kind of flexibility, choice and portability promised by the Open Cloud.

The conversations, all great and with very bright guys, got me to thinking. In so many ways, SugarCRM and Salesforce.com are alike. We both offer great CRM solutions and a strong platform on which to extend them. We both have some form of Cloud strategy. We both play more to smaller companies than many would like to admit (at least on Salesforce’s side).

But in a lot of ways the similarities end there. This is mainly due to two inherent factors in the SugarCRM model: open source and the channel-friendly nature of the company strategy.

What does this mean?

Ok, when I look at Salesforce.com, I can (in my opinion) safely say that Salesforce.com is a player in the CRM business.

…and in the Hosting business.

And in the middleware business.

And in the datacenter business.

And in the integration business.

And in the platform business.

And so on…

When you are “in the business” of something, it means you have competitors. And when I think about middleware, platforms, cloud infrastructure, data centers, integration, etc. – I think of HUGE companies like Amazon, IBM, Oracle, Microsoft, Rackspace, Informatica, to name just a few.

I DO NOT want to be competing with these guys.

I want to be partnering with them. And, guess what, SugarCRM does. In all the above areas, SugarCRM has awesome partners (Amazon, Rackspace, IBM, Microsoft, SnapLogic, Talend, Oracle) that has enabled us to give our customers choice, best of breed technology, and lower TCO. And on the flip-side, it has enabled SugarCRM to do what it does best – provide great CRM software at a great price, without a ton of infrastructure costs and other overhead that would divert attention away from that goal.

Whats more, these partners help create great options for our expansive VAR network – aiding our distribution model and putting more solutions out there to sell versus any type of competition. Cool.

Denis Pombriant makes a great point when he says “Don’t Forget About B2B CRM.”  We certainly have not…and I think it is why we have been so successful.

I am sure a lot of readers have an opinion one way or another here. I’d love to hear your thoughts…as this is a bit of thinking out loud to get a conversation started…

4 thoughts on “An Ecosystem of Competition (Salesforce.com) Vs. An Ecosystem of Distribution (SugarCRM)

  1. Martin – the strategy is correct but you’ve got to keep enabling it through the channels that help the customer get there. As Larry has said – you’re ‘in the CRM business, not the cloud business’. Spot on. But don’t forget the importance of aiding your Sales and Implementation Partners bridge the gap between the customer and Amazon, Rackspace, etc. The message needs to be matched by the product/price packaging.

  2. … and that is exactly the reason why we as VAD – Value Added Distributor – in EMEA bet on an alternative distribution model by offering our channel partners an integrated stack of Commercial Open Source (COS) and Cloud Solutions.
    And we are more and more successfully competing aginst the “Microsoft World” (Sharepoint, MS CRM, Exchange) with a “COS Universe” (Zimbra, SugarCRM, Cyn.in).

    Will still need some time to get the “mainstream” of customers. But we will get there, probably faster as we believe. TCO of COS stack is phenomenous compared with MS cost.

  3. I totally agree with you that you need to focus on your core business, in your case CRM software. But customers, and especially small companies, prefer one stop shop and we need to support them on this, as Doug is writing. So not selling CRM software but CRM solutions, including partner services etc.

  4. All,

    Thanks for the comments – absolutely well stated by all. What I was trying to say, albeit poorly, is that our part in the technology side at least, is to focus on CRM and not cloud infrastructure, integration tools, etc.

    From a marketing side – yes, our goal over the next few months is to help equip our channel partners with great messaging to educate and sell through to businesses of all sizes on the value of a true open cloud solution (with SugarCRM as a component of course.) Thanks for pointing that out Doug – that is essentially my top priority right now.

    From an alliances side – we want to work with the key partners, such as SnapLogic, Microsoft, Talend, Amazon etc. – that can help you distributors more easily create valuable stacks that give you great margin opportunities. The more repeatable we aid you to be – the more aggressively we can all attack the market.

    Thanks for reading, and my door/phone/ear is always open!

    Martin

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