Relationships: Key to getting buisiness
Over the holiday weekend, I was discussing with a few friends the reasons why our customers hire and continue to use our respective firms. One friend owns an advertising firm providing advertising and design services to Fortune 500 companies. The other has a wholesale business, selling to large retail companies. Both clearly agreed with each other that the relationship is the key reason why customers bought from them.

I agree, but what establishes the relationship? Most customers buy because they trust the company, the products or services and/or the people they buy from. Relationships are born out of trust between organizations. Even in a firm with high transaction volume, trust is established from product or service quality. Regardless of why or how, without trust, a relationship will deteriorate. But trust can be fickle; one simple misstep can cause trust to evaporate, potentially creating enough FUD (fear, uncertainty and doubt), opening the door to competitors. Think Bear Stearns. Trust with their trading partners evaporated overnight despite adequate capital reserves beforehand ($17 billion). Essentially, the FUD caused a virtual run on the bank, perception became reality, and employees and shareholders paid dearly as JP Morgan bought up the assets cheaply.

Trust plays a huge role in keeping customers over the long-term.  
And, trust is built based on delivering above and beyond what’s promised and expected. But, what role does it play in establishing the initial relationship? In open source software sales cycle awareness shrinks for open source software vendors, so there’s less time to establish trust prior to the initial transaction. So, in this instance trust needs to be built on product or service differentiation, which open source establishes in cost, transparency and freedom of choice. However, as the CIO of CorraTech’s largest customer pointed out to me last night over dinner, he said that CIO’s don’t lose jobs over spending too much money or creating little flexibility (clear benefits of open source software), but they do lose jobs over not meeting delivery promises to the business. Proprietary software vendors that have the perceived stability through proven longevity clearly have advantages here; at least for the short term.

Add the benefits of Open Source and provide value
Beyond the hype around open source, it is still a mere blip on the screen of most large company CIO’s. As a percentage of IT budgets, open source has a long way to go—or more optimistically, grow. For my company, CorraTech, although about to achieve more than 80% revenue growth in the second quarter this year, we’ll continue to be patient, as we see the market quickly coming towards us. We believe we are in the right place; establishing the right relationships with an innovative business model, ready to help organizations willing to take the risk to invest in open source software. Why? Beyond losing ones job, there is truly organizational value to be had --- and frankly, value will always prevail once realized.

        

 

In 2006 all new software seemed to “open source” their code. To me it looked as if every new, and struggling, vendor was running after the hype. Many of these commercial software vendors were not born out of open source projects but rather converted or established themselves as open source companies by licensing some set of code under the public domain. In many cases they did so without first embracing community development. But, it was most interesting that these new open source vendors did not embrace open source because of the hype or community development, but rather because of the disruptive distribution model

The success of the open source distribution model will depend partially on which commercial approach a vendor chooses, but many vendors are primarily interested in getting their software more quickly adopted by achieving greater distribution. Developing software in stealth, signing up a hand full of beta customers in the first year, then releasing 1.0 and growing by sales one at a time is no longer a viable model. For one thing, the open source distribution model decreases the need for an expensive commercial sales force, decreases the need for extensive marketing costs and speeds product time to market. In addition, by lowering the cost-of-sale, open source vendors pass the savings to the end user in lower or no license fees and spend more effort on quality engineering. Over time this will be a difficult model for closed source software vendors to compete with, especially for software vendors whose software is based on older technology architectures.

Although, some may contend that open source software shrinks the typical sales cycle, it does not. It merely contracts the sales cycle awareness period. As the diagram above depicts, open source commercial vendors become aware of opportunities much later in the sales cycle allowing them to take less unsuccessful “turns” with suspects and prospects. With open source software, customers typically do a lot of self-evaluation. The open source software distribution model, therefore, reduces time spent at the beginning of the sales cycle and allows for more efficient time to be spent on higher quality opportunities. At CorraTech – as an open source professional services firm -- we experience this first hand. By the time a customer contacts us, various people in the organization have already downloaded and evaluated the technology and now require deeper analysis to ensure the product can meet all high priority business needs. Frankly, customers using demos to make million dollar software decisions, locking their organizations into a particular vendor was never a good way to buy software. So, not only does open source introduce a new sales process it introduces a new and better way to buy software for the customer. By lowering the total-cost-of-sale, open source provides a platform for better customer intimacy, which results with a greater number of positive customer experiences and more customer wins.

SugarCRM is a prime example of how to use the open source distribution model to achieve fast growth in an already crowded market. CRM has been around since the early 90’s. There are now tens of vendors. Yet, in the past four years SugarCRM has amassed 4000 plus customers. John Roberts, SugarCRM’s CEO, has built an excellent team and a fantastic product, and has made some incredibly intuitive and bold decisions about their business model (I do not want to discount this) but open source has afforded SugarCRM the ability to invest much of the $46 million raised in product development and engineering. This, of course, further translates into more customers as quality engineering produces functionally rich enhancements, among other things, at a much faster time to market. Here is a proof point --- about one quarter of SugarCRM’s total staff is engineers. Imagine that in a commercial software company!

        

This is important. Yes, SugarCRM is less expensive than proprietary solutions but very few actually come to
to Sugar because of price.

More often, customers are interested in the the flexibility provided by  open source. They can change the code, customize more easily, and choose to deploy on-demand or on-site. This is the big reason why Sugar is getting more popular. Customers are tired of being locked in to a proprietary code set or only one deployment model. Sugar gives customers the most modern, flexible CRM application in the market. That is the real driver of customer demand.

