There’s still plenty of CIOs unsure of the licensing, publication, and ownership rights surrounding the open source model, and in their defense, rightfully so. In the past, the open source market has suffered from a lack of consolidation and standardization of these practices, but fortunately, things have changed.

As Evan Wroten of Interact Public Safety says in the article, the key lies with gaining a firm understanding of the licensing model the vendor operates under, and making sure you understand the value proposition and flexibility that comes along with owning the source code…because while open source might seem like a radical alternative to the proprietary model, it really isn’t. In reality, it’s actually more straight-forward and far easier to work with.

A lot of this is no-brainer stuff for those seasoned in CRM, but I think this is a good standard.

The points are solid and good reminders, or points to follow, for anyone.

The most important is:

Just because you’ve successfully implemented your CRM program doesn’t mean you’re done with the effort. Relating to your customers is an ongoing process, and so is working with and adapting the CRM application that supports it.

And even when companies got into a subscription model, it was closely tied to their SaaS offerings. Some people, sad to say, still feel SaaS and subscription revenue models are inextricably linked. Large companies toyed with both SaaS and subscription models mainly in the SMB space - continuing to rely on big ticket license sales in the enterprise.

So it is a bit of fresh air, and at the same time no surprise to me, that Microsoft has extended its subscription services for even its largest clients. The company has had some sub models, but it seems to be building out a model where - gasp - users can increase or decrease their software scenario over time.

Mind boggling.

I am a firm believer that the tables have turned, and that the software provider MUST prove its value in order to continue receiving a check from those using its software or services. That is where open source will continue to be a winner - even in SaaS scenarios - since companies will be able to clearly identify value and make investments as such. Risk is mitigated - since the company can always try to go it alone without a commercial version or commercial support, etc.

Oracle, Salesforce.com, SAP and Microsoft are not anywhere near this level of a value-based model. But things are moving in that direction. The next 24 months will be an interesting time - as SaaS and open source continue to converge and become a highly disruptive force to any player who is not involved in both sides of that equation.

Studies such as these speak volumes, especially when I still hear call centers being referred to as “cash cows” throughout the industry. And to be honest, that doesn’t surprise me, as I once read that a fully-functioning, multichannel call center with more than 100+ CSRs can have nearly 200 different software and hardware solutions supporting it…telephony and IP PBX being just one of them. The cost savings associated with making more of these applications open source would be monumental to the CRM industry.

Case in point: Digium is an open source telephony provider whose solution, Asterisk is integrated with SugarCRM. One of SugarCRM’s customers, Geeks on the Way, did exactly that, and has now integrated SugarCRM with Asterisk to allow callers to be recognized by phone number or other identifiers and automatically populate service logs and records…all at a fraction of the cost that a vendor like Cisco would have charged. You can read about it here.

Not enough attention has been paid to the way in which open source can transform the call center industry. How many SMBs would have access to the features and functionality usually reserved for the enterprise, and how many enterprises could save hundreds of thousands on IT overhead. The options would be limitless.

“So - how does your company make money?”

“Can ANYONE simply check in code to your solution?”

“Do businesses really buy open source software?”

I take the time to answer these questions fully, since you never know who might be your next customer. But it does surprise me that there is still a lot of fuzziness around open source models. There is especially a lot around SugarCRM’s solution. And I am sure our competitors are not helping matters.

Our VP of marketing Chris Harrick gives a nice explanation in a recent interview on TMCnet here. The most important part of his responses, I believe, is this:

There is a misconception about code contribution with open source. My company, and I’m sure others in the field, are careful what is committed to the code base with an eye forIP rights, code quality, security and scalability. The community involvement occurs around quality feedback, language translations, and product complements and extensions of which there are over 500 today.

Too many people think we have this “out there” code base that anyone can add to or change. Not true. We have a very centrally managed IP - because after all we offer a Commercially-licensed version based on the same code base.

And when it comes down to it - to address the last question above - businesses Don’t Care if a product is open or not - they just want it to work. They want it to fit their businesses with the same flexibility they expect in their human capital. CRM is a living, breathing initiative in any organization, and the software must match that. Lucky for us, by leveraging the open source manufacturing process and lifting artificial limitations on our solutions, we can offer the type of speed, power and control (to the user) that a modern CRM system needs.

I don’t think Bill has it 100% correct either way. Yes, SAP is late to the game and has been slow out of the gate with its SaaS and other innovations of late. But it is still a much larger, and in my mind will remain to be, applications provider than Salesforce.com or Google or Microsoft or Oracle, etc.

