The Best Lock-In Strategy? Empower Your Customers!

SugarCRM CEO Larry Augustin and Eucalyptus CEO former head of MySQL Marten Mickos sat down with Spikesource CEO Kim Polese at the Structure conference today. The talk was around SaaS/Cloud and open source.

It was an interesting talk – and brought up some interesting points. I think the most interesting one was not necessarily around SaaS, cloud or open source technology but rather about what the culture of “open” means in the age of the cloud and the age of social.

Really, I think more and more people are feeling less “locked-in” by companies like Salesforce.com or other older proprietary vendors. People are seeing the myriad alternatives and the emergence and growth of all of these companies in the cloud proves that there is opportunity and a clear migration path from proprietary and closed SaaS apps.

End user organizations of all types are starting to reject the notion of traditional SaaS – finding point products on a single server farm an untenable scenario. Of course, there are a ton of organizations out there that do not care about the limitations of traditional SaaS – but there are sooo many companies that need access, ownership, control, etc. – all the things that “open” offers. This is not a zero-sum game here: Salesforce.com can continue to grow even as open cloud companies like SugarCRM become huge as well.

I’ve seen a lot of ridiculous documents from competitors trying to bash Sugar as a product based on it being open source. They liken the application to a pile of car parts – claiming you have to assemble parts to make Sugar work. That is obviously a bogus analogy: in reality as Larry notes SugarCRM is more like any car you’d buy off the lot that enables you to open the hood, make changes to the cosmetics and/or drivetrain, etc. You OWN the car! Traditional SaaS in a lot of ways is like leasing a car, where the hood is welded shut and there is a gas cap that only the dealer can open to fill – at their rates. (I hope Larry doesn’t mind my extending his analogy.)

But ultimately – as Marten and Larry point out – by empowering customers and giving them control of their data – you enter an engagement lifecycle that provides value and a relationship built on real benefits – and that is more powerful than any artificial lock-in strategy out there today.

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