1. OVUM OPINION
SugarCRM becomes the core
of IBM's next-generation CRM
Reference Code: OI00125-027
Publication Date: May 2012
Author: Carter Lusher
OVUM VIEW
Summary
At SugarCRM's SugarCon 2012, IBM's VP of sales transformation, Gary Burnette, gave a
presentation about IBM moving to "social selling", a move that will dramatically change its selling
process. The new sales approach requires a new CRM infrastructure, which does not yet have an
official label, but has at its core SugarCRM along with a plethora of IBM technologies. Something
that was not mentioned, but came out after a direct question from Ovum, is that this next-
generation CRM infrastructure will over time displace the incumbent CRM product Siebel. Doing a
migration, even over time, of an enterprise application used by tens of thousands of sales
representatives worldwide is a non-trivial exercise.
What is just as interesting is that this major move is happening below the regular news radar, with
neither IBM nor SugarCRM doing the usual press and analyst outreach. However, as the
implementation progresses, we expect IBM and SugarCRM to do this once they have proof points
on business results and technology advances. For now, IBM is in the critical transition period of
replacing a system from one major partner with that of another.
IBM adopts social selling
IBM has a number of internal transformation projects under way, all of which have been brought
into the CIO's office. One very significant transformation is the move away from a traditional sales
approach of micro-managing the sales representatives, toward "social selling”, which leverages a
variety of technologies, social and otherwise. When IBM started developing this next-generation
selling method, the team was not focused on "social" but instead on dramatically increasing the
SugarCRM becomes the core of IBM's next-generation CRM (OI00125-027)
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2. productivity of the sales team. As IBM looked at the challenges of a typical sales team member, a
variety of issues surfaced that began pointing toward using social, collaboration, analytics, and
other technologies and applications, not only to increase the efficiency of sales representatives,
but also to enhance internal collaboration as well as external conversations.
Any transition of this significance will require a refresh of the supporting CRM infrastructure, which
often means displacing the existing system. This will result in an opportunity for smaller vendors
with a disruptive approach, be it speed of innovation, technology used, deployment options
offered, or business model, to win the business. At IBM, going with the emerging social-selling
idea means creating a new CRM infrastructure using many parts of its portfolio of organic and
acquired applications and technologies, but having SugarCRM at its core.
There is already a high level of familiarity between IBM and SugarCRM, in part due to the work
done in the last two years in the context of IBM's Global Alliances Partnership. However, a
transition of this magnitude is never undertaken lightly and will take years to complete.
Implications for SugarCRM
Becoming the core of IBM's new internal CRM platform is a huge win and challenge for
SugarCRM. Because the new CRM will be rolled out to tens of thousands of users worldwide it
means gaining validation as "large-enterprise-ready". Naturally, this is a major deal that will add to
SugarCRM's top line. The win also means a potential new revenue stream as SugarCRM is
included as part of a productized offering.
The challenges for SugarCRM are that it takes the IBM partnership to a much higher level with
significantly more at stake. It's a huge deal that raises the expectations of investors. Tens of
thousands of deployments, even over years, will be complex, and SugarCRM will be receiving
much deeper scrutiny from skeptical and experienced IT and business professionals at large
enterprises and public sector organizations.
Recommendations for enterprise and public sector IT
While still a nascent concept and not yet productized, enterprises and public sector organizations
looking for a new approach for taking their relationships with customers and constituents to a
higher level should engage IBM in conversation. The outcome in the short term would not
necessarily be to buy anything, but to use the insights for long-term IT and CRM strategies and
planning.
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3. Large enterprise and public sector organizations with a CRM procurement project under way or
planned should definitely include SugarCRM on the vendor long list for evaluation along with other
vendors they are considering.
SugarCRM becomes the core of IBM's next-generation CRM (OI00125-027)
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4. APPENDIX
Ask an analyst
Ovum clients are encouraged to set up phone-based inquiries to talk with analysts about the
implications of IBM's move to social selling and SugarCRM enhanced status of large enterprise
ready to their ongoing CRM planning, procurement projects, and IT strategy and plans.
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