Open Source is a genuine alternative

Open source offers the advantage of a freely available source code that can be modified by the public. It provides greater control to the end user and user licenses are not as expensive as those of proprietary models. CRM is one of the business applications that open source developers are targeting. The CRM applications market has reached a high level of maturity and open source offers newcomers with an opportunity to place a foot in the door.

According to John Roberts, who is the CEO of open source CRM software developer SugarCRM, CRM is critical for the success of every organization. Of the more than 50 million companies that need CRM for managing customer relationships, only a handful are serviced by the major players. This is because the big companies have not been able to leverage the reach of the Internet in reaching out to the customers. Open source CRM providers are utilizing the Internet to overcome geographical barriers without investing in infrastructure. The Internet serves as a medium for distributed development and also as a channel for distribution. Salesforce.com is one of the companies that have made use of the Internet for this purpose.

At present the emphasis is on developing as strong a sales and marketing strategy as possible. Open source challenges the very premise of business by making the code available to the public from the very beginning. In an open source environment, potential buyers can contribute and are in fact expected to contribute to the development of the software. Even though open source is capable of providing almost all the services associated with proprietary software, it still faces problems regarding the integration and the vertical sector development of the application.

Open source CRM offers the advantage of a low cost of ownership, a product that is driven by engineering rather than marketing, is developed faster because of the pooling of resources, is more robust and better suited for vertical integration as it is created as a result of the inputs from developers all over the world. Open source CRM reduces costs as there are no license fees attached. License fees can form up to 15% of the total cost of ownership. Other costs include cost of support, hardware, software, maintenance and upgrades, customization, etc.

Although, open source CRM model has economic merit, it cannot as yet match up to the proprietary softwares in terms of functionalities available. It offers an avenue for developers to enter the highly competitive market but in order to survive, open source CRM needs to be able to provide advanced functionalities such as predictive analysis. Also, a business that opts for open source CRM needs to have the skills at its disposal to manage and maintain it.

The distributed development methodology ensures that the various software layers are developed separately. However, the proliferation of distributed computing, service oriented architecture, and visual tools have led to a dilution of the advantage that open source held. Open source CRM enables SMBs to customize the applications in a manner that the enterprise-grade CRM vendors neglected to address.

The promise of open source CRM in addressing the issue of customization has led big players like Siebel to take notice of the fact. The Nexus project initiated by Siebel owes its origin to the acknowledgement by big companies that there exists a big market for custom development.