        

SugarCRM
SugarCRM is one of the world's leading providers of commercial open source customer relationship management (CRM) software for companies of all sizes. SugarCRM offers a flexible, cost-effective alternative to proprietary applications. SugarCRM's open source architecture allows companies to more easily customize and integrate customer-facing business processes in order to build and maintain more profitable relationships. SugarCRM provides several deployment options, including on-demand, on-premise and appliance-based solutions to suit customers' security, integration and configuration needs.

SugarCRM Features
SugarCRM brings a feature-rich set of business processes that enhance marketing effectiveness, drive sales performance, improve customer satisfaction and provide executive insight in all categories of business performance. It is a flexible platform providing many powerful capabilities to both large and small organizations.
SugarCRM is built on the pure Open Source LAMPS platform: Linux or Windows, Apache or IIS, MySQL, PHP, and SugarCRM. Its mobile solutions translate to less downtime and greater productivity. Sugar Suite integrates e-mail and calendar information with Microsoft Outlook, ensuring that company communications are centralized and coordinated. Due to the Flexible Delivery Model, there are no constraints around deployment. Moreover, the customizable User Interface and Workflow guarantee adaptation to the user, not the other way around. The Sugar Suite Modular Open Source Architecture provides 100% visible source code for inexpensive customization and support. The SugarCRM Neutral Operation System avoids "forklift" upgrades and propriety vendor lock-in.

        

Open Source and Software Upgrades

By Ron Bongo

When it comes time to upgrade to a new version of proprietary software -- take the Windows OS, for example -- many users feel burdened. Upgrades can mean an added expense for anything more extensive than a quick bug fix or minor feature upgrades.

Even free minor version upgrades of a software product can be time-expensive because of the need to back up files, uninstalling the older version and then installing the newest version. Then there is the additional task of importing saved data and taking the time to learn how the new features work.

Upgrading with Linux

Linux users, on the other hand, often look forward to upgrades. With a new distribution of KDE Latest News about KDE (K Desktop Environment) or Gnome, for example, powerful new features and functionality to the user interface are
Free both in time and cost.  Unlike upgrading Windows programs, Linux program upgrades are handled by the operating system See the HP Proliant DL380 G5 Server with Systems Insight Manager. That’s why Linux users usually can sit back and watch the Update Manager handle the task. With Open Source, upgrades are a pleasure because they increase your productivity without the burdens of upgrading proprietary software.

In addition, it is true that most open source projects make new releases fairly rapidly. This is because this process is usually community driven, even when there is a commercial entity involved. So users tend to look forward to helpful new features.

There is usually less surprise with open source upgrades. That’s because developers are always talking to their user base and they know what the users need before they deliver their upgrades.

The ongoing discourse between users and the development community for an open source project lets product users plan whether they want to do the upgrade or not. By contrast, proprietary companies are driven more by their own needs than the direct input of users.

Open Source Upgrades are faster
It takes at least 12 to 18 months for a new version of a proprietary product to reach market. In comparison, open source software may see several version upgrades every few months.

        

But at the end of the day, an email system needs to be secure, and not just secure but able to maintain absolute security when your system is being updated.

This is why I think that Zimbra, is an open source product that has been designed with future safety in mind.

Zimbra's Collaboration Suite has been designed with several levels of security for both end users (virus, spam, phishing protection) and to the overall ZCS architecture / deployment framework (authentication, encryption).

The ZCS server comes embedded with ClamAV, the award-winning open source AV system

To support highly secure deployments Zimbra Collaboration Suite is designed with a classic network security model where server-side systems must be trusted, but the client-side need not be. Thus, with the server physically protected businesses and organizations can deliver secure messaging and collaboration to their end users anywhere, even on their home computers, public Internet kiosks, etc. (without being forced to deploy costly Virtual Private Networks).

Other Web Client Security Benefits

The ZCS web client is an Ajax-based application, which offers many advantages over traditional products:

    * Web client is downloaded - Ajax client code is downloaded on demand from the trusted ZCS server after a particular user logs-in. No software is left on the client for a malicious person to tamper with.

    * No persistent caching of user data - A substantial exposure with traditional web mail clients is that they cache HTML data including message contents, and addresses. By avoiding caching user data on disk, this security vulnerability is avoided.

• Server-side control of Zimlet mash-ups - Zimlets and other mash-ups are prevented from accessing arbitrary services on the Internet. This means the ZCS server can act as a secure, proxy gateway for accessing intranet applications, and can govern which web services are accessible for mash-up within the Zimbra Ajax web clients.

But the bottom line is overall network security open source is a more secure solution than Windows.

 

        

Most of the market share for CRM software is taken by the big name brands: SAP, Siebel, Oracle and SalesForce.com. Currently open source solutions such as SUGARCRM are a small part of the market, but my prediction is that we are going to be seeing a lot more of open source products like SUGARCRM.

Years ago in the B-to-B world it used to be said, “Nobody ever got fired for buying IBM.” That was true, but it seems to me that as the world is becoming more networked and users are becoming more sophisticated, that soon functionality and price performance will become more important than branding.

Open source software is much less expensive and tends to be less buggy than branded software. One of the reasons open source is cheaper is because the industry does not spend as much on marketing and sales. But word of mouth is the best advertising and the word is getting out.

If you ask enterprise IT managers why they would choose a branded CRM solution over SUGARCRM, most would not say that the reason was quality. In fact, most will tell you that vendor professional support and services was important to them and that open source solutions don’t match up in term of product support.

Both of this reason is becoming less important. Today, the biggest system integrators are supporting open source and besides, there is also the argument that the better the product, the less support it needs.