Open-source SugarCRM stock market entry

SugarCRM, the applications company, intends to become a public company within two years, said CEO John Roberts.

SugarCRM launched 3 years ago in what Roberts said was an “experiment” to use an open-source business model to create high-quality CRM applications. The company on Monday released a beta of Sugar 5.0, a major update to its application suite.

Since its launch, SugarCRM has funded its growth largely from revenue, rather than the $26 million in venture funding it raised, CEO John Roberts said.

“Now we’re at a point where we’re acquiring customers extremely fast,” Roberts said.

Roberts anticipates that the company, which now has 125 employees, can grow to $100 million in yearly revenue in the next 2 years.

SugarCRM

The open-source business model, which had not been tried in packaged applications before SugarCRM launched, is what has allowed the company to grow so rapidly and to focus on making quality software.

Doing software engineering in the open, where outsiders can view the source code, has improved the product development process.

Selling is easier, too. Because the company makes a low-end version available for free, most of its customers are already very familiar with the product and don’t require a costly sales and marketing process, Robert said.

SugarCRM’s approach can be replicated by other companies. Database company MySQL has said that it intends to go public, and middleware provider JBoss was sold to Red Hat for $420 million. XenSource, which has built its commercial product on top of an open-source hypervisor, was bought by Citrix for $500 million.

Traditional software companies spend too much on marketing and sales and not enough on research and development

“I came to Silicon Valley to write great software. But we saw this disconnect in enterprise software companies,” Robert said.

Enhancements to Sugar 5.0 focus on making the application foundation more robust and appropriate for large-scale deployments.

New features include an Ajax e-mail client that is closely integrated with the applications and a revamped on-demand version. On-demand installations account for 40 percent of SugarCRM’s customers.

The new version also includes a Module Builder that lets business users visually create and share their own application add-ons.

Tags: open-source, SugarCRM, stock market, news, Ajax, software, CRM