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Customer Relationship Management (CRM) applications are well understood. Their functional components are straight forward, the technology sound and mature, and the benefits of successful deployments clearly generate value for organizations – large and small. So why are these applications so expensive to buy or rent? Why are there so few choices on the market for companies to consider? The reason there are so few CRM vendors is not because it’s costly to build great CRM applications, but because of the costs required to market and sell CRM applications. Take a look at the financials of any of the established CRM players, both hosted and on-premise. What you will see is that less than 15% of a CRM vendor's revenue is applied to product development and easily 50-70% of revenue is allocated to sales and marketing expenditures. This has been the norm for traditional software companies, but is it the right model for today? There is a perception today that if you host or rent your CRM application you will save money over time. The marketing engines of the leading hosting vendors have done an outstanding job selling folks on this premise. It is completely false. Renting a hosted CRM application at $50-100 per user per month over a three-year period far exceeds the cost of running an open source based CRM application. With a stock Linux server you can be up and running with Sugar CRM in less then 15 minutes – installation is that easy and Sugar bCRM is far more flexible and extendable than anything you can rent from a hosted CRM provider. Recently there have been a number of industry analysts quoted saying ‘the enterprise applications industry is dead’. We believe they are right. Modern open source based software companies are built on business models that are much more efficient and cost effective in building software, distributing software and acquiring customers. They spend far less on marketing and sales and far more on engineering and quality. Since the open source project is such an effective marketing mechanism, open source companies can keep their sales and marketing costs low. Revenues are plowed back into the product development. Our prices are a fraction of what CRM vendors charge today – your money funds real product development. Very, very little goes to fund our marketing costs. Providing application source code to customers is a good thing. Gone are the days of ‘custom demos’ by trained sales consultants or ‘Model T’ application trials from hosting providers. At SugarCRM, our source code is available to all. Download it, install it, run it for free or upgrade to a commercial license – your choice. Our bug lists are published, our feature roadmap laid out, our quality assurance testing shared with real customers – in real time. We only want to be paid once we have proven we have generated value for your company, not one minute sooner. |
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