Larry Augustin of SugarCRM: CRM is More Important Than Ever

SugarCRM held its annual user conference, SugarCon, earlier this week in San Francisco. Over 1,200 people were on hand to see what direction the company was taking its platform in. And while many of its competitors are expanding their offerings to include ecommerce, configure-price-quoting (CPQ), marketing automation and other related areas, SugarCRM CEO Larry Augustin emphatically stated that Sugar is staying true to its CRM roots and explore the many ways CRM can be even more important to business success in the near future.

I had a chance to speak with Augustin and hear how the company is looking to bring the latest and greatest technology developments to the platform to make CRM a system more relevant, and attractive, for sales professionals to turn to in order to build successful relationships with modern consumers. Below is an edited transcript of that conversation, as well as the video of our full conversation.

The Importance of Customer Relationship Management

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The Importance of Customer Relationship Management - Larry AugustinSmall Business Trends: There are several interesting things you are working on around artificial intelligence, machine learning, and also your digital assistant Candace. What are your customers saying about some of these things?

Larry Augustin: For a long time CRM has been a collector of information. We’ve been talking for a long time about turning it, not just into recording information, but also a system of engagement that helps people do their jobs. The next step of that is not just giving them a system that helps them manage how they work, but now begins to give them something back in terms of intelligence.

If you look at our journey, I think of it in those three pieces. Stage one is you still need to be system of record, you still need to record the data and you need to have access to that. You need to automate that more and more so it’s much less about the person putting data in. That’s been part of our journey. You integrate with systems, you integrate with email, other data sources so those come in more automatically. Then you make the work flow and the activities easy to do so the system helps people do things, not just presents data.

The next step to that is intelligence. You saw some of our future vision around that today. Today we announced a couple of things; the Sugar Intelligence Service which is really a collection of services that help collect data, do data augmentation and then give you some intelligence and analysis around that. Then we showed a concept with a digital sales assistant, Candace, who is helping a person through natural language query understand their prospects and know what to do next. Some exciting things there.

One of things that I like in that that we’ll be delivering very shortly is the data augmentation around a person. If you think about where your contact starts with a person, it’s frequently an email address. The way we have with the service now, you put in an email address and you can get back a fully populated record that tells a lot of information about a person.

If you think about what a good sales person does today, what do they do if they have an email address, they have that starting point around a person? They probably open up multiple tabs in their browser, they start searching for that person, they’ll go on Facebook, they’ll go on LinkedIn, they’ll do a Google News search, they’ll go to company bio page, they’ll go to Twitter, social media, Instagram. There’s a lot of information on people out there. It’s all very public. This is not information that’s secret. It’s information we all put out about ourselves. When you’re going to meet someone, a good salesman will of course go and do that work. That can be 30 minutes of work or more opening multiple tabs in a browser. When you think about it, it’s very mechanical. This is not rocket science. Essentially what we’re doing is pulling all that information together now in a very easy way. Email address you get one screen, you click, you pull that in.

Then the next step is some insides around that. I think you saw in the demo today, the person we’re going to talk to is a Patriots fan.

Small Business Trends: When you think about some of the things mentioned in the various key notes – IoT (Internet of Things), machine learning, M2M (Machine to Machine), artificial intelligence, all the things that I would assume most salespeople don’t even want to think about; are those the things that will actually make CRM usable and increase adoption for those salespeople?

Larry Augustin: Those are the things that behind the scenes will create the information, an insight that you can give to the salesperson before they talk to a prospect or go into a meeting.

It doesn’t have to be hugely sophisticated. Now over time it will get more and more sophisticated, and you heard some of that future we’re looking at. I think one of the things that sometimes hits our industry is people like to talk way, way in the future and science fiction things and it’s not believable. A lot of the things we were showing today, very believable things you can understand and gather about a person. We’re all about delivering that today. That will make the system a must-have for that salesperson to use.

Small Business Trends: You made the point in your key note yesterday about being a CRM company by choice, drilling down and doubling down on CRM. Talk a little bit about why you said that and why that’s important.

Larry Augustin: We believe that there’s a lot of opportunity for innovation at CRM. This is just one example of it. Even the digital revolution is leading to that. The information we can now gather on the internet digitally compared to what people could find out even 5 years ago, so much more sophisticated. We now have the tools to process that. I see immense opportunities to innovate in core CRM.

For us that means that we’ve chosen to be that CRM company and we are deliberately choosing not to expand our breadth of solution footprint. What does that mean? We’re not in the marketing automation business. We have great partners there, they do marketing automation… We compete with Salesforce. They’ve acquired, they’ve acquired Demandware, they’ve acquired Steelbrick. Those are all spaces where we’re happy to partner and we’re not going to go into those spaces. We see opportunity to get deeper in CRM and we’re a CRM company first and that’s our mission and vision.

