Start-up takes aim at Salesforce.com

A start-up that delivers applications over the Web, iRadeon aims to beat Salesforce.com at its own game by bringing a lower-cost, easy-to-deploy alternative to the CRM software market - and it's doing it with a twist: open source.

The company, which launched in 1999, began delivering a handful of open source applications on demand last summer, including NETOffice open source project management and ATutor open source e-learning software. This week, the company is scheduled to roll out an updated version of its hosted open source CRM offering, SugarCRM 3.5.

The package costs $150 per month for 25 users compared with Salesforce.com's starting price of $1,625 for the same number of users.

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A start-up that delivers applications over the Web, iRadeon aims to beat Salesforce.com at its own game by bringing a lower-cost, easy-to-deploy alternative to the CRM software market - and it's doing it with a twist: open source.

The company, which launched in 1999, began delivering a handful of open source applications on demand last summer, including NETOffice open source project management and ATutor open source e-learning software. This week, the company is scheduled to roll out an updated version of its hosted open source CRM offering, SugarCRM 3.5.

The package costs $150 per month for 25 users compared with Salesforce.com's starting price of $1,625 for the same number of users.

It's the same kind of proposition Salesforce.com introduced to the market when it launched six years ago. At that time, Salesforce was the only firm to deliver a hosted CRM application, meaning that end users could simply tap into the software rather than having to wrestle with large-scale and expensive in-house deployments.

Tim Krozek, director of sales at Efficient Frontier, a search engine marketing firm in Mountain View, Calif., says he used Salesforce.com for years because it was more affordable.

"A few years ago, Salesforce was right because there was no other game in town," Krozek says. "You had to use Siebel or something like that or something less than optimal like Outlook. To deploy some large Siebel system is incredibly pricey."

Efficient Frontier recently switched to iRadeon, however, because the small company was running into pricing issues as it looked to add more users to the CRM system, Krozek says.

"We were paying in the neighborhood of about $600 a month for Salesforce, and we had about nine users," he says. "Ultimately, what we're hoping to do is get our client services on board and some of our engineering operations on board with a centralized product. To add those people [to Salesforce.com] would have been really, really cost-prohibitive."

Analysts say iRadeon, which markets to small and midsize firms, as well as departments within larger companies, is tapping into an area where there is growing demand. A recent survey by Nucleus Research of 29 Salesforce.com customers found that while they were happy with Salesforce.com, 38% were planning to or would consider moving to another CRM provider.

Others, such as NetSuite, RightNow Technologies, Salesnet and Siebel also offer on-demand CRM. But Rebecca Wettemann, vice president of research at Nucleus, says iRadeon is unique because it is offering an open source alternative.

"Until we see more packaged applications coming out in the open source world, going to on-demand is a great way to get value out of something like CRM and project management without having to make the investment in custom development that using open source typically requires today," Wettemann says. "This removes a pretty big stumbling block for small companies."

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