SugarCRM 101: Licensing and Vertical Markets

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There are some subtle nuances to non-technical aspects of SugarCRM that have very meaningful implications, but are often not well understood. One such nuance relates to licensing.

Conversations relating to the topic usually resemble the following:

What is the per user cost of a SugarCRM license?

Can one resell a customized version of SugarCRM?

Is it possible to provide SugarCRM hosting services?

One of the first important points to bear in mind regarding these types of questions is that the answer can vary depending on the edition of SugarCRM in question. This is especially true for the question of licensing costs, as Community Edition is completely free, while Professional, Corporate, Enterprise and Ultimate all require payment on a per user, per month basis.

More importantly, many of these conversations tend to only revolve around equating open source to FREE (as in costs, not liberty). As discussed, it is true for Community Edition, but not for the other editions of SugarCRM -- although they too are open source. 

It is also equally important to note that open source is a programming philosophy that incorporates both the idea of making software available at no cost, as well as free to be shared. This latter part has significant ramifications on the answers to questions such as those posed earlier in this post and in turn, business models one might be considering that involve SugarCRM.

Perhaps the most overlooked matter of importance is the issue of whether or not one can customize and then resell SugarCRM. Usually this comes up within the context of the idea of creating a vertical version of SugarCRM. 

Not to get too sidetracked, but vertical refers to a version of a product that is highly tailored to fit the needs of a specific industry, such as real estate, healthcare, automobile dealerships, etc. A default SugarCRM install is said to be horizontal, as it is not specifically designed for any given industry, although its flexibility makes it a more than adequate starting point for many vertical solutions.

Back to our question of whether or not one can customize and resell SugarCRM. The answer to this is yes, but again, there are other very important factors to consider that directly relate to the version of SugarCRM we are speaking of. 

Community Edition is governed by the Affero GNU Public License (AGPL) license, which mandates that the source code for any modifications to the original code must be provided to any party that buys the customized version of SugarCRM. That includes scenarios where all one is doing is offering a customized version of SugarCRM as a subscription service. 

Note that the receiving party is free to alter that work and also resell it. They are also free to give it away. Thus, one has to consider the possibility that once our work is out and available for purchase and sold, it also means it is available for free. 

This is the exact model under which SugarCRM Community Edition is made available to the public. That is, SugarCRM -- the company -- does not expect payment for any iterations of SugarCRM Community Edition that are freely distributed by myself or any other party. They also do no expect any revenue from sales of any custom or vertical versions of SugarCRM Community Edition one might make. 

Your only obligation is to abide by the license agreement, i.e. share the code relating to the modifications. 

Within the world of Professional and other paid for editions, things are a bit different. Said versions are governed by the SugarCRM Master Subscription Agreement, not AGPL. It is often more attractive to those with thoughts of developing vertical versions of SugarCRM because the sharing requirements are far less strict than they are with the AGPL license. Thus, one could create a vertical version without fear of lost revenue due to uncontrolled sharing of the system. 

In summary, licensing cost is only one of the various factors one should consider before embarking on an adventure with SugarCRM at its core. Failing to do so may lead to unwanted surprises down the road which may end up having a large impact on your plans. 

Further thoughts on this topic can be found in this thread in the SugarCRM Forums: http://www.sugarcrm.com/forums/f22/affero-general-public-license-27882/

I would strongly encourage you to read it.

DISCLAIMER: I AM NOT AN ATTORNEY. This post is provided for informational purposes ONLY and should not be used as a replacement for advice from a qualified attorney. I would strongly urge you to consult an attorney experienced with the matter of software licensing to not only validate the above information, but also ask any additional questions you may have.