Why? Well, timing is one part. SAP has simply been around, and cornered a global applications market that was short on packaged apps in the 1990s. But we see in SAP’s success a mirror into the success of SaaS vendors today. SAP was trying to make it easier for people to get ERP running in their organizations — the alternative was highly proprietary and custom coded systems. Ewww.

But just as there are still custom built ERP and CRM solutions in many large and small companies, SaaS is not going to replace every packaged client server or non-hosted application on the planet. probably ever.

SAP knows that people will opt for on site software for a good many years, and has weighed the pros and cons of rolling out a not ready for prime time SaaS portfolio. They are not idiots.

We at Sugar still believe in - dare we say it - customer choice, and that is why we have a lot of users of each of our deployment options. But we do see SaaS as a growing strategy.

Now, I said SAP are not idiots, but I do think they have a lot to gain by getting more proactive in the game (especially with a SaaS ERP suite) rather than let Sugar, Intaact, Authoria and Salesforce.com and other companies eat their lunch in both the midmarket and the enterprise.

A candid shot from a recent SAP strategy session on SaaS.

All-in-all, the interview has some great tidbits of info about the decision-making that should take place when considering outsourcing a mission-critical application to a vendor, and supports a point I’ve made in the pass here on CRMOutsiders: Customers are looking for shear flexibility in their business applications, both in terms of deployment models and the ability to integrate and customize the application to fit their unique needs.

That point is underscored by Harr in the interview, which ironically enough, leverages Salesforce.com for their CRM needs. And while Harr says Ingres is currently happy using Salesforce.com, being able to customize and integrate SaaS software “didn’t always used to be the case.” The key, he says, has been the adoption of open source standards and architectures at the infrastructure level by SaaS providers over the last few years.

While they still don’t offer the degree of flexibility that an open source application vendor does, and while I’d hardly call Salesforce.com or other SaaS providers open source (which remains a loosely-coined term by many of our competitors), I’m glad to see that the CRM vendor market has finally learned its lesson, and has picked up on some of the concepts and trends SugarCRM established so many years ago.

As the son of a mother who’s spent the last 20+ years working in the healthcare industry as a receptionist and office manager, I can only begin to understand the difficulties associated with the near medieval manor in which doctors and hospitals store, process, and communicate patient information on a daily basis. The stories my mother has conveyed is downright scary

California’s recent $1 billion purchase of a big, unwieldy, proprietary electronic medical records (EMR) system is one, but a SugarCRM partner that’s been doing some very cool stuff in this realm is another. Jose Lacal, founder of the company OpenPHI, offers a solution called HealthAlbum, which gives patients a complete snapshot of their medical history, and can thus be taken from doctor to doctor and updated accordingly. The solution, which can run on top of SugarCRM, allows doctors to better diagnose and understand pre-existing conditions, but also allows a patient to access their own data via the Web. It’s a concept that would have seemed inconceivable 10 years ago…but is rapidly becoming a realistic reality thanks to open source

This is much different than your existing “Accounts” module - and does more to gather more free flowing data rather than exact transaction details. There’s a decent explanation and argument for it here.

It makes sense - storing the “voice of the customer” (for lack of a better term) inside your existing system. It simplifies the transition to social CRM (again, for lack of a better term) and requires little incremental IT investment.  Heck, with SugarCRM, you can create a customer module easy with Module Builder - this is exactly the kind of stuff the 5.0 platform was meant to do.

I just did a webinar with CRM expert Paul Greenberg. We discussed a lot of the need for more social media awareness in enterprises and a new understanding of what CRM can be. But I think the customer module is a good start - it an bring in data from all of those sources where your customers are talking, and allow organizations to keep a finger on the pulse of customer activity in a system they already know how to use.

Pombriant spoke to the importance that Web 2.0…or CRM 2.0 if you’d like…will have on the ability of businesses to drive customer interactions via the Web, thus avoiding skyrocketing travel costs in the process. Some of these points he outlined at our SugarCRM Acceleration Boston event, which he keynoted.

But to those points I’d also add open source, because as my blogger-in-crime Martin pointed out yesterday in his blog, “The Power of Open Integration in Action,” why bother paying for the licensing and customization fees associated with integrating Siebel with Business Objects when one can simply do it for virtually free with open source alternatives.

Oil prices just aren’t driving the cost of driving and airline travel up, they’re forcing software vendors to change the way in which they operate, develop, and sell software. Virtualization means that customers are expecting more flexibility in their software solutions and in pricing, and that can only be a good thing when it come to the bottom line, whether it’s conducting a conference call as opposed to flying to see the client, or selecting a different CRM vendor based on the aforementioned benefits.