Not So Sweet News for SugarCRM

-- By Pushpa Sathish, Staff Writer

Open source CRM provider SugarCRM has tasted moderate success with its on-demand model, with 1,000 commercial customers to boast of. The company diversified into the SaaS model in September 2004 with SugarCRM Professional. It pulled off a coup of sorts when it signed up Starbucks, Honeywell and First Federal Bank. Another achievement was stealing away special equipment provider for the automotive and appliance industries, Sterling PCU, from Salesforce.com. Apparently, the company ran into some extra costs with Salesforce, and was more than happy to switch over to SugarCRM, which apparently provided them with a sweeter deal. The future prospects for the company are not rated too highly though by Paul Greenberg, president of the CRM consultancy, 56 Group LLC:

SugarCRM's pricing model -- which operates in a more traditional way and is less "open source-like," -- will make it difficult to keep up with SaaS companies like Salesforce.com and San Mateo, Calif.-based NetSuite Inc., as it scales up.