SugarCRM CEO: Our Partners Can Profit in the Cloud

Instead of disrupting channel partners, the cloud can empower VARs, MSPs and cloud integrators. That’s the message from SugarCRM CEO Larry Augustin, who says the company’s 2010 sales grew more than 50 percent. Plus, 60 to 70 percent of SugarCRM’s revenues are coming from channel partners, August adds.

Within a TalkinCloud FastChat Video, Augustin describes how VARs and solutions providers deploy SugarCRM in multiple ways:

• On premise at the customer site.
• Via Sugar On Demand (hosted by SugarCRM itself).
• Hosted by the channel partner.
• Or via a third-party public cloud Rackspace Cloud, Amazon Web Services or Microsoft Windows Azure.

When it comes to SaaS and cloud computing, smaller customers tend to embrace Sugar On Demand. “But we’re actively recruiting partners to host and run SugarCRM themselves,” says Augustin. “I would rather have partners hosting SugarCRM rather than have us invest more in more in that type of build-out.”

Roughly one-third of SugarCRM customers use the company’s on-demand offering; one-third of customers are hosting with a partner; and one-third are running SugarCRM on premise, Augustin estimates. “I’m not sure I see that mix changing much,” he estimates. “The SMBs want SaaS; larger enterprises still want it on-premise and integrated with other applications.”

Expanding Fast

No doubt, SugarCRM has been in growth mode. The company’s 2010 revenues rose 52 percent, and Q4 2010 growth was 56 percent. Plus, SugarCRM turned cash flow positive, Augustin adds. The company has about 145 employees today and that figure could gain about 60 to 80 more people this year, Augustin estimates.

SugarCRM’s growth strategy is all about being open — beyond the software code. Augustin also wants SugarCRM to focus on open marketing and open sales strategies with channel partners.

At the end of 2010, for instance, SugarCRM Gold Partners participated in a development sprint — sitting side-by-side working with SugarCRM’s staff on key features. “It’s not only about mastering our current release; we want partners to see what’s next. By the time we launch a product, our partners’ engineers are deeply familiar with our code,” says Augustin. Looking ahead, Augustin wants partner discussions to involve sales and marketing topics.

The IBM Connection

Meanwhile, SugarCRM has also inked a partnership with IBM LotusLive — the cloud-based email and social business platform. The effort will likely expand to include more applications such as IBM Cognos. “Cognos is definitely on our target list,” says Augustin. “Business intelligence and analytics are key to anyone doing CRM.”

Augustin sees the opportunity for IBM partners to embrace SugarCRM, and SugarCRM partners to embrace LotusLive. “We had a lot of partners who doubled their business with us in 2010 vs. 2009; we’re asking those partners what they need from us to double their business with us again in 2011.”

Augustin certainly sounds optimistic. But competition looms around every corner. Salesforce.com continues to grow rapidly; Microsoft recently launched Dynamics CRM Online globally; and even Oracle is making key SaaS moves these days.

Talkin’ Cloud will be watching to see if SugarCRM can navigate the competition while engaging more channel partners.

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