SugarCRM: Big Growth Now, Exit Strategy Later?

SugarCRM continues to grow fast. But is the open source alternative to Salesforce.com, Oracle Siebel and Microsoft Dynamics CRM a serious contender in the IT channel? The VAR Guy believes the answer remains yes.  The bigger question is whether SugarCRM will remain independent, march toward an IPO, or seek a buyer over the next couple of years. Here’s why.

SugarCRM says the company has grown for 14 consecutive quarters. And in Q1 2013, the company lifted its annual recurring revenue by 30 percent vs. Q1 2012. The company now has 6,500 customers and 1.2 million end-users.

History Lesson

Impressive. But here’s the interesting back-story. SugarCRM was founded in 2004 as an open source CRM company. Co-founder and former CEO John Roberts exited in 2009. At that time Larry Augustin was named Interim CEO in May 2009. Soon after, “interim” dropped from Augustin’s title.  

Augustin is committed to open source but it’s no longer the first term SugarCRM uses to promote its business. By 2010 and 2011, the company was investing heavily in its channel partner program. And Augustin spoke at the 2012 Cloud Channel Summit — assuring partners that there are SaaS and hosting opportunities ahead for partners. 

True believers in the channel strategy include Technology Advisors Inc., which SugarCRM named as itsMost Valued Global Partner and Most Valued Partner in North America in April 2013. SugarCRM has also worked closely with IBM’s SmartCloud Services, DB2, and retail industry solutions.

Channel Changes and Competition

Still, there have been changes in the partner program. Former Channel Chief Jeff Campbell exited in March 2013 and soon after joined Get Satisfaction. Executive VP Glenn Cross is now calling the shots for SugarCRM’s partner program.

Meanwhile, rivals aren’t resting on their laurels. Salesforce.com continues to speak highly of partners — though most references involve ISVs. And Microsoft continues to push beyond on-premises CRM to promote its cloud alternatives. 

The Road Ahead

Next year — 2014 — will mark 10 years since SugarCRM was founded. The company now has about 250 employees. And venture capitalists has pumped $46 million into SugarCRM. 

Since become CEO in 2009, Augustin’s overall track record has involved business growth. Assuming that growth continues into 2014, The VAR Guy wonders if SugarCRM’s investors will be seeking a short-term financial event (IPO or company sale?) or perhaps hold on for even richer long-term rewards?

Either way The VAR Guy will be poking around for answers…