Tech Industry

Open-source CRM firm offers subscription service

Start-up SugarCRM sets out to shake up the business applications market with a free program and low-cost support.

Open-source software start-up SugarCRM plans to introduce support services for its free contact management product on Thursday, part of a big push to lure customers away from high-priced, proprietary programs.

The 5-month-old company, based in Cupertino, Calif., makes a program called Sugar Sales that's designed to help companies coordinate sales opportunities and customer service. The free application is comparable to pay-to-license applications from rivals Best Software, FrontRange Solutions, Microsoft, Salesforce.com and others in the so-called customer relationship management (CRM) software market, said John Roberts, SugarCRM's 37-year-old chief executive.

"It's the Linux of CRM," Roberts said, referring to the open-source operating system that's gained popularity in recent years, to the chagrin of Microsoft and traditional software developers.

To make money, the tiny, 10-person company is launching a set of support services for $149 per user per year. With a business model not unlike that of Linux distributor Red Hat, SugarCRM will continue to offer its software for free while collecting fees for installation services, training, warrantees, technical support and software patches. The company plans to introduce hosting services in October.

Along with the launch of its services package, SugarCRM is introducing some software features, including a tool for importing data from rivals' programs and hooks into Microsoft's Outlook e-mail program.

SugarCRM is something of a trailblazer. It's one of the few open-source software companies to focus on business applications, which is software for automating common administrative tasks such as taking orders and pitching customers. Others, including Red Hat and MySQL, typically build computing infrastructure such as operating systems and databases.

Since SugarCRM opened its doors in April, people have downloaded more than 20,000 copies of its program from the Web--far surpassing the company's projections, Roberts said. It's among the most popular downloads on Sourceforge, a Web site that hosts many open-source programming projects.

SugarCRM, founded by three former executives from CRM software maker E.piphany, raised $2 million in venture capital from Draper Fisher Jurvetson last month, Roberts said.

The CEO hopes to sign up thousands of paying subscribers by the end of the year, mounting a new front in the open-source programming movement that's reshaping the software industry. SugarCRM is the latest upstart to come along with a new business model to challenge the dominant companies in the business applications market, including Oracle, Microsoft, PeopleSoft and SAP. San Francisco's Salesforce.com, which recently began selling shares to the public, is also looking to take on the status quo with a pay-by-the month hosted CRM software service.