Open Source CRM - An Alternative to Hosted Models - Part 3.
In the previous part, we have seen the advantages of Open Source CRM over the traditional CRM model. In this concluding part, we will be looking at what are the factors that make Open Source CRM a viable option for organizations in comparison to Hosted models in the long run and also look at some of the uncertainties surrounding the Open Source CRM model that act as a blockade in its acceptance in the CRM market space.
Open Source software is something where the source-code is available freely, publicly modifiable and comes with a license to be flexible enough to the core. This hands the control to the users from a development perspective with the prospects of reduced licensing costs in the offering. Over the years, CRM has evolved into a mature market where there is a sizable market share available for open-source although market giants like SAP and Oracle who specialize in applications driven solutions have been able to occupy a fair share of the market. In spite of these issues, new entrants are busy knocking the doors in the form of Open source business application providers. In the words of John Roberts, CEO of commercial open software CRM provider SugarCRM, "CRM is a huge market and we do need a huge market. You need a large community. One should view CRM not as a nice application to have but as a mission-critical application. The big players have a fraction of the market because they cannot reach companies worldwide: they do not have the Internet to [establish] the reach."[4]
By utilizing the Internet as both a distributed development environment and a distribution channel, open source CRM companies can gain geographical reach without requiring costly company infrastructure. The Internet continues to change the way IT works but the benefits of low cost and very broad reach are not restricted to open source vendors. Marc Benioff, Salesforce.com CEO thinks "the barriers to entry - and survival - in the CRM market are high. CRM is a matter of money, market share and integrated application suites, which is why dedicated CRM vendors are being acquired." [4]
One of the reasons why software vendors do not wish to share the source-code is because of the simple reason that it is the main source of revenue for them. Although there are apprehensions about the thought that open-source techniques does help in evolution of the product at a much faster time frame than a proprietary mode of operation.
There is always an uncertainty surrounding the Open source softwares as many a time people who buy open source software do not understand the importance of specifying the requirements more elaborately to the development community as such. There is a good chance that many of the features that are part of a proprietary vendor are available in a open source product as well as there is an uncertainty when it comes to integration of the components into a solution. Open source CRM thus represents the rise of engineering over marketing and has the potential to produce software that is developed faster, is more innovative than proprietary software because it captures vision from developers worldwide and has a diverse user base. The absence of license fees is a large part of the open source CRM economic argument, but as far as CRM software is concerned license fees are only 10% to 15% of the total cost of ownership. Implementation, hardware, the cost of internal or outsourced support, customization and maintenance are where the real cost-of-business applications lie.
Open source CRM is not as functionally rich as packaged CRM applications. It is still basic and lacking sophisticated functionality such as high-end or predictive analytics. There are potential risk factors in terms of development, application maintenance and upgrades where custom integrations are concerned as well as potential security and stability issues. There is also the knowledge issue in that organizations that opt for open source need in-house skills to manage it from a technology and business perspective. Open source is adaptable and can give SMBs what packaged vendors have failed to deliver for years and are only now starting to address. Open source woos with the promise that organizations can get what they need and that the application can be moulded to the business. Users have a much greater chance of finding something that fulfils their needs with little modification and have the opportunity to influence development. It can also be a springboard to custom development.
Finally, one of the main positives to come out with the Open-Source CRM is that there is no risk of getting locked to a vendor-specific infrastructure. Open source has been able to evolve and capture the attention of the CRM space because of the fact that it is different from the traditional proprietary approach. It has added another dimension to the traditional 5-level model of on-demand CRM solutions, by introducing itself as the sixth level with the capability to share applications on a platform. Also another factor that has aided in the growth of Open Source CRM is the speed with the application has evolved due to the community development that has formed the user base for the Open source developer community.
In conclusion, the Open Source CRM presents itself as another alternative to the existing traditional model and the hosted models. As far as users are concerned with the growing number of models, the chances of creating a better match between application and business requirement are improving. How will this help the CRM space is something we might have to watch and wait.