Small Business Trends: We’re in 2016 halfway through the year. I still hear and see stories of companies, rather large companies, who are just making the decision to use CRM today. One of the terms I heard at the conference is being and “Excellent” company – meaning running their company on Excel. Are you surprised that that is still the case in 2016?

Larry Augustin: I am both surprised and encouraged by the fact that a lot of companies aren’t there and it’s an opportunity for business. If you look at the market, total commercial seats of CRM sold today, 28 million. It’s probably less than 30 million. I’ve been watching it creep up over the years. I’m pretty sure it’s still less than 30 million.

You look today and there are 350 to 400 million people whose jobs are to talk to customers in business. You compare that to less than 30 million seats of CRM and –

Small Business Trends: That’s not even 10 percent.

Larry Augustin: Not even 10 percent! That’s why you see what you see which is a lot of companies are still not there. They’re not using a commercial solution. They’re using something, let’s be clear, but they’re not using a sophisticated CRM dedicated solution. They’re using Excel. They’re using email. As much as we see Excel, we see, “We have a process for organizing folders in email.” We see that one all the time.

Let’s be fair. It’s not a bad solution when you’re 3 people because you can look at the person next to you and just say to them, “I’m going to put everything in this folder and we’ll follow it along and we’ll track together.” You can do that. But when you’re 10 people or 20 as it starts to grow, that breaks down and you have no way to track, you have no way to report on that when you are handing from 1 person to the next, the history gets completely lost in all of that. Those solutions don’t scale. There are also CRM solutions that work for small as well. That’s a different place in the market. What happens is companies still grow up with those and eventually at some point they realize this isn’t going to work for me. I have to change it.

Small Business Trends: In terms of some of the things that I saw in this conference. The things that you are baking into SugarCRM. You have the artificial intelligence, you have the machine learning, you have the digital assistance, all these things. CRM has been around for almost 30 years and we see only 10 percent roughly penetration rate. Are the things that you displayed throughout the conference, is that going to accelerate the move to CRM in the next 5-10 years? Are we going to see that 10 percent penetration rate jump to let’s say 20 percent?

Larry Augustin: I think we will begin to see it jump. Part of it is the digital revolution is making more people comfortable with all of these technologies and not just paper and pencil. The concept that I have an application that helps me do all this is becoming more widespread. Integrating with all the various digital technologies helps to encourage the growth and adoption and usage of that.

Part of it is just digital revolution in general. Part of it is the systems are delivering more and more value and there are less and less record keeping. If you look at the … Part of the way I got to that large number of potential users is you’re expanding the set of people inside a company who the system can help. If it’s just record keeping, it’s going to be a smaller set. If it’s just sales management, it’s going to be a smaller set. If it’s everyone who potentially talks to a customer and coordinates around the customer and it helps them do that job, it’s a bigger set.

As you expand into helping more of the end users role and delivering more value to the end user, that’s part of the way you expand. I think the statistics today show that in a typical company, the penetration of CRM is about 20 percent whereas about half of the company is customer facing. You think about that difference, 20 versus 50 … Part of it is how do you find the companies that don’t have something. The other part of it is what happens when you go from 20 percent of the company is users to 50 percent of the users, that’s a big jump as well. That in itself is 2-1/2 times the market in existing companies. You deliver more value to them, it has to be easier to use for them, that’s where things like the insight and the intelligence will add more value across the business.

Small Business Trends: Last question. In the end, how important is CRM today as compared to 20 years ago or 15, or 5 years ago?

Larry Augustin: CRM has evolved from the tool the VP of sales uses to manage their business and people to the center of the front office. If you look at ERP as the center of the back office and there are a ton of financial and operational systems around a company that will plug into ERP. Your expense reporting and tracking, HR and employee tracking. All those things will tend to plug into ERP. CRM holds that same role in the center of the front office. Marketing automation, other systems that are delivering information to the customer or across the front office will plug in around CRM. It becomes that center.

I talked about ecommerce and CPQ and marketing automation and you can go down the list, they’ll have to sit around CRM. Those become the dual platforms that sit at the middle of the company. In that sense, I think CRM has become more important and grown out of the tool for the VP of sales to manage that business to the platform on which a company manages their customer facing part of their business.

This is part of the One-on-One Interview series with thought leaders. The transcript has been edited for publication. If it's an audio or video interview, click on the embedded player above, or subscribe via iTunes or via Stitcher.

Brent Leary Brent Leary is the host of the Small Business Trends One-on-One interview series and co-founder of CRM Essentials LLC, an Atlanta-based CRM advisory firm covering tools and strategies for improving business relationships. Brent is a CRM industry analyst, advisor, author, speaker and award-winning blogger.