In ten years open source will be the norm for CRM. Dinosaurs like Salesforce, Microsoft, SAP and Oracle will not exist in the form they currently do. They will have to change business model profoundly or they are roadkill.
The SuiteCRM project is the 800lb gorilla in the open source CRM world. The project goes from strength to strength. New engagements are primarily enterprise global and strategic. This is traditional dinosaur territory and the bad news for dinosaurs is that the enterprise is waking up to the open source CRM landscape. Faster, cheaper, better, more innovation at a faster pace and a vastly reduced price tag for enterprise-class CRM. And all of this with no vendor lock-in and control of their own landscape. They can deploy to public clouds, private clouds, behind their own firewalls. They control their upgrades, they call the shots.
There are dinosaur world people who comfort themselves and scare customers with the story that open source is written by script kiddies working at night in their bedrooms. Just for you, we have some very, very bad news. Those global enterprises currently engaged with the SuiteCRM project understand that what is good for the project is good for them. They are donating code to the project. They have their own teams working on innovations and are donating these to the project. It’s not script kiddies working in their bedrooms (it never was), it’s some of the smartest corporate software minds innovating on a high quality code base and donating code that doesn’t impinge on their competitive advantage back to the project. We’re all floating higher on a rising tide.
Not only is the enterprise donating code, but the SuiteCRM full-time core product team is expanding – rapidly. The community of developers that support SuiteCRM is expanding. The quality of the community is growing and the number of bug fixes and other contributions is picking up pace. More eyes on more code, more innovation from more software engineers. It’s hugely exciting.
The dinosaurs should be very afraid. Extinction is a near certainty unless they adapt. It’s a Darwinian evolution. The survival of the fittest and open source is the ice age for proprietary CRM vendors.
Just as dinosaurs didn’t adapt to ecological change and were wiped off the planet, it is difficult to see how their twenty first century proprietary code cousins can adapt. Just as dinosaurs needed vast quantities of food to survive, so do their code equivalents. Cash is their food equivalent. Code dinosaurs need lots of cash food regularly. They have very, very expensive sales and marketing teams to support. They could cut these teams and reduce their overheads substantially. But this would be a death knell. Without those teams of highly remunerated marketing and salespeople, they don’t have a route to market. Those sales and marketing teams are the major differentiator between open source and proprietary software. The business logic is commoditised. Proprietary and open source CRM at enterprise level do pretty much the same things.
The difference between open source and proprietary software is that open source CRM is generally bought by the enterprise. They download it, deploy it, run code scanners on it, road-test it and satisfy themselves that it is fit for purpose. Then they engage with the project. They buy into it before it is sold to them. No salespeople are involved.
Proprietary software on the other hand is sold. Costly marketing to promote the message and sharply dressed sales teams with great collateral to close the deals. Code dinosaurs can’t survive without the sales and marketing overhead.
Alternatively they could open source their code base. This is an interesting thought and one that may happen. But the consequences will be profound. Red Hat’s CEO, Jim Whitehead, articulates the open source business model beautifully. It’s “millions of users and thousands of customers”. Only a fraction of the people who download, deploy and drive value from open source applications will ever become customers that provide revenue to open source projects. For that reason open source companies tend to be lean organisations with engineering and business process at their core. Could a CRM vendor such as Salesforce or Microsoft survive in any meaningful way if users could simply download all the code and use it as they wish. Rather than the 100% monetisation that they currently enjoy, their core revenues would shrink to a fraction.
It’s possible but the likelihood of the dinosaurs surviving such an impact is small.
It’s the agile, smaller mammals that will survive the ice age. Those that don’t have the bulk of the dinosaur’s business model.
If you’re an engineer or business analyst working for a dinosaur and you’re reading this with a sinking feeling, then don’t be too disheartened. There will still be lots of consulting and engineering jobs in the open source sector. If you’re in sales and marketing, then maybe you should worry a bit more.
The future for CRM is bright and it’s brightest in open source.