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SugarCRM CEO Sudden Departure

It's never good news when a company's founder and CEO hastily departs the company without explanation. Unfortunately for what might have been the first success in the open source business software market that is what happened last week with the sudden removal of John Roberts, now former CEO of SugarCRM. The SugarCRM CEO role has been transitioned to board member Larry Augustin as interim CEO while the company looks for a full time replacement. Roberts departure follows at least two other senior executives who recently left SugarCRM for new opportunities at GroundWork Open Source and Pentaho. While the company chose not to disclose the reasons surrounding Roberts separation, interim CEO Augustin commented in his most recent blog entry, "Yesterday, I stepped into the role of interim CEO at the company." ... "My goals for the next 30 days at SugarCRM are fairly simple: get to know the team, customers, and partners. I am looking forward to helping them to continue to execute and (taking) the company to the next level."

John Roberts SugarCRM CEO

The news of Roberts departure is a far cry from Roberts claims of SugarCRM's business success. For nearly two years, Roberts has been publicly claiming the open source CRM software company was growing, was near positive cash flow and would file an S1 statement to go public in 2009. Now in the year of the alleged IPO entry, customers and industry watchers are questioning the company's unsubstantiated claims of progress and market momentum. SugarCRM successes have been recognized with its freely downloadable open source CRM adoption. The company claims over 4 million downloads over the prior 4 years and a global footprint. However, the company is also recognized to have burned through over $50M of venture funding and not achieved sales success with its commercial open source CRM software product. The company is rumored to have little money left and has not secured a break even cash flow to continue the current operations. Whether the current venture investors are willing to throw more money at the open source business, reduce the operational expenses to get closer to break even or have another plan in mind is what the open source CRM software industry waits to see next.

Wednesday, May 6, 2009 Senior Executive Team Departures today surprised the market with the resignation of its President and Chief Strategy Officer, Steve Cakebread, as well as the layoffs of other executive team members including Gary Hanna, EVP of Enterprise Sales. Cakebread's resignation was a shocker and the company elaborated only by saying that the former President was leaving "to pursue other professional interests". Cakebread took the leadership role in 2008 after serving as the CFO for six years. Several sources suggest Cakebread left to become the CFO of SaaS provider Xactly.

Steve Cakebread
Former President Steve Cakebread

The circumstances surrounding the departure of sales guru Gary Hanna and another unnamed executive vice president were not commented on by the software as a service CRM giant and remain unclear.

Analysts and company followers suggest the poster child of the on-demand CRM software movement may be slowing down. Cowen Co. analyst Peter Goldmacher wrote in a research paper this week. “While the company has been able to close deals, we believe the deals, in general, have been downsized and invoice duration has been shortened ... We know of no deals over 1,000 seats in the quarter.” Whether today's news is an early indicator for's 2009 performance or a harbinger for the entire SaaS CRM industry is a debate based more on industry buzz that empirical data. However, industry sentiment is clearly not buying the prior Marc Benioff claims that a troubled economy is actually good for SaaS solutions.

Friday, February 6, 2009

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